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PETITIONER: THE STATE OF BOMBAY

       Vs.

RESPONDENT: R.   M. D. CHAMARBAUGWALA

DATE OF JUDGMENT: 09/04/1957

BENCH: DAS, SUDHI RANJAN (CJ) BENCH: DAS, SUDHI RANJAN (CJ) AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR P. DAS, S.K. GAJENDRAGADKAR, P.B.

CITATION:  1957 AIR  699            1957 SCR  874

ACT:   Lottery--Prize  competitions,  if and when of  a  gambling mature--Legislation  taxing  Promoters of  such  competition carried  on through newspaper printed and Published  outside the  State--Validity-Test-Territorial  nexus--Gambling,   if trade    and   commerce   within   the   meaning   of    the Constitution--Constitutionality     of     enactment--Bombay Lotteries  and Prize Competition Control and Tax  Act  (Bom. LIV  of 1948), as amended by the Bombay Lotteries and  Prize Competition  Control and Tax (Amendment) Act (Bom.   XXX  of 1952),  ss.  2(I) (d), 12 A--Constitution  of  India,  Arts. 19(1) (g), 301.

HEADNOTE:   The first respondent was the founder and Managing Director of a company, the second respondent in the appeal, which was incorporated  in the State of Mysore and conducted  a  Prize Competition  called  the R. M. D. C. Cross-words  through  a weekly  newspaper printed and published at Bangalore.   This paper  had a wide circulation in the State of Bombay,  where the  respondents set up collection depots to  receive  entry forms  and fees, appointed local collectors and invited  the people by advertisements in the paper to participate in  the competitions.  On November 20, 1952, the Bombay  Legislature passed  the Bombay Lotteries and Prize Competitions  Control and  Tax (Amendment) Act of 1952, and widened the  scope  of the definition of ’prize competition ’ contained in S.  2(1) (d)  of the Bombay Lotteries and Prize  Competition  Control and  Tax  Act of 1948, so as to include  prize  competitions carried on through newspapers printed and published  outside the State and inserted a new section, S. 12A, levying a  tax on  the  promoters of such competitions for  sums  collected from  the  State.   Thereupon, on  December  18,  1952,  the respondents moved the High Court of Bombay under Art. 226 of the  Constitution and contended that the Act as amended  and the  Rules  framed thereunder in so far as they  applied  to such   prize  competitions  were  ultra  vires   the   State Legislature and violated their fundamental rights under Art. 19(1) (g) and freedom of inter-State trade under Art. 301 of

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the Constitution.  The Single Judge who heard the matter  in the  first  instance as also the court of  appeal  found  in favour  of  the respondents, though  on  somewhat  different grounds, and the State of Bombay preferred the appeal.   The principal  question canvassed in this Court related  to  the validity.  or  otherwise  of  the  impugned  Act.   It   was contended  on behalf of the appellant that the impugned  Act was -a law relating to betting and gambling and as such  was covered 875 by  Entries 34 and 62 of List II in the Seventh Schedule  to the Constitution, whereas the contention of the  respondents was that the Act was with respect to trade and commerce  and came under Entries 26 and 60 of that List. Held,  that  in  testing  the validity  of  an  Act  it  was necessary, in the first place, to decide whether it was with respect  to  a  topic  assigned  to  the  legislature   and, secondly,  where it was so and the legislature was  a  State Legislature  and  the Act purported to  operate  beyond  the State,  whether  there was sufficient territorial  nexus  to validate  such operation and, lastly, whether the powers  of the  legislature  were  in any other  way  fettered  by  the Constitution.   So judged, the impugned Act was a  perfectly valid  legislation  and  its  constitutionality  was  beyond question. Regard being had to the purpose and scope of the Act read as a  whole there could be no doubt that all the categories  of prize  competitions included in the definition contained  in s.  2(1)  (d)  of the Act were of a  gambling  nature.   The qualifying’  clause  appearing at the end of  cl.  (1)  must apply to each of the five kinds enumerated therein, and  the word  ’or’ appearing after the word I promoters’ and  before the  word  ’for’  in  the clause  must  be  read  as  ’and’. Similarly,  cl. (ii), properly construed, could not  include any  prize  competitions  other than  those  of  a  gambling nature. Elderton  v. Totalisator Co. Ltd., (1945) 2 All E.  R.  624, held inapplicable. The impugned Act was, therefore, a legislation with  respect to  betting and gambling and fell under Entry 34 of List  II of  the Seventh Schedule to the Constitution and was  within the competence of the State Legislature. Taxes  on gambling are a well recognised group  of  indirect taxes  and  s. 12A of the Act in seeking to  tax  the  gross collections  in  the hands of the promoters, and  not  their profits,  was only following an easy and convenient  way  of getting at the gambler’s money in their hands and this  made no  difference in the character of the tax, essentially  one on  betting  and  gambling  and  not  on  any  trade,   and, consequently, the section fell within Entry 62 and not Entry 6o of List II of the Seventh Schedule to the Constitution. A  prize  competition that did not to a  substantial  degree depend upon the exercise of skill for its solution would  be of   a  gambling  nature  and  a  scrutiny  of   the   prize competitions offered by the respondents clearly showed  that there  was  an  element  of  chance  to  start  with,   and, consequently,  they  must be of a gambling nature  and  fell within the mischief of the Act. The  doctrine  of territorial nexus was  a  well-established doctrine  and  could  apply only when  (1)  the  territorial connection  between the persons sought to be taxed  and  the legislating  State  was real and not illusory  and  (2)  the liability  sought  to  be  imposed  was  pertinent  to  that connection.  The existence of sufficient 876

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territorial  nexus  in a particular case was  essentially  a question  of fact.  There could hardly be any doubt  in  the instant case that the impugned Act satisfied all these tests and,  consequently,  it was unassailable on  the  ground  of extra-territoriality.   Gambling activities were in their very nature and  essence extra-commercium although they might appear in the trappings of  trade.   They  were  considered  to  be  a  sinful   and pernicious vice by the ancient seers and law-givers of India and  have been deprecated by the laws of England,  Scotland, United  States of America and Australia.  The  Constitution- makers of India, out to create a welfare State, could  never have intended to raise betting and gambling to the status of trade, business, commerce or intercourse.   The petitioners, therefore, had no fundamental right under Art. 19(1) (g) or freedom under Art. 301 Of the Constitution in  respect  of  their  prize  competitions  that  could  be violated  and the validity of the impugned Act, in pith  and substance  an Act relating to gambling, did not fall  to  be tested by Arts. 19(6) and 304 Of the Constitution. judicial  decisions  on  Art. 1, s. 8,  sub-s.  (3)  Of  the Constitution  of  the  United  States  and  S.  92  of   the Australian  Constitution  should be used  with  caution  and circumspection in construing Arts. 19(1) (g) and 301 of  the Indian Constitution. State  of  Travancore-Cochin v. The Bombay Co.  Ltd.  (1952) S.C.R.  1112  and P. P. Kutti Keya v. The State  of  Madras, A.I.R. (1954) Mad. 621, referred to.  The  King  v. Connare, (1939) 61 C.L.R. 596,  The  King  v. Martin,  (1939) 62 C.L.R. 457, Commonwealth of Australia  v. Bank  of New South Wales, L.R. (195o) A.C. 235,  Mansell  v. Beck,  Australian  Law  journal  Vol. 3o,  NO.  7,  P.  346, Champion  v. Ames, 47 L.Ed. 492, Hipolite Egg Co. v.  United States,  55 L.Ed. 364, Hoke v. United States, 57 L.Ed.  523, United States v. Kahriger, 97 L.Ed. 754 and Lewis v.  United States, 99 L.Ed.475, discussed.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No.  134  of 1956.    Appeal  under  articles 132 (1) and 133 (I)  (c)  of  the Constitution  of  India from the Judgment  and  Order  dated January 12, 1955, of the Bombay High Court in Appeal No.  72 of  1954 arising out of the Judgment and Order  dated  April 22,  1954,  of the Bombay High Court in its  Original  Civil Jurisdiction in Miscellaneous Application No. 365 of 1952.  C. K. Daphtary, Solicitor-General of India, H. M.  Seervai, Porus A. Mehta and R. H.   Dhebar, for the appellant. 877    M.  C.  Setalvad, Attorney-General for India,  Sir  N.  P. Engineer, N. A. Palkhivala, R. A. Gagrat, S. V. Subramanian, and G. Gopal Krishnan, for the respondents. G.   R.  Ethirajulu Naidu, Advocate-General, Mysore,   Porus A. Mehta and T. M. Sen, for the intervener. 1957.  April 9. The Judgment of the Court was delivered by DAS  C.J.-This is an appeal by the State of Bombay from  the judgment and order passed on January 12, 1955, by the  Court of  Appeal  of.  the  High Court  of  Judicature  of  Bombay confirming,  though  on  somewhat  different  grounds,   the judgment  and  order passed on April 22, 1954, by  a  single Judge of the said High Court allowing with costs the present respondents’ petition under Art. 226 of the Constitution  of India.   The  said petition was presented  before  the  High

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Court of Judicature at Bombay on December 18, 1952.  In  the said petition there were two petitioners who are now the two respondents  to  this appeal.  The first  petitioner  is  an individual  who  claims  to be a citizen of  India  and  the founder  and  Managing Director of  the  second  petitioner, which  is a company incorporated in the State of Mysore  and having  its  registered head office at  2,  Residency  Road, Bangalore   in  that  State.   That  petition  was   further supported  by an affidavit sworn by the first petitioner  on the same day. The allegations appearing in the said petition and affidavit may  now  be  shortly  stated.   In  July,  1946  the  first petitioner applied for and obtained from the then  Collector of  Bombay a licence, being Licence No. 84 of 1946, for  the period  ending March 31, 1947, to conduct what was known  as the Littlewood’s Football Pool Competitions in India.   That licence  was  granted  to the  first  petitioner  under  the provisions  of the Bombay Prize Competitions Tax Act,  (Bom. XI of 1939) (hereinafter referred to as the 1939 Act), which was  then  in  force.  The said licence was  renewed  for  a period  of  one year from April 1, 1947 to March  31,  1948. During  that  period the first petitioner paid,  by  way  of competition tax, to the Bombay Provincial 113 878 Government  a  sum  of  rupees  one  lakh  per  annum.   The Government  of  Bombay having declined to  renew  the  first petitioner’s  licence  for  a  further  period,  the   first petitioner  filed  a petition under s. 45  of  the  Specific Relief   Act  in  the  High  Court  of  Bombay,  which   was eventually,  after  various proceedings,  dismissed  by  the court of appeal on or about March 28, 1949. In  the  meantime, in view of the delay  and  difficulty  in obtaining  a  renewal of the licence in  Bombay,  the  first petitioner in or about August, 1948, shifted his  activities from Bombay to the State of Mysore, where he promoted and on February 26,1949, got incorporated a company under the  name of   R.M.D.C.  (Mysore)  Limited,  which  was   the   second petitioner  in the High Court and is the  second  respondent before  us.  The first petitioner, who was the  promoter  of the  second petitioner became the Managing Director  of  the second  petitioner.  All the shareholders and  Directors  of the second petitioner are said to be nationals and  citizens of India.  The second petitioner also owns and runs a weekly newspaper  called " Sporting Star ", which was and is  still printed and published at Bangalore in a Press also owned  by the  second petitioner.  It is through this  newspaper  that the second petitioner conducts and runs a Prize  Competition called  the  R.M.D.C.  Crosswords  for  which  entries   are received from various parts of India including the State  of Bombay through agents and depots established in those places to  collect entry forms and fees for being forwarded to  the head office at Bangalore. The 1939 Act was replaced by the Bombay Lotteries and  Prize Competition  Control  and  Tax  Act  (Bom.   LIV  of  1948), (hereinafter  referred to as the 1948 Act) which  came  into force on December 1, 1948.  The 1939 Act as well as the 1948 Act,   as  originally  enacted,  did  not  apply  to   prize competitions contained in a newspaper printed and  published outside  the Province of Bombay.  So the  Prize  Competition called the R.M.D.C. Crosswords was not affected by either of those two Acts. On June 21, 1951, the State of Mysore, however, enacted  the Mysore Lotteries and Prize Competition 879

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Control and Tax Act, 195 1, which was based- upon the  lines of  the  said 1948 Act.  That Mysore Act  having  come  into force on February 1, 1952, the second petitioner applied for and obtained a licence under that Act and paid the requisite licence fees and also paid and is still paying to the  State of  Mysore the tax at the rate of 15% (latterly  reduced  to 121%)  of  the  gross receipts in respect  of  the  R.M.D.C. Crosswords  Prize  Competition and continued  and  is  still continuing  the  said  Prize Competition  through  the  said weekly  newspaper "The Sporting Star" and to  receive  entry forms  with  fees from all parts of the territory  of  India including the State of Bombay.  It is said, on the  strength of the audited books of account, that after distribution  of prizes to the extent of about 33% of the receipts and  after payment  of  taxes  in Mysore amounting  to  about  15%  and meeting the other expenses aggregating to about 47%, the net profit of the second petitioner works out to about 5% only.   On  November  20,  1952, the State of  Bombay  passed  The Bombay  Lotteries  and Prize Competitions  Control  and  Tax (Amendment)  Act (Bom.  XXX of 1952).  This Act amended  the provisions  of the 1948 Act in several  particulars.   Thus, the  words  "  but  does not  include  a  prize  competition contained  in a newspaper printed and published outside  the Province  of  Bombay", which occurred in the  definition  of Prize  Competition  in s. 2 (1) (d) of the  1948  Act,  were deleted  and the effect of this deletion was that the  scope and  the  application  of the 1948  Act  so  amended  became enlarged  and  extended so as to  cover  prize  competitions contained  in newspapers printed and published  outside  the State of Bombay.  After cl. (d) of s. 2 (1) the Amending Act inserted a new cl. (dd) which defined the word "Promoter  ". A new section was substituted for the old s. 12 and  another new section was inserted after s. 12 and numbered as a. 12A. By  this  new  s. 12A provision was made  for  the  levy  in respect of every prize competition contained in a  newspaper or  a  publication printed outside the State of  Bombay  for which a licence was obtained under the Act of a tax at  such rates as might be specified not exceeding the 880 rates  specified in s. 12 or in a lump sum having regard  to the   circulation  or  distribution  of  the  newspaper   or publication in the State of Bombay.  It is pointed out  that the  margin  of net profit being only 5%, if tax has  to  be paid to the State of Bombay under the 1948 Act, as  amended, (hereinafter  referred  to as the impugned Act)  the  second petitioner will be unable to carry on its prize  competition except at a loss.   Reference is also made to the rules framed by the State of Bombay  called the Bombay Lotteries -and  Prize  Competition Control and Tax Rules, 1952 (herein-’ after called the  said Rules), which came into force on and from December 8,  1952. The  said  Rules  require the petitioner to  apply  for  and obtain a licence in Form " H " which imposes certain onerous conditions.   The  petitioners point out that  it  would  be impossible  for  them,  in a commercial  sense  and  from  a practical  point of view, to run the prize  competitions  in the  territory of India if they are required to  comply  not only  with  the restrictions and conditions imposed  by  the Mysore  State where the newspaper is printed  and  published but  also  with  the  varying  and  different  restrictions, conditions  and  taxes imposed by the State  of  Bombay  and other  States  in  the territory of  India  where  the  said newspaper  containing the advertisements; of the said  prize competitions  are circulated.  The petitioners  submit  that the provisions of the impugned Act and the Rules, in so  far

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as they apply to prize competitions contained in  newspapers and  other  publications printed and published  outside  the State  of  Bombay, are ultra vires void and  inoperative  in law.  Upon  the  presentation of the petition a Rule  was  issued calling  upon the State of Bombay to appear and show  cause, if any it had, why the writ or orders prayed for should  not be  issued or made.  The State of Bombay filed an  affidavit raising   several   technical  legal   objections   to   the maintainability of the petition and refuting the allegations and  submissions  contained therein and  in  the  supporting affidavit.  It submitted that, as the second petitioner  was a corporation , and the first petitioner, who was a Managing Director 881 thereof, had no rights independent of the second petitioner, neither of them could lay any claim to any fundamental right under  Art.  19(1) (g) and no question could  arise  of  any violation  of the petitioner’s alleged  fundamental  rights. It further submitted that, having.  Regard to the fact  that lotteries  and  prize competitions were  opposed  to  public policy,  there  could  be no " business  "  in  promoting  a lottery  or  a  prize competition and the  question  of  the violation  of  the petitioners’ alleged  rights  under  Art. 19(1)  (g) of the Constitution did not arise.  It  was  also contended  that if the provisions of the Act and  the  Rules operated as restrictions, then the same were reasonable  and in  the  interest of the general public.   Likewise  it  was submitted that, having regard to the fact that lotteries and prize competitions are opposed to public policy, there could be  no  "business  "  in promoting  a  lottery  or  a  prize competition  and  the  question  of  the  violation  of  the provisions  of Art. 301 of the Constitution did  not  arise. It  was  denied that ss. 10 and 12 of the Act  violated  the equal  protection clause of the Constitution.  An  affidavit in  reply was filed by the first petitioner  traversing  the allegations,  submissions and contentions set forth  in  the affidavit  in  opposition filed on behalf of  the  State  of Bombay. The  main contentions of the present respondents before  the trial Judge were:- (a)The  impugned Act and particularly its taxing  provisions were  beyond  the competence of the  State  Legislature  and invalid  inasmuch as they were not legislation with  respect to  betting and gambling under Entry 34 or with  respect  to entertainments and amusements under Entry 33 or with respect to  taxation on entertainments and amusements, betting.  and gambling under Entry 62 of the State List.  The  legislation was with respect to trade and commerce and the tax levied by the  Impugned  Act  was a tax on the  trade  or  calling  of conducting  prize competitions and fell within Entry  60  of the State List. (b)  The  respondents’ prize competition was not  a  lottery and could not be regarded as gambling 882 inasmuch  as it was a competition in which skill,  knowledge and judgment had real and effective play. (c)  The  impugned Act itself contained distinct  provisions in  respect  of prize competitions and  lotteries  ,-thereby recognising that prize competitions were not lotteries.  (d)  The said tax being in substance and fact a tax on  the trade  or  business  of carrying on  prize  competitions  it offended against s. 142A (2) of the Government of India Act, 1935 and Art. 276 (2) of the Constitution which respectively provide  that such a tax shall not exceed fifty  rupees  and

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two hundred and fifty rupees per annum. (e)  The impugned Act was beyond the legislative  competence of the Bombay Legislature and invalid as it was  legislation with  respect to trade and commerce not within  but  outside the State. (f)  The impugned Act operated extra-territorially  inasmuch as  it  affected the trade or business of  conducting  prize competitions ’ outside the State and was, therefore,  beyond the competence of the State Legislature and invalid. (g)  The  impugned  Act  offended against Art.  301  of  the Constitution  inasmuch as it imposed restrictions on  trade, commerce  and  intercourse between the States  and  was  not saved by Art. 304 (b) of the Constitution. (h)  The  restrictions  imposed by the impugned Act  on  the trade  or  business of the petitioners were  not  reasonable restrictions  in  the interests of the general  public  and, therefore,   contravened  the  fundamental  right   of   the petitioners,  who were citizens of India, to carry on  their trade or business under Art. 19 (1) (g) of the Constitution. (i)  That  ss.  10,  12 and 12A of  the  said  Act  offended against  Art.  14  of  the  Constitution  inasmuch  as  they empowered   discrimination   between   prize    competitions contained   in  newspapers  or  publications   printed   and published  within the State and those printed and  published outside the State. The  State of Bombay, which is now the appellant before  us, on the other hand, maintained that 883 (a)  The  prize  competitions conducted by  the  petitioners were a lottery. (b)  The  provisions  of  the impugned Act  were  valid  and competent  legislation  under Entries 33, 34 and 62  of  the State List. (c)The  impugned  Act  was  not  extra-territorial  in   its operation. (d)The prize competitions conducted by the petitioners  were opposed  to  public policy and there could therefore  be  no trade or business of promoting such prize competitions.   (e)As  the  petitioners were not carrying on  a  trade  or business, no question of offending their fundamental  rights under  Art. 19 (1) (g) or of a violation of Art. 301 of  the Constitution could arise.   (f)The  second  petitioner being a Corporation was  not  a citizen   and  could  not  claim  to  be  entitled  to   the fundamental right under Art. 19 (1) (g) of the Constitution.   (g)In  any event the restrictions on the alleged trade  or business  of  the  petitioners  imposed  by  the  Act   were reasonable  restrictions in the public interest with in  the meaning of Art. 19 (6) and Art. 304 (b) of the Constitution. The trial Judge held:    (a)The tax levied under ss. 12 and 12A of the Act was not a  tax on entertainment, amusement, betting or gambling  but that it was a tax on the trade or calling of the respondents and fell under Entry 60 and not under Entry 62 of the  State List.   (b)The prize competition conducted by the petitioners  was not a lottery and it could not be said to be either  betting or gambling inasmuch as it was a competition in which skill, knowledge  and judgment on the part of the competitors  were essential ingredients.  (c)The levy of the tax under the said sections was void  as offending against Art. 276 (2) of the Constitution. (d)The  restrictions  imposed by the impugned  Act  and  the Rules   thereunder   offended  against  Art.  301   of   the Constitution and were not saved by Art,

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884 304(b)  inasmuch  as the restrictions imposed  were  neither reasonable nor in the public interest. (e)The  second petitioner, although it was a company, was  a citizen of India and was entitled to the protection of  Art. 19 of the Constitution. (f)The  restrictions  imposed by the impugned  Act  and  the Rules  made  thereunder were neither reasonable nor  in  the interests  of the general public and were void as  offending against Art. 19 (1) (g) of the Constitution. In  the  result the rule nisi was made absolute and  it  was further  ordered that the State of Bombay, its servants  and agents,  do  forbear from enforcing or taking any  steps  in enforcement, implementation, furtherance or pursuance of any of  the  provisions of the impugned Act and the  1952  Rules made thereunder and particularly from -enforcing any of  the penal  provisions against the petitioners, their  Directors, officers,  servants or agents and that the State of  Bombay, its  servants and agents, do allow the petitioners to  carry on their trade and business of running the Prize Competition mentioned  in  the petition and do forbear  from  demanding, collecting  or  recovering from the petitioners any  tax  as provided in the impugned Act or the said Rules in respect of the  said Prize Competition and that the State of Bombay  do pay to the petitioners their costs of the said applications.   Being  aggrieved by the decision of the trial  Judge,  the State  of Bombay preferred an appeal on June 8,  1954.   The Court of Appeal dismissed the appeal and confirmed the order of  the trial Judge, though on somewhat  different  grounds. It differed from the learned trial Judge on the view that he had  taken that there was no legislative competence  in  the Legislature  to  enact the legislation.  It  held  that  the topic of legislation was I gambling’ and the Legislature was competent to enact it under Entry 34 of the State List.  It, however,  agreed with the learned trial Judge that  the  tax levied  under s. 12A was not a tax on gambling but  that  it was a tax which fell under Entry 60. It held that there was 885 legislative competence in the Legislature to impose that tax but that the tax was invalid because it did not comply  with the   restriction  contained  in  Art.   276  (2)   of   the Constitution.   It  also took the view that  the  tax,  even assuming  it was a tax on betting or gambling, could not  be justified  -because it did not fall under Art. 304 (b).   It differed  from  the learned trial Judge when he found  as  a fact  that the scheme underlying the prize competitions  was not  a  lottery  and came to the  conclusion  that  the  Act applied  to the prize competitions of the  respondents.   It held  that the challenge of the petitioners to the  impugned provisions  succeeded because the restrictions contained  in the impugned Act controlling the business of the petitioners could not be justified as the requirements of the provisions of Art. 304 (b) had not been complied with.  The High  Court agreed  with the learned trial Judge that  the  petitioners’ prize competitions were their "business " which was entitled to  the  protection guaranteed under the  Constitution.   It took the view that although the activity of the  petitioners was  a  lottery, it was not an activity  which  was  against public interest and, therefore, the provisions of Part  XIII of the Constitution applied to the respondents’ business.   Being  aggrieved  by  the said judgment of  the  Court  of Appeal,  the appellant applied for and obtained under  Arts. 132(1)  and  133(1)  of the Constitution  a  certificate  of fitness  for  appeal  to this Court and  hence  this  appeal before us.

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The  principal question canvassed before us relates to  the validity  or  otherwise of the impugned Act.  The  Court  of Appeal has rightly pointed out that when the validity of  an Act is called in question, the first thing for the court  to do is to examine whether the Act is a law with respect to  a topic  assigned to the particular Legislature which  enacted it.   If it Is, then the court is next to consider  whether, in  the  case  of  an Act passed by  the  Legislature  of  a Province  (now  a State), its operation extends  beyond  the boundaries  of  the  Province or the State,  for  under  the provisions   conferring  legislative  powers  on   it   such Legislature  can only make a law for its territories or  any part thereof 114 886 and its laws cannot, in the absence of a territorial  nexus, have  any extra territorial operation.  If the impugned  law satisfies  both these tests, then finally the court  has  to ascertain  if  there is anything in any other  part  of  the Constitution  which  places any fetter  on  the  legislative powers  of such Legislature.  The impugned law has  to  pass all these three tests.  Taking  the first test first, it will be recalled that  the 1948 Act was enacted by the Provincial Legislature of Bombay when the Government of India Act, 1935, was in force.  Under ss.  99  and 100 of that Act the Provincial  Legislature  of Bombay had power to make laws for the Province of Bombay  or any  part  thereof  with  respect  to  any  of  the  matters enumerated  in List 11 in the Seventh Schedule to that  Act. It will also be remembered that the 1948 Act was amended  by Bombay  Act XXX of 1952 after the Constitution of India  had come  into operation.  Under Arts. 245 and 246,  subject  to the  provisions of the Constitution, the Legislature of  the State of Bombay has power to make laws for the whole or  any part  of  the  State of Bombay with respect to  any  of  the matters enumerated in List II of the Seventh Schedule to the Constitution.   The State of Bombay, which is the  appellant before us, claims that the impugned Act including s. 12A  is a law made with respect to topics covered by Entries 34  and 62  of List II in the Seventh Schedule to  the  Constitution which reproduce Entries 36 and 50 of List II in the  Seventh Schedule to the Government of India Act, 1935.  On the other hand,  the  petitioners,  who  are  respondents  before  us, maintain that the impugned Act is legislation under  Entries 26  and  60  in  List 11 of  the  Seventh  Schedule  to  the Constitution  corresponding to Entries 27 and 46 of List  II in  the Schedule to the  Government of India Act, 1935,  and that, in any event, s. 12A of the impugned Act, in so far as it  imposes  a tax, comes under Entry 60 of List II  in  the Seventh Schedule to the Constitution corresponding to  Entry 46  of List II in the Seventh Schedule to the Government  of India  Act, 1935, and not under Entry 62 of List 11  in  the Seventh Schedule to the Constitution corresponding to  Entry 50 of List 11 in the Seventh Schedule to the 887 Government  of India Act, 1935, and that as the tax  imposed exceeds  Rs.  250/-  it is void under  Art.  276  (2)  which reproduces  s.  142A of the Government of India  Act,  1935. Reference  will  hereafter  be made  only  to  the  relevant Entries  of  List  II  in the Seventh  Schedule  r,  to  the Constitution,  for they are substantially in the same  terms as  the  corresponding  Entries of List 11  in  the  Seventh Schedule  to  the Government of India Act, 1935.   For  easy reference,  the relevant Entries in List II in  the  Seventh Schedule to the Constitution are set out below:

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"  26.  Trade and commerce within the State subject  to  the provisions of Entry 33 of List III. 34.  Betting and gambling. 60.  Taxes    on   professions,   trades,   callings,    and employments. 62.  Taxes  on luxuries, including taxes on  entertainments, amusements, betting and gambling."   In order to correctly appreciate the rival contentions and to come to a decision as to the particular Entry or  Entries under  which the impugned Act including s. 12A  thereof  has been  enacted, it is necessary to examine and  to  ascertain the  purpose and scope of the impugned legislation.  It  may be  mentioned that the 1939 Act was enacted to regulate  and levy a tax on prize competitions in the Province of  Bombay. It  did  not  deal  with lotteries at  all.   That  Act  was repealed by the 1948 Act which was enacted to control and to levy  a tax not only on prize competitions but on  lotteries also.  It is not unreasonable to conclude that the  clubbing together of lotteries and prize competitions in the 1948 Act indicates that in the view of the Legislature the two topics were, in a way, allied to each other.  As already indicated, the  1948 Act was amended in 1952 by Bombay Act XXX of  1952 so  as  to  extend  its  operation  to  prize   competitions contained  in newspapers printed and published  outside  the State of Bombay.  In s. 2(1) (d) of the impugned Act will be found  the  definition  of " prize competition  "  to  which reference will be made hereafter in greater detail.   Clause (dd)  was inserted in s. 2(1) in 1952  defining  "promoter". Section 3 declares that subject to the 888 provisions  of  the Act, all lotteries and  all  prize  com- petitions are unlawful.  This is a clear indication that the legislature regarded lotteries and prize competitions as  on the  same footing and declared both of them to be  unlawful, subject, of course, to the provisions of the Act.  Section 4 creates  certain offences in connection with  lotteries  and competitions punishable, as therein mentioned.  We may  skip over  ss. 5 and 6 which deal exclusively with lotteries  and pass on to s. 7. Section 7 provides that a prize competition shall be deemed to be an unlawful prize competition unless a licence in respect of such competition has been obtained  by the promoter thereof.  There are two provisos to the section which  are not material for our present purpose.  Section  8 imposes  certain a additional penalty for  contravention  of the provisions of s. 7. -Section 9 regulates the granting of licences on such fees and conditions and in such form as may be prescribed, that is to say prescribed by rules.   Section 10 makes it lawful for the Government, by general or special order,  to,  inter alia, prohibit the grant of  licences  in respect  of  a  lottery or prize  competition  or  class  of lotteries  or prize competitions throughout the State or  in any  area.  Section II empowers the Collector to suspend  or cancel   a  licence  granted  under  this  Act  in   certain circumstances therein specified.  Section 12 authorises  the levy  of  a tax on lotteries and prize competitions  at  the rate  of 25% of the total sum received Or due in respect  of such  lottery  or prize competition.  This  section  directs that  the tax shall be collected from the promoter  of  such lottery or prize competition as the case may be. Sub-section (2) of s. 12 empowers the State Government by a Notification in  the official Gazette, to enhance the rate of tax  up  to 50%  of  the total sum received or due in  respect  of  such prize  competition as may be specified in the  Notification. Section  12A, which is of great importance for -the  purpose of this appeal, runs as follows:

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"  12A.  Notwithstanding anything contained in  section  12, there  shall be levied in respect of every lottery or  prize competition contained in a newspaper or publication  printed and published outside the State, 889 for which a licence has been obtained under section 5, 6  or 7  ,  a tax at such rates as may be specified by  the  State Government  in  a notification in the Official  Gazette  not exceeding  the  rates specified in section 12  on  the  sums specified  in the declaration made under section 15  by  the promoter of the lottery or prize competition as having  been received  or  due  in  respect  of  such  lottery  or  prize competition   or  in  a  lump  sum  having  regard  to   the circulation or distribution of the newspaper or  publication in the State." Section  15  requires every person promoting  a  lottery  or prize competition of any kind to keep and maintain  accounts relating to such lottery or prize competition and to  submit to the Collector statements in such form and at such  period as  may be prescribed.  It is not necessary for the  purpose of this appeal to refer to the remaining sections which  are designed to facilitate the main purpose of the Act and  deal with procedural matters except to s. 31 which confers  power on  the  State Government to make rules for the  purpose  of carrying  out  the provisions of the Act.   In  exercise  of powers  so  conferred on it, the State  Government  has,  by Notification  in  the Official Gazette, made  certain  rules called  the Bombay Lotteries and Prize Competitions  Control and  Tax  Rules,  1952,  to which  reference  will  be  made hereafter.  The petitioners contend that the object of the impugned Act is  to control and to tax lotteries and prize  competitions. It  is  not the purpose of the Act to  prohibit  either  the lotteries  or  the prize competitions.  They urge  that  the impugned  Act deals alike with prize competitions which  may partake   of   the  nature  of  gambling  and   also   prize competitions which call for knowledge and skill for  winning success and in support of this contention reliance is placed on  the definition of "prize competition" in s.  2(1)(d)  of the impugned Act.  We are pressed to hold that the  impugned Act  in its entirety or at any rate in so far as  it  covers legitimate  and  innocent prize competition is  a  law  with respect  to trade and commerce under Entry 26 and  not  with respect  to betting and gambling under Entry 34.  They  also urge that in any event the taxing provisions, 890 namely  ss.  12 and 12A, are taxes on the trade  of  running prize  competitions under Entry 60 and not taxes on  betting and  gambling under Entry 62.  We are unable to  accept  the correctness  of the aforesaid contentions for reasons  which we proceed immediately to state. As it has already been mentioned, the impugned Act  replaced the  1939  Act  which dealt only  with  prize  competitions. Section 2(2) of the 1939 Act defined "prize competition"  in the terms following:----   2(2) "Prize Competition " includes-   (a)     crossword   prize   competition,   missing   words competition,   picture  prize  competition,   number   prize competition,  or  any  other  competition,  for  which   the solution  is  prepared beforehand by the  promoters  of  the competition or for which the solution is determined by lot;  (b)any   competition  in  which  prizes  are  offered   for forecasts  of the results either of a future event or  of  a past event the result of which is not yet ascertained or not yet generally known; and

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(c)  any other competition success in which does not  depend to a substantial degree upon the exercise of skill, but  does  not include a prize competition  contained  in  a newspaper  or periodical printed and published  outside  the Province of Bombay." The  1948  Act  s.  2(1)(d),  as  originally  enacted,  sub- stantially reproduced the definition of " prize  competition "  as given in s. 2(2) of the 1939 Act.  Section 2(1)(d)  of the 1948 Act, as originally enacted, ran as follows: 2(1)(d)  "Prize Competition " includes (i)  cross-word  prize  competition,  missing  words prize  competition, picture prize competition, number  prize competition, or any other competition for which the solution is, prepared beforehand by the promoters of the  competition or for which the solution is determined by lot; (ii)any   competition  in  which  prizes  are  offered   for forecasts  of the results either of a future event or  of  a past event the result of which is not yet ascertained or not yet generally known; And 891 (iii)any other competition success in which does not  depend to a substantial degree upon the exercise of skill,   but  does not include a prize competition contained  in  a newspaper  printed  and published outside  the  Province  of Bombay; "  The  collocation  of  words in the first  category  of  the definitions  in  both  the  1939 Act and  the  1948  Act  as originally  enacted made it quite clear that the  qualifying clause "for which the solution is prepared beforehand by the promoters  of the competition or for which the  solution  is determined  by  lot " applied equally to each  of  the  five kinds  of prize competitions included in that  category  and set  out  one after another in a  continuous  sentence.   It should also be noted that the qualifying clause consisted of two parts separated from each other by the disjunctive  word "or".   Both parts of the qualifying clause  indicated  that each  of  the five kinds of prize  competitions  which  they qualified   were  of  a  gambling  nature.   Thus  a   prize competition for which a solution was prepared beforehand was clearly  a gambling prize competition, for  the  competitors were  only  invited  to guess  what  the  solution  prepared beforehand by the promoters might be, or in other words,  as Lord  Hewart  C. J. observed in Coles v. Odhams  Press  Ltd. (1), " the competitors are invited to pay certain number  of pence  to  have the opportunity of taking blind shots  at  a hidden target." Prize competitions to which the second  part of the qualifying clause applied, that is to say, the  prize competitions  for which the solution was determined by  lot, was necessarily a gambling adventure.  On the language  used in the definition section of the 1939 Act as well as in  the 1948  Act,  as originally enacted, there could be  no  doubt that  each of the five kinds of prize competitions  included in the first category to each of which the qualifying clause applied  was  of  a  gambling  nature.   Nor  has  it   been questioned  that the third category, which comprised  "  any other  competition  success in which does not  depend  to  a substantial degree upon the exercise of skill constituted a (1)  L.R. (1936) 1 K.B. 416. 892 gambling  competition.  At one time the notion was  that  in order to be branded as gambling the competition must be  one success  in  which depended entirely on chance.  If  even  a scintilla of skill was required for success the  competition could not be regarded as of a gambling nature.  The Court of Appeal  in the judgment under appeal has shown how  opinions

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have  changed since the earlier decisions were given and  it is  not  necessary for us to discuss the matter  again.   It will  suffice to say that we agree with the Court of  Appeal that a competition in order to avoid the stigma of  gambling must  depend  to a substantial degree upon the  exercise  of skill.   Therefore, a competition success wherein  does  not depend to a substantial degree upon the exercise of skill is now  recognised to be of a gambling nature.  From the  above discussion  it follows that according to the  definition  of prize  competition given in the 1939 Act as in the 1948  Act as originally enacted, the five kinds of prize  competitions comprised  in the first category and the competition in  the third  category were all of a gambling nature.   In  between those two categories of gambling competitions were  squeezed in,  as the second category, "competitions in  which  prizes were offered for forecasts of the results either of a future event  or  of a past event the result of which  is  not  yet ascertained   or   is  not  yet   generally   known."   This juxtaposition   is  important  and  significant   and   will hereafter be discussed in greater detail. As already stated the 1948 Act was amended in 1952 by Bombay Act  XXX  of  1952.   Section 2(1)(d)  as  amended  runs  as follows:   Prize competition " includes-     (i)   (1) cross-word prize competition,          (2)   missing word prize competition,         (3)    picture prize competition,          (4)   number prize competition, or          (5)   any other prize competition, for which the  solution  is  or  is not  prepared  beforehand  by  the promoters or for which the solution is determined by lot  or chance;  (ii)     any  competition in which prizes are  offered  for forecasts of the results either of a future event or of 893 a  past event the result of which is not yet ascertained  or not yet generally known; and (iii) any other competition success in which does not depend to a substantial degree upon the exercise of skill; It  will be noticed that the concluding sentence " but  does not  include  a prize competition contained in  a  newspaper printed  and published outside the Province of  Bombay"  has been  deleted.  This deletion has very far reaching  effect, for   it  has  done  away  with  the  exclusion   of   prize competitions contained in a newspaper printed and  published outside   the  State  of  Bombay  from  the  scope  of   the definition.  In the next place, it should be noted that  the definition  of  prize  competition  still  comprises   three categories  as before.  The second and the third  categories are  couched  in  exactly the same language  as  were  their counterparts in the earlier definitions.  It is only in  the first  category  that certain changes are  noticeable.   The five  kinds of prize competitions that were included in  the first  category of the old definitions are still  there  but instead  of  their  being set out one  after  another  in  a continuous  sentence,  they  have been  set  out  one  below another  with  a separate number assigned to each  of  them. The  qualifying  clause has been amended  by  inserting  the words  "or is not" after the word "is" and before  the  word "prepared"  and by adding the words "or chain ce" after  the word "lot".  The qualifying clause appears, as before, after the  fifth item in the first category.  It will  be  noticed that there is a comma after each of the five items including the fifth item.  The mere assigning a separate number to the five  items  of  prize competitions included  in  the  first

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category  does  not, in our judgment, affect  or  alter  the meaning,  scope and effect of this part of  the  definition. The  numbering of the five items has not dissociated any  of them  from the qualifying clause.  If the qualifying  clause were  intended to apply only to the fifth item,  then  there would  have  been  no comma after the fifth  item.   In  our opinion, therefore, the qualifying clause continues to apply to each of the five items as before the amendment.  There is grammatically no difficulty in reading 115 894 the  qualifying  clause as lending colour to each  of  those items.  Accepting that the qualifying clause applies to each of the five  kinds  of  prize competitions included  in  the  first category, it is urged that the qualifying clause as  amended indicates that the Legislature intended to include  innocent prize competitions within the definition so as to bring  all prize  competitions,  legitimate or  otherwise,  within  the operation of the regulatory provisions of the Act  including the taxing sections.  The argument is thus formulated.  As a result  of  the  amendment the qualifying  clause  has  been broken up into three parts separated from each other by  the disjunctive word " or ". The, three parts are (1) for  which the  solution is prepared beforehand by the  promoters,  (2) for  which  the solution is not prepared beforehand  by  the promoters  and (3) for which the solution is  determined  by lot  or  chance.   The  first and the  third  parts  of  the qualifying clause, it is conceded, will, when applied to the preceding five kinds of prize cometitions, make each of them gambling  a  ventures;  gut  it  is  contended  that   prize competitions  to  which the second part  of  the  qualifying clause  may  apply, that is to say  prize  competitions  for which  the solution is not prepared beforehand, need not  be of a gambling nature at all and at any rate many of them may well  be  of an innocent type.  This argument hangs  on  the frail peg of unskilful draftsmanship.  It has been seen that in  the  old  -definitions  all  the  five  kinds  of  prize competitions  included  in  the first  categorv  were  of  a gambling nature.  We find no cogent reason-and none has been suggested-why  the Legislature_which treated  lotteries  and prize  competitions  on  the same  footing  should  suddenly enlarge  the first category so as to include innocent  prize competitions.   To  hold that the first  category  of  prize competitions  include  innocent prize competitions  will  go against the obvious tenor of the impugned Act.  The 1939 Act dealt with prize competitions only and the first category in the   definition   given  there  comprised   only   gambling competitions.   The 1948 Act clubbed together lotteries  and prize  competitions  and  the first category  of  the  prize competitions                             895 included in the definition ’as originally enacted was purely gambling  as  both parts of the  qualifying  clause  clearly indicated.  Section 3 of the Act declared all lotteries  and all  prize competitions unlawful.  There could be no  reason for  declaring  innocent prize competitions  unlawful.   The regulatory provisions for licensing and taxing apply to  all prize  competitions.   If  it  were  intended  to   include. innocent prize competitions in the first category, one would have   expected  the  Legislature  to  have  made   separate provisions  for the legitimate prize  competitions  imposing less  rigorous  regulations than what had  been  imposed  on illegitimate  prize competitions.  It will become  difficult to  apply the same taxing sections to legitimate as well  as

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to    illegitimate   competitions.    Tax   on    legitimate competitions may well be a tax under Entry 60 on the  trader who  carries  on  the  trade  of  innocent  and   legitimate competition.   It may be and indeed it has been the  subject of  serious controversy whether an illegitimate  competition can  be  regarded A a trade at all and in one  view  of  the matter the tax may have to be justified as a tax on  betting and gambling under Entry 62.  Considering the nature,  scope and  effect  of  the  impugned Act  we  entertain  no  doubt whatever  that the first category of prizecompetitions  does not include any innocent prize competition.  Such is what we conceive  to  be the clear intention of the  Legislature  as expressed  in the impugned Act read as a whole and  to  give effect to this obvious intention, as we are bound to do,  we have  perforce  to  read  the word  "or"  appearing  in  the qualifying  clause after the word "promoter" and before  the word  "for" as "and".  Well known canons of construction  of Statutes   permit  us  to  do  so.  (See  Maxwell   on   the Interpretation of Statutes, 10th edition, page 238). A similar argument was sought to be raised on a construction of  cl. (ii) of s. 2(1) (d).  As already stated, in  between the  first  and the third categories of  prize  competitions which,  as  already  seen,  are of  a  gambling  nature  the definition has included a second category of competitions in which prizes are offered for forecasts of the results either of a future event or of a past event 896 the  result  of  which is not yet  ascertained  or  not  yet generally  known.  It is said that forecasts of such  events as are specified in the section need not necessarily  depend on chance, for it may be accurately done by the exercise  of knowledge  and  skill  derived from a  close  study  of  the statistics  of similar events of the past.  It may  be  that expert statisticians may form some idea of the result of  an uncertain  future  event but it is difficult  to  treat  the invitation  to  the general public to participate  in  these competitions  as  an  invitation to a game  of  skill.   The ordinary   common   people  who  usually   join   in   these competitions  can hardly be credited with such abundance  of statistical skill as will enable them, by the application of their  skill, to attain success.  For most, if not  all,  of them the forecast is nothing better than a shot at a  hidden target.  Apart from the unlikelihood that the Legislature in enacting   a  statute  tarring  both  lotteries  and   prize competitions with the same brush as indicated by s’ 3  would squeeze  in  innocent  prize  competitions  in  between  two categories  of  purely gambling varieties of them,  all  the considerations  and  difficulties  we have  adverted  to  in connection with the construction of the ,first category  and the qualifying clause therein will apply mutatis mutandis to the interpretation of this second clause. Reliance  is  placed  on s. 26 of the  English  Betting  and Lotteries Act, 1934 (24 and 25 Geo.  V c. 58) in aid of  the construction  of the second category of  prize  competitions included  in the definition given in the impugned Act.   The relevant portion of s. 26 of the aforesaid Act runs thus:   "  26. (1) It shall be unlawful to conduct in  or  through any  newspaper, or in connection with any trade or  business or the sale of any article to the public (a)  any  competition   in  which  prizes  are  offered  for forecasts  of the result either of a future event, or  of  a past event the result of which is not yet ascertained or not yet generally known; (b)  any other competition success in which does not  depend to a substantial degree upon the exercise of skill.

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                           897 It  will  be noticed that this section is not  a  definition section  at all but is a penal section which  makes  certain competitions mentioned in the two clauses unlawful.   Clause (a) of that section which corresponds to our second category is  not sandwiched between two categories of gambling  prize competitions.   In Elderton v. Totalisator Co. Ltd.  (1)  on which  the  petitioners rely the question  was  whether  the football  pool  advertised in newspapers  by  the  appellant company  came  within the wide language of cl. (a)  of  that section  which  was  in Part II of  the  Act.   Whether  the appellant  company’s football pool called for any  skill  on the part of the "investors" or whether it was of a  gambling nature  was not directly relevant to the discussion  whether it fell within cl. (a).  The penal provisions of the English Act  and the decision of the Court of Appeal throw no  light on  the construction of our definition clause.  Seeing  that prize competitions have been clubbed together with lotteries and  dealt with in the same Act and seeing that  the  second category  of  the definition of  "  prize competition  "  is sandwiched  in  between the other two categories  which  are clearly  of  a  gambling nature and in  view  of  the  other provisions  of the impugned Act and in particular s.  3  and the  taxing  sections, we are clearly of  opinion  that  the definition of " prize competition " on a proper construction of  the  language of s. 2(1) (d )in the light of  the  other provisions  of the Act read as a whole comprises only  prize competitions  which  are of the nature of a lottery  in  the wider sense, that is to say, of the nature of gambling.  The Court  of Appeal took the view that although as a matter  of construction  the  definition  did  include  innocent  prize competitions,  yet by the application of another  principle, namely,  that  a  literal construction  will  make  the  law invalid because of its overstepping the limits- of Entry 26, which  comprises only trade and commerce within  the  State, the  definition should be read as limited only  to  gambling prize  competitions so as to make it a law with  respect  to betting  and gambling under Entry 34.  It is  not  necessary for us in this case to consider whether the (1)  (1945) 2 A.E.R. 624. 898 principle  laid  down  by Sir Maurice Gwyer  C.  J.  in  the Hindu  Women’s Right to Property Act case (1) can be  called in aid to cut down the scope of a section by omitting one of two  things  when  the  section  on  a  proper  construction includes two things, for we are unable, with great  respect, to  agree  with  the  Court  of  Appeal  that  on  a  proper construction   the  definition  covers  both  gambling   and innocent competitions.  In our view, the section, on a  true construction,  covers only -gambling prize competitions  and the Act is a law with respect to betting and gambling  under Entry  34.  As, for the foregoing reasons, we  have  already arrived at the conclusion just stated, it is unnecessary for us  to refer to the language used in the third category  and to invoke the rule of construction which goes by the name of noscitur  a  sociis  relied on by learned  counsel  for  the appellant. The  next  point urged is that, although the  Act  may  come under  Entry 34, the taxing provisions of s. 12A  cannot  be said to impose a tax on betting and gambling under Entry  62 but imposes a tax on trade under Entry 60.  Once it is  held that  the  impugned  Act  is on the  topic  of  betting  and gambling under Entry 34, the tax imposed ’by such a statute, one  would  think, would be a tax on  betting  and  gambling under  Entry  62.  The Appeal Court has expressed  the  view

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that  s. 12A does not fall within Entry 62, for it does  not impose  a tax on the gambler but imposes a tax on the  peti- tioners  who do not themselves gamble but who  only  promote the  prize  competitions.   So  far  as  the  promoters  are concerned, the tax -levied from them can only be regarded as tax  on the trade of prize competitions carried on by  them. This.’  with  respect, is taking a very narrow view  of  the matter.  Entry 62 talks of taxes on betting and gambling and not  of  taxes  on  the  men  who  bet  or  gamble.   It  is necessary,,  therefore, to bear in mind the real  nature  of the  tax.   The  tax  imposed by s.  12A  is,  in  terms,  a percentage  of  the sums specified in the  declaration  made under  a. 15 by the promoter or a lump sum having regard  to the circulation and distribution of the newspaper, or (1) (1941) F.C.R. 12.                             899 publication  in  the State.  Under s. 15 the promoter  of  a prize  competition carried on in a newspaper or  publication printed  and  published  outside  the State  is  to  make  a declaration  in  such  form and at such  period  as  may  be prescribed.   Form ’J’ prescribed by r. 11 (c) requires  the promoter to declare, among other things, the total number of tickets/coupons received for the competition from the  State of  Bombay  and the total receipts out of the  sale  of  the tickets/coupons  from the State of Bombay.   The  percentage under a. 12A is to be calculated on the total sums specified in  the declaration.  It is clear, therefore, that  the  tax sought to be imposed by the impugned Act is a percentage  of the  aggregate of the entry fees received from the State  of Bombay.  On ultimate analysis it is a tax on each entry  fee received from each individual competitor who remits it  from the  State of Bombay.  In gigantic prize competitions  which the  prize competitions run by the  petitioners  undoubtedly are,  it  is  extremely  difficult  and  indeed  well   nigh impossible   for  the  State  to  get  at  each   individual competitor and the provision for collecting the tax from the promoters  after  the entry fees come into  their  hands  is nothing  but a convenient method of collecting the tax.   In other words, the taxing authority finds it convenient in the course  of administration to collect the duty in respect  of the  gambling activities represented by each of the  entries when  the same reaches the hands of the promoters.  The  tax on gambling is a well recognised group of indirect taxes  as stated by Findlay Shirras in his Science of Public  Finance, vol.  II p. 680.  It is a kind of tax which, in the language of J. S. Mill quoted by Lord Hobhouse in Bank of Toronto  v. Lambe (1), is demanded from the promoter in the  expectation and intention that he shall indemnify himself at the expense of  the  gamblers who sent entrance fees to him.   That,  we think,  is the general tendency of the tax according to  the common  understanding of men.  It is not difficult  for  the promoters  to pass on the tax to the gamblers, for they  may charge the proportionate percentage on the amount of (1)  L.R. (1887) 12 A.C. 575. 900 each  entry as the seller of goods charges the sales tax  or he  may increase the entrance fee from 4 annas to 5 annas  6 pies to cover the tax.  If in particular circumstances it is economically  undesirable or practically impossible to  pass on  the  tax  to the gamblers, that circumstance  is  not  a decisive  or even a relevant consideration for  ascertaining the  true  nature  of the tax, for it does  not  affect  the general  tendency of the tax which remains.  If taxation  on betting  and  gambling  is  to be regarded  as  a  means  of controlling  betting  and  gambling  activities,  then   the

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easiest  and  surest  way  of doing so  is  to  get  at  the promoters who encourage and promote the unsocial  activities and  who  hold  the gamblers’ money in their  -  hands.   To collect  the  tax  from  the promoters is  not  to  tax  the promoters  but  is a convenient way of imposing the  tax  on betting  and  gambling and indirectly  taxing  the  gamblers themselves.   It is to be noted that the tax here is not  on the  profits made by the petitioners but it is a  percentage of  the total sum received by them from the State of  Bombay as entrance fees without the deduction of any expense.  This circumstance also indicates that it is not a tax on a trade. According to the general understanding of men, as stated  by Lord  Warrington of Clyffe in Rex v.  Caledonian  Collieries Ltd.  (1),  there are marked distinctions between a  tax  on gross  collection  and a tax on income  which  for  taxation purposes  means gains and profits.   Similar  considerations may  apply  to tax on trade.  There is  yet  another  cogent reason  for holding that the tax imposed by s. 12A is a  tax on  betting  and  gambling.  In  enacting  the  statute  the Legislature  was  undoubtedly making a law with  respect  to betting  and  gambling  under Entry 34  as  here  in  before mentioned.  By the amending Act XXX of 1952 the  Legislature by deleting the concluding words of the definition of ’prize competition’,  namely, " but does not include etc., etc.,  " extended  the  operation of the Act  to  prize  competitions carried  on in newspapers printed and published outside  the State  of  Bombay.   They knew that  under  Art.  276  which reproduced s. 142A of the Government of India Act, (1)  L.R. (1928) A.C. 358. 901 1935,  they could not impose a tax exceeding the sum of  Rs. 250 on any trade or calling under Entry 60.  If the tax  can be  referable  either to Entry 60 or to Entry 62,  -then  in view of the fact that s. 12A will become at least partially, if  not wholly, invalid as a tax on trade or  calling  under Entry 60 by reason of Art. 276(2), the court must, in  order to uphold the section, follow the well established principle of construction laid down by the Federal Court of India  and hold  that the Legislature must have been  contemplating  to make a law with respect to betting and gambling under  Entry 62,  for there is no constitutional limit to the quantum  of tax  which  can be imposed by a law made under  that  Entry. For  reasons stated above, we are satisfied that s.  12A  is supportable as a valid piece of legislation under Entry 62. The next point urged by the petitioners is that under  Arts. 245  and 246 the Legislature of a State can only make a  law for  the  State or any part thereof and,  consequently,  the Legislature overstepped the limits of its legislative  field when by the impugned Act it purported to affect men residing and carrying on business outside the State.  It is submitted that  there is no sufficient territorial nexus  between  the State  and the activities of the petitioners who are not  in the  State.   The  doctrine of  territorial  nexus  is  well established  and there is no dispute as to  the  principles. As  enunciated  by learned counsel for the  petitioners,  if there is a territorial nexus between the person sought to be charged and the State seeking to tax him the taxing  statute may  be upheld.  Sufficiency of the  territorial  connection involves  a  consideration of two elements, namely  (a)  the connection  must  be  real  and not  illusory  and  (b)  the liability  sought  to be imposed must be pertinent  to  that connection.   It is conceded that it is of no importance  on the  question of validity that the liability imposed  is  or may  be  altogether  disproportionate  to  the   territorial connection.  In other words, if the connection is sufficient

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in the sense mentioned above, the extent of such  connection affects  merely  the  policy and not  the  validity  of  the legislation.   Keeping these principles in mind we  have  to ascertain if in the case before us there 116 902 was  sufficient  territorial nexus to  entitle  the  Bombay. Legislature to make the impugned law.  The question  whether in  a  given case there is sufficient territorial  nexus  is essentially  one  of fact.  The trial court took  the’  view that the territorial nexus was not sufficient to uphold  the validity of the law under debate.  The Court of Appeal  took a  different view of the facts and upheld the law.  We  find ourselves  in  agreement  with the  Court  of  Appeal.   The newspaper "Sporting Star" printed and published in Bangalore is   widely  circulated  in  the  State  of   Bombay.    The petitioners  have set up collection depots within the  State to  receive entry forms and the fees.  They  have  appointed local collectors.  Besides the circulation of the copies  of the  "  Sporting Star ", the petitioners print  over  40,000 extra coupons for distribution which no doubt are  available from   their   local   collectors.    The   most   important circumstance   in   these  competitions  is   the   alluring invitation  to  participate in the  competition  where  very large prizes amounting to thousands of rupees and  sometimes running into a lakh of rupees may be won at and for a paltry entrance fee of say 4 annas per entry.  These advertisements reach  a  large number of people resident within  the  Stat. The gamblers, euphemistically called, the competitors,  fill up the entry forms and either leave it along with the  entry fees at the collection depots set up in the State of  Bombay or-  send the same by poet from Bombay.  All the  activities that  the gambler is ordinarily expected to  undertake  take place,  mostly if not entirely, in the State of  Bombay  and after sending the entry forms and the fees the gamblers hold their  soul in patience in great expectations  that  fortune may  smile  on them.  In our judgment the  standing  invita- tions, the filling up of the forms and the payment of  money take place within the State which is seeking to tax only the amount received by the petitioners from the State of Bombay. The  tax  is on gambling although it is collected  from  the promoters.   All  these,  we  think,  constitute  sufficient territorial  nexus  which entitles the State  of  Bombay  to impose  a  tax on the gambling that takes place  within  its boundaries  and the law cannot be struck down on the  ground of extra territoriality. 903 Assuming   that  the  impugned  Act  is  well   within   the legislative competence of the Bombay Legislature and that it is not invalid on the ground of extra territorial operation, we have next to examine and see if there is anything else in the Constitution which renders it invalid.  The  petitioners contend  that  even  if the  prize  competitions  constitute gambling  transactions,  they  are  nevertheless  trade   or business activities and that that being so the impugned  Act infringes  the  petitioners’ fundamental  right  under  Art. 19(1)(g)  ’of  the Constitution to carry on their  trade  or business and that the restrictions imposed by the Act cannot possibly  be  supported as reasonable  restrictions  in  the interests  of  the  general public  permissible  under  Art. 19(6).   The  petitioners also point out that the  trade  or business  carried  on  by them is not  confined  within  the limits  of the State of Mysore but extends across the  State boundaries into other States within the territories of India and even into lands beyond the Union of India and they  urge

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that  in  view of the inter-State nature of their  trade  or business the restrictions imposed by the impugned Act offend against  Art. 301 which declares that, subject to the  other provisions of Part XIII of the Constitution, trade, commerce and  intercourse throughout the territory of India shall  be free  and  cannot be supported under Art.  304(b),  for  the restrictions cannot be said to be reasonable or required  in the public interest and because the procedural  requirements of  the  proviso thereto had not been  complied  with.   The State  of  Bombay repudiates these contentions  and  submits that  as  prize competitions are opposed  to  public  policy there can be no "trade" or "business"" in promoting a  prize competition   and   the  question  of  infraction   of   the petitioner’s fundamental right to carry on trade or business guaranteed  by  Art.  19(1)(g) or of the  violation  of  the freedom  of trade, commerce or intercourse declared by  Art. 301  does  not arise at all and that in any  event  if  Art. 19(1)(g)  or  Art.  301 applies  at  all,  the  restrictions imposed  by  the impugned Act  are  reasonable  restrictions necessary in the interest of the general public and saved by Art. 19(6) and by Art. 304(b),of the Constitution.  It is 904 conceded  that  the bill which became Act XXX  of  1952  and amended the 1948 Act in the manner here in before stated was introduced  in  the  Legislature of the  State  without  the previous  sanction of the President and,  consequently,  the condition precedent to the validity of the resulting Act  as laid  down in the proviso had not been complied with but  it is submitted, we think correctly, that the defect was cured, under  Art.  255, by the assent given  subsequently  by  the President to the impugned Act.  It is, however, admitted  by learned counsel appearing for the appellant State that under Art.  255 the subsequent assent of the President  will  save the Act if the other condition embodied in Art. 304(b) as to the  restrictions  imposed  by it being  reasonable  in  the public interest is held to be satisfied but it will not save the  rules framed under a. 31 of the impugned Act which  had never  been  placed before the President or assented  to  or approved  by him.  We now proceed to examine and  deal  with these rival, contentions. The first branch of the argument on this part of the  appeal raises  a  question  of a very  far  reaching  nature.   The question  posed  before us is: Can the  promotion  of  prize competitions,  which  are  opposed  to  public  policy,   be characterised as a " trade or business " within the  meaning of Art. 19(1)(g) or "trade, commerce and intercourse" within Art.  301 ? The learned trial Judge has expressed  the  view that  if  he were able to hold that the  prize  competitions conducted  by the petitioners were of a gambling nature,  he would  have had no difficulty in concluding that  they  were outside  the protection of the Constitution.  The  Court  of Appeal,  however, took a different view.  What weighed  with the  Court of Appeal was the fact that the  legislature  had not  prohibited gambling outright but only  made  provisions for  regulating  the  same and further that  the  State  was making  a profit out of these prize competitions by  levying taxes  thereon.  It is necessary to consider  the  arguments that have been adduced before us by learned counsel for  the parties in support of their respective contentions. 905 It will be noted that Art. 19(1) (g) in very general  -terms guarantees  to  all  citizens  the right  to  carry  on  any occupation,  trade  or  business  and el.  (6)  of  Art.  19 protects  legislation  which  may, in the  interest  of  the general  public,  impose  reasonable  restrictions  on   the

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exercise of the right conferred by Art. 19(1) (g).  Likewise Art.  301  declares  that trade,  commerce  and  intercourse throughout  the territory of India shall be free  but  makes such  declaration  subject to the other provisions  of  Part XIII  of the Constitution.  Arts. 302305, which are in  that Part,  lay  down certain restrictions subject to  which  the declaration  contained in Art. 301 is to  operate.   Article 302 empowers Parliament by law to impose restrictions on the freedom of trade, -commerce or intercourse not only  between one State and another but also within the State, provided in either  case  such restrictions are required in  the  public interest.  Article 304 (b) authorises the State Legislatures to  impose reasonable restrictions on the freedom of  trade, commerce or intercourse with or within the States as may  be required in the public interest, provided the formalities of procedure  are complied with Arts. 19(1) (g) and 301, it  is pointed out are two facets -of the same thing-the freedom of trade   Art. 19(1)(g) looks at the matter from the point  of view   of  the  individual  citizens  and   protects   their individual right to carry on their trade or business,   Art. 301  looks  at  the matter from the point  of  view  of  the country’s  trade and commerce as a whole, as  distinct  from the  individual interests of the citizens and it relates  to trade,  commerce  or intercourse both with  and  within  the States.  The question which calls for our decision is as  to the  true  meaning,  import  and scope  of  the  freedom  so guaranteed  and declared by our Constitution.  We have  been referred  to  a large number of -decisions  bearing  on  the Australian   and  American  Constitutions  in  aid  of   the construction of the relevant articles of our Constitution. In the Commonwealth of Australia Constitution Act (63 and 64 Vic.  c. 12) there is s. 92 from which our Art. 301  appears to have been taken.  The material part of a. 92 -runs thus: 906 On  the  imposition  of uniform duties  of  customs,  trade, commerce and intercourse among the States, whether by  means of   internal  carriage  or  ocean  navigation,   shall   be absolutely free. It  has been held in James v. Commonwealth of Australia  (1) that  the word"’ absolutely " adds nothing but  emphasis  to the width of the section.  In the same case it has also been stated and decided that the section imposes a fetter on  the legislative  power not only of the  Commonwealth  Parliament but  also  of  the Parliament of the States.   It  has  been equally  authoritatively  held that the words "  whether  by means  of internal carriage or ocean navigation "  occurring in the section do not restrict its operation to such  things and  persons  as  are carried by land or sea  but  that  the section  extends  to all activities carried on by  means  of interState  transactions (Commonwealth of Australia v.  Bank of  New  South Wales (2) ). The Privy Council  in  the  last mentioned case has also said at p. 299 that it is no  longer arguable that freedom from customs or other monetary charges alone  is secured by the section.  The idea  underlying  the section was that the Federation in Australia should  abolish the  frontiers between the different States and  create  one Australia and that conception involved freedom from  customs duties,  import&,  border prohibitions and  restrictions  of every kind, so that the people of Australia would be free to trade with each other and to pass to and fro from one  State to  another  without any let or hindrance,  or  without  any burden  or  restriction based merely on the fact  that  they were not members of the same State (James v. Commonwealth of Australia(1)). One  cannot  but  be struck by the  sweeping  generality  of

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language  used in the section.  Such a wide  enunciation  of the  freedom of inter-State trade, commerce and  intercourse was bound to lead to difficulties.  The full import and true meaning of the general words had to be considered, as  years went past, in relation to the vicissitudes of altering facts and  circumstances  which from time to  time  emerged.   The changing  circumstances  and the necessities  compelled  the court (1) L.R. (1936) A.C. 578, 627. (2) L.R. (1950) A.C. 235, 302$-303. 907 to  reach the conclusion that the conception of  freedom  of trade, commerce and intercourse in a community regulated  by law   presupposed   some  degree  of  restriction   on   the individual.   Cases  arose  out  of  statutes  enacted   for restricting  competition of privately owned  motor  vehicles with publicly owned railways, or to compel users of motor to contribute to the upkeep of the roads e.g. Willard v. Rawson (1); R. v. Vizzard(2) and O. Gilpin Ltd. v. Commissioner  of Road  Transport  and Tramways(1).  In each  of  these  three cases  the State law was upheld as not offending against  s. 92.   Cases  arose under statutes which were  sought  to  be supported on the ground of health.  In Ex parte Nelson  (No. 1) (4) a New South Wales statute prohibited entry of  cattle from   tick  infected  area  until  dipped.   Applying   the principle  of  pith  and substance, it  was  held  that  the restrictions looked at in their true light, were aids to and not  restrictions  upon the freedom  of  inter-State  trade, commerce and intercourse.  In Tasmania v. Victoria (5).  the absolute prohibition of imports of potatoes from Tasmania to Victoria could not on facts be supported as a health measure and  consequently was struck down as a violation of  s.  92. In  James  v.  Commonwealth  of  Australia(6)  came  up  for consideration the Dried Fruits Act 1928-35 which  prohibited the  carrying of any dried fruit from one State  to  another except  under a licence and which provided for  penalty  for its contravention.  The regulations authorised the  Minister to  direct  the licensee to export a certain  percentage  of dried  fruits  from  Australia.  The Minister  by  an  order determined that it would be a condition of the licence. that the licensee should export a percentage of the dried  fruits as therein mentioned.  The appellant having refused to apply for a licence, his consignments of dried fruits shipped from Aide for delivery at Sydney in performance of contracts  for sale  were  seized.   The appellant brought  an  action  for damages for what he alleged to be a wrongful seizure.  After holding that the section bound the Parliament of (1)  (1933) 48 C.L.R.316.    (4)   (1928) 42.C.L.R. 209. (2)  (1933) 50 C.L.R. 30.    (5)(1935) 52 C.L.R. 157. (3)  (1935) 52 C.L.R. 189.   (6)   L.R.  (1936)  A.C.   578, 627. 908 Commonwealth  equally with those of the States the  Judicial Committee  proceeded to say that the freedom declared in  s. 92  must  be somehow limited and the only  limitation  which emerged  from  the  context and which  could  logically  and realistically  apply  was freedom at what  was  the  crucial point in inter-State trade, namely at the State barrier  (p. 631).   In  the later case of Commonwealth of  Australia  v. Bank  of  New South Wales (1) it has been  said  that  those words were to be read secundum subjectam materiam and  could not be interpreted as a decision either that it was only the passage  of goods which is protected by s. 92 or that it  is only  at the frontier that the stipulated freedom  might  be impaired (p. 308).

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Learned  counsel  for the State has strongly relied  on  two decisions of the Australian High Court in both of which  the validity  of a New South Wales Statute called the  Lotteries and  Art  Unions  Act  1901-1929  was  called  in  question. Section  21 of that Act provided: "Whoever sells  or  offers for sale or accepts any money in respect of the purchase  of any ticket or share in a foreign lottery shall be liable  to a  penalty."  In the first of those two  cases-The  King  v. Connare(2)-the appellant offered for sale in Sydney a ticket in  a  lottery  lawfully  conducted  in  Tasmania  and   was convicted  of  an offence under s. 21.   He  challenged  the validity  of the law on the ground that it  interfered  with the  freedom  of trade, commerce and intercourse  among  the States  and consequently violated the provisions of  s.  92. It  was  held  by Starke, Dixon,  Evatt  and  McTiernan  JJ. (Latham C.J. and Rich J. dissenting) that the provisions  of s.  21  did  not  contravene s. 92  and  the  appellant  was properly convicted.  Starke J. discussed the question as  to whether the sale in -question was an ’inter-State or  intra- state  transaction but did not think it necessary to  decide that question.  After referring to the observations of  Lord Wright  in  James v. The Commonwealth (3) that  the  freedom declared by s. 92 meant freedom at the frontier, the learned Judge observed that the question (1) L.R. (1950) A.C. 235, 302-303:  (2) (1939) 51 C.L.R.596. (3) L.R. (1936) A.C. 578,627. 909 whether  that  freedom  had  been  restricted  or   burdened depended upon the true character and effect of the Act.   He took  the view (at p. 616) that the main purpose of the  Act was  to prevent or suppress lotteries and  particularly,  in ss.  19, 20 and 21, foreign lotteries and that it was  aimed at preventing what he graphically described as "illegitimate methods  of  trading",  if sales  of  lottery  tickets  were regarded  as  trading.  The learned Judge took note  of  the fact  that New South Wales law allowed State  lotteries  and concluded that the true character of the impugned Act was to suppress  gambling in foreign lottery tickets  and  examined from  the historical point of view, from, the  character  of the  Act,  its  function and its effect  upon  the  flow  of commerce,  the Act did not, in his view, restrict or  hinder the freedom of any trade across the frontier of the  States. Dixon J., as he then was, gave two reasons for his  opinion, namely that the transaction was not in itself a  transaction of inter-State trade’ commerce or intercourse but was a sale in  New South Wales of a ticket then in New South Wales  and that, apart from the State lottery and permitted  charitable raffles,  the  Act  suppressed uniformly  the  sale  of  all lottery  tickets  in  New South  Wales.   Adverting  to  the argument  which,  in substance, asked the Court  to  declare that s. 92 had created an overriding constitutional right to traffic or invest in lotteries so long as the trafficker  or investor  could  succeed in placing some boundary  or  other between  himself and the conductor of the lottery  Evatt  J. said at pp. 619-20: it  in my opinion such a proposition cannot be supported  in principle  or by reference to authority.  For it is  obvious that the appellant’s argument also involves the assertion of the  constitutional  right of a citizen, so long as  he  can rely upon, or if necessary artificially create, some  inter- State  connection  in  his business, to  sell  indecent  and obscene   publications,  diseased  cattle,   impure   foods, unbranded  poisons, unstamped silver, ungraded fruit and  so forth." The obvious inconvenience and undesirability of the  effects

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to be produced if such extravagant arguments 117 910 were  to prevail led the learned Judge to think (at p.  620) that  in the interpretation of s. 92 it was  permissible  to accept  some  postulates  or axioms demanded  alike  by  the dictates  of common sense and by some knowledge of what  was being   attempted   by  the  founders  of   the   Australian Commonwealth.   Making  these  assumptions  and  concessions Evatt J. opined (at p. 621) that the guarantee contained  in s.  92 had nothing whatever,/ to say on the topic of  inter- State  lotteries and could not be invoked to prevent  either the suppression or the restriction in the public interest of the  practice  of gambling or investing in  such  lotteries. The  learned Judge did not think that lottery tickets  could be  regarded as goods or commodities which were entitled  to the protection of s. 92 and concluded thus at p. 628:  "  If they are goods or commodities they belong to  a  very special  category, so special that in the interests  of  its citizens  the  State may legitimately exile  them  from  the realm  of trade, commerce or business.   The  indiscriminate sale  of  such tickets may be regarded as  causing  business disturbance  and loss which, on general grounds  of  policy, the State is entitled to prevent or at least minimize."   McTiernan J. was even more forthright in placing  gambling outside the pale of trade, commerce and intercourse.  At  p. 631 he said: "  Some  trades  are more adventurous  or  speculative  than others, but trade or commerce as a branch of human  activity belongs  to  an  order entirely  different  from  gaming  or gambling.   Whether a particular activity falls  within  the one or the other order is a matter of social opinion  rather than   jurisprudence......   .....................   It   is gambling,  to  buy a ticket or shard in a lottery.   Such  a transaction  does not belong to the commercial  business  of the  country.   The purchaser stakes money in a  scheme  for distributing prizes by chance.  He is a gamester."    A little further down the learned Judge observed:   "It  is  not a commercial arrangement to  sell  a  lottery ticket; for it is merely the acceptance of money 911 or  the  promise of money for a chance.  In  this  case  the purchase  of  a  lottery ticket merely founds  a  hope  that something will happen in Tasmania to benefit the purchaser."   Naturally  enough learned counsel for the appellant  State seeks to fasten upon the observations quoted or referred  to above  in support of his thesis that gambling is not  trade, commerce or intercourse within the meaning alike of s. 92 of the  Australian Constitution and our Art. 19(1)(g) and  Art. 301.   In  the  second  case-The  King  v.  Martin  (1)-the  same question  came up for reconsideration.  The only  difference in  fact was that there was no actual sale by delivery of  a lottery ticket in New South Wales but money was received  by the  agent of the Tasmania promoter in New South  Wales  and transmitted to Tasmania from where the lottery ticket was to be  sent.   The State law was again  upheld.   Latham  C.J., Rich,  Starke,  Evatt  and Mctiernan JJ.  adhered  to  their respective  opinions  expressed in the earlier case  of  The King  v. Connare (2 ). Dixon J., as he then was, gave a  new reason for his opinion that notwithstanding the  inter-State character  of the transaction s. 21 of the impugned Act  was valid.  Said the learned Judge at pp. 461-462:   " The reason for my opinion is that the application of the law does not depend upon any characteristics of lotteries or

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lottery  transactions in virtue of which they are  trade  or commerce or intercourse nor upon any inter-State element  in their  nature.  The only criterion of its operation  is  the aleatory description of the acts which it forbids.  There is no   prohibition  or  restraint  placed  upon  any  act   in connection  with  a lottery because either the  act  or  the lottery  is or involves commerce or trade or intercourse  or movement  into  or out of New South Wales  or  communication between         that        State        and         another State.................................  To say  that  inter- State trade, commerce and intercourse shall be free, means,, I think, that no restraint or burden shall be placed upon an act  falling under that description because it is  trade  or commerce or (1) (1939) 62 C.L.R. 457.   (2) (1939) 61 C.L.R. 596. 912 intercourse    or   involves   inter-State    movement    or communication."   In  this view of the matter Dixon J. now upheld s.  21  of the  impugned  Act on the ground that the criterion  of  its application   was  the  specific  gambling  nature  of   the transactions  which  it  penalised and  not  anything  which brought  the  transactions under the description  of  trade, commerce  or  intercourse or made them interState  in  their nature.   Then  came the case of  Commonwealth of Australia v.  Bank of New South Wales(1) commonly called the Bank case where it was held that s. 46 of the Banking Act, 1947, was invalid as offending  against  s. 92 of  the  Australian  Constitution. Sub-section (1) of s. 46 provided that a private bank should not,  after  the commencement of the Act, carry  on  banking business  in  Australia except as required by  the  section. Subsection (2) laid down that each private bank should carry on  banking business in Australia and should not, except  on appropriate  grounds,  cease  to  provide  any  facility  or service provided by it in the course of its banking business on the fifteenth day of August one thousand nine hundred and forty seven.  Sub-section (4) authorised that the  Treasurer might,  by  notice  published in the gazette  and  given  in writing  to  a private bank, require that  private  bank  to cease,  upon  a date specified in the  notice,  carrying  on business  in Australia.  Sub-section (8) provided that  upon and  after the date specified in a notice under  sub-s.  (4) the  private bank to which that notice was given should  not carry on banking business in Australia.  It also provided  a penalty  of pound 10,000 for each day on which  the  contra- vention  occurred.  The question was: Whether  this  section interfered   with   the  freedom  of  trade,   commerce   or intercourse  among  the  States declared by  s.  92  of  the Australian  Constitution ? It was held that the business  of banking  which  consisted of the creation  and  transfer  of credit,  the making of loans, the purchase and  disposal  of investments  and  other kindred  transactions  was  included among  those  activities described as  trade,  commerce  and intercourse in s. 92 (1) L.R. (1950) A.C. 235. 913 and,  accordingly,  the impugned s. 46 which  while  leaving untouched the Commonwealth and State Banks,, prohibited  the carrying  on  in  Australia of the business  of  banking  by private  banks,  was invalid as contravening  s.  92.   Lord Porter  delivering  the judgment of the  Judicial  Committee pointed out that it was no longer arguable that freedom from customs  or other monetary charges alone was secured by  the section.  Then after reviewing and explaining at some length

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the two cases of James V. Cowan (1) and James v. The Common- wealth(2),   his   Lordships  proceeded  to   make   certain observations  on the distinction between restrictions  which are  regulatory  and do not offend against s. 92  and  those which  are something more than regulatory and do so  offend. His  Lordship  deduced  two general  propositions  from  the decided cases, namely (1) that regulation of trade, commerce and  intercourse  among  the  States  was  compatible   with absolute freedom and (2) that s. 92 was violated only when a legislative  or  executive act operated to  restrict  trade, commerce   and  intercourse  directly  and  immediately   as distinct  from  creating  some  indirect  or   consequential impediment  which might fairly be regarded as  remote.   The problem  whether  an enactment was regulatory  or  something more  or whether a restriction was direct or only remote  or only  incidental involved, his Lordship pointed out, not  so much legal as political, social or economic  considerations. Referring  to  the  case  of  Australian  National   Airways Proprietory  Ltd.  v.  The  Commonwealth  (3)  his  Lordship expressed   his   agreement  with  the  view   that   simple prohibition  was  not regulation.  A  little  further  down, however,  his  Lordship made a reservation that he  did  not intend  to  lay  down that in  no  circumstances  could  the exclusion of competition so as to create a monopoly,  either in  a  State  or Commonwealth agency, or in  some  body,  be justified  and  that every case must be judged  on  its  own facts and in its own setting of time and circumstances,  and that it might be that in regard to some economic  activities and at some stage of social development it might be (1) L.R. (1932) A.C. 542.     (3) (1945) 71 C.L.R. 29. (2)L.R. (1936) A.C. 578, 627. 914 maintained  that prohibition with a view to  State  monopoly was the only practical and reasonable manner of  regulation, and  that inter-State trade, commerce and  intercourse  thus prohibited  and thus  monopolised remained absolutely  free. His  Lordship further added that, regulation of trade  might clearly  take  the  form of denying  certain  activities  to persons by age or circumstances unfit to perform them or  of excluding  from  passage  across the  frontier  of  a  State creatures  or  things  calculated to  injure  its  citizens. Referring  to  the  doctrine of  "pith  and  substance"  his Lordship  observed that it, no doubt, raised  in  convenient form  an appropriate question in cases where the real  issue was  one of subject matter as when the point was  whether  a particular piece of legislation was a law in respect of some subject within the permitted field, but it might also  serve a  useful  purpose  in the process of  deciding  whether  an enactment   which  worked  some  interference  with   trade, commerce and intercourse among the States was, nevertheless, untouched by s.     92  as being essentially  regulatory  in character. The  last  Australian case on the point cited before  us  is Mansell v. Beck(1).  In this case also the provisions of the Lotteries and Art Unions Act of New South Wales came up  for consideration and the decisions in the King v. Connare  (11) and  the  King v. Martin(1). were considered  and  approved. Dixon C.J. and Webb J. observed that the true content of the State  law must be ascertained to see whether the  law  that resulted  from  the whole impaired the freedom which  s.  92 protected.   Their Lordships pointed out that lotteries  not conducted under the authority of Government were  suppressed as  pernicious.   The  impugned legislation  was,  in  their Lordships’  view,  of a traditional  kind  directed  against lotteries   as  such  independently  altogether  of   trade,

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commerce  and  intercourse  between  States.   McTiernan  J. reiterated  the  views he had expressed in the case  of  the King v. Connare (2) in the following words: (1)  (Australian Law journal, Vol. 3o.  No. 7 P. 346). (2)  (1939) 61 C.L.R. 596. (3)  (1939) 62 C.L.R. 457. 915 It is important to observe the distinction that gambling  is not trade, commerce and intercourse within the meaning of s. 92  otherwise the control of gambling in Australia would  be attended with constitutional difficulties."   Williams  J. did not consider it necessary to express  any final opinion on the question whether there could be  inter- State  commerce in respect of lottery tickets.  He took  the view  that ss. 20 and 21 of the New South Wales Act were  on their  face  concerned and concerned only  with  intra-State transactions  and  that their provisions  did  not  directly hinder,  burden or delay any inter-State trade, commerce  or intercourse.   His Lordship observed that there was  nothing in  the  reasoning in the judgment in the Bank  case  or  in subsequent decisions to indicate that the King v. Connare(1) and’ King v. Martin(2) were not rightly decided.  He quoted, with  approval,  the observations of Dixon  J.  in  Martin’s case.   Fullagar  J. also took the view  that  the  previous decisions  of  the  High Court in  Connare’s  case  (1)  and Martin’s case(2) were rightly decided for the reasons  given by  Dixon  J.  Kitto J. dissented from  the  majority  view. Taylor  J.  who was also in favour of the  validity  of  the impugned law, observed:   " No simple legislative expedient purporting to  transmute trade  and commerce into something else will remove it  from the  ambit of s. 92.  But whilst asserting the width of  the field in which s. 92 may operate it is necessary to  observe that not every transaction which employs the forms of  trade and  commerce  will,  as  trade  and  commerce,  invoke  its protection.  The sale of stolen goods, when the  transaction is  juristically analysed, is no different from the sale  of any other goods but can it be doubted that the Parliament of any  State  may prohibit the sale of  stolen  goods  without infringing  s.  92 of the Constitution ?  The  only  feature which  distinguishes  such  a  transaction  from  trade  and commerce  as  generally  understood is to be  found  in  the subject  of the transaction; there is no difference  in  the means adopted for carrying it out.  Yet it may be said  that in essence such a transaction (1) (193) 61 C.L.R. 596.   (2) (1939) 62 C.L.R. 457. 916 constitutes no part of trade and commerce as that expression is   generally  understood.   Numerous  examples  of   other transactions  may  be given, such as the sale  of  a  forged passport,  or, the sale of counterfeit money, which  provoke the same comment and, although legislation prohibiting  such transactions  may,  possibly,  be  thought  to  be   legally justifiable  pursuant  to  what  has,  on  occasions,   been referred to as a "Police power", I prefer to think that  the subjects  of  such transactions are not, on  any  view,  the subjects of trade and commerce as that expression is used in s.  92 and that the protection afforded by that section  has nothing  to do with such transactions even though  they  may require,  for their consummation, the employment of  instru- ments,  whereby inter-State trade and commerce  is  commonly carried on."   After referring to the history of lotteries in England the learned Judge concluded:   "  The foregoing observations give some indication of  the

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attitude  of  the  law for over two  and  a  half  centuries towards  the carrying on of lotteries.  But they  show  also that,  in this country, lotteries were, from the  moment  of its first settlement, common and public nuisances and  that, in  general,  it was impossible to conduct  them  except  in violation  of the law.  Indeed it was impracticable for  any person to conduct a lottery without achieving the status  of a rogue and a vagabond."   In the Constitution of the United States of America  there is  no counterpart to Art. 301 of our Constitution or s.  92 of  the  Australian Constitution.  The problem  of  gambling came  up  before the courts in America  in  quite  different setting.  Article 1, s. 8, sub-s. (3) of the Constitution of the  United States compendiously called the commerce  clause gives  power  to  the Congress  to  regulate  commerce  with foreign  nations and among the several States and  with  the Indian tribes.  Congress having made law regulating gambling activities  which  extended across the  State  borders,  the question arose whether the making of the law was within  the legislative  competence  of  the Congress, that  is  to  say whether it could be brought within the commerce 917 clause.  The question depended for its answer on the further question whether the gambling activities could be said to be commerce amongst the States.  If it could, then it was  open to  Congress to make the law in exercise of its  legislative powers  under  the  commerce clause.  More  often  than  not gambling activities extend from State to State and, in  view of the commerce clause, no State Legislature can make a  law for  regulating  inter-State  activities in  the  nature  of trade.   If  betting and gambling does not fall  within  the ambit of the commerce clause, then neither the Congress  nor the  State Legislature can in any way control the same.   In such circumstances, the Supreme Court of America thought  it right to give a wide meaning to the word "commerce" so as to include  gambling  within the commerce  clause  and  thereby enable the Congress to regulate and control the same.   Thus in Champion v. Ames(1) the carriage of lottery tickets  from ’one  State to another by an express company was held to  be inter-State  commerce and the court upheld the law  made  by Congress  which made such carriage an offence.  In  Hipolite Egg  Co.  v.  United  States(2)  the  Pure  Food  Act  which prohibited the importation of adulterated food was upheld as an  exercise  of  the  power of  the  Congress  to  regulate commerce.   The prohibition of transportation of  women  for immoral purposes from one State to another or to a  foreign, land  has  also been held to be within the  commerce  clause (see Hoke v. United States (3) ). SO has the prohibition  of obscene literature and articles for immoral use.   Reference has  also  been  made  to the  cases  of  United  States  v. Kahriger(4)  and Lewis V.  United States(5) to  support  the contention of the appellant State that the Supreme Court  of the  United States looked with great disfavour  on  gambling activities.   In  the  last mentioned case  it  was  roundly stated  at p. 480 that "there is no constitutional right  to gamble ". (1)  [1903] 188 U.S. 321 ; 47 L. Ed. 492. (2)  [1911] 220 U.S. 45 ; 55 L. Ed. 364. (3)  [1913] 227 U.S. 308 ; 57 L. Ed. 523. (4)  [1953] 345 U.S. 22 ; 97 L. Ed. 754. (5)  [1955] 348 U.S. 419; 99 L. Ed. 475. 918 In  construing  the  provisions  of  our  Constitution   the decisions  of  the American Supreme Court  on  the  commerce clause and the decisions of the Australian High Court and of

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the  Privy Council on s. 92 of the  Australian  Constitution should,  for reasons pointed out by this Court in  State  of Travancore-Cochin  1. The Bombay Co. Ltd. (1), be used  with caution  and circumspection.  Our Constitution differs  from both  American  and  Australian  Constitutions.   There   is nothing  in the American Constitution corresponding  to  our Art.  19(1)  (g)  or Art. 301.  In  the  United  States  the problem  was  that  if  gambling did  not  come  within  the commerce  clause,  then neither the Congress nor  any  State Legislature  could  interfere with or  regulate  inter-State gambling.  Our Constitution, however, has provided  adequate safeguards in cl. (6) of Art. 19 and in Arts. 302-305.   The scheme of the Australian Constitution also is different from that of ours, for in the Australian Constitution there is no such provision as we have in Art. 19(6) or Arts. 302-304  of our Constitution.  The provision of s. 92 of the  Australian Constitution  being in terms unlimited and  unqualified  the judicial  authorities  interpreting the same had  to  import certain  restrictions  and limitations  dictated  by  common sense and the exigencies of modern society.  This they  did, in  some cases, by holding that certain activities  did  not amount  to  trade,  commerce or intercourse  and,  in  other cases,  by applying the doctrine of pith and  substance  and holding that the impugned law was not a law with respect  to trade, commerce or intercourse.  The difficulty which  faced the   judicial  authorities  interpreting  s.  92   of   the Australian Constitution cannot arise under our Constitution, for our Constitution did not stop at declaring by Art. 19(1) (g) a fundamental right to carry on trade or business or  at declaring  by  Art. 301 the freedom of trade,  commerce  and inter. course but proceeded to make provision by Art.  19(6) and  Arts.  302-305  for imposing in  the  interest  of  the general  public reasonable restrictions on the  exercise  of the  rights guaranteed and declared by Art. 19 (1)  (g)  and Art. 301.  As one of us said in P. P. Kutti Keya (1)  (1952) S.C.R. 1112 at p. 1121 919 v.   The State of Madras(1) the framers of our Constitution, being  aware  of  the problems  with  which  the  Australian Government had been confronted by reason of s. 92, sought to solve  them by enacting limitations in Part XIII  itself  on the  freedom guaranteed in Art. 301.  Our  task,  therefore, will be to interpret our Constitution and ascertain  whether the prize competitions falling within the definition of  the impugned Act, all of which are of a gambling nature, can  be said to be a "trade or business" within the meaning of  Art. 19(1)  (g) or "trade, commerce and intercourse " within  the meaning of Art. 301 of our Constitution. The scheme of our Constitution, as already indicated, is  to protect  the freedom of each individual citizen to carry  on his trade or business.  This it does by Art. 19(1)(g).  This guaranteed  right is, however, subject to Art.  19(6)  which protects a law which imposes, in the interest of the general public,  reasonable  restrictions  on the  exercise  of  the fundamental  right  guaranteed  by  Art.  19(1)  (g).    Our Constitution  also  proclaims  by Art. 301  the  freedom  of trade, commerce and intercourse throughout the territory  of India’  subject  to the provisions of  Arts.  302-305  which permit   the   imposition  of  reasonable   restriction   by Parliament and the State Legislatures.  The ’underlying idea in  making trade, commerce and intercourse with, as well  as within,  the  States free undoubtedly was to  emphasise  the unity  of India and to ensure that no barriers might be  set up  to break up the national unity.  One important point  to note  is that the language used in Art. 19(1) (g)  and  Art.

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301 is quite general and that the provisions for restricting the  exercise  of  the fundamental right  and  the  declared freedom of the country’s trade, commerce and intercourse are made  separately,  e.g., by Art. 19(6)  and  Arts.  302-305. This  circumstance is fastened upon by learned  counsel  for the petitioners for contending that the right guaranteed  by Art.  19(1)(g) and the freedom declared by Art. 301  should, in  the  first  instance and to start with,  be  widely  and liberally construed and then reasonable restrictions may  be superimposed on that right under Art. 19(6) or Arts. 302-305 in the interest of the general public.  According (1)  A.I.R. (1954) mad. 621. 920 to him the words "trade" or "business" or "commerce"  should be  read in their widest amplitude as meaning  any  activity which  is  undertaken or carried on with a view  to  earning profit.   There is nothing in those two Arts.  19(1)(g)  and 301, which, he says, may qualify or cut down the meaning  of the   critical  words.   He  contends  that  there   is   no justification for excluding from the meaning of those  words activities  which may be looked upon with disfavour  by  the State or the Court as injurious to public morality or public interest.  The argument is that if the trade or business  is of  the  last  mentioned  character,  then  the  appropriate Legislature   may   impose  restrictions   which   will   be justiciable  by  the  courts and this  restriction  may,  in appropriate  cases, even extend to total  prohibition.   Our attention has been drawn to Art. 25 where the limiting words "  subject to public order, morality and health "  are  used and it is pointed out that no such limiting words are to  be found  in Art. 19(1)(g) or Art. 301.  In short the  argument is  that Art. 19(1) (g) and Art. 301 guarantee  and  declare the freedom of all activities undertaken and carried on with a  view to earning profit and the safeguard is  provided  in Art.  19(6) and Arts. 302-305.  The proper approach  to  the task   of   construction   of  these   provisions   of   our Constitution*,  it  is  urged, is  to  start  with  absolute freedom  and  then to permit the State to cut  it  down,  if necessary,  by restrictions which may even extend  to  total prohibition.  On this argument it will follow that  criminal activities undertaken and carried on with a view to  earning profit  will be protected as fundamental rights  until  they are  restricted  by law.  Thus there will  be  a  guaranteed right to carry on a business of hiring out goondas to commit assault or even murder, of housebreaking, of selling obscene pictures,  of trafficking in women and so on until  the  law curbs  or  stops such activities. This appears to us  to  be completely  unrealistic and incongruous.  We have  no  doubt that   there  are  certainactivities  which  can  under   no circumstance  be regarded as trade or business  or  commerce although  the  usual  forms  and  instruments  are  employed therein.   To exclude those activities from the  meaning  of those words is not to cut down their meaning at all 921 but to say only that they are not within the true meaning of those words.  Learned counsel has to concede that there  can be  no "trade" or "business" in crime but submits that  this principle should not be extended and that in any event there is no reason to hold that gambling does not fall within  the words  "trade"  or "business" or "commerce" as used  in  the Articles  under consideration.  The question arises  whether our  Constitution makers ever intended that gambling  should be  a fundamental right within the meaning of Art.  19(1)(g) or within the protected freedom declared by Art. 301.   The  avowed  purpose of our Constitution is  to  create  a

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welfare State.  The directive principles of State policy set forth  in Part IV of our Constitution enjoin upon the  State the  duty to strive to promote the welfare of the people  by securing and protecting, as effectively as it may, a  social order  in  which justice, social,  economic  and  political, shall inform all the institutions of the national life.   It is the duty of the State to secure to every citizen, men and women,  the right to an adequate means of livelihood and  to see that the health and strength of workers, men and  women, and  the tender age of children are not abused,  to  protect children  and youths against exploitation and against  moral and material abandonment.  It is to be the endeavour of  the State to secure a living wage, conditions of work ensuring a decent  standard of life and full enjoyment of  leisure  and social  and  cultural opportunities, to protect  the  weaker sections  of the people from social injustice and all  forms of  exploitation,  to raise the standard of  living  of  its people  and the improvement of public health.  The  question canvassed  before us is whether the Constitution makers  who set up such an ideal of a welfare State could possibly  have intended  to  elevate betting and gambling on the  level  of country’s trade or business or commerce and to guarantee  to its citizens, the right to carry on the same.  There can  be only one answer to the question.   From  ancient times seers and law givers of  India  looked upon gambling as a sinful and pernicious vice and deprecated its practice.  Hymn XXXIV of the 922 Rigveda proclaims the demerit of gambling.  Verses 7, 10 and 13 say: "  7  Dice verily are armed with goads  and  driving  hooks, deceiving  and tormenting, causing grievous woe.  They  give frail  gifts  and  then destroy the man  who  wins,  thickly anointed with the player’s fairest good.  10  The  gambler’s wife is left forlorn and  wretched:  the mother  mourns the son who wanders homeless.  In  constant fear, in debt, and seeking riches, he goes  by night unto the home of others.  11 Play not with dice: no, cultivate thy corn- land.   Enjoy the gain, and deem that wealth sufficient.   There are thy cattle, there thy wife, O gambler.  So  this good Savitar himself hath told me."   The  Mahabharata  deprecates  gambling  by  depicting  the woeful conditions of the Pandavas who had gambled away their kingdom.   Manu  forbade  gambling  altogether.   Verse  221 advises  the  king to exclude from his  realm  gambling  and betting,  for those two vices cause the destruction  of  the kingdom  of  princes.  Verse 224 enjoins upon the  king  the duty  to  corporally  punish all those  persons  who  either gamble  or bet or provide an opportunity for it.  Verse  225 calls  upon the king to instantly banish all  gamblers  from his town.  In verse 226 the gamblers are described as secret thieves  who  constantly harass the good subjects  by  their forbidden  practices.   Verse  227  calls  gambling  a  vice causing great enmity and advises wise men not to practise it even for amusement.  The concluding verse 228 provides  that on  every  man  who  addicts himself  to  that  vice  either secretly or openly the king may inflict punishment according to his discretion.  While Manu condemned gambling  outright, Yajnavalkya  sought to bring it under State control  but  he too  in  verse 202(2) provided that  persons  gambling  with false  dice  or  other instruments  should  be  branded  and

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punished by the king.  Kautilya also advocated State control of gambling and, as a practical person that he was, was 923 not-averse  to  the State earning  some  revenue  therefrom. Vrihaspati dealing with gambling in chapter XXVI, verse 199, recognises that gambling had been totally prohibited by Manu because it destroyed truth, honesty and -wealth, while other law givers permitted it when conducted under the control  of the  State so as to allow the king a share of  every  stake. Such  was the notion of Hindu law givers regarding the  vice of  gambling.  Hamilton in his Hedaya, vol.  IV, book  XLIV, includes  gambling as a kiraheeat or abomination.  He  says: "It  is an abomination to play at chess, dice or  any  other game;  for  if anything is staked it is gambling,  which  is expressly prohibited in the Koran; or if, on the other band, nothing  be hazarded it is useless and vain."  The  wagering con.  tracts of the type which formed the subject-matter  of the case of Ramloll v. Soojumnull (1) and was upheld by  the Privy  Council  as not repugnant to the English  Common  Law were  subsequently prohibited by Act XXI of 1948  which  was enacted on the suggestion of Lord Campbell made in that case and  introduced in India provisions similar to those of  the English  Gaming Act (8 & 9 Vict. c. 109).   Bengal  Gambling Act (Ben.  II of 1867) provided for the punishment of public gambling  and  the  keeping of common gaming  house  in  the territories  subject to the Lieutenant Governor  of  Bengal. Lottery has been, since 1870, made an offence, under s. 294A of  the  Indian Penal Code.  Gambling agreements  have  been declared to be void under the Indian Contract Act, 1872  (s. 30).  This in short is how gambling is viewed in India.   Before  the Legislature intervened, gambling and  wagering were  not prohibited by the English Common Law although  the English courts looked upon it with disfavour and discouraged it  on  grounds  of  public  policy  by  denying  procedural facilities  which  were  granted to  other  litigants.   The Scottish  courts, however, have always refused to  recognise the  validity  of  wagering contracts  and  have  held  that sponsiones ludicroe, as they style such contracts, are  void by the Common Law of Scotland.  Gambling and Betting Act, (1)  (1848) 4 M.I.A. 339. 924 1664 (16 Car. 11, c. 7) was directed against fraudulent  and excessive gambling and betting at games or sports.  This was followed by the Gaming Act of 1710 (9 Anne.c.     19).   The Marine Insurance Act 1745 (19 Geo. 11 C.     37)   for   the first  time prohibited wagering policies on risks  connected with British shipping.  This was supplemented by the  Marine -Insurance  Act  1788  (28  Geo.   III  c.  56).   The  Life Insurance Act, 1774 (14 Geo.  III c. 48) though not intended to  prohibit wagering in general, prohibited wagering  under the cloak- of a mercantile document which purported to be  a contract of insurance.  Then came the Gaming Act of 1845  (8 and  9 Vict. c. 109) which for the first time  declared  all contracts   made   by  way  of  gaming  or   wagering   void irrespective   of   their  form  or   subject-matter.    The provisions  of this Act were adopted by our Act XXI of  1948 as here in before mentioned.  The Gaming Act of 1892 (55 and 56 Viet. c. 9) further tightened up the law. As  far back as 1850 the Supreme Court of America in  Phalen v. Virginia(1) observed:    " Experience has shown that the common forms of  gambling are  comparatively  innocuous when placed in  contrast  with widespread pestilence of lotteries.  The former are confined to  a  few persons and places, but the  latter  infests  the whole community; it enters every dwelling; it reaches  every

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class;  it  preys  upon the hard earnings of  the  poor;  it plunders the ignorant and the simple.   The observations were quoted, with approval, in Douglas v. Kentucky  (2  ). After quoting the passage  from  Phalen  v. Virginia (1) the judgment proceeded:   "Is  the state forbidden by the supreme law ’of  the  land from protecting its people at all times from practices which it  conceives to be attended by such ruinous  results?   Can the  Legislature  of  a State contract  away  its  power  to establish such regulations as are reasonably necessary  from time to time to protect the public morals against the, evils of lotteries ?" (1)  [1850] 49 U.S. 163; 12 L. Ed. 1030,1033. (2)  [1897] 168 U.S. 488 ; 42 L.  Ed. 553, 555. 925 It will be abundantly clear from the foregoing  observations that  the  activities  which have  been  condemned  in  this country  from  ancient  times appear to  have  been  equally discouraged  and  looked  upon with  disfavour  in  England, Scotland,  the United States of America and in Australia  in the cases referred to above.  We find it difficult to accept the  contention  that  those activities  which  encourage  a spirit of reckless propensity for making easy gain by lot or chance,  which lead to the loss of the hard earned money  of the  undiscerning  and improvident common  man  and  thereby lower  his standard of living and drive him into  a  chronic state  of indebtedness and eventually disrupt the peace  and happiness  of  his  humble home  could  possibly  have  been intended  by  our Constitution makers to be  raised  to  the status of trade, commerce or intercourse and to be made  the subject-matter  of’ a fundamental right guaranteed  by  Art. 19(1) (g).  We find it difficult to persuade ourselves  that gambling was ever intended to form any part of this  ancient country’s  trade, commerce or intercourse to be declared  as free under Art. 301.  It is not our purpose nor is it neces- sary  for us in deciding this case to attempt an  exhaustive definition    of   the   word   "trade",   "business",    or "intercourse".   We  are, however, clearly of  opinion  that whatever  else may or may not be regarded as falling  within the  meaning  of these words, gambling cannot  certainly  be taken  as one of them.  We are convinced and satisfied  that the  real  purpose  of Arts. 19(1) (g)  and  301  could  not possibly  have been to guarantee or declare the  freedom  of gambling.  Gambling activities from their very nature and in essence  are extra-commercium although the  external  forms, formalities  and  instruments of trade may be  employed  and they are not protected either by Art. 19 (1) (g) or Art. 301 of our Constitution.   The  Court of Appeal; we have already said, took the  view that it was not open to the State, which had not thought fit to prohibit these prize competitions but had sought to  make a  profit  out of them by levying a tax, to contend  at  the same  time that it was illegal or was not a "trade" at  all. But as pointed out in United 119 926 States  v.  Kahrigar (1), the fact of issuing a  licence  or imposing a tax means nothing except that the licensee  shall be  subject  to no penalties under the law if  he  pays  it. Lewis  v. United States of America (2) also recognises  that the Federal Government may tax what it also forbids and that nobody  has a constitutional right to gamble but that if  he elects  to  do, so, though it be unlawful, he must  pay  the tax.   In  this  connection reference may  be  made  to  the observation of Rowlatt J. in Mann v. Nash  (3) :

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  "  The revenue authorities, representing the  State,  are merely looking at an accomplished fact.  It is not condoning it or taking part in it. Further down he said: "  It  is  merely taxing the individual  with  reference  to certain  facts.   It  is not a partner or a  sharer  in  the illegality."   That  crime is not a business is also recognised in F.  A. Lindsay,  A. E. Woodward and W. Hiscox v. The  Commissioners of Inland Revenue (4)(per Lord President Clyde and per  Lord Sands) and in Southern (H.  M. Inspector of Taxes) v. A.  B. The  fact  that regulatory provisions have been  enacted  to control  gambling by issuing licences and by imposing  taxes does  not in any way alter the nature of gambling  which  is inherently vicious and pernicious. We  also arrive at the same result by applying the  doctrine of ’pith and substance’.  As Lord Porter pointed out: "  The phrase  raised in a convenient form an appropriate  question in  cases where the real issue is one of subject matter  and it  may  also  serve  a useful purpose  in  the  process  of deciding  whether  a  particular enactment  is  a  law  with respect to trade, commerce or intercourse as such or whether it  is  a  law  with respect to  some  other  subject  which incidentally trenches upon trade, commerce and intercourse." Reference has already been made to the observations  (1) 345 U.S. 22; 97 L. Ed. 754. (2)  348 U.S. 49 ; 99 L. Ed- 475. (3) L. R.(1932) 1 K.B.D. 752 at P. 757. (4)  18 T.C. 43. (5)  L.R. (1933) 1 K.B. 713; 18 T.C. 59. 927 of Dixon J., as he then was, in King v. Martin (1).   Adapt- ing  his  language,  we  may say  that  when  Art.  19(1)(g) guarantees  or Art. 301 declares the freedom of  trade  they describe human activities in a specific aspect.  They single out  attributes  which the act or transaction may  wear  and make  the  freedom,  which they confer,  depend  upon  those attributes.   The  freedom secured by the two  Articles,  we think,  implies  that no unreasonable  restraint  or  burden shall  be placed upon an act falling under that  description because  it  is trade or commerce or intercourse.   We  have analysed the provisions of the impugned Act and it is  quite clear  that the Act does not purport directly  to  interfere with  trade,  commerce  or  intercourse  as  such,  for  the criterion of its application is the specific gambling nature of  the transaction which it restricts.  The purpose of  the Act   is   not  to  restrict  anything  which   brings   the transactions  under  the description of trade,  commerce  or intercourse.   In  other  words,  the Act  is  in  pith  and substance  an Act with respect to betting and gambling.   To control  and  restrict  betting  and  gambling  is  not   to interfere with trade, commerce or intercourse as such but to keep  the flow of trade, commerce and intercourse  free  and unpolluted  and to save it from anti-social activities.   In our opinion, therefore, the impugned Act deals with gambling which is not trade, commerce or business and, therefore, the validity  of the Act has not to be decided by the  yardstick of  reasonableness  and public interest laid down  in  Arts. 19(6)  and  304.   The appeal  against  the  stringency  and harshness,  if  any, of the law does not lie to a  court  of law.  In  the view we have taken, it is not necessary for  us  to consider  or express any opinion on this occasion as to  the vexed  question  whether restriction, as con.  templated  in Arts. 19(6) and 304(b), may extend to total prohibition  and

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this is so because we cannot persuade ourselves to hold that Art.   19(1)(g)  or  Art.  301  comprises   all   activities undertaken  with  a  view to profit as  "trade"  within  the meaning  of those Articles.  Nor is it necessary for  us  on this occasion to consider  (1) (1939) 62 C.L.R. 457. 928 whether a company is a citizen within the meaning of Art’ 19 and indeed the point has not been argued before us. The  last  point urged by the petitioners is  that  assuming that  the  impugned Act deals only with  gambling  and  that gambling is not "trade" or "business" or "commerce" and  is, therefore,   not   entitled  to  the   protection   of   our Constitution, the prize competitions run by them are in fact not  of  a gambling nature.  The trial court  accepted  this contention  while the Court of Appeal rejected it.  We  have examined the scheme and the rules and the official solutions and the explanations in support thereof and we have come  to the  conclusion that the competition at present run  by  the petitioners  under the name of R.M.D.C. Crosswords are of  a gambling  nature.  Our view so closely accords with that  of the  Court of Appeal that we find it unnecessary to go  into the details of the scheme.  To start with, we find that  the Board of Adjudicators pick up nine of the clues and  -select only  those competitors whose answers correspond  with  ’the official solution of those nine clues.  Those nine clues may be  from the top, may be from the bottom or may be  selected at  random.  It is said that they-are like  nine  compulsory questions  in  a  school examination but then  in  a  school examination,  the  students  are told  which  are  the  nine compulsory questions and they can take particular care  with regard  to  those; but in this scheme there  is  no  knowing which  nine  will be selected and  those  competitors  whose answers  do  not  accord  with  the  official  solution  are debarred  from  being  considered for the  first  prize.   A competitor  may have given correct answers to eight  of  the nine  selected clues and may have given correct  answers  to the  remaining eight so that he has sent in sixteen  correct answers but he will, nevertheless, not be considered for the first  prize  because  his  answers  to  the  nine  selected questions did not agree with the official solutions of those nine  clues.   This is a chance element to start  with.   We have then seen that the competing words out of which one  is to  be selected are in some cases equally apt.  We  are  not satisfied that the word selected by the Board is the 929 more  apt  word in many. cases.  The reasons given  by  them appear  to  us  to  be  laboured  and  artificial  and  even arbitrary in some cases.  On the whole, we have come to  the conclusion  that  the  Court  of Appeal  was  right  in  its conclusion that in point of fact the prize competitions  run by  the  petitioners  partake  of  a  gambling  nature  and, therefore, fall within the definition and are to be governed by the regulatory and taxing provisions of the Act.  For  the  reasons  stated  above,  we  have  come  to   the conclusion  that the impugned law is a law with  respect  to betting and gambling under Entry 34 and the impugned  taxing section is a law with respect to tax on betting and gambling under  Entry  62  and that- it was  within  the  legislative competence  of  the State Legislature to  have  enacted  it. There  is sufficient territorial nexus to entitle the  State Legislature  to  collect the tax from  the  petitioners  who carry  on  the prize competitions through the  medium  of  a newspaper printed and published outside the State of Bombay. The  prize  competitions being of a  gambling  nature,  they

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cannot  be  regarded as trade or commerce and  as  such  the petitioners  cannot claim any fundamental right  under  Art. 19(1)(g)  in  respect  of such competitions,  nor  are  they entitled  to  the  protection  of  Art.  301.   The  result, therefore, is that this appeal must be allowed and the order of the lower court set aside and the petition dismissed  and we do so with costs throughout.                                 Appeal allowed. 930