JUDGMENT 1. - In this writ petition under Article 226 of the Constitution of India, petitioner Ashok Kumar has prayed for issuance of a writ order or direction to the non-petitioners No. 1 and 2 to abolish the camp system for distribution /sale of tickets of Rajasthan State Lotteries and has further sought a direction against the non petitioners not to sell any lottery ticket without first charging the price thereof. It is also prayed that a direction be issued to the respondents to recover the amount due from the camp incharge and the employees of the State Government who are found responsible for issuance of lottery on credit and they should be punished and criminal cases be register against them. The petitioner has also prayed in the petition that the contract entered into by the respondent with M/s. Vimal agency, Madurai be cancelled and the State Government be directed not to open the 87 Diwali Bumper Draw and also prayed for a direction to be issued against non-petitioners No. 1 and 2 for not indulging in any business of lottery in future. 2. Briefly stated the facts of the case are that the petitioner who is said to be a journalist and having contracts with leading news papers of Rajasthan has filed this writ petition as public interest litigation. The contention of the petitioner is that there is large scale corruption in the Rajasthan State Lotteries Department. He has submitted that the revenue from the lotteries which should have been utilised for development of the State is being misused and misappropriated by some Government employees for their own benefit In the writ petition, the petitioner has submitted that the various State Governments are authorised by the Government of India to organise such lotteries for augmenting their financial resources for development purposes. In pursuance thereof in the year 1968, the State of Rajasthan decided to organise state lotteries with a view for augmenting its resources and utilising the net profits thereof on developmental schemes. It was with this object in mind, the State of Rajasthan by Notification dated 10th December, 1968, issued a scheme called as State Lotteries Scheme, 1968. Clause 3 of the said Scheme provides that the State lotteries will be conducted. It was with this object in mind, the State of Rajasthan by Notification dated 10th December, 1968, issued a scheme called as State Lotteries Scheme, 1968. Clause 3 of the said Scheme provides that the State lotteries will be conducted. In the Government and the Government in the Finance (Expenditure) Department will be the controlling authority for the working of the scheme and the Director will be the incharge of the Scheme and will take steps for implementation thereof in accordance with the directions of the Government. Clause 6 of the Scheme provides for sale of tickets. It is provided that the tickets may be sold through agents or at sale booths run under the direct control of the Director, District Lotteries. The relevant provision for the appointment of agent is Clause 7 in the said scheme, which is as follows : "7 Appointment of agents (i) Agents for the sale of tickets will be appointed under Rajasthan State Lotteries (Agency) Rules, 1968. (ii) Gazetted Government servants, employees of Small Savings and State Lotteries Department, and employees of the Police Department will not be eligible for appointment as agents. (iii) The Director and when so authorised by the Government, the District Lottery Officer, and the Sale. Officer shall appoint agents for the sale of tickets. (iv) Agents for areas outside Rajasthan shall not be appointed unless the Government of the State concerned has given concurrence for the ,ale of tickets in their State." 3. In Clause 8 of the said Scheme, it is provided that tickets will be supplied to agents on payment of full price and, clause 9 provides for payment of commission to agents. In clause 5 form and price of the tickets is provided. It is laid down that for the first State Lottery the price of a ticket will be Rs. 2/-. 4. The State Government also issued Rules regarding the Rajasthan State Lotteries (Agency) Rules, 1968. The Rules were issued on 1st August, 1968. In the Rules, the commission which is to be paid to agents is prescribed. The procedure for appointment of agents is also laid down in the said Rules. 5. The State Government issued various types of lotteries in pursuance of the Scheme of 1968. The Government of India, Ministry of Home Affairs issued broad guidelines on 26/27th June, 1984 to the Chief Secretaries of all the State Governments and union territories. The procedure for appointment of agents is also laid down in the said Rules. 5. The State Government issued various types of lotteries in pursuance of the Scheme of 1968. The Government of India, Ministry of Home Affairs issued broad guidelines on 26/27th June, 1984 to the Chief Secretaries of all the State Governments and union territories. In the communication dated 26/27th June, 1984, it was observed by the Government of India that as there had been criticism about some aspects of lottery schemes and complaints of mal practices were received, it was, therefore, considered necessary to bring out some uniformity and to curb corruption and scope of mal practices in the running of lotteries, with this object the Government of India formulated the guide-lines. The relevant guide-lines enumerated in the said communication are as follows:- (1) Weekly lotteries:- (a) The ceiling on the first prise may be Rs. 1 lakh. (b) The maximum price for one ticket may be fixed Rs. 1/-. (2) Bumper Draws:- (a) The ceiling on the first prise may be fixed at Rs. 25 lakhs. (b) The maximum price of a ticket may not exceed Rs. 3/- Minimum Revenue Accruing From Lottery : The net profit accruing from the lottery may be at least 15% of the gross value of the tickets printed for sale. 6. The further case of the petitioner is that the State Government in order to sell the tickets employed agency system, where under any person by depositing Rs. 1/- in the Lottery Department, after purchasing minimum 100 tickets could become agent. An agent so appointed is entitled to certain percentage of commission. In the year 1970, the State Government adopted camp system. Under this system, the employees of the State Government in the Lottery Department who were either LDCs or UDC's or Junior Accountant were deputed in various parts of the country to open a camp for the purpose of selling tickets outside the State of Rajasthan. Earlier, the State Government opened nine camps. But some of the camps have been abolished and at present there are camps at five places only. In the writ petition, the complaint of the petitioner is that tickets were supplied to the agents on credit basis. These agents or the camps-in-charges did not maintain any account and that huge Government money is outstanding against them. But some of the camps have been abolished and at present there are camps at five places only. In the writ petition, the complaint of the petitioner is that tickets were supplied to the agents on credit basis. These agents or the camps-in-charges did not maintain any account and that huge Government money is outstanding against them. To illustrate the petitioner has pointed out that against one Shri K.V. Bhaskaran who was a UDC and camp-incharge of Madras, an amount of Rs. 50 lacs is outstanding against him. Similar to Bhaskaran, there are other agents also. Another complaint raised in the writ petition by the petitioner is that the State Government is spending about Rs. 25/- lacs only on advertisement of each scheme of lottery draw per rear and lacs of rupees are spent on the maintenance of the Lottery Department. In this way, the lion's share of common-man's hard-earned contribution by allurement of lottery scheme never goes to the State exchequer to be utilised for development work, but is consumed by administrative agency, commission agents why sell the lottery tickets and the administrative machinery mobilised for operating the scheme. 7. On 29th August, 1987, an advertisement was issued in the Rajasthan Patrika by non-petitioner No. 2 informing that the Rajasthan State Lotteries Department is introducing a special bumper draw with the turn-over of Rs. 4,10,000,00.00 at the time of Dusserah and Diwali and offers were invited for the sole-selling agency or on sole-selling basis. It was pointed out that the Government will spend Rs. 25/- lacs on publicity. Apart from the above scheme. the State Lotteries Deptt. announced for Rajasthan Diwali Bumper Draw No. 87 on 15th Sept., 1987. In this scheme, the first prise is of Rs. 1,10.000. The total prizes are of Rs. 2,44,000,00/- and the price of the ticket is Rs. 10/-. The petitioner has further stated in the writ petition that on 15th September, 1987 an advertisement was issued whereby it was informed that the stockists may contact the Director in this respect. On 24th September, 1937, an advertisement was issued in the newspaper by M/s. Vimal Agency, Madurai, in which it was stated that for the Rajasthan Diwali Bumper, the Rajasthan State Lotteries Department has appointed M/s. Vimal Agency, Madurai as sole-selling stockist. On 24th September, 1937, an advertisement was issued in the newspaper by M/s. Vimal Agency, Madurai, in which it was stated that for the Rajasthan Diwali Bumper, the Rajasthan State Lotteries Department has appointed M/s. Vimal Agency, Madurai as sole-selling stockist. The petitioner has further submitted that three parties, namely M/s. Sanjay Agency, Delhi, Vishal Agency, Bombay and M/s. G.C Ajmera Agency of Jaipur submitted their tenders in pursuance of the advertisement of the Government. These three tenders were received by the Government. The Government rejected all the three tenders. Thereafter an advertisement was issued on 15th September, 87 asking the agents to contact the Department of Lottery and the contract was given to M/s. Vimal Agency, Madurai on 17th September, 1987. The petitioner has alleged that M/s. Vimal Agency is sister agency of M/s. Amrit & Company who has cheated the Nagaland Government for an amount of Rs. 3 crores. 8. In the petition, the petitioner has pointed out that the following illegalities/irregularities were committed in regard to appointment of M/s. Vimal Agency, Madurai as sole stockist in the matter of issuing the scheme of 87- Draw i.e. the Rajasthan Diwali Bumper : 1. The tickets should not have been more than Rs. 3/-, but for this 87-Bumper Draw, the tickets are kept for Rs. 10/-. 2. The appointment of M/s. Vimal Agency and M/s. Amrit & Company as sole stockist was illegal. 3. The scheme of 87-draw was not published. 4. 35 lacs tickets of the value of Rs. 3.5 crores were handed over to M/s. Vimal Agency only for Rs. 16,50,0000/-. 5. There is no check in the contract if the stockist refuses to give any prise to the winner. 6. The State Government has violated the guide lines issued by the Central Government vide letter dated -6/27th June, 1984 inasmuch as the price of the ticket is Rs. 10/- and the first prise is of Rs. crore, 1 lacs and profit margin is less than 18%. 9. In the reply submitted by the respondents, it was pleaded that there were no irregularities in the issuance of the Scheme. It was denied that there was any corruption in the Lottery Department, as alleged be the petitioner. It was admitted that on depositing Rs. crore, 1 lacs and profit margin is less than 18%. 9. In the reply submitted by the respondents, it was pleaded that there were no irregularities in the issuance of the Scheme. It was denied that there was any corruption in the Lottery Department, as alleged be the petitioner. It was admitted that on depositing Rs. 1/- and purchasing minimum 100 tickets and submitting an application, a person could be appointed as an agent who is allowed a certain percentage of commission. It was also admitted that the State Government adopted camp system to sell tickets through camp offices and employees of the Department. The respondents also admitted that the State Government opened 9 such camps and at present there are only 4 camp offices at Delhi, Bangalore, Lucknow and Bombay. The respondents also admitted that certain amounts are outstanding against agents and all-out efforts are being made to effect recoveries. The State has taken the stand that gradually the Department has reduced the number of camps and efforts are being made to gradually switch over to another mode of selling tickets so that the sale of the tickets is secured with net profit margin without any risk or responsibility of effecting recoveries. The case of the respondents is that Diwali 87-Bumper Draw is a definite step towards this system to secure sale of lottery tickets without any risk to the Govt. and at the same time earning net profit of more than 10%. 10. In the written statement, the respondents have pleaded that the Diwali Bumper Draw Scheme of selling lottery tickets was evolved in such a manner so that the entire amount recoverable by the State Government could be secured first and total net profit Rs. 40,50,000/- be earned by the State Government. 11. The respondents have raised certain preliminary objections which are as follows : 1. That the petitioner has no locus standi to file this writ petition. 2. The petitioner who is a stranger to the agreement has filed the writ petition mainly to challenge the contractual agreement entered into between the State Government and M/s. Vimal Agency, Madurai and the terms and conditions of the agreement cannot be challenged by means of a writ petition under Article 226 of the Constitution. 3. 2. The petitioner who is a stranger to the agreement has filed the writ petition mainly to challenge the contractual agreement entered into between the State Government and M/s. Vimal Agency, Madurai and the terms and conditions of the agreement cannot be challenged by means of a writ petition under Article 226 of the Constitution. 3. That all the terms and conditions of the agreement have almost been completed and concluded and, as such, the writ petition is not maintainable. 4. In the writ petition, the petitioner has claimed the relief of cancellation of contract entered into with M/s. Vimal Agency, Madurai, but the said firm was not impleaded as a party and the writ petition deserves to be dismissed as not maintainable on this ground 5. That the petitioner has not come with clean hands to seek equity relief and, as such, he cannot be given any relief. 12. It may be stated here that the petitioner impleaded M/s. Vimal Agency, Madurai as a party to the writ petition. One Manohar Singh who had purchased 10 tickets of Rajasthan Diwali Lottery, 1987 was also impleaded as respondent in the writ petition on his application, vide order dated 4th November, 1987, passed by this Court. Manohar Singh and M/s. Vimal Agency, Madurai have also filed their replies Manohar Singh opposed the petitioner and supported M/s. Vimal Agency. M/s. Vimal Agency filed a separate reply and supported the case of the respondents 13. In the rejoinder, the petitioner denied the various allegations made against the petitioner and submitted that the petitioner has challenged the entire system of selling tickets on credit or by adjustment and that the alleged contract is a fraud on public. It was also contended that the agreement was against the terms and conditions enumerated in the scheme of 1968. It was also contended that the writ petition has been filed in public interest. The petitioner in his rejoinder has also pointed out that the scheme was not published on the day it is purported to be issued. In Fact, the scheme was published later on as the gazette was printed only on 15th October, 1987 and was back-dated as September 1987. The petitioner categorically stated that the Finance (revenue) Department sent the scheme for printing to the Government Press vide latter No F. (28) FD/ RRAI/87 dated 17 September, 1987. In Fact, the scheme was published later on as the gazette was printed only on 15th October, 1987 and was back-dated as September 1987. The petitioner categorically stated that the Finance (revenue) Department sent the scheme for printing to the Government Press vide latter No F. (28) FD/ RRAI/87 dated 17 September, 1987. It was received by the Government Press after 17th September, 1987. The petitioner has stated that the work-order is No. 888 and the notification was sent for composition on 6th October, 1987 and the notification was pointed on 5 October, 1987, in the Government Press and was made available for sale on 19th October, 1987. M/s. Vimal Agency his been secretly appointed as main stockist and about 35 lacs tickets have been delivered to this Agency without realising the full price of the same, and that prior to the publication of the scheme, agreements were entered into with M/s. Vimal Agency on 17th September, 1987 and 18th September, 1987. The entire public and the other stockists and agents were kept in dark about the scheme. The petitioner submitted that the agreement was against public interest. The consideration and object of the agreement is unlaw full. The agreement involved injury to public money and is opposed to public policy. The petitioner also submitted in the rejoinder that favour was shown to the sole stockist M/s. Vimal Agency, Madurai at the cost of public money. It was submitted that the tickets were sold to M/s. Vimal Agency Madurai, but the Government incurred an expenditure of Rs. 2,5 000,00 on publicity. Much has been said in the rejoinder about the prizes which goes to the sellers of tickets. 14. During the course of arguments, in order to justify the scheme for Diwali Bumper Draw 1987, Shri Bhandari, learned counsel for the State, placed before the Court the file pertaining to the Scheme, for perusal. A note from the Government file was placed for perusal. From the file it appeared that some Schedule was prepared prior to 29th Aug., 1987. The Scheme was prepared by the Director of Lotteries. It was placed before the Minister-in-charge of the Lotteries for approval. The Scheme was placed before the Chief Minister also. The Scheme was approved by the Chief Minister & the Minister-in-charge Shri Shish Ram Ola. From the file it appeared that some Schedule was prepared prior to 29th Aug., 1987. The Scheme was prepared by the Director of Lotteries. It was placed before the Minister-in-charge of the Lotteries for approval. The Scheme was placed before the Chief Minister also. The Scheme was approved by the Chief Minister & the Minister-in-charge Shri Shish Ram Ola. The noting on the file bears the signature of Shri Hari Dev Joshi as Chief Minister and Shri Shish Ram Ola as Minister in-charge of the Lotteries Department. From the scheme it was evident that the Scheme was prepared with the aim to earn a profit of about Rs. 70,00,000/-. From the file, it appears that the scheme was not implemented No reasons have been given as to why the said scheme was not implemented which had the approval of Shri Harideo Joshi, Chief Minister, who was also he Finance Minister at the relevant time. In the file, there was a noting from which it was evident that the Director entered into negotiation with M/s. Vimal Agency directly on a revised scheme, according to which the Government was to earn a net profit of Rs. 40-50 lacs. Thus, the profit which the Government was to earn according to the previous scheme amounting to Rs. 70,00,000/- was reduced only to Rs. 40.50 lacs. There was noting on the file to suggest that the revised scheme was approved by the Chief Minister who was also, the Finance Minister at the relevant time. This scheme was also prepared by the Director of Lotteries. The noting dated 11th September, 1987, on the file also revealed that the Minister remained in touch with the agents. It also appeared that the `scheme was prepared on or about 14th September, 1987. The agreement was entered into between the State and M/s Vimal Agency on 17th September, 1987. A rider agreement was entered into on 18th September, 1987. As per the contention of the State, the Scheme was published in the official gazette on 18th September, 1987. In the scheme published in the Gazette dated 18th Septmber, 1987, it is provided that if any agent purchases 30 lacs tickets, he will be treated as a stockist and if any agent purchases all 40 lacs tickets be will be treated as main stockist and for becoming a stockist an agent will have to give a bank guarantee of Rs. 67 lacs and enter into an agreement with the Director of the State Lotteries. Rajasthan, to lift 5 lacs tickets each time on payment of Rs. 13 lacs and to lift entire 30 lacs tickets in 15 days before the draw. If an agent who wants to become main stockist, has to give bank guarantee of Rs. 67 lacs and lift the tickets as above. It also provided that the main stockist will be paid unclaimed prizes. As per the scheme, a ticket was valued at Rs. 10/-. 15. In the agreement dated 17th September, 1987, entered into between the Director. State Lotteries on behalf of the Government of Rajasthan and M/s. Vimal Agency, it was stipulated that M/s. Vimal Agency was appointed main stockist for the Rajasthan Diwali Bumper Draw on payment of commission as laid down in para 3 of the State Government notification. But the number of the notification and the date were not given in the agreement. As per the agreement M/s. Vimal Agency were required to give an irrevocable bank guarantee from the State Bank of India in the sum of Rs. 67 lacs. The Government was requried to deliver to M/s. Vimal Agency tickets of the Rajasthan Diwali Bumper Draw-87. It was stipulated between the parties that irrespective of whether M/s. Vimal Agency could be actually able to sell 40 lacs tickets or not, it shall pay a sum of Rs. 40.50 lacs to the Government. 16. Shri A.K. Bhandari, learned counsel for the petitioner, submitted that the agreement dated 17th September, 1987, was arrived at secretly. The revised scheme was not published. The secret negotiations took place between M/s. Vimal Agency and the Minister-in-charge. As such, the contract between the Government and M/s. Vimal Agency is not a fair agreement and is liable to be cancelled by this Court. He has further submitted that the agreement has caused a loss of Rs. 29.50 lacs to the State exchequer. The agreement was against public interest. It is further submitted that the agreement was against the provisions of the Rajasthan State Lotteries Scheme, 1968, and the Rajasthan State Lottery (Agency) Rules, 1968. 17. Shri A.K. Bhandari has vehemently contended that even before the Scheme was published that agreement was entered into. 29.50 lacs to the State exchequer. The agreement was against public interest. It is further submitted that the agreement was against the provisions of the Rajasthan State Lotteries Scheme, 1968, and the Rajasthan State Lottery (Agency) Rules, 1968. 17. Shri A.K. Bhandari has vehemently contended that even before the Scheme was published that agreement was entered into. The agreement was so hurriedly entered into that the particulars which should have been furnished in the agreement are lacking as would be evident from the omissions in the agreement itself. In fact, the submission of Shri A.K. Bhandari is that even the Scheme was not published on 18th September, 1987; but the scheme was published after 15th October, 1987. Even the Gazette dated 18th September, 1987 was back-dated. Shri A.K. Bhandari has further submitted that before the printing of publication of the Scheme, M/s. Vimal Agency was appointed as main stockist and about 35 lacs tickets were delivered to this agency without realising the full price of the same. 18. On the other hand, Shri U.N. Bhandari, learned counsel for the State, has submitted that the revised scheme was prepared with the aim to earn a net profit of Rs. 40.50 lacs The submission of Shri U.N. Bhandari, learned counsel for the State, is that is was not possible for the Government to have arranged for the sale of 40 lacs tickets and, as such, the easiest method was to appoint a stockist and to arrange to get a net profit of Rs. 40 lacs without any risk. In his submission, the previous scheme was not practicable. There were a number of pit-falls in it and, perhaps the Government could not have earned Rs. 70.00 lacs as desired in the scheme The further submission of Shri U.N. Bhandari is that it was within the competence of the Government to have entered into an agreement with M/s. Vimal Agency and even there was no necessity for the publication of the Scheme Shri U.N. Bhandari has also submitted that the Lottery Minister was the Minister-in-charge of the Lottery Department and as per the business rules he was competent to sanction the Scheme himself and he was under no obligation to have any consultation with the Chief Minister. As such, the revised scheme cannot be assailed on the ground that no consent of the Chief Minister was obtained. 19. As such, the revised scheme cannot be assailed on the ground that no consent of the Chief Minister was obtained. 19. We have given our thoughtful consideration to the respective sub-missions made by the learned counsel for the parties. 20. Before we make any comments on the submissions made by the learned counsel for the parties, it would be better if we curl out the indicates which are required for guiding the Court in arriving at its determination it the agreement is reasonable and in public interest. 21. In (I) M/s. Kasturi Lal Vs state of J&K ( AIR 1980 SC 1992 ) , that Supreme Court observed that every activity of the Government has a public element in it and it must therefore, be informed with reason and guided by public interest. Every action taken by the Government must be in pubic interest. The Government cannot act arbitrary and without reason and, if it does its action will be liable to be invalidated. If' the Government awards a contract or leases out or grants any other largess, it would be liable to be tested for its validity on the touch-stone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. In the same judgment, the Supreme Court has expressed its opinion that the Government cannot act in a manner which would benefit a private party at the cost of the State. Such an action would be both unreasonable and contrary to public interest. The Government, therefore, cannot for example, give a contract or sell or lease-out its property for a consideration less than the highest that can be obtained for it. In the same judgment, the Supreme Court has further observed that it is imperative in a democracy governed by the rule of law that governmental action must be kept within the limits of the law and if there is any transgression, the Court must be ready to condemn it. 22. In (2) Ramana D. Shetty v. International Airport Authority of India, ( AIR 1979 SC 1628 ) , the Supreme Court in this regard laid down that the Government is not free, like an ordinary individual, in selecting the recipients for its largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. In (2) Ramana D. Shetty v. International Airport Authority of India, ( AIR 1979 SC 1628 ) , the Supreme Court in this regard laid down that the Government is not free, like an ordinary individual, in selecting the recipients for its largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. It was observed by the Supreme Court in that case the it the law is now well established that the Government need not deal with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure. In Airport Authority's case (Supra). the action of the International Airport Authority of India in accepting the tender of other respondents was held discriminatory since it excluded other persons similarly situated from tendering for the contract and it was also held invalid as it was without any reason. The Supreme Court also held it arbitrary because it violated the equality clause of the Constitution as also the rule of administrative law inhabiting arbitrary action. In view of the proposition of law laid down by the Supreme Court in the above referred cases, the following principles may be enumerated : 1. The Government action must not be arbitrary or capricious but must be based on some principles which needs the test of reason and relevance. 2. Unlike the private individual the State cannot act as it pleases in the matter of giving largess and it cannot choose to deal with any person being in its absolute and unfettered discretion. 3. Every activity of the Government has a public element in it and it must, therefore, be informed with reason and guided by public interest. 4. The Government cannot act in a manner which would benefit a private party at the cost of the State. As such, an action would be both unreasonable and contrary to public interest. 5. If the Government awards a contract, it is liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. 23. Now, we may revert to the facts of the case. 5. If the Government awards a contract, it is liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. 23. Now, we may revert to the facts of the case. The petitioner has challenged the contract dated 17th September, 1987, whereby M/s. Vimal Agency Madurai was appointed as sole stockist in the matter of issuance and sale of tickets regarding the scheme of 87-Draw i.e. Rajasthan Diwali Bumper Draw, on the ground that it was based on public policy. The agreement was not in public interest. The Scheme under which the contract was given to M/s. Vimal Agency was not notified in the official gazette. Even if it was notified, it was after the agreement was entered into with M/s. Vimal Agency. The petitioner has also challenged the contract with M/s. Vimal Agency on the ground that without assigning any reason, the Government cancelled the previous scheme by which it could have earned a profit of Rs. 70 lacs and agreed to introduce a new scheme by which the profit was reduced to Rs. 40.50 lacs only. It is also contended by the petitioner that the scheme was in violation to the directions given by the Central Government and even it was against the Rajasthan State Lottery Scheme, 1968 and the Rajasthan State Lottery (Agency) Rules, 1968. Thus, in short, the submission of the learned counsel for the petitioner is that the contract dated 17th September, 1987, was unreasonable, arbitrary and against public interest. 24. On the basis of the submissions made by the learned counsel for the petitioner and on the basis of the facts on record and on the basis of the facts which have come to our notice by inspection of the Government file, as stated above, we raised the following questions to the learned counsel for the State : 1. Is the Government not bound to follow the guidelines which were issued by the Government of India, Ministry of Home Affairs on 26th/27th June, 1984 for running of lotteries by the State Government ? 2. Is the Government not bound to follow the Rajasthan State Lotteries (Agency) Rules. Is the Government not bound to follow the guidelines which were issued by the Government of India, Ministry of Home Affairs on 26th/27th June, 1984 for running of lotteries by the State Government ? 2. Is the Government not bound to follow the Rajasthan State Lotteries (Agency) Rules. 1968 or the Rajasthan state Lotteries scheme, 1968 merely on the ground that the said Rules and the Scheme are not statutory and are prescribed by an executive order ? 3. Was the action of the Government in replacing the original scheme, by which a net profit of Rs. 70/- lacs was contemplated by a scheme whereby the profit was reduced to Rs. 40.50 lacs, reasonable, far and in public interest ? 4. Why the agreement entered into with M/s. Vimal Agency be not declared invalid on the ground that it was made prior to the publication of the scheme for 87th Diwali Bumper Draw ? 25. During the course of arguments, we put the above referred questions to Shri U. N. Bhandari, learned counsel for the State. The reply of the learned counsel was that Entry No. 4 of the List-I (union list) of Seventh Schedule of the Constitution of India empowers the Central Government to mike law with respect to lotteries organised by the Government of India or the Government of a State, but the Government of India without enacting any law, by an executive order has authorised the State Governments to organise State Lotteries for augmenting their financial resources. It was, therefore, in pursuance of the directions given by the Central Govt., the State of Rajasthan in the year 1968 decided to organise State lotteries with a view to augment its financial resources and utilising the net profits thereof on different development schemes, Shri Bhandari further submitted that in the absence of any legislation made by Parliament with respect to lotteries, the State Government is fully entitled and empowered to issue lotteries and is not bound by the directions given by the Central Government. As regards this contention of Shri U.N. Bhandari we are satisfied. As regards this contention of Shri U.N. Bhandari we are satisfied. in view of the principles laid down in H. Anraj v. State of Maharashtra, ( AIR 1984 SC 781 ) , wherein the Supreme Court has stated that a Government of a State is not required to obtain permission of the Union Government in order to organise its lotteries in the absence of Parliamentary legislation. We are of the opinion that if a State Government does not follow the directives of the Central Government, it is for the Central Government to enforce its directive if it deems it proper to do so. Legally speaking, it is true that in the absence of parliamentary legislation the Government is under no obligation to follow the directions issued by the Central Government for organising lotteries, although it is an act of gross impropriety. 26. With regard to the second question regarding procedure to be followed in observing the Rajasthan State, Lotteries (Agency) Rules, 1958 and the Rajasthan State Lotteries Scheme, 1968, the submission of Shri U.N. Bhandari was that these are executive rules and the State Government has a right to organise its business in a manner suitable to it. Without prejudice, to his said sub-mission and in the alternative. Shri U.N. Bhandari has submitted that even otherwise sale of tickets and appointment of the sole stockist was in accordance with the rules and the scheme 27. Regarding the publication of the Scheme Shri U.N. Bhandari, learned counsel for the State submitted that it was published on 18th September, 1987, and the publication was valid. 28. Regarding question No. 3, the submission of Shri Bhandari was that it was not possible to have sold 40 lacs tickets and under the scheme, which was published on 18th September, 1987, the earning of a net profit of Rs. 40-50 lacs as without any risk Therefore. Shri Shish Ram Ola, Minister-in charge of the Lottery Department approved the Scheme which waw placed by the Director of Lotteries. Shri Bhandari has further submitted that since Shri Shish Ram Ola, the Minister concerned, was the appropriate authority under the rules of business and, as such, there was no necessity for him to have obtained the approval of the Chief Minister. 29. Shri U.N. Bhandari, learned counsel for the State, has denied that the Scheme for Diwali Bumper Draw (87) was issued without any notification. 29. Shri U.N. Bhandari, learned counsel for the State, has denied that the Scheme for Diwali Bumper Draw (87) was issued without any notification. Shri Bhandari has also submitted that awarding a contract in favour of M/s. Vimal Agency was reasonable and valid as it gave to the Government a clear profit of Rs. 40.50 lacs without any risk any kind. 30. Shri B.L. Sharma, learned counsel for respondent No. 3 M/s Vimal Agency Madurai, supported Shri U.N. Bhandari and contended that there was no irregularity in the matter of awarding contract in favour of M/s. Vimal Agency. Shri Sharma also submitted that the agreement was fair and reasonable. Learned Advocate General who appeared in pursuance to the order dated 26th October, 1987, passed by this Court, also supported Mr. Bhandari. 31. Shri A.K. Bhandari, learned counsel for the petitioner, submitted that the Scheme is required to be published in the officer gazette as per the Rajasthan State Lotteries Scheme, 1968 and also the Rajasthan State Lotteries (Agency) Rules. 1968. He referred to Rule 4 (i) and submitted that the rule provides that number and value of prise for State Lotteries shall be determined and notified by the Government in the official gazette. He further referred to Rule 20, according to which date, time and place of draw is required to be notified by the Government in the official gazette. Shri A.K. Bhandari submitted and pointed out that the scheme which was prepared prior to 29th August, 1981, was a scheme through which the Government could have earned a profit of Rs. 70 lacs; but the Scheme was changed by the State Lottery Department, which reduced the profit of the Government from Rs. 70 lacs to Rs. 40.50 lacs. He challenged the subsequent scheme on the ground that it had no approval of the Finance Minister. 32. With regard to publication, the submission of Shri A.K. Bhandari is that it was positively published on 15th October, 1987. Shri Bhandari submitted that in the rejoinder the petitioner has pleaded and given the details of the printing and publication of the Scheme which has not been controverted by the respondents. His submission is that the Scheme was sent for composition on 6th October, 1987 and was printed on 15th October, 1987. Shri Bhandari submitted that in the rejoinder the petitioner has pleaded and given the details of the printing and publication of the Scheme which has not been controverted by the respondents. His submission is that the Scheme was sent for composition on 6th October, 1987 and was printed on 15th October, 1987. His further submission is that in the writ petition, the petitioner had clearly asserted that no scheme was published and it was, therefore, after the filing of the writ petition, the respondent got a gazette printed by putting 18th September, 1987 on it. Thus, though, the gazette was printed on 15th Oct., 1987, but it was back-dated as 18th September, 1981. Shri A.K. Bhandari also asserted and pointed out that before that publication of the Scheme M/s. Vimal Agency had been secretly appointed as main stockist and tickets were delivered to the agency without realising the full price of the same, which was a clear violation of the rules. He, thus submitted that the acceptance of the secret offer made by M/s. Vimal Agency amounts to arbitrary action in the matter of distribution of State largess. On the point of arbitrariness and unreasonableness of the Scheme, Shri A.K. Bhandari sub-fitted that, though. there was no term as sole stockist in the Rules and the Scheme referred to above, but it was by notice dated 15th September, 1987, this new word was used by the Department of Lotteries. Giving of contract to ore party is a clear indication that favour has been shown and the Government has been put to a financial loss. Shri A. K. Bhandari, in this regard, referred to various clause of the agreement dated 17th September, 1987 and pointed out that clause regarding bank guarantee, was a device to give benefit to M/s. Vimal Agency. He submitted that the guaranteed amount of Rs. 67 Iac consisted of part of amount to be paid to the prise winners and Rs. 40 lacs were to be retained by the Government as profit. When according to the Scheme and the Rules all the tickets could have been sold in cash. Regarding Clause 1/-A of the agreement, Shri Bhandari submitted that it gave respondent No. 3 a commission of near about 20%. 40 lacs were to be retained by the Government as profit. When according to the Scheme and the Rules all the tickets could have been sold in cash. Regarding Clause 1/-A of the agreement, Shri Bhandari submitted that it gave respondent No. 3 a commission of near about 20%. when it would be clear- that M/s. P.M Jain, C.P. Aimera and Sanjay Agency who gave their tenders for offering to sell the tickets at a commission of Rs. 3/- to 31/4% of the net profit. Shri A.K. Bhandari referred to Clause 2 of 1968 Rules, which provides that the prise winner should surrender the prise winner ticket to the Director of Lotteries and if the ticket is not surrendered no prise can be given. He also referred to the Agency Rules, 1968, which provides that the prise money will be directly paid to the winner without any sort of intervention from the agent who sells the tickets But in accordance with the terms of the agreement if the prices are not claimed, the entire money would go to M/s. Vimal Agency. Referring to Clause 7 of the Scheme published in the Official Gazette dated 18th September, 1947, Shri Bhandari pointed out that Rs. 5,060/- were ear marked as collection charges to the agent, but in the agreement a contract contrary to the Scheme was entered into and collection charges of Rs. 98,000/- were provided for the agent. Shri A.K. Bhandari also calculated the profit that would be earned by the sole-selling agent which as per his contention is as follows : Commission Rs. 80.00 lakhs Seller prize Rs. 33.85 lakhs Agent bonus Rs. 13.85 lakhs Stockist incentive Rs. 29.22 lakhs Collection charges Rs. 0. 98 lakhs Total Rs. 157.90 lakhs 33. In reply to the submission made by Shri U. N. Bhandari that was not possible for the Government to have sold the tickets, he submitted that the State had sold 40 lacs tickets in the matter of 84 Bumper Draw and earned a net profit of Rs. 90 lacs. 34. We have given our thoughtful consideration to the submissions made by Shri U. N. Bhandari for the State, Shri B.L. Sharma for respondent and Shri A.K. Bhandari on behalf of the petitioner. 90 lacs. 34. We have given our thoughtful consideration to the submissions made by Shri U. N. Bhandari for the State, Shri B.L. Sharma for respondent and Shri A.K. Bhandari on behalf of the petitioner. We are of the opinion that no satisfactory and reasonable explanation has been given by the Director of the State with regard to questions No. 2 to 4 referred to above. We are also of the opinion that the contract entered into with M/s. Vimal Agency was not fair and reasonable and the action of respondent No. 1 on the basis of Director's report in awarding the contract was arbitrary and it cannot stand on the touch-stone of the Principles that we have culled out from the various judgments of the Supreme Court, as indicated above. In this regard, our reasons, inter alia are as follows:- 1. That there is no controversy between the parties that prior to 29th August, 1987, the Scheme was prepared for running of lotteries, which was approved by the Chief Minister of Rajasthan. This Scheme was to yield a net profit of Rs. 70 lacs. This Scheme was replaced by another Scheme. This scheme is Rajasthan Diwali Bumper Draw 87. Through this Scheme, a net profit of Rs. 40.50 lacs is contemplate]. Thus, change-over from the sanctioned scheme to another scheme has put the State exchequer to a loss of Rs. 29.50 lacs The only reason given for this change, as stated above, is that it was not possible for the Government to have sold 40 lacs tickets. This explanation, in our opinion, cannot be sustained. In 84-Draw of Lottery, the Department had sold 40 lacs tickets. Further, it is not understandable why the Government was not competent to sell 40 lacs tickets. In organging Rajasthan Diwali Bumper-87 draw, the Government incurred the following expenditure : Printing of tickets Rs. 1.65 lacs Publicity Rs. 22.50 lacs Administrative expenses Rs. 1.00 lacs It is also on record that the Government is having a complete department and have also arranged camps at four places in India where they are having their offices. In these circumstances, it is clear that the Scheme which was prepared by the Director and approved by the Government and was published in the Official Gazette, dated 18th September, 1987, was neither reasonable nor fair. 2. That the Scheme which was published in the Official Gazette dated 18th September. In these circumstances, it is clear that the Scheme which was prepared by the Director and approved by the Government and was published in the Official Gazette, dated 18th September, 1987, was neither reasonable nor fair. 2. That the Scheme which was published in the Official Gazette dated 18th September. 1987 was not in accordance with the Rajasthan State Lotteries Rules of the Scheme referred to above. The State Government made substantial departure from the Rules and the Scheme in preparing the scheme. 3. The appointment of M/s. Vimal Agency was not in accordance with the Rajasthan State Lotteries (Agency) Rules, 1968. 4. The Notification for the Scheme of the Rajasthan Diwali Bumper 87- Draw is dated 17th September, 1987 and it was published, as per the contention of respondent No. 1 in the official gazette dated 18th September, 1987, but the agreement which is based on the Scheme was entered into on 17th September, 1987. It is thus, clear that the agreement was entered into prior to the publication of the Scheme, prior to 17th September, 1987, the Scheme was not made known to any other person. The names of the persons to whom the Director of the State Government contacted for giving contract in terms of the Scheme, have not been disclosed. Thus, the charge of the petitioner that the agreement was secretly entered into with M/s. Vimal Agency by the Director and respondent No. 1 is not untrue. 5. That the admitted case of the State was published in the Gazette dated 18th September 1987, but the facts, as disclosed by the petitioner in his rejoinder are quite different and in the absence of counter affidavit there is no reason to disbelieve the facts disclosed in the rejoinder filed by the petitioner. In the rejoinder, the petitioner has disclosed that the Scheme was sent to the Government Press for printing vide order dated 17th September, 1987 and the Scheme was sent by the Press for composition on 6th October, 1987. which was ultimately printed on 15th October, 1987. Any how, this would not effect the circumstances as the position remains that the Scheme was published after the contract was entered into, whether it was published on 18th Sept., 1987. or on 15th October, 1987, is not much material. 6. which was ultimately printed on 15th October, 1987. Any how, this would not effect the circumstances as the position remains that the Scheme was published after the contract was entered into, whether it was published on 18th Sept., 1987. or on 15th October, 1987, is not much material. 6. That, as stated above, M/s. Vimal Agency were appointed as sole selling agent and as per the agreement they are to claim commission of Rs. 80 lacs. The sole-selling agent is also entitled to agent bonus and stockist commission in addition to the fact that they are also entitled to forfeit the amount of unclaimed prizes, all go to show that the contract was awarded to them for giving more benefits. Such an agreement which benefits an individual at the cost of the State cannot be styled as fair and reasonable in public interest. The Government by an advertisement which appeared on 15th September, 1987, asked the stockists to contact the Director of State Lotteries, Rajasthan, Jaipur (House No. 516, Gali No. 5, Raja Park Jaipur). but the contract was given to M/s. Vimal Agency on 17th September, 1987, without giving any opportunity to the other stockists. Thus the Director misled both the Public and the Government. 7. That on 29th August, 1987, the Rajasthan State Lotteries Department issued a notice for introducing a special bumper draw at the time of Dusserah and Diwali. Certain persons gave their tenders and claimed 3% to 31/4%. commission on net profit; but the Government did not think it proper and agreed to give a commission of 20% to M/s. Vimal Agency, Madurai, with order benefits. 35. Looking to the facts and circumstances of the case, we are of the opinion that filing of the writ petition as a public interest litigation is justified. 36. Now, a very serious question arises in this case. All the lottery tickets have been sold The entire money has been realised by M/s. Vimal Agency, Madurai from the purchase of the tickets. Part of the money has been paid to the State Government and the substantial portion of the sale proceeds of the tickets remains with M/s. Vimal Agency. The petitioner has filed this writ petition on 16th October, 1987, while the agreement was entered into on 17th September, 1987, and prior to the filing of the writ petition all the tickets had been sold. The petitioner has filed this writ petition on 16th October, 1987, while the agreement was entered into on 17th September, 1987, and prior to the filing of the writ petition all the tickets had been sold. The State Government as well as M/s. Vimal Agency, by the time the writ petition was filed, had already incurred a considerable expenditure for selling the tickets. In case, the agreement is invalidated and set aside, it would be difficult to return the amount to the various purchasers of the tickets looking to these circumstances, it would now be most inequitous to sit aside the contract which the State Government had entered into with M/s. Vimal Agency In the circumstances, though, we are extremely unsatisfied with the manner in which the Scheme was prepared and sanctioned and the manner in which the agreement was entered into by the Director of State Government with M/s. Vimal Agency which definitely put the State Government to a loss and has positively benefitted one individual, but looking to the circumstances that it would not be possible to refund the amount of lottery tickets to the purchasers of the tickets, we feel, we should not interfere and cancel the agreement in exercise of our discretion under Article 226 of the Constitution of India. However, we would like to observe that the Government should realise that the Government should act in a manner consistent with the concept of fairness and without any discrimination if a feeling is to be nurtured in the minds of the citizens that the Government is by and for the people. The Director and Secretary should not be blindly relied upon. The Minister is not a party by name and no observations can be made against him. nor there are any personal allegations of mala fides. We have got no facts to give a finding of 'mala fides' or 'ulterior motive' against the lottery Minister personally. In all probability, he may have bona fidely signed on "dotted lines" wrongly trusting the Secretary and Director. 37. Though, We have not invalidated the contract, however, we would like to observe that the Government, in future while assigning such contrate will take into consideration and act within the para-meters of the principles laid down by the Supreme Court in the cases referred to above and would not assign contract arbitrarily and without proper publication of the Scheme. 37. Though, We have not invalidated the contract, however, we would like to observe that the Government, in future while assigning such contrate will take into consideration and act within the para-meters of the principles laid down by the Supreme Court in the cases referred to above and would not assign contract arbitrarily and without proper publication of the Scheme. We further direct that the Government will appoint a committee and take appropriate measures for realisation of the various dues which are understanding against the camp incharges we (sic who) are retaining the Government money and, if the finding of the committee is given against the Camp-incharges, an appropriate civil and/or criminal action would be taken against them. The stay order granted by this Court vide its order dated 21st October, 1987 and confirmed by the order dated 26th October, 1987 is hereby vacated. 38. The State Government shall publish a date for the opening of the draw of Rajasthan Diwali Bumper 87th Draw, as early as possible. 39. In the premises aforesaid, we partly allow the writ petition in the manner indicated above and leave the parties to bear their own costs.Petition Partly allowed. *******