T JOHN ROSE Vs. STATE OF KERALA

JUDGEMENT

(1.) Writ petitioner is engaged in the sale and distribution of paper lotteries organized and conducted by the Royal Government of Bhutan which is marketing its lotteries in various States in India in terms of Ext. P1 bilateral agreement entered into between the Government of India and the Royal Government of Bhutan. Petitioner was having a certificate of registration issued under S.7 of the Kerala Tax on Paper Lotteries Act, 2005 for the sale of Bhutan lotteries in the State of Kerala. While so, he was served with Ext. P13 notice dated 27/10/2006 to show cause why registration granted to the petitioner be not cancelled on the ground that the petitioner has violated some of the provisions of S.4 of the Lotteries (Regulation) Act, 1998. Referring to clause (j) of S.2 of the Kerala Tax on Paper Lotteries Act, 2005 it is stated that the paper lotteries conducted in the State of Kerala should comply with the conditions prescribed under S.4 of the Lotteries (Regulation) Act, 1998 and the promoter should be a person who has been duly appointed by the Royal Government of Bhutan supported by documentary evidence and only those paper lotteries will come under the purview of the Kerala Tax on Paper Lotteries Act, 2005. It was also stated that as per the terms of the agreement between the Royal Government of Bhutan and the Government of India the lottery tickets could be sold in India subject to the provisions of the relevant laws in force in India, the Lotteries (Regulation) Act, 1998 and the Kerala Tax on Paper Lotteries Act, 2005. Reference was also made to the report of the Director of Vigilance and Anti Corruption Bureau dated 16/10/2006. Further it is stated in the notice that the petitioner had violated S.4(b), S.4(c), S.4(d) and S.4(h) of the Lotteries (Regulation) Act, 1998.

(2.) Petitioner then sent a detailed reply dated 06/11/2006 refuting the various allegations raised in the notice. Petitioner has stated that he is engaged in the sale and distribution of paper lotteries organized and conducted by the Royal Government of Bhutan which is marketing its lotteries in all States in India where sale of lottery tickets is permitted. Petitioner was granted registration after due verification of all the documents produced and was treated as a promoter for the sale of lottery tickets of Bhutan in the State of Kerala. Further it was also pointed out that as per S.5 of the Central Act, no State Government can prohibit the sale of lottery tickets organized by other State Governments within the State unless such State Government does not organize its own lottery and declares that State is a lottery free zone. Central Government has never thought of taking any action against the sale of lottery tickets of the Royal Government of Bhutan in the State of Kerala on the ground that the petitioner has violated the provisions of S.4 of the Lotteries (Regulation) Act, 1998. No order was also passed by the Government of India under S.6 of the Act holding that the petitioner is selling lottery tickets of Royal Government of Bhutan in contravention of S.4 or 5 of the Central Act. It is also stated that the petitioner was never made known about the enquiry conducted by the Director of Vigilance and Anti Corruption Department. The attempt of the State Government who is a competitor in the business of conducting lotteries is only to see that lottery tickets of Government of Bhutan are not sold in the State of Kerala. Further it is stated that State Government has no power to interfere with the treaty entered into between Royal Government of Bhutan and the Government of India. Petitioner therefore submitted that there is no justification in cancelling the registration granted to him under the Kerala Tax on Paper Lotteries Act. Since the respondent did not accept the tax to renew the registration petitioner has approached this Court seeking a declaration that S.10(4) of the Kerala Tax on Paper Lotteries Act, 2005 in so far as it provides that cancellation of registration of promoters is beyond the legislative powers of the State of Kerala, inconsistent with the provisions of the Lotteries (Regulation) Act, 1998 and is discriminatory and ultra vires the provisions of Art.298 of the Constitution and also for a writ of certiorari to quash Ext. P13 notice. Direction was also sought for commanding the third respondent to receive the tax under the Kerala Tax on Paper Lotteries Act, 2005 and also for other consequential reliefs.

(3.) Learned Single Judge repelled the challenge against Ext. P13 notice and stated that since Bhutan is a foreign country and not a State in the Republic of India the provisions of the Central Act are not applicable to lotteries run by the Royal Government of Bhutan. Learned Judge took the view that a legislation under Entry 40 of list I of the Seventh Schedule of the Constitution can apply only to lotteries conducted by the Central and the State Governments and the prohibition against the State of Kerala in taking action against other State lotteries has no application whatsoever to the lottery run by the Royal Government of Bhutan. Learned Judge took the view that under Ext. P1 treaty, it can sell the tickets of its lotteries in the various states in India, but its sale shall be subject to the local laws applicable. Learned Judge referred to Entry 34 of List II and stated that in the case of foreign lotteries, the State Government can always maintain the stand that the registration can be granted only if they conform to the stipulations contained in S.4 of the Central Act, the learned Judge felt. Learned Judge also took the view, as far as other State lotteries are concerned, the provisions under the Kerala Act, which have the tendency to prohibit the sale of tickets of lotteries of other States are not enforcible by virtue of the constitutional limitation on the power of the State Legislature. But as far as the foreign lotteries are concerned, there is no necessity to read down the provisions of the Kerala Act.