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                 REPORTABLE   

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION                       CIVIL APPEAL NO. 3518 OF 2007

All Kerala Online Lottery Dealers  Association                              .... Appellant(s)

Versus

State of Kerala & Ors.                                .... Respondent(s)

WITH     CIVIL APPEAL NO. 3519 OF 2007

WITH     CIVIL APPEAL NO. 3520 OF 2007

WITH WRIT PETITION (C) NO. 641 OF 2007

AND WRIT PETITION (C) NO. 233 OF 2010

J U D G M E N T

R.K. Agrawal, J.

Civil Appeal Nos. 3518-3520

1) These appeals are directed against the common final judgment

and order dated 23.05.2006 passed by the Division Bench of the High

Court of Kerala at Ernakulam in Writ Appeal Nos. 2011, 2012 and

2235 of 2005 whereby the High Court dismissed the appeals filed by

the  appellants  herein  against  the  judgment  and  order  dated

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27.07.2005 passed by learned single Judge of the High Court in Writ

Petition (C) Nos. 14495, 16063 and 19582 of 2005.

2) Brief facts:

(a) The State of Kerala, by notification dated 13.01.2005, issued in

exercise  of  the  power  conferred  by  Section  5  of  the  Lotteries

(Regulation) Act, 1998, (in short ‘the Act’), prohibited the sale of all

computerized  and  online  lottery  tickets  marketed  and  operated

through  vending  machines,  terminals,  electronic  machines  and

tickets sold through internet in the State with immediate effect and

declared that  Kerala shall  be a free zone from online and internet

lotteries.

(b) By  a  subsequent  notification  dated  27.01.2005,  the  State  of

Kerala  decided  to  prohibit  the  sale  of  all  lotteries  organized,

conducted or promoted by the State as well as by every other State

Government in the State of Kerala with immediate effect and declared

that the State shall hereafter be a Lottery Free Zone.

(c)   The State  of  Kerala,  in  partial  modification of  the  notification

dated  27.01.2005,  issued  a  subsequent  notification  dated

22.04.2005,  permitting  the  sale  of  paper  lotteries  organized,

conducted  or  promoted  by  every  State  Government  including  the

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State  of  Kerala  and  the  prohibition  imposed  on  the  sale  of

computerized  and  on-line  lottery  tickets  organized,  conducted  or

promoted by every State Government continued to remain in force

declaring the territory of the State of Kerala to be online, internet and

computerized lotteries free zone.   

(d)     Being  aggrieved  by  the  notification  dated  22.04.2005

discriminating between the paper lotteries and online lotteries, the All

Kerala Online Lottery Dealers Association, State of Sikkim and one

Sreekala and others filed Writ  Petition (C)  Nos.  19582, 14495 and

16063 of 2005 respectively before the High Court.   

(e) A learned single Judge of the High Court, by judgment and order

dated 27.07.2005, dismissed the writ petitions.

(f) Being aggrieved by the decision of the learned single Judge, the

petitioners therein preferred Writ Appeal Nos. 2011, 2012 and 2235 of

2005 before the Division Bench of the High Court.  

(g) The Division Bench,  by a common judgment and order dated

23.05.2006, dismissed the appeals.   

(h) Against  the  said  order,  the  appellants  have  preferred  these

appeals by way of special leave before this Court.

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Writ Petition (C) Nos. 641 of 2007 and 233 of 2010  

(a) One Bibhash Karmakar-the petitioner herein has filed the above

petitions  in  public  interest  alleging  that  the  States  of  Sikkim,

Nagaland  and  Goa  are  running  lottery  business  contrary  to  the

provisions of the Act which is detrimental to the society as a whole.    

(b) This Court, by order dated 27.11.2009 in Writ Petition (C) No.

641 of 2007, directed the State to explain as to whether the State of

Sikkim  is  running  lottery  business  contrary  to  the  provisions  of

Section 4 of the Act.  In response to the above, the State Government

filed an affidavit dated 10.12.2009 before this Court denying all the

irregularities as claimed by the petitioner herein and cited various

provisions of the Act as well as the Sikkim Online Network Lottery

Rules,  2001  to  show  that  the  lottery  business  in  the  State  is  in

consonance with the pre-existing rules and regulations.

(c) This Court, by order dated 21.06.2010, tagged Writ Petition (C)

No. 233 of 2010 with Writ Petition (C) No. 641 of 2007.    

3)  Heard the arguments advanced by learned senior counsel for the

parties and perused the records.  Since a common question of law

and facts arise in these appeals and petitions, they are being disposed

of by this common judgment.  

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Points for Consideration:

4) The sole question for consideration before this Court is whether

the State Government can discriminate between the paper lottery and

online lottery in pursuance of the provision of Section 5 of the Act.  

Rival Submissions:

5)   Learned senior counsel for the appellants contended before this

Court that  online lottery is also a lottery, as defined under Section

2(b) of the Act.  So, if the State Government intends to prohibit the

same, it has to prohibit all the lotteries whether paper or online.  The

selective  prohibition  of  the  sale  of  online  lottery  tickets  is

impermissible, in the light of Section 5 of the Act, as interpreted by

this Court in B.R. Enterprises vs. State of U.P. and Others (1999) 9

SCC 700.  The distinction drawn by the State Government between

paper  lottery  and  online  lottery  is  discriminatory  and  violative  of

Article 14 of the Constitution of India.  Learned senior counsel further

contended that the impugned notification is vitiated by mala fides.  It

was further alleged that the State Government is being controlled by

the  paper  lottery  mafia  and under  its  influence  the  sale  of  online

lottery tickets has been prohibited.  The State Government does not

have the competence to issue the impugned notification.  Though the

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State Government is competent to legislate on lotteries by virtue of

Item  34  of  List  II  concerning  betting  and  gambling,  the  power  to

legislate  on  lotteries  organized  by  the  Government  of  India  or  the

Government of a State is the exclusive preserve of the Parliament by

virtue of Entry 40 of List I of the Seventh Schedule.  So, the State

Government,  which  is  incompetent  to  legislate  on  lotteries  run by

other States, has no power to issue the impugned notification.  The

State  Government,  without legislative  competence,  has ventured to

prohibit  online  lottery  which  is  totally  fraudulent  and  colourable

exercise of the power.  

6) Learned senior  counsel  for  the appellants  further  pointed out

that the contention that online lottery was not in the contemplation of

the Parliament or the Court, cannot be accepted.  The Act has to be

interpreted to adapt it to the changing times.  According to learned

senior  counsel,  the  Parliament  was  well  aware  about  the  growing

advancement  of  science  and  technology  and  the  use  of  electronic

media in future days to come and, therefore, when it defined ‘lottery’

under Section 2(b) of the Act, it included also the online lottery or

internet  lottery  which  may  come  into  existence  in  future.   It  was

further submitted that the provision contained in Section 5 of the Act

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would empower the State Government to prohibit the sale of tickets of

all the lotteries and it cannot be restricted only to online or internet

lotteries.  He further submitted that if it is to be taken that the online

lottery  is  a  class  of  lotteries  for  which  the  State  Government  is

empowered  to  prohibit  then  it  is  only  the  Parliament  which  can

classify  the  same and the State  of  Kerala has no power to  do so.

According  to  him,  the  Central  Government  framed  the  Lotteries

(Regulation) Rules, 2010 (in short ‘the Rules’) under sub-section (1) of

Section 11 of the Act and defined online lotteries under Rule 2(e) of

the Rules that too for the first time in the year 2010, therefore, the

State Government had no right or jurisdiction to prohibit the online

lottery  in  the  year  2005.   The  principles  laid  down  in  B.R.

Enterprises (supra) will apply to all types of lotteries and a judgment

of  this  Court  cannot  be  ignored merely  by  saying  that  it  failed  to

consider some point or other.  

7) Learned  senior  counsel  further  contended that  this  Court,  in

B.R. Enterprises (supra), has read down Section 5 of the Act, to save

it  from  the  vice of  unconstitutionality,  emanating  from  conferring

unbridled power on the State, which may be termed as abdication of

the essential legislative function, by failing to provide guidelines for

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the exercise of that power.  In the said decision, in paragraphs 84 and

87, it was held as follows:

“84. In  Section  2(b)  lotteries  are  defined  to  be  a  Scheme  for distribution  of  prizes  by  a  lot  or  chance.   This  definition  itself recognizes that even in State lotteries the prizes are to be collected by chance  without  any  skill,  hence  gambling  in  nature.   Section  3 prohibits  that  no  State  lotteries  can  be  organized  without  the condition stipulated under clauses (a) to (k) of Section 4.  Section 4 provides the conditions to be complied with by the State lotteries.  To initiate any State lottery it is left to the policy of each State, for this Act is silent.  The only control is, in case it decides, then it must follow the  conditions  as  laid  down under  Section 4.   Next  comes Section  5  which  is  subject  matter  of  challenge,  the  delegation  of power to the State to prohibit the sale of lottery tickets organized by every other State.  If a State desires not to subject its people to the lottery gambling,  it  has no power to restrict  lotteries organized by other States.  It is to remove this mischief that power is conferred through delegation to the States to do it in terms of their own policy. By  virtue  of  this,  now the  State  Government  can prohibit  sale  of lottery tickets of every other State within its territory.  Next, Section 6 seeks  strict  compliance  with  Section  4.   Under  this  the  Central Government may prohibit any State lottery which is being conducted in contravention of the conditions as laid down under Section 4 or Section 5.  Section 7 shows the rigour of this Act by making it  a penal offence as against all, who violate the provisions of this Act, be it  is  Head  of  the  Department  of  the  Government  or  the  agent, promoter  or  trader  to  be  punishable  with  two  years  rigorous imprisonment.   Section  8  makes  such  an  offence  cognizable  and non-bailable.  Similarly, Section 9 deals with offences committed by the companies.  Section 10 entrusts the Central Government power to give directions to the State Government for carrying into execution the provisions of this Act, Rule or Order.  Sections 11 and 12 are the rule-making  power  entrusted  to  the  Central  and  the  State Governments respectively.  Section 13 repeals the Ordinance.  Thus, the  whole  Act  makes  clear  that  the  subject  it  is  dealing  with  is gambling in nature.  The object of the Act is not to control the policy decision of each State to start or to close its lotteries, but to regulate it in case a State decides to run its own lottery through modalities and conditions laid down therein.  Emphasis of the whole Act is to abide by the conditions strictly if you want to run a lottery.  Thus, regulation  is  through  conditions  to  eliminate  even  the  remotest possibility  of  malpractices  by  providing  stringent  measures  for  its compliance.   Perusal  of  the Act  reveals,  the scheme of  the Act  is limited in its application, and it admits the subject it is dealing is

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gambling in nature.  As we have said, the decision to collect or not to collect revenue through State lotteries is exclusively within the policy decision of the State and for this, neither the Union nor Parliament interferes  nor  is  there  any  indication  under  the  Act.   Thus,  the question which remains is, if any State decides that it does not want any lotteries but if it feels helpless as having no jurisdiction over the lotteries organized by other States, what is the way out ?  This can only be done by Parliament or by entrusting this power on such State desiring  so,  which  has  been  done  through  Section  5.   In  this background,  for  this  helplessness of  a  State  as recorded in Anraj case-I [(1984) 2 SCC 292] the remedy is provided by entrusting this power on the State under the impugned provision.  This helps such State to achieve its objective of lottery (gambling) free zone within its territory.   A well-concerned remedy.   Next  question is  what  could have been the guideline?  If State lotteries are gambling and it cannot be terms as ‘trade and commerce’ at common parlance for any free right under the Constitution.  Such right though recognized under Article 298, so other States may continue to enjoy till prohibited by valid law, and if any State wants within its State lottery-free zone and for which the power is entrusted to such State, it cannot be said in this setting and background and the nature of the subject that such a delegation is of its essential legislative power.  The only guideline necessary in such delegation is to see that the State does not pick and  choose  one  State  from  the  other,  which  guideline  is  already provided in this Section.  It provides that such a ban could only be if it is applied to every other State.  The only residual field of attack so far as this delegation could be, which has been attacked in this case, that the State could on one hand ban lotteries of every other State but  run  its  own  lotteries.   It  is  argued  that  while  a  State  bans lotteries of other States not to permit any gambling activity in the public interest as a policy but this very public interest is flouted by having lotteries of its own.  It is true that unless this provision is read down to mean a State can only ban lotteries of other States when it bans as a policy its own lotteries it is bound to be subjected to the vagaries  as  pointed  out  and  on  deeper  scrutiny  it  may  not successfully stand.  But, by reading down the provision, which has to be  read  that  it  is  only  that  State  which  decides  lottery-free  zone within its State can prohibit lotteries of other States clearly provides the  guidance for  the  exercise  of  such  a  power.   It  is  inbuilt  and inherent in the provision itself in view of the scheme of the Act and nature of subject in issue.  If interpretation as given on behalf of the State of Tamil Nadu is accepted that delegation of power is absolute, then the submission that such delegation is unbridled without any guideline carries  great  weight.   Submission for  the State  of  Tamil Nadu is that  the lotteries may be prohibited in phases,  viz.  while running its own lotteries yet prohibiting other lotteries, may be as a public policy, for law and order, for political reasons, morality, etc.

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For  surviving  such  an  interpretation  given  by  Mr.  Ganguli, Parliament  should  have  provided  some  guidelines.  Such  an interpretation  falls  into  the  trap  of  the  submission  that  this delegation  is  unbridled.   So,  if  there  are  two  interpretations,  the interpretation which upholds the validity should be accepted.  So, the interpretation as given by Mr. Ganguli cannot be accepted.       

87. We find on plain reading of Section 5, it empowers the State Government  within  its  State  to  prohibit  the  sale  of  tickets  of  the lotteries organized by every other State.  There is also nothing in the language reading by itself so as to say, whether such power can be exercised  by  the  State  while  running  its  own  lottery  or  can  be exercised only where such State does not run its own lottery.  This leads to two possible interpretations, as referred to above.  In view of settled principle  of  interpretations,  the interpretation given by the union to read down the provision has substance.  This would mean that the State could only exercise such discretion if it decides not to have any lottery within its territory including its own lottery.  In this situation, the delegate is tied down by this limitation which itself is a clear  guide  to  a  State  hence  cannot  be  said  to  be  unbridled delegation.  So even to the first part it cannot be said to be arbitrary or unbridled.  So, we have no hesitation to approve the interpretation given by the Union to uphold the validity of Section 5.”

Relying on the above quoted paragraphs, learned senior counsel for

the  appellants  vehemently  contended  that  the  State  shall  either

prohibit the sale of all lotteries or allow the sale of all lotteries in the

State.   Selective  prohibition  of  a  particular  type  of  lottery  is

impermissible in the light of the above binding judgment.  

8) In support of this submission learned senior counsel apart from

the  decision  in  B.R.  Enterprises  (supra) relied  on  the  following

decisions,  viz.,  The  Senior  Electric  Inspector  and  Others vs.

Laxmi  Narayan  Chopra  and  Others 1962  (3)  SCR  146,  State

(Through CBI/New Delhi) vs. S.J. Choudhary (1996) 2 SCC 428 and

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SIL Import, USA vs. Exim Aides Silk Exporters, Bangalore (1999)

4 SCC 567.   

9) The learned senior counsel for the State of Kerala-the respondent

herein supported the impugned notification by contending that the

State Government is competent to prohibit a particular type of lottery.

There is no fetter on the power of the Government under Section 5.

Learned senior counsel further submitted that when the Parliament

enacted  the  Act  in  the  year  1998,  there  was  nothing  before  it  to

presume that in times to come online lotteries will  also come into

existence apart from the paper lotteries and, therefore, the provision

of Section 5 which empowers the State Government to prohibit the

sale of tickets of a lottery organized, conducted or promoted by every

other State necessarily relate to paper lottery.  Even otherwise, online

lottery is different from paper lottery and can be treated as a class in

itself.  The State Government is, therefore, empowered under Section

5 of the Act to prohibit the sale of online lotteries or internet lotteries

in its State.  He further submitted that the Central Government itself

treated online  lotteries  as  a  different  class in  itself  and,  therefore,

framed the Rules providing the rules and regulations for organizing

paper lottery or online lottery or both subject to certain terms and

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conditions.  Thus, the intention of the Parliament was to treat paper

lotteries and online lotteries a different class.  The decision in  B.R.

Enterprises  (supra) would  therefore  necessarily  be  understood  to

relate to paper lotteries only.  The said decision cannot be construed

as  a  precedent.   So,  the  declaration  of  law,  made  therein,  is  not

applicable to online lotteries.  It is also submitted that prohibition of

sale of online lotteries has been made bona fide and the classification

is  reasonable  and  not  arbitrary.   Learned  senior  counsel  further

submitted that the scheme of Section 4 would show that the Act was

framed with a view to deal with paper lotteries which were in vogue at

that point of time whereas the distributors of online lotteries do much

more than selling the tickets.  They decide and implement the lottery

schemes, provide infra-structure and technology, print lotteries and

participate in the conduct of draws.  Section 4(h) of the Act prohibits

holding of  draws, more than once in a week.  This restriction has

been made taking into account the conduct of paper lotteries.  But, in

online lotteries, 70 to 100 draws are made every day in a week.  On

the  above  grounds  the  respondents  prayed  for  dismissal  of  the

appeals.   

Discussion:

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10) Before going into the validity of the impugned notification, it is

fruitful to refer to certain provisions of the Act.  The relevant portion

of the Statement of Objects and Reasons for framing this legislation

is as under:  

“The conduct  of  certain  types  of  lottery  trade  in the  country,  the malpractices thereof and their impact on the poorer sections of the society has been under scrutiny of the Government for quite some time.  The continued prevalence of the popularly known single digit and instant lotteries and the temptation offered by them proved to be the undoing of many families, especially poor daily wagers and low income groups.  In spite of the guidelines issued by the Central Government over a period of time as also the guidelines issued in the recent past by the Honourable Supreme Court.   In the matter,  the evil  has not been totally eliminated and it is felt that a Central legislation to regulate the conduct  of  lotteries is necessary to protect  the interest  of  the gullible poor.”

Section 2(b) defines ‘lottery’ which reads as follows:

“2 (b) ‘lottery’  means a scheme, in whatever form and by whatever name  called,  for  distribution  of  prizes  by  lot  or  chance  to  those persons  participating  in  the  chances  of  a  prize  by  purchasing tickets.”

3. Prohibition of lotteries.—Save as otherwise provided in Section 4,  no  State  Government  shall  organize,  conduct  or  promote  any lottery.   

Section  4  enumerates  the  conditions,  subject  to  which  a  State

Government may organize, conduct or promote a lottery, which reads

as follows:  

“4. Conditions  subject  to  which  lotteries  may  be  organized etc.:- A  State  Government  may  organize,  conduct  or  promote  a lottery, subject to the following conditions, namely:- “(a) prizes shall not be offered on any pre-announced number or on the basis of a single digit; (b) the State Government shall print the lottery tickets bearing the

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imprint and logo of the State in such manner that the authenticity of the lottery ticket is ensured; (c) the  State  Government  shall  sell  the  tickets  either  itself  or through distributors or selling agents; (d) the proceeds of the sale of lottery tickets shall be credited into the public account of the State; (e) the State Government itself shall conduct the draws of all the lotteries; (f) the  prize  money  unclaimed  within  such  time  as  may  be prescribed  by  the  State  Government  or  not  otherwise  distributed, shall become the property of that Government;  (g) the place of draw shall be located within the State concerned; (h) no lottery shall have more than one draw in week; (i) the draws of all kinds of lotteries shall be conducted between such  period  of  the  day  as  may  be  prescribed  by  the  State Government;  (j) the number of  bumper draws of  a lottery shall  not be more than six in a calendar year; (k) such  other  conditions  as  may  be  prescribed  by  the  Central Government.”

5. Prohibition of sale of ticket in a State.—A State Government may,  within  the  State,  prohibit  the  sale  of  tickets  of  a  lottery organized, conducted or promoted by every other State.

6.  Prohibition  of  organization  etc.,  of  lottery.—The  Central Government may, by order published in the Official Gazette, prohibit a lottery organized, conducted or promoted in contravention of the provisions of Section 4 or where tickets of such lottery are sold in contravention of the provisions of Section 5.

7.  Penalty.—(1) Where a lottery is organized, conducted or promoted after the date on which this Act receives the assent of the President, in contravention of the provisions of this Act, by any Department of the  State  Government,  the  Head  of  the  Department  shall  be punishable with rigorous imprisonment for a term which may extend to two years or with fine or with both:

Provided that  nothing  contained in  this  section shall  render  such Head of the Department liable to any punishment if he proves that the contravention was committed without his knowledge or that he exercised  all  due  diligence  to  prevent  the  commission  of  such contravention.

(2) Notwithstanding anything contained in sub-section (1), where a contravention under this Act has been committed by a Department of Government  and  it  is  proved  that  the  contravention  has  been

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committed with the consent or connivance of, or is attributable to any neglect on the part of, any officer, other than the Head of the Department, such officer shall also be deemed to be guilty of that contravention  and  shall  be  liable  to  be  proceeded  against  and punished accordingly.

(3) If any person acts as an agent or promoter or trader in any lottery organized, conducted or promoted in contravention of the provisions of this Act or sells, distributes or purchases the ticket of such lottery, he shall be punishable with rigorous imprisonment for a term which may extend to two years or with fine or with both.

8. Offences to be cognizable and non-bailable.—The offence under this Act shall be cognizable and non-bailable.”

11) From the above provisions, it can be seen that the tickets of a

State-run lottery shall be printed by the State itself.  Sale of tickets

alone is permitted through the agents or through distributors.  The

entire sale proceeds have to be credited in the public account of the

State.  Draws of all the lotteries have to be conducted by the State

Government.  No lottery can have more than one draw in a week.

Bumper draws shall not be more than six in a calendar year.  The

cumulative effect of sub-sections (h) and (j) appears to be that a State

can run only 52 ordinary lotteries and six bumper lotteries in a year.

Section  5  empowers  the  State  Government  to  prohibit  the  sale  of

tickets of lotteries organized, conducted or promoted by every other

State Government.  Section 6 empowers the Central Government to

prohibit  the  conduct  of  lotteries,  which  are  in  violation  of  the

provisions  of  Section  4  or  which  are  sold  in  contravention  of  the

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prohibition  imposed  by  the  State  Government  under  Section  5.

Section 7 provides the penalty for running a lottery in violation of the

provisions of the Act.  The Head of the Department and other officers

responsible  for  the  conduct  of  the  lottery  shall  be  punished  with

imprisonment, which may extend to two years or with fine or with

both.   Similar  punishment  can  be  imposed  on  those  who  sell  or

purchase the tickets of such a lottery.  Section 8 makes the offences

under the Act cognizable and non-bailable.  Cognizable offence means

an offence for which a police officer may arrest the accused without

warrant  (Section  2(c)  of  the  Code  of  Criminal  Procedure,  1973 (in

short  ‘the Code’).   In this background, it  is  also relevant to quote

Section 4 of the Code which reads as follows:

“4. Trial  of  offences under the Indian Penal  Code and other laws:- (1) All  offences under  the Indian Penal  Code (45 of  1860) shall be investigated, inquired into, tried, and otherwise dealt with according to the provisions hereinafter contained.  (2) All offences under any other law shall be investigated, inquired into,  tried,  and  otherwise  dealt  with  according  to  the  same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences.”

Since no provision is made for investigating the offences under the

Act, the provisions under the Code will apply to its investigation, by

virtue of Section 4(2) of the Code quoted above.   

12) It  is  also  relevant  to  mention the  Notifications  issued  by  the

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State Government from time to time.

“Government of Kerala    Reg. No. KL/TV(N)/12/2003-2005 2005

KERALA GAZETTE EXTRAORDINARY

PUBLISHED BY AUTHORITY

Vol.L Thiruvananthapuram 13th January, 2005 Volume 50 Thursday No. 77

23rd Pousha 1926

GOVERNMENT OF KERALA Taxes (H) Department

     NOTIFICATION  G.O.(P)  No.  4/2005/TD  dated,  Thiruvanathapuram,  13th January, 2005.

S.R.O. No. 34/2005 - In exercise of the powers conferred by Section 5 of the Lotteries (Regulation) Act, 1998 (Central Act 17 of 1998),  the  Government  of  Kerala  hereby  prohibit  the  sale  of  all Computerised  and  Online  lottery  tickets  marketed  and  operated through  vending  machines,  terminals,  electronic  machines  and tickets sold through Internet  in Kerala,  with immediate effect  and declare that Kerala shall be the free zone from Online and Internet

By order of the Governor. P. MARA PANDYAN,

 Secretary to Government

Explanatory Note

(This does not form part of the Notification, but is intended to indicate its general purport).

Government have decided to prohibit the sale of computerized and online lottery tickets in the State of Kerala with immediate effect

This notification is intended to achieve the above object.”  

“Government of Kerala    Reg. No. KL/TV(N)/12/2003-2005 2005

KERALA GAZETTE EXTRAORDINARY

PUBLISHED BY AUTHORITY

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Vol.L Thiruvananthapuram 27th January, 2005 Volume 50 Thursday No. 169

                               7th Magga 1926

GOVERNMENT OF KERALA Taxes (H) Department

NOTIFICATION G.O.(P) No. 11/2005/TD dated, Thiruvanathapuram, 27th January, 2005.

S.R.O. No. 73/2005 - WHEREAS Notification II  G.O.  (P)  No. 4/2005/TD  dated  13th January,  2005  published  as  S.R.O.  No 34/2005  in  Kerala  Gazette  Extraordinary  No.  77  dated  the  13th January, 2005 prohibiting the sale of computerized and online lottery tickets in the State of Kerala has been issued under Section 5 of the Lotteries Regulation Act, 1998 (Central Act 17 of 1998).  

AND  WHEREAS  the  Government  of  Kerala  have  decided  to prohibit the sale of all lotteries organized, conducted or promoted by the State of Kerala with immediate effect.  

AND  WHEREAS  the  Government  of  Kerala  have  decided  to prohibit  the sale of  tickets  of  all  lotteries organized, conducted or promoted by every other State Government also;

NOW  THEREFORE,  in  exercise  of  the  powers  conferred  by Section 5 of the Lotteries (Regulation) Act, 1998 (Central Act 17 of 1998) and all other powers enabling for it, the Government of Kerala hereby prohibit the sale of tickets of all lotteries organized, conducted or  promoted  by  every  other  State  Government  including  lotteries organized, conducted or promoted by the Government of Kerala in the State of Kerala with immediate effect and declare that the State of Kerala shall hereafter be a Lottery Free Zone.  

By order of the Governor. P. MARA PANDYAN,

Secretary to Government

Explanatory Note

(This does not form part of the Notification, but is intended to indicate its general purport).

Government of Kerala have decided to make the State of Kerala a Lottery Free Zone.

This notification is intended to achieve the above object.  II

G.O.(P) No.11/2005/TD dated, Thiruvananthapuram, 27th January, 2005.  

S.R.O.No. 74/2005, - In exercise of the powers conferred by

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subsections (1) and (2) of section 12 of the Lotteries (Regulation) Act, 1998  (Central  Act  17  of  1998),  the  Government  of  Kerala  hereby make  the  following  rules  to  repeal  the  Kerala  State  Lotteries (Regulation) Rules, 2003 issued in G.O.(P) No. 118/2003/TD dated the  16th July,  2003  and  published  as  S.R.O.No  646/2003  in  the Kerala Gazette Extraordinary No. 1278 dated the 16th July, 2003, as amended subsequently, namely:-

Rules 1. Short title, application and commencement:- (1) These rules   

may be called the Kerala State Lotteries (Regulation) (Repeal) Rules, 2005.

2. These  rules  shall  apply  to  the  whole  of  the  State  of   Kerala. 3. They shall come into force at once.

2. Repeal:- The Kerala State Lotteries (Regulation) Rules, 2003 is hereby repealed.

By order of the Governor. P. MARA PANDYAN,

Secretary to Government

Explanatory Note

(This does not form part of the Notification, but is intended to indicate its general purport).

Government  of  Kerala  by  notification  issued  as  G.O. (P)No.11/2005/TD  dated  27th January,  2005  and  published  as S.R.O.No  73  in  Kerala  Gazette  Extraordinary  No.  169  dated  27th January, 2005 has prohibited the sale of lottery tickets organized, conducted or promoted by the Government of Kerala. Accordingly the Kerala State Lotteries (Regulation) Rules, 2003 has to be repealed.  

This notification is intended to achieve the above object.”  

        “Government of Kerala       Reg. No.KL/TV(N)/12/2003-2005 2005

KERALA GAZETTE EXTRAORDINARY

PUBLISHED BY AUTHORITY

Vol.L Thiruvananthapuram 22nd April, 2005 Volume 50 Friday No. 837

2nd Vaisakha 1927

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GOVERNMENT OF KERALA Taxes (H) Department

NOTIFICATIONS G.O.(P)  No.  382/2005/TD  dated,  Thiruvanathapuram,  22nd April, 2005.

S.R.O. No. 73/2005 - WHEREAS Notification II  G.O.  (P)  No. 4/2005/TD  dated  13th January,  2005  published  as  S.R.O.  No. 34/2005  in  Kerala  Gazette  Extraordinary  No.  77  dated  the  13th January, 2005 prohibiting the sale of computerized and online lottery tickets in the State of Kerala.

AND  WHEREAS,  by  Notification  No.  I  issued  as  G.O. (P)No.11/2005/TD  dated  27th January,  2005  and  published  as S.R.O.No. 73 in the Kerala Gazette Extraordinary No. 169 dated the 27th January, 2005, the Government of Kerala prohibited the sale of tickets  of  all  lotteries  organized,  conducted  or  promoted  by  every State Government including that of State of Kerala and declared the State as a Lottery Free Zone.  

NOW  THEREFORE,  in  exercise  of  the  powers  conferred  by Section 5 of the Lotteries (Regulation) Act, 1998 (Central Act 17 of 1998) and in partial modification of the Notification issued as S.R.O. No. 73/2005 dated the 27th January, 2005, the Government of Kerala hereby lift  the prohibition partially by permitting the sale of paper lotteries  organized,  conducted  or  promoted  by  every  State Government  including  the  State  of  Kerala  provided  that  the prohibition imposed on the sale of computerized and online lottery tickets organized, conducted or promoted by every State Government shall  continue to remain in force and the territory of  the State of Kerala shall be online, internet and computerized lotteries free zone.  

By order of the Governor. P. MARA PANDYAN,

Secretary to Government

Explanatory Note

(This does not form part of the Notification, but is intended to indicate its general purport).

Government  of  Kerala  by  notification issued as  G.O.  (P)  No. 66/2005/TD dated 20th April, 2005, have reconsidered the issue of the prohibition imposed on the sale of all Lottery Tickets in the State of Kerala and have decided to reintroduce Paper Lottery conducted by the State Government with the same pattern and prize Structure as it prevailed before 27th January, 2005.”

From a perusal of the Notification dated 13.01.20015, issued by the

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Government of Kerala, we find that the State had prohibited the sale

of all computerized and online lottery tickets marketed and operated

through  vending  machines,  terminals,  electronic  machines  and

tickets  sold  through  internet  in  Kerala.   However,  by  notification

dated 27.01.2005, the State had prohibited the sale of tickets of all

lotteries in the State of Kerala.  Vide notification dated 27.01.2005,

the Government of Kerala made the Kerala State Lotteries (Regulation)

(Repeal) Rules, 2005 which repealed the entire Kerala State Lotteries

(Regulation) Rules, 2003.  Vide another notification dated 22.04.2005,

the  Government  of  Kerala  lifted  the  prohibition  of  sale  of  paper

lotteries  organized,  conducted  or  promoted  by  every  State

Government including the State of Kerala.  However, the prohibition

imposed on the sale of computerized and online tickets continued to

remain in force.

13) In the 2010 Rules, framed by the Central Government, online

Lottery has been defined under Rule 2(1)(e) which is as under-

“‘online lottery’ means a system created to permit players to purchase lottery tickets generated by the computer or online machine at the lottery terminals where the information about the sale of a ticket and the  player’s  choice  of  any  particular  number  or  combination  of numbers  is  simultaneously  registered  with  the  central  computer server;”

Rule 3 permitted the State Government to organize a paper lottery or

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online lottery or both subject to the conditions specified in the Act

and these rules.   Thus from the Rules, it is clear that online lottery is

being treated as a separate lottery from paper lottery and it is a class

in itself.   

14) In  the  case  on  hand,  we  are  mainly  concerned  with  the

provisions of Section 5 and Section 6 of the Act.  These two Sections

cover  different  fields.   Section  5  deals  with  prohibition  of  sale  of

tickets, whereas Section 6 deals with prohibition of conduct of the

lottery itself.  So, Section 5 enables the State Government to prohibit

the sale of tickets of lotteries run by every other State Government.

The grounds on which prohibition of sale of tickets can be made are

not detailed under Section 5.  But, the same can be gathered from

other provisions of the Act and also by reference to the Object and

Scheme of the Act.  Going by the scheme of the Act, it appears that

violation of any of the conditions contained in Section 4 could be a

ground for the State Government to prohibit the sale of tickets of a

particular  lottery,  organized,  conducted  or  promoted  by  any  other

State  Government.   If  the  State  Government  thinks  it  fit,  it  may

prohibit the sale of all lottery tickets in the State and make it a lottery

free zone.  Section 6 empowers the Central Government to prohibit a

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lottery run by the State Government.  The Central Government can

prohibit the running of a lottery by a State Government if it is found

that  the  same is  in  violation  of  the  provisions  of  Section 4.   The

Central Government can also prohibit the running of a lottery if it is

found that the tickets of that lottery are sold in a State, where the

sale  of  the  same  has  been  prohibited  by  the  concerned  State

Government under Section 5.  

15) In view of the above, it is relevant to mention Entry 40 under

List I and Entry 34 in List II of the Seventh Schedule and Article 246

of the Constitution of India which are as under:-

Entry 40 List I-Union List

“40.   Lotteries  organized  by  the  Government  of  India  or  the Government of a State.”

Entry 34 List II-State List

“34.Betting and Gambling.”

Article 246 of the Constitution

“246.  Subject  matter  of  laws  made  by  Parliament  and  by  the Legislatures of States.—(1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the “Union List”).

(2) Notwithstanding anything in clause (3), Parliament and, subject to clause (1), the Legislature of any State also, have power to make laws with  respect  to  any  of  the  matters  enumerated  in  List  III  in  the Seventh Schedule (in this Constitution referred to as the “Concurrent List”). (3) Subject to clauses (1) and (2), the Legislature of any State has

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exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the “State List”). (4) Parliament has power to make laws with respect to any matter for any  part  of  the  territory  of  India  not  included  in  a  State notwithstanding  that  such  matter  is  a  matter  enumerated  in  the State List.”

It is common case that the Parliament, by virtue of Entry 40 under

List I of the Seventh Schedule, has got exclusive power to legislate on

State lotteries,.  By virtue of Entry 34 in the State List, concerning

betting and gambling, State Legislatures have the power to legislate

on lotteries, other than State Lotteries because it is also one of the

forms of gambling   

16) The State of Sikkim, in its trading capacity, has been organizing,

conducting  and  promoting  online  lotteries  in  accordance  with  the

provisions  of  the  Act  and lottery  tickets  are  being  sold  in  various

lottery playing States in India including the State of Kerala.  The State

of Sikkim, as pleaded before this Court, substantially depends on the

revenue raised by the sale of  lottery tickets.   It  is a north eastern

State  with  no  avenues  of  industrialization.   It  is  the  case  of  the

appellants that they started the business of online lottery in the State

of Kerala in the year 2003.  Online lottery is a tamper proof lottery

which has been designed using the aid of  modern technology that

eliminates all the ills of paper lottery and has greater transparency

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and is universally recognized as a tamper proof and safe method of

conducting lotteries.  Modernization led to spurt of computerization,

satellite and internet connectivity which bears a great impact on every

aspect  of  life,  made things easier  and faster  and brought  in more

transparency.  Thus began lottery in another form, popularly called

“online lottery.”  The difference in the lotteries of  this form is that

“online” is free from possibility of any duplication, tamper etc., and is

totally transparent.

17) Online lotteries became popular in our country, only recently.  It

made their presence felt in India from 2000-2001 onwards.  Though

all  types  of  lotteries  are  meant  to  be   covered  by  the  Lotteries

(Regulation)  Act,  1998, the deleterious effect  of  paper lotteries was

uppermost  in  the  mind  of  the  Central  Government  while  bringing

forth the  above legislation as,  at  the relevant  time,  paper  lotteries

were most popular among the people.  The various sub-sections of

Section 4 will reveal that the irregularities in the conduct of paper

lotteries were mainly in the contemplation of  the Parliament.   The

decision in B.R. Enterprises (supra) also dealt with the prohibition of

sale of tickets of paper lotteries invoking power under Section 5 of the

Act.   Still,  the  general  principles  laid  down  by  this  Court  in  the

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abovementioned case, while interpreting Section 5, are binding.  So,

the  power  to  prohibit  sale  of  tickets  is  granted  in  relation  to  a

particular  lottery  or  particular  type  of  lottery.   That  means,  a

particular lottery can be the subject-matter of prohibition.  In other

words, all types of lotteries need not be prohibited.  But, going by that

decision, a particular type of lottery can be prohibited, if  only, the

State Government also does not run that lottery.  The online lottery is

a particular lottery, which is not run by the State Government.  So,

going by the principles laid down in  B.R. Enterprises (supra),  the

State Government can separately ban the sale of online lotteries as

online lottery  is  a particular  class of  lottery,  different  and distinct

from paper lotteries.   

18) Learned counsel for the appellants also brought into notice para

21 of the Writ Petition filed before the High Court to show how the

system of online lottery functions, which is as under:

“The Online lottery involves installation of a Central Server, various terminals, which are connected to the said Central Server through a satellite and all this involves huge expenses running into hundred of crores.  In this online lottery form, there are no pre-printed tickets as such.   A  person  interested  to  purchase  a  ticket  of  online  lottery comes to the terminal, fills a play-slip with numbers selected by him and hands it over to the person manning the terminal.  This play-slip is  put  into  the  terminal  and numbers  selected  by  the  player  are transmitted to the central server, which registers the said numbers. A person may not like to select any numbers and may play lucky dip in which case the computers makes random generation of numbers itself  and transmit them to the central server,  which registers the

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said numbers.   In either of  the cases after  the central server has registered  the  numbers,  it  generates  a  ticket  and  commands  the terminal, which acts like a fax on command and delivers the ticket, which  is  on  an  imported  thermal  paper.   The  ticket  besides containing these numbers contains various codes, details as also bar codes, which ensures against any possibility of any duplication etc. The game is made more interesting and entertaining since the player has option to choose numbers for himself.  Like paper lottery in this case also various tickets can be printed and sold as such, however, the same may not sell at all because the player does to like to lose the charm of selecting the numbers himself.  However, whatever be the position, all the details regarding the number of tickets sold, their respective playing numbers,  the number to tickets sold from each terminal etc. are all available in the central server.  The generation of tickets  for  any  particular  scheme  closes  30  minutes  before  the holding of the draw and no retail terminal can generate a ticket for such draw after such closing and at the time of draw all the details are readily available to the authorities immediately before the draw. The draw is held by the respective State themselves through a tamper free  machine  and  is  telecast  on  the  Zee  Television  Network  and watched by the public at large.”  

19) It was also contended before this Court that in exercise of the

powers conferred by Section 5 of the Act and in partial modification of

the  notification  issued  earlier  declaring  Kerala  a  lottery  free  zone

State,  the Government lifted the prohibition partially by permitting

the sale of paper lotteries and the prohibition imposed on the sale of

computerized  and  online  lotteries  continued  to  remain  in  force

declaring  the  territory  of  Kerala  to  be  online,  internet  and

computerized lottery free zone.  The legislative competence in respect

of State run lotteries vests exclusively with the Centre except where a

State is a lottery free State and that only the Central Government will

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have  the  power  to  deal  with  the  same.   The  notification  dated

22.04.2005 was issued by the State on the ground that the State of

Kerala shall be an online lottery free zone.   

20) The  State  of  Kerala  is  of  the  view  that  online  lottery  and

conventional paper lotteries are to be dealt separately and are entirely

different in every aspect by the nature and features inherent in it.

The  State  of  Kerala  is  of  the  view  that  online  lottery  does  not

characterize the features of a lottery as defined under the Act.  In fact,

the  so-called  online  lottery  is  not  a  lottery  as  it  is  a  widespread

network using internet, cheating the public in a massive way in the

absence of a proper regulatory system of the same standards.  The

online companies are merely ‘gaming’, but not conducting any lottery

as per the guidelines issued under the Act.  It is further pleaded that

though it is claimed that online lotteries are universally recognized as

tamper proof lotteries, in experience, it is felt that the so-called online

lotteries were cheating the massive gullible public by misusing the

advancement of information technology in the field of economy.  The

Government of Kerala has detected and established before the Union

Government that online lotteries organized by the State of Sikkim are

blatantly  violating  the  provisions  of  Section  4  of  the  Act.   It  was

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further contended that the Central Act was enacted by the Parliament

on 07.07.1998.  At the time of formulating the Act, only conventional

paper lottery was being conducted in the country.  No online lottery

existed at the time of enactment of the Act.  The Central Act did not

envisage or  took into  account  the  online lotteries  in  the  definition

clause  while  stipulating  conditions  under  section  4  of  the  Act  for

organizing, conducting or promoting a lottery by a State Government.

The  conditions  stipulated  therein  are  only  intended  to  cover  the

conduct of paper lotteries.  The Government of Kerala has detected

the flagrant violations and fraud inherent in the online lotteries and

also the illegal activities of the appellants which directly affects more

than 15 lakhs people of Kerala who have already been deceived and

are being continuously cheated on minute to minute basis.  The ill

effects of these lotteries had assumed major dimensions in the State.

The newspaper reports, petitions from the public and reports from the

police reveal the magnitude of its ill effects, which include suicides,

divorces, starvation and murders.  This created more hardship to the

respondent-State.   

21) The  violations  in  terms of  the  Act  in  the  case  of  Meghalaya,

Sikkim and Nagaland State lotteries have already been furnished to

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the Union Government on 12.01.2004 and 23.08.2004, some of which

mentioned by the Division Bench of the High Court in the judgment

are as follows:-

“(a)  The  online  lottery  tickets  of  Meghalaya,  Sikkim and

Nagaland States are printed by the terminal in violation of

Section 4(b) of the Lotteries (Regulation) Act, 1998

(b) The tickets of these States are printed in the stationery

of the Sole-selling agent.  

(c)  The draws are conducted in such a manner that the

transparency and credibility of the draw process is not at

all established.  According to Meghalaya rules, the presence

of one Judge shall form the quorum.  

(d)  The  draws  are  conducted daily  in  a  severe  gambling

fashion  and  in  violation  of  Section  4(h)  and  prizes  are

offered on the basis of a single digit violating Section 4(a) of

the Act.  

(e)  There  are  clear  similarities  in  the  name  of  different

lotteries and they follow the same prize pattern, obviously

making an attempt to circumvent Section 4(h).”

It  is  then  pleaded  that  in  practice,  the  so-called  online  lotteries,

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mislead the general public by its mesmeric gambling instinct inherent

in it.  People are attracted to the modern technology used in these

lotteries and the instantaneous nature of it.  They spend all their time

in front of the online outlets and spoil all their money.  They are being

trapped by the simple prizes they get and they invest the remaining

part of their money in a hope to get more and more big prizes.  This is

a continuous process starting from early in the morning and extends

too  late  in  the  night.   The  lotteries  conducted  by  these  online

companies have draws in every 15 minutes.  Technically, they call it

‘weekly lotteries’ in order to circumvent the objectives of the Act, but

in result they are ridiculously setting aside the spirit of the Act.  As a

technical argument, each lottery has only one draw in a week.  The

draw of one lottery repeats only in the next week.  But, the tactics

followed by these States is that they are conducting more than 100

lotteries with very strange names and by assigning pseudonyms.  The

online  lotteries  running  in  Kerala  were  in  flagrant  violation of  the

provisions of the Act and this fact was detected by the State of Kerala.

The  State  of  Kerala  has  made  known  this  fact  to  the  Union

Government twice. The findings of the Government of Kerala revealed

that  the  other  States,  on  whose  behalf  the  lotteries  are  being

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conducted in Kerala, have least control over them and major source of

income from these gambling type of lotteries siphoned by the so-called

middlemen who acts in the name of ‘sole selling agents’.  Similarly,

the States of Karnataka and Arunachal Pradesh have stopped the sale

of online lotteries as they have admitted the violations pointed out by

the State of Kerala.  Online lotteries are being conducted under the

name of other State Governments, circumventing the provisions of the

Act,  and  also  the  single  digit  lotteries  through  dubious  methods

adopted  by  their  distributors  and  agents.   In  some  cases,  some

lotteries  except  one  digit  all  other  digits  will  be  pre-fixed  and the

buyer has to choose only a single digit.  In some other cases, one digit

of  two  digit  number  or  of  three  digit  number  will  be  changing

continuously, but in a pre-determined cyclic manner, which shows

that the draw is held only for one digit.   It was detected from the

lottery terminals that the tickets of States of Meghalaya and Nagaland

are being printed one after another from the same terminal and the

same  pool  in  an  unbroken  manner.   Several  tickets  without  the

imprint  and  logo  of  other  State  Governments  and  even  without

signature of the authorized officer of those States have been found

being sold in the State of Kerala.  Standard set of rules are printed on

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the reverse side of the stationery and tickets of more than one States

are  being  printed  on  the  same  material,  by  the  same  terminal  in

unbroken  strips.   The  proceeds  of  the  sale  of  online  lotteries  are

rather shared by the distributors and agents without crediting in the

public account of the respective States, in violation of the provisions

of the Act.  The details of unclaimed money are not brought to the

knowledge of  the other State Governments, whereas the unclaimed

prize  money is  being  appropriated by  the  distributors  and agents.

The place of draw is not at all located within the other States, whereas

the  same  is  being  conducted  according  to  the  convenience  of  the

distributors.   The  lottery  distributors  and  agents  of  other  State

Governments  are  resorting  to  such  unscrupulous  methods  and

conducting  online  lotteries  in  every  15  minutes  from  the  lottery

terminals.   The  Lottery  Department  of  the  State  had detected  the

draws being conducted in lottery outlets for more than 49 draws in a

day.   

22) The provisions in respect of Sikkim State Lotteries was reported

to the Ministry of Home Affairs, Government of India on 12.01.2004.

The  scheme  of  lotteries  furnished  by  the  Government  of  Sikkim

revealed  that  they  were  not  in  conformity  with  the  provisions  of

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Section 4 of the Act.  The irregularities/violations in respect of the

Sikkim lotteries being sold in Kerala in the year 2004 were brought to

the notice of the State Government earlier with a request for further

documents/clarifications.  Some of these violations/ irregularities are

briefly mentioned below:

“i. On a perusal of the agreement between the Government of Sikkim and  M/s.  Tashi  Delek  Gaming  Solutions  Pvt.  Ltd.,  the  Marketing Agent,  it  is  seen  that  the  agreement  with  the  marketing  agent  is executed seven days before the Sikkim Online Network Lottery Rules came into effect.  

ii The  Marketing  Agent  is  vested  with  powers  more  than  what  the Lottery Regulation Act permits.  The State of Sikkim was asked to offer specific remarks on this.  

iii. Since a detailed description of the method of draw was not furnished by the State of Sikkim, the same was called for from this office.  

iv. As per rule 12 of the Sikkim Online Network Lottery Rules, 2001, the tickets will be printed on pre-printed ticket material.  On perusal of the  tickets  of  Super-Lotto  and  Thunder  Ball  it  is  seen  that  the specimen play slips furnished by the Director of  Lotteries,  Sikkim bear the imprint and logo of PLAYWIN.  This shows that the tickets are  instantly  printed  at  the  retail  computer  terminal,  violating Section 4(b) of the Lotteries Regulation Act, 1998.  

v. The contractual agreement between the Play Win sub-agent and the distributors was not furnished.  So also the names of distributors for certain districts in Kerala were not furnished.  

vi. The  Government  has  furnished  the  details  of  926  retail  outlets operating in the State.  But the contractual agreement between the distributor and these retail outlets were not submitted.  

vii. The marketing Agent under the Sikkim State Lotteries is empowered to set-up the required infrastructure and use of technology for the draw purpose.  It is clearly more than what is statutorily permissible under Section 4(c) of the Act.  

viii. As per Section 4(e) of the Central Act, ‘the State Government itself shall conduct the draws of all the lotteries.’  But actual conduct of

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the draws is done by the Marketing Agent, reducing the role of the State Government to that of a mere spectator, thereby violating the above provision.  

ix. The Thunderball, the last prize amount of Rs.20/- is ‘when one main number  and  the  Thunder  ball  (fixed)  are  matched.’   Until clarifications to the contrary are provided with evidence, it has to be presumed that this is a camouflaged single digit lottery specifically prohibited under Section 4(a) of the Central Act.”  

It was also pointed out in the letter to the Government of India that

Sikkim  has  delegated  more  rights  and  responsibilities  to  the

Marketing Agents than what is statutorily permissible under the Act.

However, regarding the appointment of Marketing Agents, the State of

Sikkim has informed that they will discuss the matter with the legal

wing. The State of Sikkim has admitted that the tickets are printed on

PLAYWIN Stationery, clearly admitting violation of Section 4(b) of the

Act. With regard to the allegation that ‘Thunder Ball’ lottery is being

organized on the basis of  single digit,  the State of  Sikkim has not

offered  any  reasonable  explanation  or  furnished  any  document

instead the State has merely refuted the same.  Even though the State

of Sikkim was requested to furnish details/documents/clarifications

regarding the allegations raised, no reply was received from it.  The

Government of Sikkim was reminded on 11.05.2004 and 15.06.2004

to furnish the details called for earlier and also to provide details of

the new lotteries introduced by them in Kerala.  There has been no

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response from the State so far.  Thus the violations and irregularities

pointed out in respect of Sikkim State Lotteries as in January, 2004

continue unabated.  This shows that the Government of Sikkim is not

inclined to address the serious issues pointed out by the Government

of Kerala with regard to the illegalities and violations connected with

Sikkim State Lottery tickets which are being sold among the public in

Kerala.  

Conclusion:

23) The conduct of certain types of lottery trade in the country, the

malpractices thereof and their impact on the poorer sections of the

society have been under scrutiny of the Government for quite some

time.  The continued prevalence of the popularly known single digit

and instant lotteries and the temptation offered by them proved to be

the undoing of many families, especially poor daily wagers and low

income  groups.   In  spite  of  the  guidelines  issued  by  the  Central

Government over a period of time as also the guidelines issued in the

recent past by this Court, the evil has not been totally eliminated.   

24) The relevant provisions of the Act clearly demonstrate that even

though all types of lotteries are meant to be regulated by the said Act,

online  lotteries  were  not  under  the  contemplation  of  the  Central

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Government at the time when the Act came into force.  It is otherwise

also not a disputed fact that online lotteries became popular insofar

as  India  is  concerned  only  recently  and  in  any  case  after  the

enforcement of the Act and that is why the Government of India while

framing the 2010 Rules specifically defined ‘online lotteries’.  Having

this background in mind, the Scheme of the Act would clearly show

that the Government at that stage was concerned with paper lotteries

of  all  kinds.   From the  preamble  of  the  Act  spelled  out  from the

Statement of Objects and Reasons as re-produced hereinbefore, the

necessity  to  bring  about  legislation  in  the  matter  of  regulating

lotteries was felt on account of continued prevalence of single digit

and instant lotteries.  It was primarily done to curb malpractices in

the conduct of such lotteries which at that time were paper lotteries

only when the Act came into force.   

25) With  regard  to  the  contention  regarding  the  function  of  the

online  lottery,  we  are  of  the  considered  view  that  any  type  of

manipulation can be done in the printing of tickets at the terminal.

The  customer  cannot  know  whether  the  ticket  is  printed  at  the

terminal based on the command from the central server or not.  The

State  of  Sikkim  does  not  have  any  control  over  its  thousands  of

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terminals all  over India.   As per Section 4(h)  of  the Act,  the draw

should be  held  once  in  a  week.   It  means  a  fortune seeker,  after

purchasing the ticket, will get a week’s cooling time to wait for the

result  of  the  draw.   But,  under  the  scheme  of  online  lotteries,  a

number  of  lotteries  run  simultaneously.   So,  by  holding  several

lotteries, there can be several draws with a gap of few minutes in a

day and the gullible will remain glued and there is every likelihood of

purchase of tickets repeatedly, till all his savings are exhausted.  So,

if  the  Government  takes  a  decision  in  public  interest  to  prohibit

online lotteries, this Court should not interfere with the said decision

unless  there  are  compelling  grounds.   As  held  earlier,  going  by

Section 5, as interpreted by this Court in  B.R. Enterprises (supra),

the sale of ticket of a particular lottery can be prohibited provided the

concerned  State  Government  is  not  running  that  lottery.   While

interpreting a Statute of this nature meant to suppress the mischief of

gambling,  this  Court  should  accept  the  concept  of  purposive

interpretation and if possible save the notification intending to save

the people from the vice of gambling.  

26) It  is  common  case  that  lottery  is  a  species  of  gambling.

Gambling is considered as a pernicious  vice by all civilized societies

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from  time  immemorial.   The  Rigvedas,  Smritis  and  Arthashastras

have  condemned gambling as a  vice.   Several  Judges and learned

authors  are  unanimous  in  their  condemnation  of  gambling.

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 class; it preys upon the hard earnings of the

poor; it plunders the ignorant and the simple.

27) In Words and Phrases, Butterworths, 3rd Edition at page 71, it is

stated as follows:

“It must not be entirely forgotten in the construction of these Acts of Parliament (see now the Lotteries and Amusements Act, 1976) that the evil which the lottery law has sought to prevent was the evil which existed where poor people with only a few pence to feed their children would go and put these few pence into a lottery and lose them, and this sociologically was a bad thing…”    

28) Even in B.R. Enterprises (supra), this Court has held as under:

“47.  From  the  references  from  Dharmashastra,  opinions  of distinguished  authors,  references  in  the  Encyclopaedia Britcannica and Boston Law Review and others, we find that each concludes, as we have observed, lottery remains in the realm of gambling.  Even where it is State-sponsored still it was looked down upon as an evil.  Right from ancient time till the day all expressed concern to eliminate this, even where it was legalized for raising revenue either by the king or in the modern times by the State.  Even this legitimization was for the sole

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purpose of raising revenue, was also for a limited period, since this received condemnation even for this limited purpose.  All this gives a clear picture of the nature and character of lottery as perceived through the conscience of the people, as revealed through  ancient  scriptures,  also  by  various  courts  of  the countries.”

This Court further added:

“59…..But it cannot be doubted and it is recognized by all the countries that gambling by its very nature promises to make a poor man a rich man; to quench the thirst of a man in dire economic distress or to a man with a bursting desire to become wealthy  overnight  it  draws  them  into  the  magnetic  field  of lotteries with crippling effect.  More often than not, such hopes with  very  remote  chance  encourages  the  spirit  of  reckless prosperity (sic  propensity) in him, ruining him and his family. This  encouraging  hope  with  the  magnitude  of  prize  money never  dwindles.   Losses  and  failures  in  lotteries  instead  of disencouragement increases the craze with intoxicating hope, not only to erase the losses but to fill his imaginative coffer. When  this  chance  mixes  with  this  utopian  hope,  he  is repeatedly  drawn back  into  the  circle  of  lottery  like  a  drug addict.  Inevitably, the happiness of his family is lost.  He goes into a chronic state of indebtedness…..”

29) Article 246(1) of the Constitution of India deals with exclusive

power  of  the  Parliament  to  make  laws  with  respect  to  matters

enumerated in List I (Union List) in the Seventh Schedule.  As per

Article 246(2), Parliament and the Legislature of any State also have

power to make laws with respect to any of the matters enumerated in

List III (Concurrent List) in the Seventh Schedule.  The Legislature of

the State has, however, exclusive power to make laws with respect to

matters enumerated in List II (State List) in the Seventh Schedule, as

per Article  246(3)  of  the Constitution.  Also,  there being a specific

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entry dealing with lotteries, the power to legislate on lotteries would

be in the exclusive domain of the Parliament, even though it is a form

of gambling and would be generally covered under Item No. 34 of List

II (State List).  The Parliament, in exercise of the power vested in it to

enact law on lotteries as per Item No. 40 of List I (Union List), enacted

the Lotteries (Regulation) Act, 1998.  Section 3 of the Act ordains that

save as otherwise provided in Section 4, no State Government shall

organize, conduct or promote any lottery.  A State Government has

been authorized to organize, conduct or promote a lottery, subject to

the  conditions  enumerated  in  Section  4  which  has  already  been

re-produced earlier.  It is absolutely clear that even though the power

to  legislate  on  lotteries  vests  exclusively  with  the  Parliament,  the

respective States have been delegated this power,  but it  has to be

subject  to  conditions  enumerated  in  Section  4.   By  virtue  of  the

provisions contained in Section 12 of the Act, the Government may,

by notification in the Official  Gazette,  make rules to carry out  the

provisions  of  the  Act.   Exercising  the  powers  vested  in  it  by  the

provisions contained in Section 12, the State of Kerala has framed the

“Kerala Paper Lotteries (Regulation) Rules, 2005.”

30) Provisions of the Act, in particular, Section 12 of the Act clearly

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manifest  that  even  though  the  power  to  legislate  on  the  subject

‘lotteries’ is in the exclusive domain of the Parliament, the power to

legislate  as  well  has  been  delegated  by  the  Parliament  to  the

respective  States  in  the  country  and as  mentioned  above,  it  is  in

exercise of that power the State of Kerala has indeed framed the Rules

of 2005.  It is significant to mention that Section 5 further authorizes

a  State  Government  to  prohibit  the  sale  of  tickets  of  the  lottery

organized, conducted or promoted by every other State.  Section 5 of

the Act was, however, under a serious challenge in B.R. Enterprises

(supra).  Framed  in  somewhat  different  language,  the  challenge  to

Section 5 was that the delegation to the State to decide to prohibit the

sale  of  lotteries  organized  by  other  States  is  a  delegation  by

Parliament  of  its  essential  legislative  power,  without  any  policy  or

bereft  of  the guidelines and that  there was total  abdication of  the

legislative  power  of  the  Parliament  which was  a  naked  delegation,

hence, violative of Article 14 of the Constitution of India. The counter

contention raised by the States and, in particular, the State of Tamil

Nadu which had banned lotteries of other States, but continued to

have its own, was that on a plain reading of Section 5, a State without

banning its own lotteries can ban lotteries organized by other States.

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The Union of India and also the State of U.P. had raised a contention

that Section 5 should be read as to entitle only such State to ban

which, as a policy, does not permit its own lottery to run.  If this be

so,  possibly  there  could  be  no  discrimination  as  it  would  apply

uniformly  to  all  the  States.   On the  respective  contentions  of  the

learned counsel as mentioned above, this Court framed the question

as follows:

“81. The legal principle which emerges, as submitted, is that delegation of essential legislative power of the principal to the delegatee would amount to abdication of its legislative power and if it is bereft of any guidelines then it is unsustainable in the eye of the law…..”

While dealing with the question aforesaid, this Court first recorded

reasons as to why the power had been delegated by the Union to the

States.  It was inter alia observed as follows:-

“83. As revealed from Anraj case-I some of the States sought permission  of  the  Union  as  a  policy  to  raise  their  revenue through  these  lotteries,  which  was  conferred  by  the Presidential Order under Article 258(1), though it records, the State could have exercised their discretion as a policy to have their  own  lotteries  without  such  permission  in  view  of  its extended executive power under Article 298.  It further reveals, till Parliament makes any law, the decision to start its lottery or to close it is exclusively within the executive power of each State.  This is because it is the policy decision of a State which has to decide as a principle whether it desires to collect in this form the revenue or not.  The benefit  of Article 298 is, it  is extraterritorial,  applicable  beyond  its  territory,  it  is  for  this State lotteries are places in Entry 40 List I.  So in a federal structure, Union has to play a role to coordinate between one State with the other.  So by regulation it has to subserve the objectives.  The Union cannot force a State to gamble if such a

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State does not want to gamble.  To run its own lotteries or to close it is left on the discretion of each State.  It is each State which has to decide its policy and has to be concerned about its subject.  In any case, the Union cannot force any State that it  must run its  own lotteries.   But control  of  State  lotteries running in the territory of other States is left on the Union. The State cannot restrict sales of lotteries organized by other States  even  in  its  territory  unless  authorized  by  the  Union. This difficulty was felt by the State which is indicated in Anraj case-I.   That  seems  to  be  the  reason  that  Parliament  has delegated this power to the State under section 5…..”

31) After  taking  into  consideration  the  background  leading  to

delegation of power by Union to the States, the question as to whether

the  delegation  could  be  construed  to  be  such  as  amounting  to

delegation of its essential legislative power and that too unguided or

unbridled was examined.  The question was answered as follows:-

“84. In  Section  2(b)  lotteries  are  defined  to  be  a  scheme  for distribution  of  prizes  by  a  lot  or  chance.   This  definition  itself recognizes that even in State lotteries the prizes are to be collected by chance  without  any  skill,  hence  gambling  in  nature.   Section  3 prohibits  that  no  State  lotteries  can  be  organized  without  the condition stipulated under clauses (a) to (k) of Section 4.  Section 4 provides the conditions to be complied with by the State lotteries.  To initiate any State lottery it is left to the policy of each State, for this Act is silent.  The only control is, in case it decides, then it must follow the  conditions  as  laid  down under  Section 4.   Next  comes Section  5  which  is  subject  matter  of  challenge,  the  delegation  of power to the State to prohibit the sale of lottery tickets organized by every other State.  If a State desires not to subject its people to the lottery gambling,  it  has no power to restrict  lotteries organized by other States.  It is to remove this mischief that power is conferred through delegation to the States to do it in terms of their own policy. By  virtue  of  this,  now the  State  Government  can prohibit  sale  of lottery tickets of every other State within its territory.  Next, Section 6 seeks strict compliance with Section 4.  Under this the Central Government may prohibit any State lottery which is being conducted in contravention of the conditions as laid down under Section 4 or Section 5.  Section 7 shows the rigour of

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this Act by making it a penal offence as against all, who violate the provisions  of  this  Act,  be  it  the  Head  of  the  Department  of  the Government or the agent, promoter or trader, to be punishable with two years rigorous imprisonment.  Section 8 makes such an offence cognizable and non-bailable.  Similarly, Section 9 deals with offences committed  by  the  companies.   Section  10  entrusts  the  Central Government  power  to  give  directions to  the  State  Government  for carrying  into  execution  the  provisions  of  this  Act,  Rule  or  Order. Sections  11  and  12  are  the  rule-making  power  entrusted  to  the Central and the State Governments respectively.  Section 13 repeals the Ordinance.  Thus, the whole Act makes clear that the subject it is dealing with is gambling in nature.  The object of the Act is not to control  the  policy  decision  of  each  State  to  start  or  to  close  its lotteries, but to regulate it  in case a State decides to run its own lottery  through  modalities  and  conditions  laid  down  therein. Emphasis of the whole Act is to abide by the conditions strictly if you want  to  run  a  lottery.   Thus,  regulation  is  through conditions  to eliminate even the remotest possibility of malpractices by providing stringent measures for its compliance.  Perusal of the Act reveals, the scheme of  the  Act  is  limited in its  application,  and it  admits  the subject it  is dealing is gambling in nature.  As we have said, the decision to collect or not to collect revenue through State lotteries is exclusively within the policy decision of the State and for this, neither the Union nor Parliament interferes nor is there any indication under the Act.  Thus, the question which remains is, if any State decides that it does not want any lotteries but if it feels helpless as having no jurisdiction over the lotteries organized by other States, what is the way out?  This can only be done by Parliament or by entrusting this power  on  such  State  desiring  so,  which  has  been  done  through Section 5.  In this background, for this helplessness of a State as recorded in Anraj case-I [(1984) 2 SCC 292] the remedy is provided by entrusting this power on the State under the impugned provision. This helps such State to achieve its objective of lottery (gambling) free zone within its territory.  A well-concerned remedy.  Next question is what could have been the guideline?  If State lotteries are gambling and it cannot be terms as ‘trade and commerce’ at common parlance for  any  free  right  under  the  Constitution.   Such  right  though recognized under Article 298, so other States may continue to enjoy till prohibited by valid law, and if any State wants within its State lottery-free zone and for which the power is entrusted to such State, it cannot be said in this setting and background and the nature of the subject that such a delegation is of its essential legislative power. The only guideline necessary in such delegation is to see that the State  does  not  pick  and choose  one  State  from the  other,  which guideline is already provided in this Section.  It provides that such a ban could  only  be if  it  is  applied  to  every  other  State.   The only residual field of attack so far as this delegation could be, which has

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been attacked in this case, that the State could on one hand ban lotteries of every other State but run its own lotteries.  It is argued that while a State bans lotteries of other States not to permit any gambling  activity  in  the  public  interest  as  a  policy  but  this  very public interest is flouted by having lotteries of its own.  It is true that unless this provision is read down to mean a State can only ban lotteries of other States when it bans as a policy its own lotteries it is bound to be subjected to the vagaries as pointed out and on deeper scrutiny it may not successfully stand.  But, by reading down the provision,  which  has  to  be  read  that  it  is  only  that  State  which decides  lottery-free  zone  within  its  State  can  prohibit  lotteries  of other States clearly provides the guidance for the exercise of such a power.  It is inbuilt and inherent in the provision itself in view of the scheme of the Act and nature of subject in issue.  If interpretation as given on behalf of the State of Tamil Nadu is accepted that delegation of power is absolute,  then the submission that  such delegation is unbridled without any guideline carries great weight.  Submission for the State of Tamil Nadu is that the lotteries may be prohibited in phases,  viz.  while  running  its  own  lotteries  yet  prohibiting  other lotteries, may be as a public policy, for law and order, for political reasons, morality, etc. For surviving such an interpretation given by Mr.  Ganguli,  Parliament  should  have  provided  some  guidelines. Such an interpretation falls into the trap of the submission that this delegation  is  unbridled.   So,  if  there  are  two  interpretations,  the interpretation which upholds the validity should be accepted.  So, the interpretation as given by Mr. Ganguli cannot be accepted.” “85. There are two parts of the attack of the delegation of power to the State under Section 5.  The latter part, by which it can prohibit sale of lottery tickets organized by every State which leaves no scope of  any discretion on the  States  to  discriminate from one State  to other.  So if it decides no lottery tickets of any State to be sold it cannot pick and choose from one State to the other.        Once it, as a policy, decides to prohibit the sale of lottery tickets of other States it must prohibit every other State, that is to say, all the States and such a delegation cannot be said to be either abdication of the legislative power of Parliament or to be unbridled or unguided. As we have said looking to the nature of the subject and object of the Act which is to help each State in its endeavor to run State lotteries which would include starting or closing its lotteries and when a State wants to have lottery-free zone in its State, then such a delegation to ban lottery of every other State cannot be said to be invalid.  To the first part, there are two interpretation, one on the plain reading of Section 5, a State may run its own lottery yet may prohibit the sale of lotteries of other States.  This construction leads to discrimination and  opens  for  criticism  of  unbridled  delegation.   The  submission further is, if the ban of sale of lottery tickets of every other State is as a public policy, affecting the morality and resultant ill effect on its

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subject then there is no justification that the State may run its own lottery  affecting the  very  subject  for  which the power  is  exercised prohibiting  the  lotteries  of  other  states.   It  is  true,  if  such  an interpretation is accepted then this submission has a force.  On the other  hand,  on  behalf  of  the  Union  the  submission  is  that  the language of the section has to be read down.  The decision to have its lottery  or  not  to  have  its  lottery  has  to  be in the public  interest. Every  decision  to  have  either  lotteries  authorized  by  the  State  or organized  by  the  State  has  to  be  in  public  interest.   May  be  for collection of public revenue or for a public purpose.  It has been held in  Central  Inland Water  Transport  Corporation Ltd.  v.  Brojo  Nath Ganguly AIR para 93: There must be no injury or harm to the public interest, public good and public welfare.  Thus,  the  decision  to  run  State  lottery  has  to  be  made  with  the conscience (sic consciousness) of its evil consequences on its subject. Thus before deciding the State has to equate the public welfare with the  injury  on  its  public.   It  may  be  in  a  given  case  within  the limitation of its financial capacity with the need of the hour it has to decide to run its own lotteries to augment its revenue in the larger interest of the public which if weighed with the evil consequences on its subject, the public welfare gains more by running it then the evil consequence on its subject has to give way till the situation changes by  finding  a  better  way  for  this  additional  source  or  evil consequences inflicting on its subject  overweighing.   This  exercise has to be by each State, the Union not coming in its way.  It is for each State to decide what is its public welfare and what constitutes an injury to the public interest.  Rattan Chand Hira Chand vs. Askar Nawaz Jung holds, what constitutes public interest or welfare would depend upon the time.  The social milieu in which the contract is sought to be enforced would decide the factum, the nature and the degree of injury.  86. So, whenever a State decides to run or not to run its lotteries it is  the State  which has to  decide as a  public  policy  in the  public interest.  Once such a decision is taken to have its State lottery-free zone, the entrustment of power by Parliament cannot be said to be ultra vires.  87. We find on plain reading of Section 5, it empowers the State Government  within  its  State  to  prohibit  the  sale  of  tickets  of  the lotteries organized by every other State.  There is also nothing in the language reading by itself so as to say, whether such power can be exercised  by  the  State  while  running  its  own  lottery  or  can  be exercised only where such State does not run its own lottery.  This leads to two possible interpretations, as referred to above.  In view of settled principle  of  interpretations,  the interpretation given by the union to read down the provision has substance.  This would mean that the State could only exercise such discretion if it decides not to

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have any lottery within its territory including its own lottery.  In this situation, the delegatee is tied down by this limitation which itself is a  clear  guide  to  a  State  hence  cannot  be  said  to  be  unbridled delegation.  So even to the first part it cannot be said to be arbitrary or unbridled.  So, we have no hesitation to approve the interpretation given by the Union to uphold the validity of Section 5.”

32) From the observations made by this Court, as extracted above,

learned counsel representing the appellants contended that the State

of  Kerala could not  prohibit  any form of  lottery  as long as it  was

running other forms of lottery of other States as also of the State of

Kerala.  After having given anxious thought to the rival contentions,

we are not inclined to accept the contention raised by learned senior

counsel for the appellants.  

33)  It may be reiterated that the question that came to be framed by

this  Court  on  the  rival  contentions  raised  by  the  counsel  for  the

parties in B.R. Enterprises (supra) was as to whether the delegation

of  essential  legislative  power  of  the  principal  to  a  delegatee  would

amount to abdication of its legislative power and if it is bereft of any

guidelines then is it unsustainable in the eyes of law.  This Court held

that if the State decides that it does not want any lotteries but if it

feels helpless as having no jurisdiction over the lotteries organized by

other States, it can only be done by the Parliament or by entrusting

this power on such State desiring so, which has been done through

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Section 5.  The remedy is provided by entrusting this power on the

State  under  Section  5.   This  would  help  the  State  to  achieve  its

objective of ‘lottery free zone’ within its territory.  While dealing with

the guidelines, this Court further observed that if a State may want it

to be a lottery-free zone, it  could not be said that such delegation

would be of essential legislative power.  The only guideline necessary

in such a delegation is to see that the State does not pick and choose

one State from the other, which guideline is already provided in the

Section.  If  the ban is applied to all  the States and also the State

banning  lotteries,  the  contention  that  delegation  was  excessive,

uncanalised and unbridled would lose its sting.  We are satisfied that

by virtue of  the provisions contained in Section 12 of the Act,  the

Centre has delegated its power to legislate with regard to lotteries to

States and further that there is specific delegation with regard to ban

of lotteries of  other States by virtue of  the provisions contained in

Section  5  of  the  Act.   This  delegation  of  legislative  power  of  the

principal  to  the  delegatee  would  not  amount  to  abdication  of

legislative  power  by  the  Centre  and  it  would  not  be  without  any

guidelines and would be sustainable in law if  the concerned State

may ban a lottery in its own State and of other States as well.  What

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is true with regard to the total ban of lotteries of other States, in our

view, would also be true with regard to a particular kind of lottery as

the delegation of power has been held to be valid if the power by the

delegatee may be used uniformly in its own State and also with regard

to the other States.  In the context of the facts and circumstances of

the case as fully detailed above, we hold that when the State of Kerala

may prohibit a particular kind of lottery from its own State, it can

prohibit sale of such lottery from any other State and that would not

be unsustainable in the eyes of law nor it could be against law as held

by this Court in B.R. Enterprises (supra).   

34) We also  hold  that  it  is  not  a case of  abdication of  legislative

power  and would  not  be  bereft  of  any guidelines  if  the  legislation

banning lotteries was applied uniformly. We, on the interpretation of

the  point  on  the  issue  of  delegation  of  essential  legislative  power

bereft of any guidelines, hold that it is not a case of abdication of the

legislative  power of  the  Centre  and further  that  if  the ban on the

online lottery applies uniformly, it would not be a case of exercising

power by a delegatee without any guidelines.  

35) In  the  case  of  The Senior  Electric  Inspector  (supra), this

Court, while considering as to whether the doctrine of contemporanea

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expositio can be applied in construing Acts which are comparatively

modern, held as under:-

“The  legal  position  may  be  summarized  thus:-The  maxim contemporanea  expositio  as  laid  down  by  Coke  was  applied  to construing ancient statutes but not to interpreting Acts which are comparatively modern.  There is a good reason for this change in the mode of interpretation.  The fundamental rule of construction is the same  whether  the  court  is  asked  to  construe  a  provision  of  an ancient  statute  or  that  of  a  modern  one,  namely,  what  is  the expressed  intention  of  the  Legislature.   It  is  perhaps  difficult  to attribute to a legislative body functioning in astatic society that its intention was couched in terms of considerable breadth so as to take within  its  sweep  the  future  development  comprehended  by  the phraseology used.  It is more reasonable to confine its intention only to the circumstances obtaining at the time the law was made.  But in a modern progressive society it would be unreasonable to confine the intention of a Legislature to the meaning attributable to the modern Legislature to  the  meaning attributable  to  the  modern Legislature making  laws  to  govern  a  society  which  is  fast  moving  must  be presumed to  be  aware  of  an enlarged  meaning  the  same concept might  attract  with  the  march  of  time  and  with  the  revolutionary changes brought about in social,  economic,  political  and scientific and  other  field  of  human  activity.   Indeed,  unless  a  contrary intention appears,  an interpretation should be given to  the words used to take in new facts and situations, if the words are capable of comprehending them.”

36) In  State vs. S.J. Choudhary (supra), this Court in paragraph

10 had referred to a passage contained in statutory interpretation by

Francis Bennion, Second Edition for holding that the Indian Evidence

Act, 1872 is by its very nature is an “ongoing Act”.  Paragraph 10 of

the judgment is reproduced below:-

(2) It is presumed that Parliament intends the court to apply to an ongoing Act a construction that continuously updates its wording to allow for changes since the Act was initially framed (an updating construction).  While  it  remains  law,  it  is  to  be  treated  as  always speaking.  This  means  that  in  its  application  on  any  date,  the

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language of the Act, though necessarily embedded in its own time, is nevertheless to be construed in accordance with the need to treat it as current law.

                            * * *” In the comments that follow it  is pointed out that an ongoing Act is taken to be always speaking. It is also, further, stated thus:  

“In construing an ongoing Act, the interpreter is to presume that Parliament intended the Act to be applied at any future time in such a way as to give effect to the true original intention. Accordingly the interpreter is to make allowances for any relevant changes that have occurred,  since  the  Act’s  passing,  in  law,  social  conditions, technology, the meaning of words, and other matters. Just as the US Constitution  is  regarded  as  ‘a  living  Constitution’,  so  an  ongoing British Act  is regarded as ‘a  living Act’.  That  today’s  construction involves the supposition that Parliament was catering long ago for a state of affairs that did not then exist is no argument against that construction. Parliament, in the wording of an enactment, is expected to anticipate temporal developments. The drafter will try to foresee the future, and allow for it in the wording.

* * * An enactment of former days is thus to be read today, in the light

of dynamic processing received over the years, with such modification of the current meaning of its language as will now give effect to the original  legislative  intention.  The  reality  and  effect  of  dynamic processing  provides  the  gradual  adjustment.  It  is  constituted  by judicial  interpretation,  year  in  and  year  out.  It  also  comprises processing by executive officials.”

37) Similarly,  in  SIL  Import  USA  (supra),  this  Court  has  again

reiterated as follows:-

“16. Francis  Bennion  in  Statutory  Interpretation has  stressed  the need  to  interpret  a  statute  by  making  “allowances  for  any  relevant changes  that  have  occurred,  since  the  Act’s  passing,  in  law,  social conditions, technology, the meaning of words, and other matters”.

17. For the need to update legislations, the courts have the duty to use  interpretative  process  to  the  fullest  extent  permissible  by  the enactment. The following passage at p. 167 of the above book has been quoted with approval by a three-Judge Bench of this Court in  State v. S.J. Choudhary:

“It is presumed that Parliament intends the court to apply to an ongoing Act a construction that continuously updates its wording to allow for  changes since the  Act  was initially  framed (an updating construction).  While  it  remains  law,  it  is  to  be  treated  as  always

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speaking.  This  means  that  in  its  application  on  any  date,  the language of the Act, though necessarily embedded in its own time, is nevertheless to be construed in accordance with the need to treat it as current law.””

38) With  the  ongoing  development  in  the  field  of  science  and

technology, even though the online lotteries were not in vogue in 1998

when the Parliament had passed the Act, it came into existence at a

later point of time.  The principles laid down by this Court in  B.R.

Enterprises (supra) would apply to the paper lotteries which were in

existence  at  that  point  of  time.   The  principles  laid  down therein

would also apply to online lotteries or internet lotteries by treating

them as a separate class.  The principle laid down therein is that if

the  State  Government  has  to  prohibit  any  lottery  organized,

conducted or promoted by every other State, it has to prohibit the sale

of its own lottery also.  Meaning thereby, if a paper lottery is being

prohibited  by a  particular  State  then that  paper  lottery  has  to  be

prohibited as a whole.  Likewise, if online or internet lottery is to be

prohibited by a State then that online lottery or internet lottery of all

States including that State also has to be prohibited.  Viewed from

this angle, we are of the considered opinion that State of Kerala was

well within its rights to prohibit the sale of online or internet lotteries

in its State and there is no fault in it.  It is well within the powers

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conferred on it under Section 5 of the Act.  A State Government can

organize,  conduct  or  promote  a  lottery  subject  to  conditions

mentioned in Section 4 and if there is any violation of the conditions

mentioned  in  Section  4,  it  would  be  always  open  to  the  State

Government to prohibit  such lottery and that would be within the

legislative power vested with the State under Section 5 of the Act as in

that case the State would be only complying with the provisions of the

Act  made  by  the  Parliament.   The  learned  Single  Judge  while

examining the facts of the case, manner and method in which the sale

of online lotteries are conducted, has already held that it violates the

provisions  contained  in  Section  4  of  the  Act.   In  fact,  during  the

course  of  arguments,  no  effort  was  made  to  dislodge  the  findings

recorded by the courts below. The view adopted from the observation

made  by  this  Court  in  B.R.  Enterprises  (supra),  in  any  case,  is

possible.   

39) In  our  considered  opinion,  learned  single  Judge  of  the  High

Court rightly mentioned in his judgment that “in fairness, it must be

conceded that  Section 5,  in  the  light  of  the  interpretation in  B.R.

Enterprises  (supra),  admits  two  interpretations.   One  is  that  the

State can prohibit any form of lottery, if only it is not running any

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lottery at all.  The second interpretation is that the State can prohibit

a particular form of lottery, if it is not running that form of lottery,

even  if  it  is  running  other  types  of  lotteries.   The  Act  has  been

designedly made to suppress the mischief of lottery.   Therefore, we

feel  that  an  interpretation,  which  advances  the  object  of  the  Act,

should  be  favoured.   That  means,  the  State  can  prohibit  online

lotteries, if it is not running the said type of lotteries.  The decision in

B.R. Enterprises (supra), which was dealing with the prohibition of

paper  lotteries,  does  not  stand  in  the  way  of  accepting  such  an

interpretation.  Accordingly, the main challenge against the impugned

notification that it violates Section 5 of the Act is repelled.  

40) In view of the foregoing discussion, we do not find any infirmity

in the order passed by the Division Bench of the High Court dated

23.05.2006, consequently, the appeals and the writ petitions fail and

are accordingly dismissed.  However, the parties are left to bear their

own costs.

...…………….………………………CJI.           (H.L. DATTU)                                  

.…....…………………………………J.                  (R.K. AGRAWAL)                                  .…....…………………………………J.                  (ARUN MISHRA)                                  

NEW DELHI; NOVEMBER 5, 2015.  

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ITEM NO.1A               COURT NO.11               SECTION XIA (For Judgment)                S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS

Civil Appeal  No(s).  3518/2007 ALL KERALA ONLINE LOTTERY DEALERS ASS.             Appellant(s)                                 VERSUS STATE OF KERALA & ORS.                             Respondent(s) WITH W.P.(C) No. 641/2007 C.A. No. 3519/2007 C.A. No. 3520/2007 W.P.(C) No. 233/2010 Date : 05/11/2015 These appeals and writ petitions were called on

pronouncement of today. For Appellant(s)  Mr. Nikhil Nayyar, AOR                                         Petitioner-in-person For Respondent(s)  Ms. Liz Mathew, AOR                                        M/s Arputham Aruna & Co.

Mr. Gopal Singh, AOR Mr. Rituraj Biswas, Adv. Ms. Varsha Poddar, Adv. Mr. Shreekant N. Terdal, AOR Mr. T.C. Sharma, AOR

Hon'ble Mr. Justice R.K. Agrawal pronounced the reportable judgment of the Bench comprising Hon'ble the Chief Justice, His Lordship and Hon'ble Mr. Justice Arun Mishra.  

The appeals and writ petitions are dismissed in terms of the signed reportable judgment.  

(R.NATARAJAN)        (SNEH LATA SHARMA)  Court Master       Court Master

(Signed reportable judgment is placed on the file)        

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