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Himachal Pradesh High Court · body

2005 DIGILAW 157 (HP)

RAJEEV PURI v. STATE OF H. P.

2005-05-24

A.K.GOEL, SURJIT SINGH

body2005
JUDGMENT Arun Kumar Goel, J.—Petitioner is aggrieved from the action of the respondents in allowing lotteries/raffles/lucky draws being held and conducted by respondents No. 2 to 9 as well as by different functionaries of the State like Sub-Division Officer-cum-Chairman, Winter Carnival Committee Manali; State Level Summer Festival Organizing Committee Dharamshala; 150th Celebration Committee Dalhousie, District Chamba; State Level Lavi Mela Committee Rampur Bushahr, District Shimla; and the like. 2. Case of the petitioner is, that he is engaged in the business of sale and purchase of lotteries in the State of Himachal Pradesh. As an agent, he was selling and purchasing lottery tickets of State of Nagaland earlier and at the time of filing of this petition was the stockist of lotteries organized by Royal Government of Bhutan in accordance with the guidelines of the Honble Supreme Court of India and Lotteries (Regulation) Act, 1998. He was appointed as area stockist for sale of weekly lotteries being organized by the Royal Government of Bhutan. 3. Annexure P-l is the copy of certificate issued in favour of the petitioner by Lakshmi Enterprises, who was appointed as the sole distributor by Sanjay Jayanti Lai and Co., New Delhi. Latter is the marketing agent of Bhutan Lotteries. 4. Petitioner claims that for professing business of his choice, he has a right under the Constitution of India, which can only be curtailed by law. Further case of the petitioner is that vide Annexure P-4 notification dated 4.11.1999, Government of H.P. had prohibited the sale of tickets of all types of lotteries organized, conducted or promoted by all State Governments and Union Territories including the State of H.P. within the territory of H.P. Its violation was punishable under Sections 7, 8 and 9 of the Lotteries (Regulation) Act, 1998 (hereinafter referred to as the Act). This notification was rescinded by the Government on 9.12.2003 vide Annexure P-5 with immediate effect. Again sale of tickets of all types of lotteries etc. was prohibited in exercise of Powers under Section 5 of the Act, vide Annexure P-6 by the State Government. 5. In this background, further case of the petitioner is that running of lotteries and holding of raffles/lucky draws etc. by the respondents and various functionaries of the State, as well as holding of lottery/raffle draws by Red Cross Societies etc. was prohibited in exercise of Powers under Section 5 of the Act, vide Annexure P-6 by the State Government. 5. In this background, further case of the petitioner is that running of lotteries and holding of raffles/lucky draws etc. by the respondents and various functionaries of the State, as well as holding of lottery/raffle draws by Red Cross Societies etc. being in violation of law, therefore, the respondents may be restrained and prohibited from doing so, or in the alternative the petitioner may be allowed to sell lottery tickets in the State. 6. Further as per the petitioner, Act and the Rules framed thereunder, are being flouted by none else than by respondent No. 1 and its functionaries. That being the position, those who are running lottery and/or are holding raffles/lucky draws etc. have to be prosecuted and appropriate directions need to be issued in this behalf. 7. Another prayer made in the writ petition is, that because accounts of the lotteries/raffles/lucky draws are not being properly maintained, as such, directions may be issued to them to get their accounts audited either from a Chartered Accountant or from the Accountant General of Himachal Pradesh. Since no action was taken to check the illegality being committed by the respondents, petitioner is forced to file this writ petition. 8. Respondents, when put to notice have filed replies. Respondent No. 1 through Director, HP State Lotteries has stated, that petitioner cannot claim any parity in the matter of running lotteries in the State of H.P. He has no locus-standi to maintain this writ petition. Reason being that as per his own showing, he is an agent of Bhutan State Lotteries and there is no public interest involved in the writ petition. Besides this, lottery is neither a trade nor business, but is a privilege granted by the State, therefore, writ petition is not maintainable. 9. Regarding raffles being held by the Red Cross Societies, the stand of respondent No. 1 is that the same is governed by Act No. XV of 1920, i.e. the Indian Red Cross Society Act, 1920. By referring to the objects and reasons of this Act, it is pointed out that the Red Cross Society is performing humanitarian and charitable work in helping the downtrodden and poor people who are suffering from diseases, hunger and are in need of shelter etc. By referring to the objects and reasons of this Act, it is pointed out that the Red Cross Society is performing humanitarian and charitable work in helping the downtrodden and poor people who are suffering from diseases, hunger and are in need of shelter etc. His Excellency, the President of India, is the President of the Society under this Act. It is a body corporate. Objects of the Indian Red Cross Society Act, 1920, are as under : "(1) Aid to the sick and wounded members of the Armed Forces of the Union in accordance with the terms and spirit of the Geneva Convention of 12th August, 1949 and discharge of other obligations devolving upon the Society under the Conventions as the recognized auxiliary of the Armed Forces Medical Services. (2) Aid to the demobilized sick and wounded members of the armed Forces of the Union. (3) Maternity and Child Welfare. (4) Junior Red Cross. (5) Nursing and ambulance work. (6) Provisions of relief for the mitigation of suffering caused by epidemics, earthquakes, famines, floods and other disasters, whether in India or outside. (7) The establishment and maintenance of peace among all nations in accordance with the decisions of the International Red Cross Organization. (8) Work parties to provide comforts and necessary garments etc. for hospitals and health institutions. (9) The expense of management of the Society and its branches and affiliated societies and bodies. (10) The representation of the Society on or at International or other Committees formed for furthering objects similar to those of the Society. (11) The improvement of health, prevention of disease and mitigation of suffering and such other cognate objects as may be approved by the Society from time to time." 10. Grievance of the petitioner is based on his right to sell lottery tickets within the State and the equation of such right with the right to trade and commerce as guaranteed by the Constitution of India. This has been alleged to be outside the purview of Articles 14, 19, 301 and 304 of the Constitution of India. 11. Regarding instances cited by the petitioner, stand of respondent No. 1 is, that those are for charitable activities where fetes, raffles etc. are organized at local level to attract money for such causes/for protection of heritage of a particular town or district etc. Therefore, it does not constitute lottery. 11. Regarding instances cited by the petitioner, stand of respondent No. 1 is, that those are for charitable activities where fetes, raffles etc. are organized at local level to attract money for such causes/for protection of heritage of a particular town or district etc. Therefore, it does not constitute lottery. After 28.2.2004, i.e. after issuance of Annexure P-6, no lottery activity has been authorized by the State in Himachal Pradesh. For the first time it has come to its notice that sale of lottery tickets is being effected by the petitioner for which he will be prosecuted. It is thus prayed by respondent No. 1 that this writ petition, being without merit, may be dismissed. 12. The Deputy Commissioners of Sirmaur, Solan, Bilaspur, Una, Kangra and Shimla districts have filed separate replies to the writ petition. Their stand is almost identical to that of respondent No. 1. It is primarily based on Red Cross Society Act, 1920 and Indian Red Cross Society Rules, 1994. Stand of all of them is that holding of lucky draws /raffles is permissible under the Rules framed under the Act of 1920. Therefore, no exception can be taken to it. This is in addition to the objects and reasons for which the Red Cross Society has been constituted. No exception can be taken to the holding of such lucky draws/raffles by this Society. 13. Documents attached with the writ petition indicate that the authorities at local level like 150th Anniversary Celebration Committee, Dalhousie, District Chamba; State Level Summer Festival Organizing Committee, Kangra at Dharamshala; Winter Carnival Committee, Manali; and other such authorities are holding the lucky draws/raffles. They appear to be approaching the authorities under Rule 54 of H.P. State Lottery Rules, 1987. These rules were repealed w.e.f. 26.5.1994 when rules of 1994 with the same name came into force. 14. After the coming into force of the Act, Government of H.P. Finance Department (Directorate of State Lotteries), enacted Himachal Pradesh State Lottery Rules, 1999 under the Act, i.e. the Lotteries (Regulation) Act, 1998. 15. In these circumstances, applications if any submitted by the aforesaid functionaries of the state for holding lucky draws/raffles for whatever purpose do not appear to be in consonance with law. Nothing was brought to our notice, on behalf of respondent No. 1 by Mr. Sood to show as to under what authority of law such raffles/lucky draws were being conducted. In these circumstances, applications if any submitted by the aforesaid functionaries of the state for holding lucky draws/raffles for whatever purpose do not appear to be in consonance with law. Nothing was brought to our notice, on behalf of respondent No. 1 by Mr. Sood to show as to under what authority of law such raffles/lucky draws were being conducted. 16. Faced with this situation, it was submitted on behalf of the respondents that keeping in view the object, as well as the purpose for which the money raised by such committees is to be utilized, no exception can be taken to holding of such raffles/lucky draws. 17. In case functionaries of the State like those pointed out in the preceding paragraphs of this judgment feel that it is necessary to hold lucky raffles/lucky draws, they cannot do so unless there is legal sanction behind it, though a prayer was made on behalf of the respondents not to entertain this plea of the petitioner. We are of the firm view that unless permitted by law, rules or regulations, such raffles/lucky draws cannot be held by functionaries of the State. 18. In so far as holding of raffles/lucky draws etc. by respondents No. 2 to 9 for and on behalf of the Red Cross Society is concerned, it is permissible under the provisions of the Indian Red Cross Society Act, 1920 and the Rules of 1994, supra. Rule 6 (c) which is relevant in this behalf is to the following effect:— "6(c)The provisions of Section 6(b) above shall apply in respect of net proceeds of collections from fairs, raffles, sale of pin-flags, seals, fetes, lotteries and variety shows and any other collections received by any of the District or State Union Territory Branches and not earmarked for a specific purpose” (Emphasis supplied) 19. In the face of this position, plea urged on behalf of the petitioner that holding of raffles/lucky draw is a lottery within the meaning of Section 2(b) of the Act is without substance. Nothing to the contrary has been brought to our notice on behalf of the petitioner. This plea is accordingly rejected. 20. Another plea of Shri Sharma, learned Counsel for the petitioner was, that in view of Annexure P-6 nobody can run the lottery in the State of H.P. by holding any sale and purchase of lottery tickets. Nothing to the contrary has been brought to our notice on behalf of the petitioner. This plea is accordingly rejected. 20. Another plea of Shri Sharma, learned Counsel for the petitioner was, that in view of Annexure P-6 nobody can run the lottery in the State of H.P. by holding any sale and purchase of lottery tickets. This plea also does not hold good in the face of decision of the Supreme Court in M/s B.R. Enterprises v. State of U.P. and others, AIR 1999 SC 1867. 21. By referring to this decision Mr. Sharma urged that respondents need to be not only restrained, but further prosecuted also. Per him, provisions of the Act are being followed more in breach than compliance by the respondents. At the same time he also urged that his client cannot be in any manner stopped from the sale and purchase of lottery tickets of the State of Tripura as well as Royal Government of Bhutan in the State of Himachal Pradesh. 22. For the reasons set out here in below this plea cannot be accepted. Lottery having the element of chance is in fact in the nature of gambling. What was held in this behalf in the above referred decision of the Supreme Court reported in AIR 1998 SC 1867 (supra) is as under:— "70. For this, we revert to scrutinize as to what made lotteries gambling and how State lotteries cleanses this character. As we have already recorded, the difference between gambling and the trade that a gambling inherently contains a chance with no skill, while trade contains skill with no chance. What makes lottery a pernicious is its gambling nature. Can it be said that in the State organized lotteries this element of gambling is excluded? There could possibly be no two opinions that even in the State lotteries the same element of chance remains with no skill. It remains within the boundaries of gambling. The stringent measures and the conditions imposed under the State lotteries are only to inculcate faith to the participant of such lottery, that it is being conducted fairly with no possibility of fraud, misappropriation or deceit and assure the hopeful recipients of high prizes that all is fair and safe. That assurance is from stage one to the last with full transparency. That assurance is from stage one to the last with full transparency. No doubt, holding of the State lotteries for public revenue has been authorised, legalised and once this having been done it is expected from the State to take such measure to see- that people at large, faithfully and hopefully participate in larger number for the greater yield of its revenue with no fear in their mind. The Act further ensures by virtue of Section 4(d) that proceeds of the sale of such lottery tickets is credited to the public accounts of the State. This is to give clear message to the participants that the proceeds is not in the hands of individual group or association but is ensured to be credited in the State accounts. But, as we have said this by itself would not take it outside the realm of gambling. It remains within the same realm. In this regard, there is no difference between lotteries under Entry 34, List II and a lottery organized by the State under Entry 40, List I. When character of both the State organized lotteries and other lotteries remains the same by merely placing the apparel of the State with authority of law, would not make any difference, it remains gambling as element of chance persist with no element of skill. Even other lotteries under Entry 34, List II could only be run under the authority of the State or the law of the State. Only difference is in one case, authority is that of State and in other, the Parliament. That is why, what is excluded from the penal consequences under Section 294-A, Indian Penal Code is the lotteries authorized by the State, not merely lotteries organized by the State. So, on the reasoning as put forward even lotteries under Entry 34, List II cannot be said to be pernicious. The lotteries authorized by the State also has a sanction in law. As we have said, a gambling may be taxed and may be authorized for a specified purpose, but it would not attain the status of trade like other trades or become res commercium. No gambling could be commercium hence in our considered opinion the principle of RMDC case, AIR 1957 SC 699 (supra) would equally be applicable even to the State organized lottery. No gambling could be commercium hence in our considered opinion the principle of RMDC case, AIR 1957 SC 699 (supra) would equally be applicable even to the State organized lottery. In no uncertain terms the said decision recorded that the constitutional makers could never have conceived to give protection to gambling either under Article 19(1) (g) or as a trade under Article 301 of the Constitution." 23. In this very judgment, it has also been held that it is not a trade within the meaning of Articles 301 to 303 of the Constitution of India. It is again reiterated by the Supreme Court that the State has the power to prohibit the sale of lottery tickets of every other State. Section 4 of the Act must be read down as limiting exercise of such power only by a State which decides not to have any lottery within its territory including its own lottery. Further it is not the case of the petitioner that except for raffles /lucky draws being conducted by authorities at Tehsil/District level, any other lottery is being run by any functionary of the State. 24. Whose cause the petitioner is espousing? Admittedly he is not the State, who only can run lottery under the provisions of the Act. So far Royal Government of Bhutan is concerned, in view of the specific stipulation in treaty with the Bhutan Government that sale of Bhutan lottery tickets would be subject to relevant laws in India, Bhutan lottery would fall in Entry 34 of List 2 of the Constitution of India and would be subject to laws of State Government. This matter is no more res-integra in view of the decision of the Supreme Court in AIR 1998 SC 1867 (supra). Relevant paragraphs from this judgment in this behalf are extracted below : "81. The sale of lottery tickets of Bhutan but for the aforesaid stipulation in the treaty it possibly could have been said it cannot be subjected to the laws of lotteries in India. But once treaty itself stipulates it to be subject to any law in India, then if the sale of Bhutan lottery tickets are not State organized lotteries, it necessarily falls under other lotteries under Entry 34, List II. There is no other Entry pertaining to lottery. But once treaty itself stipulates it to be subject to any law in India, then if the sale of Bhutan lottery tickets are not State organized lotteries, it necessarily falls under other lotteries under Entry 34, List II. There is no other Entry pertaining to lottery. Thus, it necessarily follows that its sale within India will be subject to the laws of the State as is applicable under this Entry. In other words, if the State prohibits sale within its State not only sale of its own lottery but every other lottery, then the sale of lottery tickets of Bhutan will have to be subjected to the laws of that State. Thus, prohibition to other lotteries will equally be applicable to the sale of Bhutan lottery. In the present case, learned Additional Solicitor General, Mr. Vaidyanathan, also subscribed to this interpretation on behalf of the Union. As we have said, in the absence of law by the Parliament, so far the treaty with the said stipulation, there could possibly be no other interpretation. This interpretation further eliminates possible discrimination which is subject of attack in the present case. Thus, the Bhutan lottery could not be said to be privileged or it, in any way, discriminates with other State lotteries. 95. In view of the findings recorded by us above, holding lotteries organized by the State is also gambling in nature, thus the principle as laid down in RMDC case, AIR 1957 SC 699 (supra) would equally be applicable to the case of State lotteries. Thus, State lotteries cannot be construed to be a trade and business within the meaning of Articles 301 to 303 of the Constitution of India. We also hold that the impugned provisions are not violative of Article 14 nor the delegation of power by the Parliament to the State Government could be said to be delegation of its any essential legislative power or a delegation, which is unguided or unbridled. Thus, we uphold Section 5 and various sub-clauses of Section 4 to be valid piece of legislation." 25. The Act regulates running of lottery by a State throughout the length and the breadth of the country. And as already held petitioner is not the State. He has no fundamental right, as lottery is not a trade either under Article 19 or Articles 301/304 of the Constitution of India. The Act regulates running of lottery by a State throughout the length and the breadth of the country. And as already held petitioner is not the State. He has no fundamental right, as lottery is not a trade either under Article 19 or Articles 301/304 of the Constitution of India. Annexure P-6 cannot be said to be suffering from the vice of arbitrariness muchless illegality. Petitioner in law cannot run the lottery because he cannot do so in view of the provisions of Section 294-A of the Indian Penal Code. Therefore, his alternate prayer to permit him to sell lottery tickets as is being done by the Deputy Commissioners of different Districts in the State also is without merit. No other point was urged. 26. In view of the aforesaid discussion, there is no merit in this writ petition which is accordingly dismissed. While dismissing the same, respondent No. 1-State is directed that till it regulates holding of raffles/ lucky draws by its functionaries at local level, i.e. by Winter Carnival Committee Manali; State Level Summer Festival Organizing Committee, Dharamshala; 150th Celebration Committee Dalhousie, District Chamba; State Level Lavi Mela Committee Rampur Bushahr, District Shimla; and the like, no such raffle/lucky draw be allowed to be conducted by anyone throughout the State. This direction is to be carried out by all concerned in the State. We may clarify that this direction does not apply to raffles/ lucky draws etc. conducted by Red Cross Authorities. 27. Copy of this judgment be sent to the Chief Secretary to the Government of H.P. and Director General of Police, Himachal Pradesh, who shall ensure that this direction is carried out by all concerned in its letter and spirit. No costs. Writ petition dismissed.