STATE OF SIKKIM Vs. STATE OF KERALA

JUDGEMENT

(1.) THE first petitioner is the State of Sikkim. The second petitioner is a Company, registered under the Companies Act. It is the marketing agent of the online lotteries of the first petitioner. The third petitioner is a registered partnership firm, appointed as the distributor of online lottery tickets, by the second petitioner. They have approached this Court, mainly challenging Ext. P11 notification dated 22. 4. 2005 issued by the Kerala Government, prohibiting the sale of computerized and online lottery tickets, organized, conducted or promoted by all State Governments in the Kerala State and permitting the sale of paper lotteries, organized, conducted or promoted by various State Governments, including the Kerala Government. The brief facts of the case are the following:

(2.) THE organizing of lotteries by State Governments is regulated by the provisions of the Lotteries (Regulation) Act, 1998. The State of Sikkim has issued Ext. P12 Sikkim On-line Network Lottery Rules, 2001 for organizing, conducting and promoting online lotteries. The second petitioner, the sole marketing agent of the first petitioner, has established computer terminals throughout the territory of India, except in lottery free zone States, for the sale of online lottery tickets. It has established more than 900 such terminals in the State of Kerala. While so, the Government of Kerala issued the Kerala State Lotteries and Online Lotteries (Regulation) Rules, 2003. In purport, exercise of the powers under the said Rules, when the Director of Lotteries of the State of Kerala and the officers under him, started interfering with the running of lotteries by the 1st petitioner in the State, petitioners 1 and 2 approached this Court, challenging the offending provisions in the said Rules. A learned single Judge of this Court upheld the validity of the Rules. But, the Division Bench of this Court, by Ext. P1 order dated 19. 12. 2003, stayed the impugned provisions of the Rules. Finally, the Writ Appeal was dismissed, vacating the said interim order. But, the Apex Court entertained the S. L. P. against the judgment of the Division Bench. By Ext. P3 order dated 17. 5. 2004, the Apex Court restored Ext. P1 interim order of the Division Bench. While so, this Court, by Ext. P4 judgment, held that if any lottery is run in violation of Section 4 of the Lotteries (Regulation) Act, the police can prosecute the offenders, as any violation of Section 4 is a cognizable offence. The Writ Appeals filed against the said judgment are pending before the Division Bench of this Court. The first petitioner herein has challenged Ext. P4 judgment directly before the Hon'ble Supreme Court and the Apex Court has admitted the S. L. P. and by Ext. P6 dated 6. 9. 2004, ordered that Ext. P1 interim order of the Division Bench will remain in force. The petitioners pointed out that subsequently Ext. P4 judgment was stayed by the Apex Court. While so, contempt proceedings were initiated against the officers of the State of Kerala for the violation of the interim orders of the Apex Court and in the said proceedings, the respondents apologized and undertook to withdraw all prosecutions. Subsequently, the Government by S. R. O. 33/2005 dated 13. 1. 2005, issued Ext. P10 amendment to the Kerala State Lotteries and On-line Lotteries (regulation) Rules, 2003 and vide S. R. O. No. 34/2005 dated 13. 1. 2005, prohibited the sale of all computerized and online lottery tickets in the State of Kerala. The relevant Government orders publishing them are G. O. (P ). No. 3/2005/td dated 13. 1. 2005 and G. O. (P ). No. 4/2005/td dated 13. 1. 2005. They were followed by S. R. O. No. 73/2005 dated 27. 1. 2005, prohibiting the sale of all lotteries in the State of Kerala and declaring the State a lottery free zone. Simultaneously, the Government repealed the Kerala State Lotteries and Online Lotteries (Regulation) Rules, 2003. The said combined notification published as per G. O. (P ). No. 11/2005/td dated 27. 1. 2005 is produced as Ext. P13 in the writ petition. Subsequently, the Government published S. R. O. No. 382/2005 dated 22. 4. 2005, as per G. O. (P ). No. 68/2005/td dated 22. 4. 2005 (Ext. P11), lifting the ban, concerning the sale of paper lotteries and continuing the ban on the sale of computerized and online lottery tickets organized, conducted or promoted by all State Governments. By the said notification, Kerala has been declared to be an online lottery free zone. This Writ Petition is filed, challenging Exts. P10 and P11 and seeking consequential reliefs.

(3.) EXT. P10 is no longer in force, in view of Ext. P13. At the time of hearing, the challenge against Ext. P11 alone was canvassed and that too, to the extent it prohibits computerized online lotteries. According to the petitioners, the State has no jurisdiction to issue a notification in the nature of Ext. P11. The State may declare that Kerala is a lottery free zone and prohibit the sale of all lotteries including online lotteries, in the State of Kerala. But, it cannot prohibit the sale of tickets of online lotteries alone. The same will offend the provisions of Section 5 of the Lotteries (Regulation) Act, as interpreted by the Apex Court, it is submitted.