# ASSOCIATION v. STATE OF KERALA & ORS

- **Citation:** [2015] 10 S.C.R. 880
- **Court:** Supreme Court of India
- **Decided:** 2015-11-05
- **Case number:** Civil Appeal No. 3518 of2007
- **Bench:** H.L. Dattu, R.K. Agrawal, Arun Mishra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/association-v-state-of-kerala-ors-30264
- **Pages:** 58

## Headnote

Lotteries (Regulation) Act, 1998: s.5 - Ban on online
lottery-Notification dated 27.01.2005 permitting the sale of
paper lotteries organized, conducted or promoted by every
State Government including the State of Kera/a while
D maintaining the prohibition imposed on the sale of
computerized and on-line lottery tickets organized,
conducted or promoted by every State Government and
declaring the territory of the State of Kera/a to be online,
internet and computerized lotteries free zone- Whether the
E State Government can discriminate between the paper lottery
and on line lottery- Held: State Government is competent to
prohibit a particular type of lottery- That means a particular
lottery can be the subject matter of prohibition - In other words,
all types of lotteries need not be prohibited -
r.3 of Rules,
F
2()_10 makes clear that online lottery is treated as separate
lottery from paper lottery and it is a class in itself - Thus,
State Government can separately ban the sale of online
lotteries as on/ine lottery is a particular class of lottery,
G different and distinct from paper lotteries- State Government
is, therefore, empowered uls. 5 to prohibit the sale of on line
lotteries or internet lotteries in its State - Constitution of India,
1950 -Articles 246 - Lotteries (Regulation) Rules, 2010 -
rr.2(e), 3.
H
880
ALL KERALAONLINE LOTTERY DEALERS ASSN. v.
881
STATE OF KERALA & ORS.
Dismissing the appeals and writ petition, the Court
A
HELD: 1. The relevant provisions of the Lotteries
(Regulation) Act, 1998 clearly demonstrate that even though
all types of lotteries are meant to be regulated by the said
Act, on line lotteries were not under the contemplation of the
B
Central Government at the time when the Act came into force.
The online lotteries became popular in India recently and in
any case after the enforcement of the Act and that is why the
Government of India while framing the 201 O Rules specifically
defined 'online lotteries'. In this background, the Scheme C
of the Act clearly show that the Government at that stage
was concerned with paper lotteries of all kinds. With regard
to the contention regarding the function of the on line lottery;
any type of manipulation can be done in the printing of tickets
at the terminal. The customer cannot know whether the D
ticket is printed at the terminal based on the command from
the central server or not. The State of Sikkim does not have
any control over its thousands of terminals all over India. As
per Section 4(h) of the Act, the draw should be held once in
a week. It means a fortune seeker, after purchasing the E
ticket, will get a week's cooling time to wait for the result of
the draw. But, under the scheme of on line lotteries, a number
of lotteries run simultaneously. So, by holding several
lotteries, there can be several draws with a gap of few F
minutes in a day and the gullible will remain glued and there
is every likelihood of purchase of tickets repeatedly, till all
his savings are exhausted. So, if the Government takes a
decision in public interest to prohibit on line lotteries, this
Court should not interfere with the said decision unless G
there are compelling grounds. While interpreting a Statute
of this nature meant to suppress the mischief of gambling,
this Court should accept the concept of purposive
interpretation and if possible save the notification intending
H
882
SUPREME COURT REPORTS
[2015] 10 S.C.R.
A to save the people from the vice of gambling. It is common
case that lottery is a species of gambling. Gambling is
considered as a pernicious vice by all civilized societies
from time immemorial. [Paras 24-26] [918-H; 919-A-F]
B
Words and Phrases, Butterworlhs, 3rd Edition at
page 71 - referred to.
2. Article 246(1) of the Constitution of India deals
with exclusive power of the Parliament to make laws with
C respect to matters enumerated in List I (Union List) in
the Seventh Schedule. As per Article 246(2), Parliament
and the Legislature of any State also ha

## Text

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(2015] 10 S.C.R. 880
A
ALL KERALA ONLINE LOTTERY DEALERS
B
c
ASSOCIATION
v.
STATE OF KERALA & ORS.
(Civil Appeal No. 3518 of2007)
NOVEMBER 05, 2015
[H.L. DATTU, CJI., R.K. AGRAWAL AND
ARUN MISHRA, JJ.]
Lotteries (Regulation) Act, 1998: s.5 - Ban on online
lottery-Notification dated 27.01.2005 permitting the sale of
paper lotteries organized, conducted or promoted by every
State Government including the State of Kera/a while
D maintaining the prohibition imposed on the sale of
computerized and on-line lottery tickets organized,
conducted or promoted by every State Government and
declaring the territory of the State of Kera/a to be online,
internet and computerized lotteries free zone- Whether the
E State Government can discriminate between the paper lottery
and on line lottery- Held: State Government is competent to
prohibit a particular type of lottery- That means a particular
lottery can be the subject matter of prohibition - In other words,
all types of lotteries need not be prohibited -
r.3 of Rules,
F
2()_10 makes clear that online lottery is treated as separate
lottery from paper lottery and it is a class in itself - Thus,
State Government can separately ban the sale of online
lotteries as on/ine lottery is a particular class of lottery,
G different and distinct from paper lotteries- State Government
is, therefore, empowered uls. 5 to prohibit the sale of on line
lotteries or internet lotteries in its State - Constitution of India,
1950 -Articles 246 - Lotteries (Regulation) Rules, 2010 -
rr.2(e), 3.
H
880
ALL KERALAONLINE LOTTERY DEALERS ASSN. v.
881
STATE OF KERALA & ORS.
Dismissing the appeals and writ petition, the Court
A
HELD: 1. The relevant provisions of the Lotteries
(Regulation) Act, 1998 clearly demonstrate that even though
all types of lotteries are meant to be regulated by the said
Act, on line lotteries were not under the contemplation of the
B
Central Government at the time when the Act came into force.
The online lotteries became popular in India recently and in
any case after the enforcement of the Act and that is why the
Government of India while framing the 201 O Rules specifically
defined 'online lotteries'. In this background, the Scheme C
of the Act clearly show that the Government at that stage
was concerned with paper lotteries of all kinds. With regard
to the contention regarding the function of the on line lottery;
any type of manipulation can be done in the printing of tickets
at the terminal. The customer cannot know whether the D
ticket is printed at the terminal based on the command from
the central server or not. The State of Sikkim does not have
any control over its thousands of terminals all over India. As
per Section 4(h) of the Act, the draw should be held once in
a week. It means a fortune seeker, after purchasing the E
ticket, will get a week's cooling time to wait for the result of
the draw. But, under the scheme of on line lotteries, a number
of lotteries run simultaneously. So, by holding several
lotteries, there can be several draws with a gap of few F
minutes in a day and the gullible will remain glued and there
is every likelihood of purchase of tickets repeatedly, till all
his savings are exhausted. So, if the Government takes a
decision in public interest to prohibit on line lotteries, this
Court should not interfere with the said decision unless G
there are compelling grounds. While interpreting a Statute
of this nature meant to suppress the mischief of gambling,
this Court should accept the concept of purposive
interpretation and if possible save the notification intending
H
882
SUPREME COURT REPORTS
[2015] 10 S.C.R.
A to save the people from the vice of gambling. It is common
case that lottery is a species of gambling. Gambling is
considered as a pernicious vice by all civilized societies
from time immemorial. [Paras 24-26] [918-H; 919-A-F]
B
Words and Phrases, Butterworlhs, 3rd Edition at
page 71 - referred to.
2. Article 246(1) of the Constitution of India deals
with exclusive power of the Parliament to make laws with
C respect to matters enumerated in List I (Union List) in
the Seventh Schedule. As per Article 246(2), Parliament
and the Legislature of any State also have power to ma.ke
laws with respect to any of the matters enumerated in
List Ill (Concurrent List) in the Seventh Schedule. The
o Legislature of the State has, however, exclusive power
to make laws with respect to matters enumerated in List
II (State List) in the Seventh Schedule, as per Article
246(3) of the Constitution. Also, there being a specific
entry dealing with lotteries, the power to legislate on
E
lotteries would be in the exclusive domain of the
Parliament, even though it is a form of gambling and
would be generally covered under Item No. 34 of List II
(State List). The Parliament, in exercise of the power
vested in it to enact law on lotteries as per Item No. 40 of
F List I (Union List), enacted the Lotteries (Regulation) Act,
1998. Section 3 of the Act or~ains that save as otherwise
provided in Section 4, no State Government shall
organize, conduct or promote any lottery. A State
Government has been authorized to organize, conduct
G or promote a lottery, subject to the conditions
enumerated in Section 4.
By virtue of the provisions
contained in Section 12 of the Act, the Government may,
by notification in the Official Gazette, make rules to carry
H out the provisions of the Act. Exercising the powers
·ALL KERALA ONLINE LOTTERY DEALERS ASSN. v.
883
STATE OF KERALA & ORS.
vested in it by the provisions co_ntained in Section 12, A
the State of Kera la has framed the "Kera la Paper Lotteries
(Regulation) Rules, 2005." By virtue of the provisions
contained in Section 12 of the Act, the Centre has
delegated its power to legislate with regard to lotteries
to States and further that there is specific delegation with B
regard to ban of lotteries of other States by virtue of the
provisions contained in Section 5 of the Act. This
delegation of legislative power of the principal to the
delegatee would not amount to abdication of legislative
power by the Centre and it would not be without any c
guidelines and would be sustainable in law if the
concerned State may ban a lottery in its own State and
of other States as well. What is true with regard to the
total ban of lotteries of other States, would also be true
with regard to a particular kind of lottery as the delegation 0
of power has been held to be valid if the power by the
delegatee may be used uniformly in its own State and
also with regard to the other States. In the context of the
facts and circumstances of the case when the State of .
Kerala may prohibit a particular kind of lottery from its E
own State, it can prohibit sale of such lottery from any
other State and that would not be unsustainable in the
eyes of law nor it could be against law. It is not a case of
abdication of legislative power and would not be bereft
of any guidelines ifthe legislation banning lotteries was
applied uniformly. [Paras 29, 33, 34] [921-A-H; 922-A-C;
F
931-D-H; 932-A]
3. With the ongoing development in the field of
science and technology, even though the online lotteries
were not in vogue in 1998 when the Parliament had G
passed the Act, it came into existence at a later point of
time. The principles laid down by this Court in B.R.
Enterprises would apply to the paper lotteries which
were in existence at that point of time. The principles
laid down therein would also apply to online lotteries or H
884
SUPREME COURT REPORTS
[2015] 10 S.C.R.
A internet lotteries by treating them as a separate class.
The principle laid down therein is that if the State
Government has to prohibit any lottery organized,
conducted or promoted by every other State, it has to
prohibit the sale of its own lottery also. Meaning thereby,
B if a paper lottery is being prohibited.by a particular State
then that paper lottery has to be prohibited as a whole.
Likewise, if online or internet lottery is to be prohibited
by a State then that online lottery or internet lottery of all
States including that State also has to be prohibited.
C Viewed from this angle, State of Kerala was well within
its rights to prohibit the sale of on line or internet lotteries
in its State and there is no fault in it. It is well within the
powers conferred on it under Section 5 of the Act. [Paras
D. 38, 39] [935-D-H; 936.-AJ
B.R. Enterprises v. State of UP and Ors. (1999) 9
sec 700: 1999 (2) SCR 111 - relied on.
The Senior Electric Inspector and Ors. v. Laxmi
E
Narayan Chopra and Ors. 1962 (3) $CR 146;
State (Through CBI/New Delhi) v. S.J. Choudhary
(1996) 2 sec 428: 1996 (2) SCR 556; SIL
Import, USA v. Exim Aides Silk Exporters,
Bangalore (1999) 4 SCC 567: 1999 (2) SCR 958
F
- referred to.
Case Law Reference
1999 (2) SCR 111
relied on
Para 5
G
1962 (3) SCR 146
referred to
Para 8
1996 (2) SCR 556
referred to
Para 8
1999 (2) SCR 958
referred to
Para 8
H
ALL KERALAONLINE LOTTERY DEALERS ASSN. v.
885
STATE OF KERALA & ORS.
CIVIL APPELLATE JURISDICTION: Ci"1il Appeal No. A
3518 of 2007
From the Judgment and Order dated 23.05.2006 of
the Division Bench of the High Court of Kera la at Ernakulum in
Writ Appeal No. 2011 of 2005
WITH
C. A. Nos. 3519 & 3520 of 2007
W.P. (C} Nos. 641/2007 & 233/2010
Nikhil Nayyar for the Appellants. Appellant-in-person.
Liz Mathew, Arputham Aruna & Co., Go pal Singh, Rituraj
Biswas, Varsha Poddar, Shreekant N. Terdal, T.C. Sharma,
for the Respondents.
The Judgment of the Court was delivered by
R.K. AGRAWAL, J.
Civil Appeal Nos. 3518-3520
B
c
D
1. These appeals are directed against the common final
E
judgment and order dated 23.05.2006 passed by the Division
Bench of the High CourtofKerala at Ernakulam in WritAppeal
Nos. 2011, 2012 and 2235 of 2005 whereby the High Court
dismissed the appeals filed by.the appellants herein against
the judgment and order dated 27.07.2005 passed by learned
F
single Judge of the High Court in Writ Petition (C) Nos. 14495,
16063 and 19582 of2005.
2. Brief facts:
(a) The State of Kerala, by notification dated 13.01.2005, G
issued in exercise of the power conferred by Section 5
of the Lotteries (Regulation) Act, 1998, (in short 'theAct'),
prohibited the sale of all computerized and online lottery
tickets marketed and operated through vending H
886
SUPREME COURT REPORTS
[2015] 10 S.C.R.
A
machines, terminals, electronic machines and tickets
sold through internet in the State with immediate effect
and declared that Kerala shall be a free zone from online
and internet lotteries.
B
c
D
E
F
G
H
(b) By a subsequent notification dated 27.01.2005, the
State of Kerala decided to prohibit the sale of all lotteries
organized, conducted or promoted by the State as well
as by every other State Government in the State of Kerala
with immediate effect and declared that the State shall
hereafter be a Lottery Free Zone.
(c) The State of Kerala, in partial modification of the
notification dated 27.01.2005, issued a subsequent
notification dated 22.04.2005, permitting the sale of
paper lotteries organized, conducted or promoted by
every State Government including the State of Kerala and
the prohibition imposed on the sale of computerized and
on·-line lottery tickets organized, conducted or promoted
by every State Government continued to remain in force
declaring the territory of the State of Kerala to be online,
internet and computerized lotteries free zone.
(d) Being aggrieved by the notification dated 22.04.2005
discriminating between the paper lotteries and online
lotteries, the All Kerala Online Lottery Dealers
Association, State of Sikkim and one Sreekala and
others filed Writ Petition (C) Nos. 19582, 14495 and
16063 of 2005 respectively before the High Court.
(e) A learned single Judge of the High Court, by judgment
and order dated 27.07.2005, dismissed the writ
petitions.
(f) Being aggrieved by the decision of the learned single
Judge, the petitioners therein preferred Writ Appeal Nos.
ALL KERALA ONLINE LOTTERY DEALERS ASSN. v.
887
STATE OF KERALA& ORS. [R.K.AGRAWAL, J.)
2011, 2012 and 2235 of 2005 beftire the Division Bench A
of the High Court.
(g) The Division Bench, by a common judgment and order
dated 23.05.2006, dismissed the appeals.
B
(h) Against the said order, the appellants have preferred
these appeals by way of special leave before this Court.
Writ Petition (C) Nos. 641 of 2007 and 233 of 201C
(a) One Bibhash Karmakar-the petitioner herein has filed
C
the above petitions in public interest alleging that the
States of Sikkim, Nagaland and Goa are running lottery
business contrary to the provisions of the Act which is
detrimental to the society as a whole.
D
(b) This Court, by order dated 27 .11.2009 in Writ Petition
(C) No. 641 of 2007, directed the State to explain as to
whether the State of Sikkim is running lottery business
contrary to the provisions of Section 4 of the Act. In
response to the above, the State Government filed an
E
affidavit dated 10.12.2009 before this Court denying all
the irregularities as claimed by the petitioner herein and
cited various provisions of the Act as well as the Sikkim
Online Network Lottery Rules, 2001 to show that the
lottery business in the State is in consonance with the
F
pre-existing rules and regulations.
(c) This Court, by order dated 21.06.2010, tagged Writ
Petition (C) No. 233 of 2010 with Writ Petition (C) No.
641of2007.
G
3. Heard the arguments advanced by learned senior
counsel for the parties and perused the records. Since a
common question of law and facts arise in these appeals and
petitions, they are being disposed of by this common judgment.
H
888
SUPREME COURT REPORTS
[2015] 10 S.C.R.
A
Points for Consi'cteration:
4.The sole question for consideration before this Court is
whether the State Government can discriminate between the
paper lottery and on line lottery in pursuance of the provision of
B
Section 5 of the Act.
Rival Submissions:
5. Learned senior counsel for the appellants contended
before this Court that on line lottery is also a lottery, as defined
C
under Section 2(b) of the Act. So, if the State Government
intends to prohibit the same, it has to prohibit all the lotteries
whether paper or on line. The selective prohibition of the sale
of on line lottery tickets is impermissible, in the light of Section
0
5 of the Act, as interpreted by this Court in B.R. Enterprises
vs. State of U.P. and Others (1999) 9 SCC 700. The
distinction drawn by the State Government between paper
lottery and online lottery is discriminatory and violative of Article
14 of the Constitution of India. Learned senior counsel further
E contended that the impugned notification is vitiated by mala
fides. It was further alleged that the State Government is being
controlled by the paper lottery mafia and under its influence
the sale of on line lottery tickets has been prohibited. The State
Government does not have the competence to issue the
F
impugned notification. Though the State Government is
competent to legislate on lotteries by virtue of lten:i 34 of List II
concerning betting and gambling, the power to legislate on
lotteries organized by the Government of India or the
Government of a State is the exclusive preserve of the
G Parliament by virtue of Entry 40 of List I of the Seventh
Schedule. So, the State Government, which is incompetent to
legislate on lotteries run by other States, has no power to issue
the impugned notification. The State Government, without
legislative competence, has ventured to prohibit online lottery
H
ALL KERALA ONLINE LOTTERY DEALERS ASSN. v.
889
STATE OF KERALA& ORS. [R.K.AGRAWAL, J.]
which is totally fraudulent and colourable exercise of the power.
A
6. Learned senior counsel for the appellants further
pointed out that the contention that on line lottery was not in the
contemplation of the Parliament or the Court, cannot be
accepted. The Act has to be interpreted to adapt it to the B
changing times. According to learned senior counsel, the
Parliament was well aware about the growing advancement
of science and technology and the use of electronic media in
future days to come and, therefore, when it defined 'lottery'
under Section 2(b) of the Act, it included also the Online lottery C
or internet lottery which may come into existence in future. It
was further submitted that the provision contained in Section
5 of the Act would empower the State Governmern to prohibit
the sale of tickets of all the lotteries and it cannot be restricted
only to online or internet lotteries. He further submitted that if it D
is to be taken that the online lottery is a class of lotteries for
which the State Government is empowered to prohibit then it
is only the Parliament which can classify the same and the
State of Kera la has no power to do so. According to him, the
Central Government framed the Lotteries (Regulation) Rules,
E
2010 (in short 'the Rules') under sub-section (1) of Section 11
of the Act and defined online lotteries under Rule 2(e) of the
Rules that too for the first time in the year 2010, therefore, the
State Government had no right or jurisdiction to prohibit the F
online lottery in the year 2005. The principles laid down in
B.R. Enterprises (supra) will apply to all types of lotteries
and a judgment of this Court cannot be ignored merely by saying
that it failed to consider some point or other.
7. Learned senior counsel further contended that this Court,
G
in B.R. Enterprises (supra), has read down Section 5 of the
Act, to save it from the vice of unconstitutionality, emanating
from conferring unbridled power on the State, which may be
termed as abdication of the essential legislative function, by
H
890
SUPREME COURT REPORTS
[2015] 10 S.C.R.
A
failing to provide guidelines forthe exercise of that power. In
the said decision, in paragraphs 84 and 87, it was held as
follows:
8
c
D
E
F
G
H
"84. In Section 2(b) lotteries are defined to be a Scheme
for distribution of prizes by a lot or chance. This definition
itself recognizes that even in State lotteries the prizes
are to be collected by chance without any skill, hence
gambling in nature. Section 3 prohibits that no State
lotteries can be organized without the condition stipulated
under clauses (a) to (k) of Section 4. Section 4 provides
the conditions to be complied with by the State lotteries.
To initiate any State lottery it is left to the policy of each
State1 for this Act is silent. The only control is, in case it
decides, then it must follow the conditions as laid down
under Section 4. Next comes Section 5 which is subject
matter of challenge, the delegation of power to the State
to prohibit the sale of lottery tickets organized by every
other State. If a State desires not to subject its people to
the lottery gambling, it has no power to restrict lotteries
organized by other States. It is to remove this mischief
that power is conferred through delegation to the States
to do it in terms of their own policy. By virtue of this, now
the State Government can prohibit sale of lottery tickets
of every other State within its territory. Next, Section 6
seeks strict compliance with Section 4. Under this the
Central Government may prohibit any State lottery which
is being conducted in contravention of the conditions as
laid down under Section 4 or Section 5. Section 7 shows
the rigour of this Act by making it a penal offence as
against all, who violate the provisions of this Act, be it is
Head of the Department of the Government or the agent,
promoter or trader to be punishable with two years
rigorous imprisonment. Section 8 makes such an offence
cognizable and non-bailable. Similarly, Section 9 deals
ALL KERALA ONLINE LOTTERY DEALERS ASSN. v.
891
STATE OF KERALA& ORS. [R.K.AGRAWAL, J.]
with offences committed by the companies. Section 10 A
entrusts the Central Government power to give directions
to the State Government for carrying into execution the
provisions of this Act, Rule or Order. Sections 11 and 12
are the rule-making power entrusted to the Central and
the State Governments respectively. Section 13 repeals
B
the Ordinance. Thus, the whole Act makes clear that the
subject it is dealing with is gambling in nature. The object
of the Act is not to control the policy decision of each
State to start or to close its lotteries, but to regulate it in
case a State decides to run its own lottery through C
modalities and conditions laid down therein. Emphasis
of the whole Act is to abide by the conditions strictly if
you want to run a lottery. Thus, regulation is through
· conditions to eliminate even the remotest possibility of 0
malpractices by providing stringent measures for its
compliance. Perusal of the Act reveals, the scheme of
the Act is limited in its application, and it admits the
subject it is dealing is gambling in nature. As we have
said, the decision to collect or not to collect revenue E
through State lotteries is exclusively within the policy
decision of the State and for this, neither the Union nor
Parliament interferes nor is there any indication under
the Act. Thus, the question which remains is, if any State
decides that it does not want any lotteries but if it feels
F
helpless as having no jurisdiction over the lotteries
organized by other States, what is the way out ? This
can only be done by Parliament or by entrusting this power
on such State desiring so, which has been done through
Section 5. In this background, for this helplessness of a G
State as recorded in Anraj case-I [(1984) 2 sec 292]
the remedy is provided by entrusting this power on the
State under the impugned provision. This helps such
State to achieve its objective of lottery (gambling) free
zone within its territory. A well-concerned remedy. Next H
892
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS
[2015] 10 S.C.R.
question is what could have been the guideline? If State
lotteries are gambling and it cannot be terms as 'trade
and commerce' at common parlance for any free right
under the Constitution. Such right though recognized
under Article 298, so other States may continue to enjoy
till prohibited by valid law, and if any State wants within
its State lottery-free zone and for which the power is
entrusted to such State, it cannot be said in this setting
and background and the nature of the subject that such a
delegation is of its essential legislative power. The only
guideline necessary in such delegation is to see that the
State does not pick and choose one State from the other,
which guideline is already provided in this Section. It
provides that such a ban could only be if it is applied to
every other State. The only residual field of attack so far
as this delegation could be, which has been attacked in
this case, that the State could on one hand. ban lotteries
of every other State but run its own lotteries. It is argued
that while a State bans lotteries of other States not to
permit any gambling activity in the public interest as a
policy but this very public interest is flouted by having
lotteries of its own. It is true that unless this provision is
read down to mean a State can only ban lotteries of other
States when it bans as a policy its own lotteries it is bound
to be subjected to the vagaries as pointed out and on
deeper scrutiny it may not successfully stand. But, by
reading down the provision, which has to be read that it
is only that State which decides lottery-free zone within
its State can prohibit lotteries of other States clearly
provides the guidance for the exercise of such a power.
It is inbuilt and inherent in the provision itself in view of
the scheme of the Act and nature of subject in issue. If
interpretation as given on behalf of the State of Tamil Nadu
is accepted that delegation of power is absolute, then
the submission that such delegation is unbridled without
ALL KERALA ONLINE LOTTERY DEALERS ASSN. v.
893
STATE OF KERALA& ORS. [R.K.AGRAWAL, J.]
any guideline carries great weight. Submission for the A
State of Tamil Nadu is that the lotteries may be prohibited
in phases, viz. while running its own lotteries yet
prohibiting other lotteries, may be as a public policy, for
law and order, for political reasons, morality, etc. For
surviving such an interpretation given by Mr. Ganguli,
B
Parliament should have provided some guidelines. Such
an interpretation falls into the trap of the submission that
this delegation is unbridled. So, if there are two
interpretations, the interpretation which upholds the
validity should be accepted. So, the interpretation as C
. given by Mr. Ganguli cannot be accepted.
87.We find on plain reading of Section 5, it empowers
the State Government within its State to prohibit the sale
of tickets of the lotteries organized by every other State.
D
There is also nothing in the language reading by itself so
as to say, whether such power can be exercised by the
State while running its own lottery or can be exercised
only where such.State does not run its own lottery. This
leads to two possible interpretations, as referred to
E
above. In view of settled principle of interpretations, the
interpretation given by the union to read down the
provision has substance. This would mean that the State
could only exercise such discretion if it decides not to
have any lottery within its territory including its own lottery.
F
In this situation, the delegate is tied down by this limitation
which itself is a clear guide to a State hence cannot be
said to be unbridled delegation. So even to the first part
it cannot be said to be arbitrary or unbridled. So, we G
have no hesitation to approve the interpretation given by
the Union to uphold the validity of Section 5."
Relying on the above quoted paragraphs, learned senior
counsel for the appellants vehemently contended that the State
shall either prohibit the sale of all lotteries or allow the sale of H
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all lotteries in the State. Selective prohibition of a particular
type of lottery is impermissible in the light of the above binding
judgment.
8. In support of this submission learned senior counsel
B apart from the decision in B.R. Enterprises (supra) relied on
the following decisions, viz., The Senior Electric Inspector
and Others vs. Laxmi Narayan Chopra and Others 1962
(3) SCR 146, State (Through CBI/New Delhi) vs. S.J.
Choudhary (1996) 2 SCC 428 and SIL Import, USA vs.
C
EximAides Silk Exporters, Bangalore (1999) 4 SCC 567.
9. The learned senior counsel for the State of Kerala-the
respondent herein supported the impugned notification by
contending that the State Government is competent to prohibit
o a particular type of lottery. There is no fetter on the power of
the Government under Section 5. Learned senior counsel
further submitted that when the Parliament enacted the Act in
the year 1998, there was nothing before it to presume that in
times to come online lotteries will also come into existence
E apart from the paper lotteries and, therefore, the provision of
Section 5 which empowers the State Government to prohibit
the sale of tickets of a lottery organized, conducted or promoted
by every other State necessarily relate to paper lottery. Even
otherwise, on line lottery is different from paper lottery and can
F
be treated as a class in itself. The State Government is,
therefore, empowered under Section 5 of the Act to prohibit
the sale of online lotteries or internet lotteries in its State. He
further submitted that the Central Government itself treated
online lotteries as a different class in itself and, therefore,
G framed the Rules providing the rules and regulations for
organizing paper lottery or orrline lottery or both subject to
certain terms and conditions. Thus, the intention of the
Parliament was to treat paper lotteries and online lotteries a
H different class.The decision in B.R. Enterprises (supra) would
therefore necessarily be understood to relate to paper lotteries
ALL KERALA ONLINE LOTTERY DEALERS ASSN. v.
895
STATE OF KERALA& ORS. [R.K.AGRAWAL, J.]
only. The said decision cannot be construed as a precedent. A
So, the declaration of law, made therein, is not applicable to
on line lotteries. It is also submitted that prohibition of sale of
online lotteries has been made bona fide and the classification
is reasonable and not arbitrary. Learned senior counsel further
submitted that the scheme of Section 4 would show that the B
Act was framed with a view to deal with paper lotteries which
were in vogue at t.hat point of time whereas the distributors of
online lotteries do much more than selling the tickets. They
decide and implement the lottery schemes, provide infrastructure and technology, print lotteries and participate in the C
conduct of draws. Section 4(h) of the Act prohibits holding of
draws, more than once in a week. This restriction has been
made taking into account the conduct of paper lotteries. But,
in on line lotteries, 70 to 100 draws are made every day in a 0
week. On the above grounds the respondents prayed for
dismissal of the appeals.
Discussion:
10. Before going into the validity of the impugned E
notification, it is fruitful to refer to certain provisions ·of the Act.
The relevant portion of the Statement of Objects and
Reasons for framing this legislation is as under:
"The conduct of certain types of lottery trade in the country,
F
the malpractices thereof and their impact on the poorer
sections of the society has been under scrutiny of the
Government for quite some time. The continued
prevalence of the popularly known single digit and instant
lotteries and the temptation offered by them proved to G
be the undoing of many families, especially poor daily
wagers and low income groups. In spite of the guidelines
issued by the Central Government over a period of time
as also the guidelines issued in the recent
.st by the
Honourable Supreme Court. In the matter, the evil has H
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not been totally eliminated and it is felt that a Central
legislation to regulate the conduct of lotteries is necessary
to protect the interest of the gullible poor."
8
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F
G
Section 2(b) defines 'lottery' which reads as follows:
"2 (b)'lottery' means a scheme, in whatever form and by
whatever name called, for distribution of prizes by lot or
chance to those persons participating in the chances of
a prize by purchasing tickets."
3. Prohibition of lotteries.-Save as otherwise
provided in Section 4, no State Government shall
organize, conduct or promote any lottery.
Section 4 enumerates the conditions, subject to which a
State Government may organize, conduct or promote a
lottery, which reads as follows:
"4.Conditions subject to which lotteries may be
organized etc.:- A State Government may organize,
conduct or promote a lottery, subject to the following
conditions, namely:-
"(a) prizes shall not be offered on any pre-announced
number or on the basis of a single digit;
(b) the State Government shall print the lottery tickets
bearing the imprint and logo of the State in such manner
that the authenticity of the lottery ticket is ensured;
(c) the State Government shall sell the tickets either itself
or through distributors or selling agents;
(d) the proceeds of the sale of lottery ticket$ shall be
credited into the public account of the State;
( e) the State Government itself shall conduct the draws
H
of all the lotteries;
ALLKERALAONLINE LOTTERYDEALERSASSN. v.
897
STATE OF KERALA& ORS. [R.K.AGRAWAL, J.]
(f) the prize money unclaimed within such time as may A
be prescribed by the State Government or not otherwise
distributed, shall become the property of that Government;
(g) the place of draw shall be located within the State
concerned;
B
(h) no lottery shall have more than one draw in week;
(i) the draws of all kinds of lotteries shall be conducted
between such period of the day as may be prescribed
by the State Government;
C
'
(j) the number of bumper draws of a lottery shall not be
more than six in a calendar year;
(k) such other conditions as may be prescribed by the o
Central Government."
5. Prohibition of sale of ticket in a State.-A State
Government may, within the State, prohibit the sale of
tickets of a lottery organized, conducted or promoted by E
every other State.
6. Prohibition of organization etc., of lottery.-The
Central Government may, by order published in the
Official Gazette, prohibit a lottery organized, conducted
F
or promoted in contravention of the provisions of Section
4 or where tickets of such lottery are sold in contravention
of the provisions of Section 5.
7. Penalty.-(1) Where a lottery is organized, conducted
or promoted after the date on which this Act receives the G
assent of the President, in contravention of the provisions
of this Act, by any Departn 1ent of the State Government,
the Head of the Department shall be punishable with
rigorous imprisonment for a term which may extend to H
898
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B
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SUPREME COURT REPORTS
[2015] 10 S.C.R.
two years or with fine or with both:
Provided that nothing contained in this section shall
render such Head of the Department liable to any
punishment if he proves that the contravention was
committed without his knowledge or that he exercised
all due diligence to prevent the commission of such
contravention.
(2) Notwithstanding anything contained in sub-section (1 ),
where a contravention under this Act has been committed
by a Department of Government and it is proved that the
contravention has been committed with the consent or
connivance of, or is attributable to any neglect on the part
of, any officer, other than the Head of the Department,
such officer shall also be deemed to be guilty of that
contravention and shall be liable to be proceeded against
and punished accordingly.
(3) If any person acts as an agent or promoter or trader
in any lottery organized, conducted or promoted in
contravention of the provisions of this Act or sells,
distributes or purchases the ticket of such lottery, he shall
be punishable with rigorous imprisonment for a term
which may extend to two years or with fine or with both.
8. Offences to be cognizable and non-bailable.-
. The offence under this Act shall be cognizable and nonbailable."
11. From the above provisions, it can be seen that the
tickets of a State-run lottery shall be printed by the State itself.
Sale of tickets alone is permitted through the agents or through
distributors. The entire sale proceeds have to be credited in
the public account of the State. Draws of all the lotteries have
H to be conducted by the State Government. No lottery can have
ALL KERALA ONLINE LOTTERY DEALERS ASSN. v.
899
STATE OF KERALA& ORS. [R.K.AGRAWAL, J.]
more than one draw in a week. Bumper draws shall not be A
more than six in a calendar year. The cumulative effect of subsections (h) and 0) appears to be that a State can run only 52
ordinary lotteries and six bumper lotteries in a year. Section 5
empowers the State Government to prohibit the sale of tickets
of lotteries organized, conducted or promoted by every other B
State Government. . Section 6 empowers the Central
Government to prohibit the conduct of lotteries, which are in
violation of the provisions of Section 4 or which are sold in
contravention of the prohibition imposed by the State
Government under Section 5. Section 7 provides the penalty C
for running a lottery in violation of the provisions of the Act.
The Head of the Department and other officers responsible
for the conduct of the lottery shall be punished with
impri_sonment, which may extend to two years or with fine or 0
with both. Similar punishment can be imposed on those who
sell or purchase the tickets of such a lottery. Section 8 makes
the offences under the Act cognizable and non-bailable.
Cognizable offence means an offence for which a police officer
may arrest the accused without warrant (Section 2( c) of the
E
Code of Criminal Procedure, 1973 (in short 'the Code'). In
this background, it is also relevant to quote Section 4 of the
Code which reads as follows:
"4. Trial of offences under the Indian Penal Code F
and other laws:- (1) All offences under the Indian Penal
Code (45of1860) shall be investigated, inquired into,
tried, and otherwise dealt with according to the provisions
hereinafter contained.
(2) All offences under any other law shall be investigated, G
inquired into, tried, and otherwise dealt with according
to the same provisions, but subject to any enactment for
the time being in force regulating the manner or place of
investigating, inquiring into, trying or otherwise dealing
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with such offences."Since no provision is made for
investigating the offences under the Act, the provisions
under the Code will apply to its investigation, by virtue of
Section 4(2) of the Code quoted above.
B
12. It is also relevant to mention the Notifications issued
c
by the State Government from time to time.
"Government of Kerala
2005
Reg. No. KL/TV(N)/12/2003-2005
KERALA GAZETTE
EXTRAORDINARY
PUBLISHED BY AUTHORllY
Vol.L
Thiruvananthapuram
13th January, 2005
Volume 50
Thursday
D
No. 77
23rd Pousha 1926
E
GOVERNMENT OF KERALA
Taxes (H) Department
NOTIFICATION
G.O.(P) No. 4/2005/TD dated,Thiruvanathapuram, 131h
January, 2005.
S.R.O. No. 34/2005- In exercise of the powers conferred
F
by Section 5 of the Lotteries (Regulation) Act, 1998
(Central Act 17 of 1998), the Government of Kerala
hereby prohibit the sale of all Computerised and Online
lottery tickets marketed and operated through vending
machines, terminals, electronic machines and tickets
G
sold through Internet in Kera la, with immediate effect and
declare that Kerala shall be the free zone from Online
and Internet
H
By order of the Governor.
P. MARAPANDYAN,
Secretary to Government
ALL KERALA ONLINE LOTTERY DEALERS ASSN. v.
901
STATE OF KERALA& ORS. [R.K.AGRAWAL, J.]
(This does not form part of the Notification, but is intended A
to indicate its general purport).
Government have decided to prohibit the sale of
computerized and online lottery tickets in the State of
Kerala with immediate effect
B
This notification is intended to achieve the above object."
"Government of Kerala
2005
Reg.No.KUTV(N)/1212003-2005
KERALA GAZETTE
EXTRAORDINARY
PUBLISHED BY AUTHORITY.
Vol.L
Thiruvananthapuram
Volume 50
Thursday
2J1h January, 2005
No. 169
7th Magga 1926
GOVERNMENT OF KERALA
Taxes (H) Department
NOTIFICATION
G.O.(P) No. 11/2005/TD dated, Thiruvanathapuram, 271h
January, 2005.
c
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S.R.O. No. 73/2005 - WHEREAS Notification II GO. (P)
No. 4/2005/TD dated 13th January, 2005 published as
F
S.R.O. No 34/2005 in Kerala Gazette Extraordinary No.
77 dated the 131h January, 2005 prohibiting the sale of
computerized and online lottery tickets in the State of
Kera la has been issued under Section 5 of the Lotteries G
Regulation Act, 1998 (Central Act 17of1998).
AND WHEREAS the Government of Kerala have
decided to prohibit the sale of all lotteries organized,
conducted or promoted by the State of Kerala with
immediate effect.
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AND WHEREAS the Government of Kerala have
decided to prohibit the sale of tickets of all lotteries
organized, conducted or promoted by every other State
Government also;
B .
NOW THEREFORE, in exercise of the powers conferred
by Section 5 of the Lotteries (Regulation) Act, 1998
(Central Act 17of1998) and all other powers enabling
for it, the Government of Kerala hereby prohibit the sale
of tickets of all lotteries organized, conducted or
C
promoted by every other State Government including
lotteries organized, conducted or promoted by the
Government of Kerala in the State of Kerala with
immediate effect and declare that the State of Kerala
shall hereafter be a Lottery Free Zone .
. D
E
By order of the Governor.
P.