STATE OF GUJARAT Vs. MOHANDAS MANUMAL

JUDGEMENT

(1.) The four respondents in Criminal Appeal No. 383 of 1975 were charged before the learned Metropolitan Magistrate Ahmedabad in Summary Case No. 2957 of 1974 with an offence punishable under secs. 4 (1)(a) (b) (c) and (d) of the Bombay Lotteries (Control and Tax) and Prize Competitions (Tax) Act 1958 (the Act). All the respondents are Directors of a private limited company known as Mohan Benefit Private Limited. The activity of this Company is to open schemes and enroll certain number of members or subscribers to the scheme. Each scheme is also known as a Group; and the number of subscribers is limited to a particular number. Each subscriber has to deposit or subscribe every month a particular amount for a particular number of months. The group in question as disclosed from the advertisement at Exh. 6 is described as Peoples Own Group. It is to consist of 2000 members each member subscribing a monthly subscription of Rs. 20.00 for 60 months. Each members is to get a Pass-book allotted to him. 34 Chits will be drawn every month; and the first two lucky members will get Rs. 1 200 each. Thereafter they have not to pay any instalment with the result that they cease to be the members of the group. In the remaining 32 chits drawn each lucky member gets Rs. 50.00 as bonus. with this difference that he continues in the group and has to continue to subscribe Rs. 20.00 per month in order to enable him to earn the prize of Rs. 1 200 These type of draws are repeated every month. Every five months there are two extra bonus draws of Rs. 1 200 each. After one year a member becomes eligible for a loan not exceeding 75 per cent of the subscribed amount on interest at the rate of 12 per cent per annum without any security. He becomes eligible for this loan four times of the entire period of the scheme i.e. 60 months. Those who have not received any gift i.e. bonus nor taken any help of loan would get bonus of 10% on the subscribed amount payable at the end of the period of the scheme i.e. 60 months. The advertisement or pamphlet at Exh.6 is in four languages including English and Gujarati. As regards return of the subscribed amount at the end of the scheme with bonus at the rate of 10% the English version of the advertisement uses the word gift or loan whereas Gujarati version uses the word bonus or loan. This scheme if held to be a lottery as contemplated by the Act would squarely fall under sec. 4(1)(a) (c) and (d) of the Act. The contention before the trial Court however was that this scheme would not fall within the meaning of lottery. The learned Magistrate stated that looking to the work done by the company it appeared that the company was doing the Sarafi business; that the deposit of any member was not at stake in any case but there was an additional benefit to the members either for winning a prize or a bonus prize; that there was an element of chance for winning a prize but thereby there was no loss of any kind to the member; that the prizes were being declared only as incentive to attract the members to deposit money in the Company and that the company was primarily doing the business of banking and prize declaration was meant for incentive for the promotion of the business of the Company.

(2.) It must at once be said that there was no evidence worth the name to suggest that the business of the Company was of banking. On the contrary the specimen passbook produced at Exh. 7 shows the object of the Company as under :

(3.) The first question to be determined as has been argued before us on behalf of both the sides and also by the learned advocates at the bar who intervened with the permission of the Court was what is the connotation of the word lottery occurring in the Act. It may be stated that neither the Indian Penal Code nor the Act defines lottery. But certain decisions in England and India make it clear what is meant by this term. In Halsburys Laws of England Third Edition Volume 18 at page 238 (paragraph 460) following observations occur :