STATE OF GOA Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) The First Petitioner is the State of Goa. Second Petitioner is the authorised agent and sole distributor of the First Petitioner, for marketing the lotteries organised by First Petitioner.

(2.) First Petitioner organises two types of lotteries under the Goa State Lottery Rules, 1991. The first is the conventional/ traditional lottery, known as open number tickets, wherein the lottery tickets are sold to participants and the winning tickets are drawn from the pool of tickets offered for sale. In this scheme, the sale of open number tickets concludes before the lottery draw is actually held. The second is known as instant lottery, where the sale of tickets commences only after declaration of the results and continues till the last date fixed by the Director of State Lotteries. These Petitions relate to the legality of Instant Lotteries and the right of the State of Karnataka (first Respondent) to prohibit the sale of tickets under such Instant Lottery Scheme organised by another State.

(3.) The petitioners contend that each State has the right to conduct lotteries and other State cannot prohibit or regulate sale of such lotteries in their States. They also contend that the Instant Lottery organised by State of Goa conforms to the essential characteristics of, a lottery organised by a State and, therefore, the other states where tickets of such lottery are sold cannot regulate or prohibit sale of such tickets. In this behalf, reliance is placed on two decisions of the Supreme Court in H. Anraj v. State of Maharashtra, AIR 1984 SC 781 and State of Haryana v. Suman Enterprises, 1994 (4) SCC, 217.3.1. In Anraj's case, the Supreme Court held as follows at Page 783:-"Entry 40 of' List I of the VII Schedule to the Constitution is "Lotteries organised by the Government of India or the Government of a State". Entry 34 of List II of VII, Schedule is, "Betting and gambling". There is no dispute before us that the expression "Betting and gambling" included and has always been understood to have included the conduct of lotteries. Quite obviously, the subject 'Lotteries organised by the Government of India or the Government of a State" has been taken out from the legislative field comprised by the expression "Betting and gambling" and is reserved to be dealt with by Parliament. Since the Subject 'Lotteries organised by the Government of India or the Government of a State' has been made a subject within the exclusive legislative competence of Parliament, it must follow, in view of Art. 246(1) and (3), that no legislature of a State can make a law touching lotteries organised by the Government of India or the Government of a State"."Therefore, the Government of a State has the right to conduct lotteries subject to legislation by Parliament. Since there is at present no legislation by Parliament in the subject of 'Lotteries organised by the Government of India or the Government of a State', the Government of every State has the unrestricted right to organise lotteries of its own."3.2. In SUMAN ENTERPRISES, the Supreme Court laid down the following basic and essential characteristics of a State organised lottery :(a) The lottery tickets which bear the imprints and logo of the State must be printed by the State Government or directly at the instance of the State Government, so as to ensure its authenticity and genuineness and to ensure that any possibility of duplication of the tickets and sale of fake tickets is provided against and rendered impossible;(b) The State itself must sell the tickets, though, if it thinks necessary or proper so to do; through a sale distributor or selling agent or several agents or distributors under terms and conditions regulated by the agreement reached between the parties.(c) The sale proceeds of the tickets either sold in retail or wholesale, shall be credited for the funds of the Government.(d) The draws for selecting the prize winning tickets must be conducted by the State itself, irrespective of the size of the prize money. (e) If any prize money is unclaimed or is otherwise not distributed by way of prize, it must revert to and become the property of the State Government. The Supreme Court while declaring that no State can interfere or regulate the lotteries organised by other State Governments, has indicated that the Lottery organising State should make an application to the State where it decides to sell the lottery tickets, so that the concerned State Government can examine the application in the light of the criteria laid down by the Supreme Court and make an appropriate order as to whether the lottery of the organising State qualifies for being reckoned as a lottery organised by the State; and if the affected State comes to the conclusion that the Lottery is a State organised lottery, it shall declare and notify that the tickets in respect of such lottery could be sold. It is made clear that such examinations not with the intention of regulating the sale of such lottery ticket, but to ensure it falls under the category of 'State organised lotteries'. It follows therefore that if the affected State comes to the conclusion that the 'lottery' does not answer the required characteristics, it can either prohibit or regulate the sale of such tickets.