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THE STATE OF SIKKIM REP BY ITS DIRECTOR versus THE STATE OF TAMIL NADU REP BY

High Court of Madras

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The State of Sikkim rep by its Director v. The State of Tamil Nadu rep by - W.P.M.P.No.54259 of 2002 [2002] RD-TN 776 (1 October 2002)



IN THE HIGH COURT OF JUDICATURE AT MADRAS



Dated: 01/10/2002

Coram

THE HON'BLE MR.JUSTICE P.D. DINAKARAN

W.P.M.P.No.54259 of 2002

and W.P.M.P.Nos. 54260 and 54261 of 2002,

W.P.M.P.SR.Nos.165142 and 165295 of 2002

in W.P.No.36067 of 2002

and

W.P.M.P.No.56159 of 2002,

W.P.M.P.SR.No.165140 of 2002

in W.P.No.37384 of 2002

The State of Sikkim rep by its Director ..... Petitioner. -Vs-

1. The State of Tamil Nadu rep by

Secretary to Govt., Department of Home,

Court - II, Fort St.George, Chennai - 9.

2. The Director General of Police,

Kamaraj Salai,

Mylapore, Chennai - 4. ..... Respondents. P.D.DINAKARAN,J.

:Order

The State of Sikkim, the petitioner in W.P.No.36067 of 2002, seeks a writ of a writ of Declaration, declaring Rule 20 of the Tamil Nadu State Lotteries (Regulation) Rules, 2002 (herein after referred to as the 'Rules') as ultra vires the Constitution, the provisions of Sections 5, 6 and 12 of the Lotteries (Regulation) Act (herein after referred to as the 'Act') and illegal, null and void ab initio, in so far as the petitioner is concerned and the said writ petition was admitted on 19.9.2002. 2.1. Pending the said W.P.No.36067 of 2002, the State of Sikkim also filed W.P.M.P.Nos.54259 to 54261 of 2002, viz.

(i) for an order of interim injunction, restraining the first respondent from passing any order under Rule 20(1) of the Rules without a show cause notice and affording the petitioner an opportunity of being heard in this regard pending disposal of the above writ petition, in W.P.M.P.No.54259 of 2002;

(ii) for an order of interim injunction, restraining the second respondent and his men, agents and subordinates from seizing the lottery tickets of the petitioner from its distributor or its stockist and sub agents in the State of Tamil Nadu by virtue of powers vested on them under the Rules and/or Section 294A of the Indian Penal Code pending disposal of the above writ petition, in W.P.M.P.No.54259 of 2002; and

(iii) for an order of interim stay, staying the operation of and effect of Rule 20 of Rules, pending disposal of the above writ petition, in W.P.M.P.No.54261 of 2002.

2.2. As it may not be proper to stay the statutory Rule pending disposal of the writ petition challenging the Rule, this Court while admitting W.P.No.36067 of 2002 on 19.9.2002, posted the petition for stay, viz., W.P.M.P.No.54261 of 2002 along with the main writ petition. However, passed the following interim order in W.P.M.P.Nos.54259 and 54260 of 2002 on 19.9.2002:

"Except to make it clear that the respondents shall not initiate any action under Rule 20 of the Tamil Nadu State Lotteries (Regulation) Rules, 2002, which is impugned in the above writ petition, nor initiate any prosecution or seize the lotteries of the petitioner without giving any fair and reasonable opportunity to the petitioner, no further order is required in these petitions."

3. Thereafter, the State of Mizoram, the petitioner in W.P.No.37384 of 2002 sought for a writ of Declaration, declaring Rule 20 of the Rules, as ultra vires the Constitution, the provisions of Sections 5, 6 and 12 of the Act and illegal, null and void ab initio, in so far as the petitioner is concerned and the same was admitted on 1.10.2002. However, in the petition for stay, viz., W.P.M.P.No.56159 of 2002 this Court passed an order dated 1.10.2002 identical to that of the order dated 19.9.2002 passed in W.P.M.P.Nos.54259 and 54260 of 2002 in W.P.No.36067 of 2002.

4. Mr.D.Krishna Kumar, learned Special Government Pleader appearing for the respondents sought the leave of this Court to post the above W.P.M.P.s for being mentioned along with W.P.M.P.SR.Nos.165140, 16514 2, 165295 of 2002, seeking modification of the earlier interim orders dated 19.9.2002 and 1.10.2002 made in W.P.M.P.Nos.54259 and 54260 of 2002 in W.P.No.36067 of 2002, and W.P.M.P.No.56159 of 2002 in W.P. No.37384 of 2002 respectively. Since, the petitions in W.P.M.P.SR.Nos.1 65140, 165142, 165295 of 2002 were not numbered and placed before this Court, the Registry is directed to number the same. Hence, these matters were heard for further orders.

5. Heard Mrs.Nalini Chidambaram and Mr.R.Krishnamoorthy, learned senior counsel appearing for the petitioners in respective writ petitions, and Mr.N.R.Chandran, learned Advocate General for the respondents 1 and 2.

6. Mr.N.R.Chandran, learned Advocate General, seeks modification of the orders dated 19.9.2002 and 1.10.2002 made in W.P.M.P.Nos.54259 and 54260 of 2002 in W.P.No.36067 of 2002, and in W.P.M.P.No.56159 of 2002 in W.P.No.37384 of 2002 respectively, on the following grounds: i. writ petitioners are in huge arrears of sales tax payable to the State of Tamil Nadu and therefore the State of Tamil Nadu is empowered to prevent any evasion of payment of sales tax payable by the writ petitioners; ii. writ petitioners are not printing their respective lottery tickets on their own; instead, they permit their agencies to print their respective lottery tickets and therefore, the very authenticity of the respective lottery tickets could not be ensured by the State of Tamil Nadu. Consequently, fake lottery tickets are being sold carrying the very same numbers in duplicates, and as a result, the innocent general public are being betrayed and therefore, the very object of the enactment is defeated; and iii. in any event, the interim orders dated 19.9.2002 and 1.10.2002, referred to above, shall not be an impediment on the Enforcement Agency appointed by the State of Tamil Nadu to exercise the power conferred under the impugned Rule 20 of the Rules, in order to achieve the object of the Act, as the impugned Rule 20 of the Rules is not stayed by this Court.

7. Both Mrs.Nalini Chidambaram and Mr.R.Krishnamoorthy, learned senior counsel appearing for the writ petitioners, contend that: (a) the writ petitioners are not in arrears of any sales tax; but it is only the third respondent, an agency of the State of Tamil Nadu is in huge arrears of sales tax;

(b) the allegations with regard to the fake lottery tickets said to be sold by the petitioners or by their agencies are false and incorrect; and (c) in any event, neither the petitioners nor their agencies are party to such fake lottery tickets being sold, carrying the same numbers, in duplicates.

8. I have given careful consideration to the submissions of both sdies.

9.1. Admittedly, the validity of the Lotteries (Regulation) Act, 19 98, has been upheld by the Apex Court in M/s. B.R. ENTERPRISES LTD. v. STATE OF U.P. & ORS. reported in 1999 (9) SCC 700 = AIR 1999 SC 186 7. 9.2. Section 4 of the Act, which imposes several conditions subject to which the lotteries may be organized, reads as under: “Section 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 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 a 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." 9.3. Section 5 of the Act prohibits the sale of lottery tickets in a State, which reads as under.

“Section 5: Prohibition of sale of tickets 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.”

9.4. The Apex Court in M/s. B.R. ENTERPRISES LTD. v. STATE OF U.P. & ORS. reported in 1999 (9) SCC 700 = AIR 1999 SC 1867, while upholding the validity of the Act and interpreting Section 5 of the Act, has held as follows:

“......Para (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 organised 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 subst ance. 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 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.” 9.5. The impugned Rule 20(1) of the Rules, contemplates that the writ petitioners should satisfy the State of Tamil Nadu with relevant documents and details for the sale of lottery tickets with regard to: (a) the details as per section 4 of the Act; (b) copy of the rules, if any, made under section 12 of the Act; (c) specimen ticket should be submitted with name of the lottery, number of draws along with details of the prize structure of every lottery scheme and any subsequent addition or deletion to the scheme made from time to time; (d) details of distributors or selling Agents appointed for selling its lottery tickets in the State and the cancellation and fresh appointment thereof;

(e) details of procedure specified by the concerned State Government/Country for conducting the lottery draws and disbursing the prize amount;

(f) Details of the designated Authority or body entrusted to conduct the lottery draw by the concerned State Government/Country; (g) details of the procedure for publishing the lottery results; and (h) any other relevant information as directed by the Authority so as to enable it to verify that the scheme is conducted as per the provisions of the Act.

9.6. According to the learned Advocate General, these documents and the details are required for the Enforcement Agency of State of Tamil Nadu only to satisfy themselves that the conditions mentioned in Section 4 of the Act, referred to above, are complied with, particularly, to ensure the authenticity of the lottery tickets sold by the respective writ petitioners, as otherwise, the very object of the enactment would be severely defeated. 9.7. Both the learned senior counsel appearing for the writ petitioners categorically submit that there is no arrears of sales tax payable by the respective petitioners or their agencies and they also seriously deny the sale of fake lottery tickets by the respective petitioners or their agencies.

10.1. In this regard, this Court cannot ignore the fact that the Lotteries (Regulation) Act, 1998, was intended to regulate the lotteries. The conduct of the lottery trade in the country, the mal practices thereof and their impact on the poorer sections of the Society have drawn the attention of the Government for quite sometime. The temptation offered by the lottery traders proved to be the undoing of many families, especially poor daily wagers and low income groups and the said evil could not be totally eliminated, in spite of several guidelines issued in that regard, by the Apex Court. It is only under such circumstances, the Central legislation enacted the Lotteries ( Regulation) Act, 1998, to regulate the conduct of the lotteries in order to protect the interest of gullible poor. 10.2. If that be so, both the petitioners would not, in any way, be prejudiced by submitting their relevant documents and details contemplated under Rule 20(1) of the Rules so that the Enforcement Agency of the State of Tamil Nadu could ensure themselves with regard to the authenticity of lottery tickets being sold by the respective petitioners or their agencies, which, in fact, would not only prevent the sale of fake lottery tickets in the same number in duplicates, by which innocent poor people are tempted and betrayed, but also would benefit the respective petitioners and their agencies as it would prevent the sale of such fake lottery tickets by dubious persons. 10.3. That apart, Rule 20(7) of the Rules empowers the State Government to ensure that there is no arrears of sales tax payable to the State of Tamil Nadu. If the Agent selling the lottery tickets could not produce a certificate issued by the Assessing Authority to the effect that the sales tax in respect of the draw has been paid to the State Government, the Enforcement Agency of the State of Tamil Nadu is empowered to take appropriate action to prevent such evasion of sales tax and to recover the same, of course, after providing a fair and reasonable opportunity to the lottery traders and their agencies.

10.4. Once the petitioners categorically submit that they are not in arrears of sales tax, there need not be any impediment on the Enforcement Agency of State of Tamil Nadu for exercising the powers conferred under Rule 20(7) of the Rules, impugned herein, because in my considered opinion, when there cannot be a prohibition, prohibiting the writ petitioners to sell their respective lottery tickets in the State of Tamil Nadu in view of the decision of the Apex Court in M/s. B.R. ENTERPRISES LTD. v. STATE OF U.P. & ORS. reported in 1999 (9) SCC 70 0 = AIR 1999 SC 1867, referred to above, equally there cannot be any illegality or lack of jurisdiction on the part of the Enforcement Agency of State of Tamil Nadu to ensure that there is no evasion of sales tax to be paid by the petitioners or their agencies with respect to their respective lottery trade in the State of Tamil Nadu.

11. For the foregoing reasons, I am obliged to make it clear that the interim orders of this Court dated 19.9.2002 and 1.10.2002 made in W.P.M.P.Nos.54259 and 54260 of 2002 in W.P.No.36067 of 2002, and in W.P.M.P.No.56159 of 2002 in W.P.No.37384 of 2002 respectively, will not, in any way, be an impediment for the Enforcement Agency of the State of Tamil Nadu to satisfy themselves with regard to the authenticity of the lottery tickets being sold by the petitioners or their agencies requiring the writ petitioners to submit relevant document and details contemplated under Rule 20(1) of the Rules nor disentitle the Enforcement Agency to exercise their powers conferred under Rule 20(7) of the Rules to prevent any evasion of sales tax payable by the respective writ petitioners to the State of Tamil Nadu, of course after giving a fair and reasonable opportunity to the petitioners, on the following conditions:

i. the Enforcement Agency, namely the Director of Raffles, State of Tamil Nadu shall issue a certificate of authenticity of the lottery tickets of the respective writ petitioners and permit them or their agencies to sell their respective lottery tickets within 24 hours of the State Government working day from the time of submission of their respective documents and details contemplated under Rule 20(1) of the Rules read with Section 4 of the Act; and ii. the Enforcement Agency, Director of Raffles, State of Tamil Nadu is further directed to scrupulously follow the same yardstick even in the case of the third respondent, in order to ensure the authenticity of the lottery tickets being sold by her and to prevent any evasion of payment of sales tax payable by her to the State of Tamil Nadu.

In the result, W.P.M.P.Nos.54259 to 54261 and 56159 of 2002 and W.P. M.P.SR.Nos.165142, 165295 and 165140 of 2002 are ordered accordingly. 11.10.2002

Index: Yes

Internet:Yes

sasi/kpl

((SCO LYRIX 6.1

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Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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