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PETITIONER: H. ANRAJ AND OTHERS ETC.

       Vs.

RESPONDENT: STATE OF MAHARASHTRA

DATE OF JUDGMENT23/01/1984

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) VENKATARAMIAH, E.S. (J) MISRA, R.B. (J)

CITATION:  1984 AIR  781            1984 SCR  (2) 440  1984 SCC  (2) 292        1984 SCALE  (1)93  CITATOR INFO :  E          1984 SC1542  (1)  RF         1986 SC  63  (7)

ACT:      Constitution of India 1950      Articles 73  and 298-Government  of State-Whether could organise lotteries-Whether  competent to ban sale of tickets of lotteries conducted by other State Governments.      Entry 40  List I  VIII Schedule,  Entry 34 List II VIII Schedule & Articles 246(1) and (3).      State Legislature  whether competent  to  enact  a  law touching lotteries organised by the Government of India or a State Government.      Lotteries Sale  of tickets  of lotteries  conducted  by other State Government-State Government-Whether competent to ban within its own State.

HEADNOTE:      By a  press  release,  the  Government  of  Maharashtra declared that  the sale  of lottery  tickets of States other than the  State of  Maharashtra was  unlawful and warned the public that no lottery ticket of other States should be sold within the State.      The petitioners who were agents for the sale of tickets for lotteries  conducted by  various State Governments other than the  State  of  Maharashtra  contended  in  their  writ petitions, that  the aforesaid  ban that  was sought  to  be imposed had  no  legal  authority.  Under  the  Constitution lotteries organised  by  the  Government  of  India  or  the Government of  a State  was a  subject which  was within the exclusive legislative  competence of  Parliament and that it was not  open to  the Government  of any State purporting to Act in exercise of its executive power to impose such a ban. On  behalf   of  the   State  Government-respondent  it  was contended that  the Union  Government’s executive  power was co-extensive with the power to make laws, that the President in exercise  of his power under Article 258(1) had entrusted to the  State Government  the executive  power of  the Union through a  Presidential order dated April 2, 1969 in respect of  lotteries  run  by  the  State,  and  therefore  it  was competent for the State Government to impose the ban.

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    Allowing the writ petitions, ^      HELD: 1.  The Government  of Maharashtra cannot purport to ban the 441 sale of  lottery tickets  of other  State by  virtue of  the entrustment  of   power  under   Article   258(1)   of   the Constitution. [447 D]      2. Entry  40 of  List I  of the  VIIIth Schedule to the Constitution is  "Lotteries organised  by the  Government of India or  the Government of a State". Entry 34 of List II of VIIIth  Schedule  is,  "Betting  and  gambling".  Since  the subject ’Lotteries  organised by  the Government of India or the Government  of a  State’ has  been taken  out  from  the legislative field  comprised by  the expression "Betting and gambling" and  reserved to  be  dealt  with  by  Parliament, within its  exclusive legislative competence it must follow, in view  of Article  246(1) and (3) that no legislature of a State. can  make a  law touching  lotteries organised by the Government of India or the Government of a State. [444 D-E]      3. Article  73 extends the executive power of the Union to the matters with respect to which Parliament has power to make laws. But the executive power of the Union, by the very opening words  of Art.  73 is  "subject to the provisions of the Constitution".  It therefore  follows that the executive power of  the Union  with respect  to lotteries organised by the Government  of a  State has  necessarily to be exercised subject to  the provisions  of the  Constitution,  including Art. 298, which expressly extends the executive power of the State to  the carrying  on of  any trade or business subject only to  legislation by  Parliament if the trade or business is not  one with  respect to which the State Legislature may make laws. [447G-H; 440A-B]      4.  Reading   and  considering   Articles  73  and  298 together, it is clear that the executive power of a State in the matter of carrying on any trade on business with respect to which  the State legislature may not make laws is subject to legislation  by Parliament  but is  not  subject  to  the executive power  of the  Union. The Government of a State is not  required   to  obtain   the  permission  of  the  Union Government in  order  to  organise  its  lotteries,  in  the absence of  Parliamentary legislation.  Even  assuming  that such permission  is necessary,  a condition  imposed by such permission that lottery tickets of one State may not be sold in another  State cannot be enforced by the other State. The other State  has no  power to  make any  laws in  regard  to lotteries organised by the first State. Its executive power, by virtue  of Article 298, extends to lotteries organised by itself but  not to  lotteries organised  by the other State. [448C-E]      5. If  a State  acts in breach of the condition imposed by the President while entrusting power under Article 258 it is open to the President to revoke the permission or to take such further  or other  action as  may  be  constitutionally permissible but  it cannot possibly enable the Government of the other  State to  do anything about it except to complain perhaps to the Union Government. [448 E-F]      In the  instant case the source of power for the ban is claimed to  be the  entrustment of  power by  the  President under Act  258(1) through  the Residential order Dated April 2, 1969. But the terms of the entrustment do not justify the claim The  entrustment of  power  is  only  ’in  respect  of lotteries organised  by  that  Government’.  The  expression ’that Government’ in the context of the entrustment of power to  the   Government  of   Maharashtra  can  only  mean  the

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Government of Maharashtra and no other. [447 B-C]      L.B. Paradise  Lottery Centre  v. State, AIR 1975 AP 50 Shri Indravadan  Chaman Lal  Thacker v.  State  of  Gujarat, S.C.A. 1309/70 approved. 442 Komal Agency  v. State, AIR 1971 Bombay 332 and H.G. Jain v. State of Tamilnadu, AIR 1973 Madras 402; over-ruled.

JUDGMENT: ORIGINAL JURISDICTION:  Writ Petition  Nos. 2333  or 2336 of 1983.       (Under Article 32 of the Constitution of India). Advocates for the Petitioners.      L.M. Singhvi,  A.M. Singhvi,  Vimal  Dave  and  Krishan Kumar.      T.S. Krishnamurthy Iyer, Naresh Kumar Sharma and Vineet Kumar.      Dr.  Y.S.   Chitale,   (Not   present)   Mrs.   Sadhana Ramchandran and  Raju Ramchandran  and Harjinder  Singh (Not present) Advocates for the Respondents:      A.V. Rangam  and Mrs.  Sarla Chandra  for the  State of Tamilnadu.      N.H. Gurusahani,  Ashwani Kumar, N.N. Keshwani and M.N. Shroff and A.S. Nambiar Not Present.      The Judgment of the Court was delivered by      CHINNAPPA REDDY,  J. The  several petitioners  in these writ petitions  are agents  for the  sale of tickets for the lotteries conducted  by the  Governments of  various  States other than  Maharashtra. They  question the ban sought to be imposed by  the Government of Maharashtra on the sale within the State  of Maharashtra  of tickets of lotteries conducted by the  Government of  other States. They, generally, seek a writ in  the nature  of a  Mandamus directing  the State  of Maharashtra to  forbear from  interfering with  the sale  or distribution of  lottery tickets in respect of the lotteries organised’  by   the  Governments   of  States   other  than Maharashtra.      There is  no  express  notification  or  order  of  the Government of  Maharashtra imposing  a ban  on the  sale  of lottery  tickets   of  other.   States  in   the  State   of Maharashtra. The  ban is sought to be spelt out from a Press release of  the Director  of Publicity,  Sachivalaya, Bombay dated September  24, 1969  and a communication’ dated August 24, 1981 addressed by the Government of Maharashtra, 443 Finance Department, to some of the petitioners individually. The Press release is as follows:      SALE OF LOTTERY TICKETS OF OTHER STATES UNLAWFUL           Warning to Public           On September  16, the  Minister for  Finance in  a      Press conference,  followed by  a press  note, made  it      clear to  agents who  are selling  lottery tickets that      the sale  of lottery  tickets of  other States  in this      State is  unlawful. The  Government of India, in giving      permission for  conducting State  lotteries had  made a      condition that  the lottery  tickets should not be sold      in another  State, without  the express consent of that      State, No such permission has been given in Maharashtra      for the  sale of outside State lottery tickets. Despite      the warning  given by  the Minister, unauthorised sales      of lottery  tickets, of  outside States  continues, and      the Government  is therefore taking steps to stop these

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    obviously unlawful  practices by  seizing all stocks of      tickets of  other States’  lotteries,  The  public  are      warned that no tickets other that the Maharashtra State      Lottery tickets  can be  sold  within  the  Maharashtra      State".      The communications  addressed to the petitioners are in the following terms:      Sir,           I  am   directed  to  refer  to  your  letter  No.      DA/PL/81/622, dated  22.6.1981 on  the above  mentioned      subject and  to state  that there is ban on the sale of      other State Lottery tickets in State of Maharashtra. It      is, therefore,  regretted that  your request  to permit      you to  sell your  State Lottery  tickets in this State      cannot’ be accepted. Yours faithfully,                                                   Sd/-                                       State Lottery Officer,                                    Finance Department      The basic  submission on  behalf of  the petitioners is that there 444 is no  legal authority  for the imposition of the ban. It is argued that  ’ under  the Constitution, ’Lotteries organised by the  Government of India or the Government of a State’ is a subject  which  is  within  ’  the  exclusive  legislative competence of  Parliament and  that it  is not  open to  the Government of any State purporting to act in exercise of its executive power  to impose  such a  ban as that sought to be imposed by the Government of Maharashtra. On the other hand, it is  sought to  be argued  on behalf  of the Government of Maharashtra that  the Union  Government’s executive power is co-extensive with the power of Parliament to make laws, that the President in exercise of his power under Art. 258(i) has entrusted to  the Government  of Maharashtra  the  executive power of  the Union in respect of lotteries run by the State and therefore,  it  was  competent  for  the  Government  of Maharashtra to impose the ban.      Entry 40  of List  I  of  the  VIIth  Schedule  to  the Constitution is  "Lotteries organised  by the  Government of India or  the Government of a State". Entry 34 of List IT of VIIth Schedule  is, "Betting  and  gambling".  There  is  no dispute before us that the expression "Betting and gambling" includes and has always been understood to have included the conduct  of   lotteries.  Quite   obviously,   the   subject ’Lotteries organised  by the  Government  of  India  or  the Government  of   a  State’  has  been  taken  out  from  the legislative field  comprised by  the expression "Betting and gambling" and  is reserved  to be  dealt with by Parliament. Since the  subject ’Lotteries organised by the Government of India or  the Government of a State’ has been made a subject within the  exclusive legislative  competence of Parliament, it must  follow, in  view of  Act. 246(1)  and (3),  that no legislature of  a State  can make  a law  touching lotteries organised by  the Government of India of the Government of a State. This  much is  beyond controversy and the Maharashtra legislature has  acknowledged the  position,  as  indeed  it must, in  Sec. 32  of the Bombay Lotteries (Control and Tax) and Prize  Competitions (Tax)  Act, 1958.  It is  an Act  to control and  tax lotteries  and to tax prize competitions in the State  of Maharashtra.  Section 32(b) expressly provides that nothing  in the Act shall apply to "a lottery organised by the  Central Government  or a State Government". This, as we said,  is but  a recognition  of the prevailing situation under the  Constitution. The  Constitutional position cannot

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be altered by an act of the State legislature.      It appears  that  the  Government  of  Maharashtra  and various  other   State  Governments   requested  the   Union Government to  authorise them  to conduct  lotteries for the purpose of ’finding funds 445 for financing  their development plants’. Such authorisation was, of  course, strictly, not necessary in the absence of a law made by Parliament pursuant to Entry 40 of List I of the VIIth Schedule  to the  Constitution.  Article  298  of  the Constitution extends  the executive  power of  the Union and each State  to the  carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of  contracts for  any purpose,  with the stipulation that if  the trade,  business or  purpose is  not  one  with respect  to   which  Parliament  may  make  laws,  the  said executive power of Parliament shall be subject in each State to legislation  by the  State and  if the trade, business or purpose  is   not  one  with  respect  to  which  the  State legislature may  make laws,  the said executive power of the State shall  be subject  to legislation by Parliament. Thus, while the  Government of  a State  is free  to carry  on any trade or  business in  respect of  which it may not have the power to  make laws  the power  to carry  on such  trade  or business shall  be subject  to  legislation  by  Parliament. Therefore, the  Government of  a  State  has  the  right  to conduct lotteries  subject  to  legislation  by  Parliament. Since there  is at  present no  legislation by Parliament on the subject  of lotteries  organised by  the  Government  of India or  the Government of a State, the Government of every State has  the unrestricted  right to  organise lotteries of its own.  We will  consider the effect of the impact of Art. 73, Art. 258(1) and Entry 40 of List I read with Art. 246 on this right a little later.      To continue  the expose  of facts,  in response  to the request of  the several  State Governments,  the Ministry of Home Affairs, Government of India, addressed a communication dated July 1,1968 to the Chief Secretaries to the Government of all  States. It  was stated in the letter that though the Central Government  was opposed  to the  idea  of  lotteries being  conducted   by  Governments,   they  had  decided  to authorise the State Governments to conduct lotteries in view of the representations of some of the State Governments that it would  help them  ’to mobilise  savings and to find funds far financing  their development  plans’.  However,  it  was added :           "At the  same time,  it is also felt that suitable      steps should  be taken  to safeguard  the interests  of      such State  Governments, who, as a matter of policy, do      not desire  to start  State Lotteries or permit sale of      tickets of  lotteries organised in other States, within      their jurisdiction.  In order  to avoid objections from      such States,  it has  been  decided  that  the  Central      Governments permission  for conducting  State Lotteries      is available  on the  condition that  tickets to such a      lottery will 446      not be  sold  in  another  State  without  the  express      consent of  the State Government concerned. I am to add      that in  order to  achieve this  object an amendment of      Section 294-A  IPC is  being undertaken to make sale of      tickets, without  the consent  of the  State Government      concerned, a penal offence".      We may  mention here that the proposal to amend Section 294-A IPC  to achieve  the object  of preventing the sale of

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lottery tickets  of one State being sold in States which are opposed to  the conduct  of lotteries  as a matter of policy has remained  a static proposal and no such amendment has so far been attempted to be made.      The  communication   dated  July   1,  1968   from  the Government of India was followed by Presidential order under Art. 258(1)  of the  Constitution.  The  Presidential  order relating to  the State  of Maharashtra  with  which  we  are concerned. is as follows:-                      No. 29/29/63-P.IV                     Government of India                   Ministry of Home Affairs               New Delhi, the 2nd April, 1969.                            ORDER           Whereas the  Government of  Maharashtra propose to      organise a State lottery;           And  whereas   the  Central   Government  has   no      objection to it:           Now, therefore, the President is pleased to permit      the  Government  of  Maharashtra  to  conduct  a  State      lottery, subject  to the  condition that the tickets of      the lottery  shall not be sold in another State without      the permission of the Government of that State.           The President is further pleased to entrust to the      Government of  Maharashtra under  clause (1) of Article      258 of  the Constitution  the executive  power  of  the      Union  in   respect  of  lotteries  organised  by  that      Government.      Sd/-      (D.D. JOSHI) Deputy Secretary to the Government of India 447      It was after this entrustment of executive power of the Union to  the  Government  of  Maharashtra  ’in  respect  of lotteries organised  by that Government’ that the Government of Maharashtra  proceeded to  issue the  Press  release  and thereafter the  individual communications,  earlier referred to, making  it known  that the  sale of  lottery tickets  of other States was banned in the State of Maharashtra.      The source  of power  for the  ban is claimed to be the entrustment of  power by  the President under Art. 258(1) of the Constitution.  But the  terms of  the entrustment do not justify the  claim. The entrustment of power, as is seen, is only ’in respect of lotteries organised by that Government’. The expression  ’that Government’  in  the  context  of  the entrustment of  power to  the Government  of Maharashtra can only mean  the Government  of Maharashtra  and no other. Nor can it  ever be  that such  executive  power  as  the  Union Government may  possess in  respect of the trading, business or, for that matter, any other activity of the Government of one State  may be  entrusted to  the Government  of  another State. That  would be  destructive of  the very  scheme  and structure of our Constitution. The Government of Maharashtra cannot therefore  purport to ban the sale of lottery tickets of Other  States by virtue of the entrustment of power under Article 258(1) of the Constitution.      It is  then said  that the  permission granted  to each State to  conduct its  lotteries is expressly subject to-the condition that  the tickets of the lottery shall not be sold in another State without the permission of the Government of that State.  We have already pointed out that Article 298 of the Constitution  extends the executive power of every State to the  carrying on  of any  trade or  business even if such trade or  business is  one with  respect of which Parliament alone has  the exclusive  power to make laws, subject to the

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stipulation that  such executive power of the State shall be subject to  Parliamentary legislation.  It is  true that  in view of  Entry 40  of List  I of  the VIIth  Schedule to the Constitution Parliament  has exclusive  power to  make  laws with respect  to "Lotteries  organised by  the Government of India or  the Government of a State", that Article 73 of the Constitution extends the executive power of the union to the matters with  respect to  which Parliament bas power to make laws and,  therefore; the  executive power of the Union must extends  to   the  subject   "Lotteries  organised   by  the Government of  India or  the Government of a State". But the executive power  of the  union, by the very opening words of Article  73,   is  "subject   to  the   provisions  of  this Constitution". It  follows that  the executive  power of the Union with respect to lotteries 448 organised by the Government of a State has necessarily to be exercised subject  to the  provisions of  the  Constitution, including Article 298, which expressly extends the executive power of  the State  to the  carrying on  of any  trade  or. business subject  only to  legislation by  Parliament if the trade or business is not one with respect to which the State legislature may  make laws.  It is  to be noted that Article 298 does  not open with the words ’subject to the provisions of the  Constitution’,  as  does  Article  73.  Reading  and considering Articles  73 and  298 together,  as they  should indeed  be  read  and  considered,  it  is  clear  that  the executive power  of a State in the matter of carrying on an; trade  or   business  with   respect  to   which  the  State legislature may  not make  laws is subject to legislation by Parliament but  is not subject to the executive power of the union, That  is why we mentioned earlier that the Government of a  State is  not required to obtain the permission of the Union Government  in order to organise its lotteries, in the absence of  Parliamentary legislation.  Even  assuming  that such permission  is necessary, we do not see how a condition imposed by such permission that lottery tickets of one State may not  be sold  in another  State may  be enforced  by the other State.  The other  State has  no power to make laws in regard to  the lotteries  by the  first State. Its executive power, by  virtue  of  Article  298,  extends  to  lotteries organised by  itself but  not to  lotteries organised by the other State.  If a  State acts  in breach  of the  condition imposed  by  the  President  while  entrusting  power  under Article 258,  it is  open to  the President  to  revoke  the permission or to take such further or other action as may be constitutionally permissible  but it  cannot possibly enable the Government  of the  other State  to do  a thing about it except to  complain, perhaps,  to the  Union Government. The Government of India is quite obviously alive to the position that there  is no  way of  enforcing  the  stipulation  that lottery tickets  of one  State shall  not be sold in another except by  Parliament making  a  law  in  that  behalf.  The awareness is  revealed by  the last  sentence in  the letter dated July 1, 1968 which says,           "I am  to add that in order to achieve this object      an amendment  of Section  294-A IPC is being undertaken      to make  sale of  tickets, without  the consent  of the      State Government concerned, a penal offence". The proposed amendment is yet to see the light of day.      A submission  which appears  to have  found favour with the 449 High Court  of Bombay  in Kamal Agency v. State and the High Court of Madras in H.G. Jain v. State of Tamil Nadu was that

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in Entry  40 of  List I  and the  respective local  Acts,  a lottery organised by a State must be construed to refer to a lottery lawfully  organised by a State and that if a lottery is not  lawfully organised  by a  State it  would  not  fall within Entry  40 of  List I  but would  fall under  the head ’gambling’  under   Entry  34  of  List  II  and  the  State legislature would  then be empowered to legislate in respect of  the   same.  Where  the  State  Legislature  could  thus legislate, it  was said,  the State  Government  could  take executive  action  in  respect  of  lotteries  organised  by another State  if they were unlawful. The Gujarat and Andhra Pradesh High  Courts  have  dissented  from  this  view.  In Special Civil  Application No.  1309 of  1970 Bhagwati, C.J. presiding over  a Division  Bench of  the Gujarat High Court and in  L.B. Paradise  Lottery Centre  v. State  one  of  us sitting  singly  in  the  Andhra  Pradesh  High  Court  have explained that  there is  no justification for first reading the word  ’lawfully’ into  Entry  40  of  List  I  and  then proceeding to  interpret the  expression  ’Lottery  lawfully organised’ as  meaning a  lottery organised  persuant to the entrustment of  executive power  of the  Union under Article 258 of  the Constitution. It was observed "legislative power cannot be  fed into  Entry 34,  by feeding the word ’lawful’ into Entry  40 or  List I  and thus artificially restricting the cope  of Entry  40". It  was pointed  out  that  if  the Government of  a  State  organised  a  lottery  without  the entrustment of  executive power  as contemplated  by Article 258 or  in disregard  or defiance  of any condition that may have been  imposed while  entrusting executive  power  under Article 258  it would  never be a matter for the legislature of one  State to  take upon  itself  the  power  to  declare unlawful the lottery run by the Government of another State; and even  less so  could the  Government of  a State declare unlawful a  lottery run  by the  Government of another State and thereafter  ban the sale of the tickets of the lotteries organised by  that State.  In the  Madras case  it was  also observed that  the entrustment  order carried  with  it  all powers which  the State Government might take to realise the maximum collection.  We cannot  subscribe to this view. That would really  amount to the entrustment of vital legislative powers   to    the   State   Government   which   would   be constitutionally,  impermissible.   We  do   not  think   it necessary to refer in any further detail to the decisions of the Gujarat, Andhra Pradesh Bombay and Madras decisions 450 except to  say that we generally agree with the reasoning in the Gujarat  and Andhra  Pradesh decisions and disagree with the reasoning  in the  Bombay and  Madras decisions.  In the result we  allow the Write petitions and direct the State of Maharashtra to  forbear from giving effect to the ban on the sale or  distribution of  tickets of  lotteries organised by other States. There is no order regarding to costs. N.V.K.    Appeal allowed. 451