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Madhya Pradesh High Court · body

1998 DIGILAW 63 (MP)

Rajneesh Trivedi v. State of M. P.

1998-01-23

A.K.MATHUR, S.K.KULSHRESTHA

body1998
ORDER Mathur, C.J. -- 1. This is a Public Interest Litigation whereby the petitioner has prayed that the respondent No. 1 may be directed to prevent and prosecute the respondent Nos. 2 and 3 from running a lottery scheme being contrary to the provisions of The Madhya Pradesh Lottery Pratibandh Act, 1993 (for short the Act of 1993). The petitioner has also prayed that the respondent No.1 be also directed to appoint an authority under the Act of 1993 to try the offence for the city of Jabalpur. 2. The petitioner is a public spirited person and a practicing Advocate of this Court. He has prayed that the respondents 2 and 3 who are running lottery in the State of M.P. be prevented and prosecuted under the provisions of the Act of 1993. It is alleged that the respondent No.2 is mainly engaged in collection of fixed deposits and paying interest at the rate of approximately 15% per annum. It is stated that so far as collection of deposit is concerned, there is no grievance but distribution of the gifts on those deposits by drawing a lot is not permitted and that is prohibited by the Act of 1993. It is alleged that the first scheme was issued by the respondent No. 2 vide Annexure P-1 known as Kanakdhara. The said scheme reads as under: KANAKDHARA A FIXED DEPOSIT PROPOSAL WITH A DIFFERENCE Our design: The Bridge between your dreams and reality. It involves money deposits in units of Rs. 5000/- each carrying a handsomely attractive interest @ 15% compouriding monthly for a period of 3 years. Join in or be left out - It may be the chance of a lifetime! The proposal is to restrict the event of these deposits to the first 5000 depositors on a first come first served basis. So hurry up and avail the opportunity and earn benefits, being one amongst the first five thousand on depositing Rs. 5000/- at the earliest! The last date of deposits is 15th of Feb., 1996. In Addition Have the pleasure and joy of being one among ten such depositors entitled to attractive and valuable gift items which shall be bestowed on them by draw of lots on the date to be fixed only after 15th of Feb. 1996 and in the presence of all the presiding depositors and others esteemed observers. In Addition Have the pleasure and joy of being one among ten such depositors entitled to attractive and valuable gift items which shall be bestowed on them by draw of lots on the date to be fixed only after 15th of Feb. 1996 and in the presence of all the presiding depositors and others esteemed observers. The date and venue shall be notified and published in the local newspapers. No regrets if you are not the lucky one among the ten. It's a no loss offer. You are always a gainer as you positively get Rs. 7820/after 3 years on the deposit of one unit of Rs. 5000/-. The gift, if comes to you, is only an addition to this gain. Attractions: 1. Bonanza Maruti 800 2. 5 Tolas Gold Jewellery. 3. Bajaj Chetak, 4. Silver Dinner Set. 5. 1 Refrigerator (Videocon-Jetmatic). 6. 1 Washing Machine (videocon). 7. 1 Music System (Videocon). 8. 1 Mixer (Lexus-Usha). 9. Cordless Phone (Panasonic). 10. 1 Geyser (Racold). 11. 1 Handmixer (Philips). 12. 10 Cameras (Yashica). 13. 40 Light Weight Irons (Philips). 14. 50 Wrist Watches (Titan). 15. 50 Snak Toasters (Jaipan). 16. 50 Pressure Pans (Hawkins). 17. 100 Casseroles (Milton 1500 ML). 18.100 Wall Clocks. 19. 100 Bone China Cups (6 Pes). Second Scheme is known as Kanakdhara 2, vide pamphlet Annexure P-3. The Third Scheme is known as Kalpataru, vide pamphlet Annexure P-4, which is also on the same lines as Annexure P-1. 2.1. It is alleged that subsequently, Kalpataru-2 and Kalpataru-3 were introduced by the respondent No.2 and the First Prize in the kalpataru-3 was a Maruti-800 Car and wide publicity was given in the local newspaper. Copy of newspaper is on record as Annexure P-5. It is alleged that some more schemes were subsequently commenced known as Super Bonanza-2 and Basera vide Annexures P-6 and P-7. 3. Similarly the respondent No.3 also floated a scheme known as Samdariya Gold Deposit Scheme. We need not to pursue the scheme floated by the respondent No.3 as the learned counsel appearing for the respondent No.3 Shri Sapre made a statement at bar that the scheme has already been abandoned and, therefore, we need not detail the facts in regard to the respondent No.3 and the learned counsel for the petitioner also did no~ dispute the statement. 4. 4. Learned counsel for the petitioner submitted that in fact by inviting these deposits, various prizes are proposed to be given to the depositors by drawing lot and this is prohibited under the Act of 1993. Hence, the petitioner has prayed that the respondent State should be directed to initiate the action against the respondent No.2 under the Act of 1993 and prevent the respondent No.2 from continuing this kind of drawing by lottery. In order to appreciate the contentions raised by the learned counsel for the petitioner, it is necessary to refer to the relevant provisions of the Act, aims and objects. The Act of 1993 was enacted with the specific purpose to be achieved that the tendency of getting easy money should be prevented. The aims and objects of the Act of 1993 are to curb the tendency of earning easy money or a chance money as it gives rise to so many social evils. The Act of 1993 was brought into force with effect from 25th day of January, 1993 and it received the a sent of the President on the 3rd April, 1993. The statement of object and reasons reads as under:- Reasons for enactment. -- The Government of Madhya Pradesh had left that the business of lottery in the State was having detrimental social and economic impact particularly on the poorer sections. They were becoming habituated to the lottery and losing their hard earned money. This in turn created domestic tension. There has been consistent demand by Members of the Legislative Assembly, the Members of Parliament and of persons almost from an walks of life to prohibit the business of lottery. Accordingly, the M.P. Lottery Pratibandh Adhyadesh, 1992, was promulgated by the Governor on 18th November, 1992 banning the trade of or business in any lottery in the State. 2. The President issued a proclamation on 15th December, 1992 under Article 356 of the Constitution, in relation to the State of Madhya Pradesh declaring, inter alia that the powers of the legislature of the State shall be exercisable by or under the authority of Parliament. The Madhya Pradesh Lottery Pratibandh Adhyadesh, 1992 would have ceased to be in force on the 25th January, 1993 i.e. after expiry of six weeks from the date of proclamation issued by the President. The Madhya Pradesh Lottery Pratibandh Adhyadesh, 1992 would have ceased to be in force on the 25th January, 1993 i.e. after expiry of six weeks from the date of proclamation issued by the President. It became necessary to promulgate a fresh Ordinance by the President in exercise of the powers conferred by clause (1) of Article 123 of the Constitution. The Parliament was not in session at the time of expiry of six weeks from the date of proclamation issued by the President. Accordingly, the Madhya Pradesh Lottery Pratibandh Ordinance, 1993 was promulgated by the President on 25th January, 1993. 3. The proposed Legislation seeks to replace the said Ordinance. 4. The Parliament has under Article 357 (1) (a) of the Constitution conferred on the President the powers of the Legislature of the State to make laws vide the Madhya Pradesh State Legislature (Delegation of Powers) Act, 1993. 5. In view of the urgency of the matter, it is not practicable to consult the Consultative Committee on Madhya Pradesh Legislation to be constituted under the above Act. The Legislation is accordingly being enacted without reference to the Consultative Committee. Section 2 of the Act of 1993 provides definitions. Section 2(a) defines "agent" as under: " 'agent' means and includes Main Stockist or, by whatever name called, who may be an individual or a group of persons or a company registered under the Companies Act, 1956, or a partnership firm entrusted with the responsibility of sale of State Lottery tickets on an agency basis on behalf of the State Government." Section 2(b) defines 'lottery' as under: " 'lottery' means a scheme for distribution of prizes by lot or chance to those persons participating in the chances of a prize by purchasing tickets." Section 2 (c) defines "promoters" as under: " 'promoters' in relation to a lottery, includes an organizer or any person having control of a lottery." Section 2(d) defines "tickets" as under: " 'tickets' includes, in relation to any lottery or proposed lottery, any document evidencing the claim of a person to participate in the chances of the lottery. " Section 3 of the Act of 1993 imposes a total ban on lottery. Section 3 reads as under: "3. " Section 3 of the Act of 1993 imposes a total ban on lottery. Section 3 reads as under: "3. Ban on lottery - Notwithstanding any agreement or contract entered into by the State Government with any person, no person shall be permitted to deal with in the trade or business of lottery or be an agent or promoter in respect of any lottery, nor shall he sell, distribute, or purchase any lottery ticket within the territory of Madhya Pradesh." Section 4 of the Act of 1993 defines 'penalty'. It reads as under: "4. Penalty- If any person acts as an agent or a promoter or a trader in lottery or sells, distributes or purchases the lottery tickets, he shall be punishable with rigorous imprisonment for a term which may extend to two years or with fine which may extend to ten thousand rupees, or with both." Section 5 of the Act of 1993 deals with other offences in connection with lottery. Section 6 of the Act of 1993 deals with offences by companies. Section 7 of the Act of 1993 gives power of entry and search. And section 8 says that offences are cognizable and non-bailable. 5. In the above scheme of the Act of 1993, we have to see whether the scheme as quoted above and floated by the respondent No.2 falls within the definition of 'lottery' or not. 'Lottery' has been defined in the Act of 1993 which means distribution of prizes by lot or chance to those persons participating in the chances of a prize by purchasing tickets. 'Ticket' means and includes in relation to any lottery or proposed lottery, any document evidencing the claim of a person to participate in the chances of the lottery. Section 3 deals with prohibition and says that no person shall be permitted to deal with in the trade or business of lottery or be an agent or promoter in respect of any lottery, nor shall he sell, distribute, or purchase any lottery ticket within the territory of Madhya Pradesh. Ban on lottery means that no person who is exclusively dealing in the trade or business of lottery shall be permitted to sell, distribute, or purchase any "lottery ticket within the territory of Madhya Pradesh. Ban on lottery means that no person who is exclusively dealing in the trade or business of lottery shall be permitted to sell, distribute, or purchase any "lottery ticket within the territory of Madhya Pradesh. Thus, what is prohibited is the business or a trade of lottery and it means that no person shall run any lottery in the State of Madhya Pradesh as a business or a trade. 6. 'Lottery' has been defined in the Century Dictionary as under: "A scheme for raising money by selling chances to share in a distribution of prizes; more specifically, a scheme for distribution of prizes by chance among persons purchasing tickets, the correspondingly numbered slips or lots, representing prizes or blanks, being drawn from a wheel on a day previously announced in connection with the scheme of the intended prizes. In law the term 'lottery' embraces all schemes of distribution of prizes by chance, such as policy-playing, gift exhibitions, prize concerts, raffles at fairs, etc. and includes various forms of gambling." Similarly, in Corpus Juris Secundum, Vol. 54 at page 845, the three essential elements of a lottery are stated thus: "There are three elements essential to the existence of a lottery, namely, chance, consideration and prize; if these three elements are present the scheme is a lottery, otherwise it is not. . . . . . . . . . . . . . . . . . . . . . . If an essential element is absent the scheme is not a lottery, regardless of the motive for the omission, and, conversely if all the elements are present, the scheme is a lottery, regardless of the fact that the purpose of its sponsor is to increase his business." In Volume 38, American Jurisprudence 2d at page 113 the further statement of law in paragraph 6 is: " In order to comprise a lottery, these three elements or ingredients (mentioned above) must be present; chance alone will not do so, nor will chance even when coupled with consideration. Nor is the combination of consideration and prize sufficient alone." What it shows is that there are three essential ingredients of lottery and that means, chance, consideration and prize. In order to constitute a lottery, these three elements should be present and if any of the said three elements is not there, then it would not be a lottery. 7. Nor is the combination of consideration and prize sufficient alone." What it shows is that there are three essential ingredients of lottery and that means, chance, consideration and prize. In order to constitute a lottery, these three elements should be present and if any of the said three elements is not there, then it would not be a lottery. 7. In the Act of 1993, what is prohibited is the trade or the business in lottery. Thus, in the State of M.P., no person can undertake any trade or business in lottery. In this background, we have to examine whether the scheme floated by the respondent No.2 strictly comes within the ambit of 'ban' imposed by the State under section 3 of the Act of 1993 or not. It is an admitted fact that the respondent No.2 is essentially a finance company and it is not dealing in the trade or the business of a lottery. The essential business of the respondent No.2 is of a finance company. The money which is being deposited by the depositors will accrue them interest at the rate of 15% per annum and those first five thousand depositors who make investment are to be given prizes in case their names appear in the draws. As such, it is essentially a promotion she-me and not a trade or business in lottery. It is incidental that those depositors who make investment and whose names are put in draw and find their names in the draw are given the promotional benefits in terms of car or other items mentioned in the scheme. It is not a case that those persons who are interested in the scheme will lose their deposits if their names do not come in the draw. Their deposits remain intact and they get interest on their deposits at the rate of 15% per annum. Their money remains intact and it is not like other lotteries where tickets are purchased and after draw, the tickets are lost. The scheme of the respondent No. 2 is more of the nature of promotional scheme and not strictly in terms of a trade or a business of lottery. Their money remains intact and it is not like other lotteries where tickets are purchased and after draw, the tickets are lost. The scheme of the respondent No. 2 is more of the nature of promotional scheme and not strictly in terms of a trade or a business of lottery. The lottery in the present case is an incidental thing and the essential trade is that of investment which accrues interest at the rate of 15% and the amount deposited by the incumbents remains intact and does not get exhausted after the draw. 8. As per the statement of the object. and reasons reproduced above and provisions of section 3 of the Act of 1993, it is only to prevent a trade or a business in lottery which is encouraged by sale of tickets and drawing them and thereafter prizes are distributed to the lucky people, and not the promotional scheme in which the lucky prizes are not the essential elements but are incidental factors. This kind of promotional scheme is not new. All over the country, such promotional schemes are attached to the goods which are sold by the dealers by offering attractive prizes for such lucky draws. It is thus apparent that what is prohibited in the scheme of things .is the sale, business or trade in lottery and not such kind of promotional schemes. If the definitions of 'lottery' and 'ticket' given in the Act of 1993 are read together with the prohibitory provisions contained in section 3 of the Act of 1993, it is clear that it is essentially the prohibition in the trade or business of lottery and not the prohibition of promotional scheme which is being run by the respondent No.2. 9. Learned counsel for the petitioner invited our attention to the case of Bombay Scooters, Chhindwara v. Collector, Chhindwara and another ( 1983 MPLJ 572 ). This was a case with regard to Prize Chits and Money Circulation Schemes (Banning) Act and M.P. Lottery (Niyantran Tatha Kar) Adhiniyam, 1973. Under the Adhiniyam of 1973, the Collector used to issue licenses for running the business of lottery and then regular business of lottery was undertaken by those licensees; but that is not the case here. Here it is essentially a finance company which has brought out attractive prizes in order to attract investment in the company. Under the Adhiniyam of 1973, the Collector used to issue licenses for running the business of lottery and then regular business of lottery was undertaken by those licensees; but that is not the case here. Here it is essentially a finance company which has brought out attractive prizes in order to attract investment in the company. Hence, this promotional scheme of the respondent No.2 cannot be said to be a regular business or trade in lottery so as to attract provisions of the Act of 1993 for preventing and launching prosecution. Our attention was also invited to the decision of their Lordships of Supreme Court in the case of H. Anraj v. Government of Tamilnadu [ (1986) 1 SCC 414 ]. This was a case in relation to sales tax and there the question was whether the lottery tickets are goods and not actionable claims and it was held by their Lordships that lotteries are goods and not actionable claims. There the question was also whether in such a business, lottery tickets can be subjected to sales tax or not. That is not the case here. Here the draw of lottery is not by way of trade or business in lottery but it is only a promotional scheme and it can not, by any stretch of imagination, be said to be trade or business in lottery so as to prohibit it under section 3 of the Act of 1993. Our attention was also invited to the decision in the case of Commercial Corporation of India v. State of Kerala and another (AIR 1997 Kerala281). This was a case with regard to sale of lottery tickets of other States. The State of Kerala banned the sale of lottery tickets in the State. This was a regular business of lottery floated by Maharashtra Pradesh, Tamilnadu, West Bengal, Tamilnadu and Karnataka and sale of those lottery tickets in the State of Kerala was prevented. In that connection, the matter was examined. But as already mentioned above that the scheme floated by the respondent No.2 is not a trade or business in lottery. It is only a promotional scheme and it does not fall within the mischief of section 3 of the Act of 1993. Hence, the decision of Kerala High Court is of no assistance to the learned counsel for the petitioner. 10. It is only a promotional scheme and it does not fall within the mischief of section 3 of the Act of 1993. Hence, the decision of Kerala High Court is of no assistance to the learned counsel for the petitioner. 10. In the circumstances, we are of the opinion that since the respondent No. 2 is not dealing in trade or business of lottery, therefore, the promotional scheme floated by it does not fall within the mischief of section 3 of the Act of 1993 so as to be prohibited. There is no merit in this Public Interest Litigation. The writ petition is consequently dismissed. There shall be no order as to costs.