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2011 DIGILAW 53 (GAU)

Raunak Agency and Proprietor Shri Manoj S. Singh v. State of Mizoram

2011-01-21

B.D.AGARWAL

body2011
JUDGMENT B.D. Agarwal, J. 1. This Writ Petition under Article 226 of the Constitution of India has been filed by a person intending to express his interest in the On Line Lotteries business in the State of Mizoram. However, in view of the conditions imposed by the Government of Mizoram in Clause 9 in the "Invitation for Expression of Interest" dated 13.12.2010 (hereinafter referred to as 'IEI' briefly) the Petitioner is apprehending his disqualification at threshold and as such has prayed for a writ in the nature of certiorari so as to quash and set aside the said 'IEI'. 2. Heard Mr. M. Zothankhuma, learned senior counsel for the writ Petitioner and Sri B. Deb, learned Advocate General, Mizoram. 3. While issuing notice of motion on 16.12.2010 the operation of the aforesaid 'IEI' was stayed. Hence, the State filed an application for vacating the Stay Order on 14.1.2011, which has been registered as CM application No. 2 of 2011. The said application will also stand disposed of by this common judgment. I have also perused the pleadings of both the parties. 4. Before addressing the legality and sustainability of the impugned 'IEI' it is necessary to mention here that in the year 2008 the State-Respondents had appointed the Petitioner as its agent for selling On Line Lottery tickets and executed an Agreement on 16.9.2008. The validity of the said Agreement was for a period of four years. While the aforesaid Agreement was in force, the Government introduced a new system of State Lottery as per the remodelled financial structure with effect from 1.3.2010. Decision of the Government in this regard was communicated to the Petitioner under letter dated 26.2.2010. The said decision of the Government was challenged in this Court by way of filing Writ Petition (Civil) No. 11 of 2010 and the Petitioner contended therein that it tantamount to discontinuation of the existing Agreement for sale of On Line Lottery tickets. During the pendency of the Writ Petition the Government of Mizoram took a policy decision to ban all kinds of 'Lottery' in the State and a Notification in this regard was issued on 18.3.2010. In view of this development the Writ Petition was closed with the following observations: Accordingly, the writ petition stands dismissed. During the pendency of the Writ Petition the Government of Mizoram took a policy decision to ban all kinds of 'Lottery' in the State and a Notification in this regard was issued on 18.3.2010. In view of this development the Writ Petition was closed with the following observations: Accordingly, the writ petition stands dismissed. However, it is made clear that if the Government reviews its decision and revives conducting of lotteries in the State during the agreement period with the writ Petitioner, the Government may reconsider the renewal of the agency with the Petitioner for the lapsed period on the existing terms and conditions of the agreement. Besides this, Petitioner is also at liberty to approach the Civil Court for damages, if so advised. 5. Although it has not been pleaded in the writ petition, but, during the course of hearing Mr. M. Zothankhuma, learned senior counsel for the Petitioner admitted the fact that after disposal of the earlier writ petition the Petitioner had also filed a civil suit, being Title Suit No. 68 of 2010, in the Court of Senior Civil Judge seeking damages for breach of Agreement dated 16.9.2008 and the pendency of the said suit debars the Petitioner to express his interest and offer his bids against 'IEI' dated 13.10.2010. 6. Apart from other infirmities and illegalities in the impugned 'IEI' the Petitioner is seriously aggrieved with the conditions imposed under Clause 9, which are reproduced below: If any interested firm has any Court-case pending in any Court of law against the State of Mizoram relating to any claim or rights or liabilities arising out of any Sole Selling Agency or any Distributorship or defaulter, or having any criminal case ending in conviction against any Director or proprietor of any such firm in any Criminal Court anywhere in India, unless stayed by a competent higher Court, such firm/party shall be summarily disqualified for appointment as Mizoram State Paper or Online Lottery Distributor/ Selling Agent. 7. According to Mr. M. Zothankhuma , restraining firms and individuals to participate in the bidding in the event of pendency of any case in a court of law against the State of Mizoram directly offends Article 19(1)(g) of the Constitution of India and as such the 'IEI' is ultra vires to the Constitution and the same should be quashed. 7. According to Mr. M. Zothankhuma , restraining firms and individuals to participate in the bidding in the event of pendency of any case in a court of law against the State of Mizoram directly offends Article 19(1)(g) of the Constitution of India and as such the 'IEI' is ultra vires to the Constitution and the same should be quashed. Besides this, the learned Counsel for the Petitioner has also submitted that the earlier order of the Government banning Lotteries in the State was withdrawn only on 3.1.2011, whereas, the impugned 'IEI' was published on 13.12.2010 and the date for submitting technical and financial bids was also fixed on 29.12.2010. According to the learned Counsel so long the earlier order of the Government dated 18.3.2010, banning all kinds of Lotteries in the State was in vogue, the Government could not have issued 'IEI' on 13.12.2010 and on this count also the impugned 'IEI' is illegal and unsustainable. 8. On the other hand, learned Advocate General contended that under Clause (6) of Article 19 of the Constitution of India the Government can put reasonable restrictions to practise any profession, trade or business. The learned Advocate General further submitted that the restrictions imposed under Clause 9 of the 'IEI' was not directed against any particular individual or firm with any oblique motive or to debar the writ Petitioner specifically from bidding in the lottery business in the State. The learned Advocate General further submitted that the restrictions were imposed in view of the enabling provisions under Clause 4 of the Lotteries (Regulation) Rules, 2010, published by the Government of India under Lotteries (Regulation) Act, 1998. Under Clause 4(1) it has been provided that the Organising State may specify qualification, experience and other terms and conditions for the appointment of distributors or Selling Agents. According to the learned Advocate General the conditions imposed under Clause 9 of the 'IEI' is in conformity to Clause 4 of the Lotteries (Regulation) Rules, 2010. 9. Apparently, Article 19 has been included in Part-III of the Constitution of India which deals with various fundamental rights of its citizens. Basically, it is an extension of Article 14 which provides equality before law and equal protection of the laws. At the same time, Article 19(1)(g) does not give unfettered right in the matter of profession, trade or business. Apparently, Article 19 has been included in Part-III of the Constitution of India which deals with various fundamental rights of its citizens. Basically, it is an extension of Article 14 which provides equality before law and equal protection of the laws. At the same time, Article 19(1)(g) does not give unfettered right in the matter of profession, trade or business. Under Clause (2) to (6) of Article 19 the Government has every right to impose reasonable restrictions. In other words, Clauses (2) to (6) are exceptions to the fundamental rights of free trade and business and as such the reasonableness of the restrictions has to be examined keeping in mind the interest of the general public vis-a-vis objective behind imposing restrictions. 10. In the case before me, Clause 9 of the impugned 'IEI' stipulates certain conditions before becoming eligible to participate in the bidding for holding State Lotteries. So far as the restrictions upon persons who are either defaulters or have been convicted in a criminal case are concerned there is no challenge to its reasonableness by the Petitioner. In other words, the Petitioner is aggrieved by the first part of the restrictions that relates to pendency of any case in a court against the State of Mizoram. As noted earlier the writ Petitioner has filed the Title Suit seeking damages for breach of Agreement dated 16.9.2008, which was allegedly abandoned halfway of the Agreement period. However in view of the language employed in clause-9 the Petitioner's bid/offer would be summarily rejected because of the pending case. In my considered opinion, the first part of Clause 9 tantamount to prohibiting a citizen from pursuing a legal remedy. I am also of the view that if such condition is allowed to remain a part of the 'IEI' it would operate as a coercive method to deter the aggrieved party to approach any court of law, seeking appropriate remedy and relief. 11. The above apart, the impugned 'IEI' was notified while the Government Notification dated 18.3.2010, banning all State Lotteries, was in force. The Government has failed to justify as to how the impugned 'IEI' was published on 13.12.2010, even before lifting of ban. 11. The above apart, the impugned 'IEI' was notified while the Government Notification dated 18.3.2010, banning all State Lotteries, was in force. The Government has failed to justify as to how the impugned 'IEI' was published on 13.12.2010, even before lifting of ban. Similarly the contention of the learned Advocate General that the conditions have been imposed in view of the enabling provision under 2000 Rules is also not sustainable inasmuch as the Lotteries (Regulation) Rules, 2010 was published on 1.4.2010 and the same was adopted by the Govt. only on 6.1.2011. To put it differently the Govt. cannot now take the shelter of the aforesaid Rules which were adopted by the Govt. subsequent to publication of 'IEI'. 12. Since the learned Advocate General defended the restriction clause in the impugned 'IEI' on the basis of Clause (6) of Article 19 and on the other hand, since the Petitioner is alleging infringement of his fundamental rights guaranteed under Article 19(1)(g) of the Constitution the said provisions are quoted below for ready reference: 19. Protection of certain rights regarding freedom of speech, etc.-(1) All citizens shall have the right- (a) to freedom of speech and expression; (b) to assemble peaceably and without arms; (c) to form associations or unions; (d) to move freely throughout the territory of India; (e) to reside and settle in any part of the territory of India; (and) [***] (g) to practise any profession, or to carry on any occupation , trade or business. (2) to (5) x x x (6) Nothing in Sub-clause (g) of the said clause shall affect the operation of any existing law in so far it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, [nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to, (i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or (ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise] 13. In the case of Chintamanrao V. State of Madhya Pradesh AIR 1951 SC 118 the Hon'ble Supreme Court had the occasion to examine the contours of Article 19(1)(g) of the Constitution and observed that a proper balance has to be struck between 'right to trade" as enshrined under Article 19 and also the social control permitted under Clause (6) of the said Article. The relevant observations of the Hon'ble Apex Court can be fruitfully extracted below: The word 'reasonable' implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by Clause (6) of Article 19, it must be held to be wanting in that quality. 14. In the case State of Madras vs. V.G. Row AIR 1952 SC 196 , the Hon'ble Supreme Court observed that there can be no general principle or standard to test reasonableness of a restriction on a particular trade and each case has to be judged on the basis of the facts and circumstances of the case in the following words: The test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. 15. Clause 9 of the impugned 'IEI' is not in the nature of limited restrictions but the terms and conditions are virtually total restrictions for certain class of prospective bidders in the Lottery business. It is not understood what public interest is involved and how the objective of inviting bid for State Lotteries would be sub served if a few persons are debarred from participating in the tender process without any fault on their part. I fail to understand as to how filing of a case in a court of law can be taken as an offence to restrain such persons from bidding in a State largesse. I fail to understand as to how filing of a case in a court of law can be taken as an offence to restrain such persons from bidding in a State largesse. I am also of the view that before putting any such restriction in a tender notice the Govt. is obliged to take into consideration the eminent risk of deprivation of right to life to the prospective bidders, guaranteed under Article 21 of the Constitution. However, in the instant case the State Govt. appears to have totally glossed over both Articles 14 and 21 of the Constitution, while imposing restrictions in the 'IEI' under Clause 9. 16. For the foregoing reasons, I hold that Invitation for Expression of Interests dated 13.12.2010, issued by the Directorate of Institutional Finance and State Lotteries, Govt. of Mizoram, is hit by Articles 14, 19(1)(g) and 21 of the Constitution of India and the same is also illegal in view of the fact that the 'IEI' was published even before lifting of ban on Lotteries by the State Government. Consequently, the impugned 'IEI' is hereby quashed. Liberty is given to the State-Respondents to issue fresh 'IEI' in consonance with Article 19 of the Constitution of India. 17. In the result, the writ petition stands allowed. However, I do not propose costs of the litigation. Petition allowed.