ORDER
K.L. Manjunath, J.
1. The legislative and executive competency of the State of Karnataka in declaring Karnataka State as free zone from online and internet lotteries is called in question in these Writ Petitions.
2. Govt. of Meghalaya is the 1st petitioner in W.P.No.31393-95/04. 2nd petitioner is one of the agents of the State of Meghalaya. 3rd petitioner therein is the marketing agent of paper lottery of the State of Meghalaya.
3. In W.P.Nos. 31451-54/04 State of Sikkim is the 1st petitioner, 2nd petitioner is a marketing agent of the State of Sikkim, 3rd petitioner is engaged in occupation of selling lottery tickets of online lotteries of State of Sikkim and Meghalaya. 3rd petitioner is also selling tickets of the State of Sikkim and 4th petitioner is the director of the 3rd petitioner.
4. Petitioners are challenging the notification dated 24.7.2004 issued by the State of Karnataka prohibiting the sale of online and Internet lotteries and declaring the State of Karnataka as free zone of online and internet lotteries. Notification dated 24.7.2004 reads as hereunder:
'In exercise of powers conferred by Section 5 of the Lottery(Regulation) Act, 1998 (Central Act No. 17 of 1998), the Government of Karnataka hereby declares that the Karnataka State shall be the free zone from Online and Internet lotteries and prohibits the sale of all Computerized and Online lottery tickets marketed and operated through vending machines, terminals, electronic machines and tickets sold through internet in Karnataka with immediate effect.'
According to the petitioners, Entry-40 of List-I of 7th Schedule of Constitution of India provides for organization of lotteries either by the Govt. of India or by the Govt. of the State. Under Act 17/ 98 parliament in order to regulate lotteries and to provide for matters connected thereof and incidentally thereto has enacted the Act called Lottery (Regulation) Act, 1998 (hereinafter referred to as 'The Act') and the State does not have any power to regulate, supervise or legislate upon lotteries organized by other States. According to them, as per Section 5 of the Act, State Government can prohibit the sale of tickets of a lottery organized, conducted and promoted by every other State. Relying upon the definition of lottery and the judgment of the Hon'ble Supreme Court in B.R. ENTERPRISES v. STATE OF UTTAR PRADESH AND ORS., : (1999)9SCC700 contends that State of Karnataka cannot prohibit the sale of online/internet lotteries when the State of Karnataka has not banned conventional/paper lotteries within the State. According to them, State of Karnataka can declare the State as a lottery free zone but cannot prohibit a particular type of lottery thereby running conventional or paper lotteries of the State or allowing other States to sell their paper/conventional lotteries. According to the petitioners, notification dated 24.7.2004 issued by the State of Karnataka is in violation of Section 2(b) R/w Section 5 of the Act. Section 2(b) of the Act defines the word 'lottery'.
'Lottery means - a scheme in whatever form and by whatever name called for distribution of prizes by lot or chance to those persons participating in the chance of a prize by purchasing tickets.'
According to them, State Government can organize, conduct and promote a lottery subject to the conditions stipulated under Section 4 of the Act and if there is any violation of the conditions of Section 4 of the Act, the persons who contravenes are also liable to be punished. If such offences are committed by any State, Central Government may take action under Section 7 of the Act contending that ban of online and internet lotteries is contrary to the law laid down by the Hon'ble Supreme Court in B.R.Enterprises' cases. Petitioners have approached this Court to declare the notification dated 24.7.2004 as illegal and unconstitutional and requests this Court to quash the said notification.
5. State has filed its counter contending that petitions filed by the petitioners as not maintainable in view of Article 131 of the Constitution of India. It is contended by the State that as per the Lotteries Regulation Act, 1998, lottery can be organized either by the Union of India or by a State. Under Section 5 of the Act, State Government may within the State prohibit sale of tickets and lottery organized or conducted or promoted by every other State. If a State has prohibited sale of internet or online lottery of other States, it is a dispute between one State and another State and the State which has got legal right to conduct, promote and organize such lotteries as provided under the Act, can question the notification only before the Hon'ble Supreme Court and not before the High Court. It is further contended that petitioners 2 & 3 in the first batch of petitions and petitioners 2 to 4 in the second batch of petitions are only the agents of State of Meghalaya and State of Sikkim and that they have no independent right to question the notification dated 24.7.2004, therefore, petitions filed by the petitioners cannot be entertained by this Court and dispute in regard to a legal right of States cannot be settled by a High Court.
6. Further relying upon the judgment of the Hon'ble Supreme Court in B.R. Enterprises Case, it contends that when the judgment was delivered by the Hon'ble Supreme Court, online and internet lotteries were not invented by any State and that only conventional/ paper lotteries were being organised by the State, therefore Supreme Court had no occasion to consider whether the State can prohibit a particular type of lottery. Relying upon the very same judgment, Govt. Advocate has contended that online lottery is a class by itself and is different from conventional/paper lotteries and the State of Karnataka following the judgment in B.R.Enterprises case, has declared the State as a lottery free zone and prohibited the sale of its own lotteries viz., online and internet lotteries. It is further contended that State has not contravened either Section 5 of the Act or over-looked the judgment of the Hon'ble Supreme Court in B.R. Enterprises case. Therefore, respondents/State has requested the Court to dismiss the petitions.
7. Two persons filed impleading applications to come on record as additional respondents. One application was filed on 3.9.2004 by one Sri N.P. Amrutesh, a member of the Bar. Similarly, one Sri B. Krishna Bhat has filed an application to come on record on 1.10.2004. These two applications were resisted by the petitioners contending that they are neither necessary nor proper parties to adjudicate the matter in dispute and requested the Court to dismiss the applications. According to the impleading applicants, running of a online lottery is a social evil, due to which many poor people have committed suicide on account of loss sustained by them in playing lottery and that there was hue and cry among the general public and therefore State of Karnataka banned the online lottery in order to respect the sentiments and feelings of the general public. They further contend that online and internet lottery cannot be considered as a lottery as defined under Section 2(b) of the Act and they made an attempt to contend that online and internet lottery as not a lottery as defined under the Act. This Court permitted them to argue their case since they were supporting the case of the respondents. When the State is defending its action, applicants have no individual right to come on record. This Court is of the opinion that the applicants are neither necessary nor proper parties to adjudicate the dispute. In the circumstances, applications filed by the applicants to come on record have to be dismissed. Accordingly, they are dismissed.
8. I have heard Sri Soli J.Sorabji, learned Senior Advocate for Government of Meghalaya and Sri Subhash Agarwal, learned Senior Advocate for the State of Sikkim. Both of them contend that Article 131 of Constitution of India cannot be attracted to the facts and circumstances of the case. According to them, in regard to the dispute involves any question of law or fact on which the existence or extent of a legal right depends, then only Article 131 is attracted. According to them, in the present case, remaining petitioners viz., petitioners 2 & 3 in the first batch and petitioners 2 to 4 in the second batch are also aggrieved by the act of the State and that the remaining petitioners have invested several crores of rupees on the business and more than thousand retail outlets of each State are being run by the remaining petitioners and on the business of online and internet lotteries more than 30,000 persons are seeking out their livelihood. Relying upon the judgments in the case of STATE OF BIHAR v. UNION OF INDIA AND ANR., : [1970]2SCR522 STATE OF RAJASTHAN AND ORS. v. UNION OF INDIA, : [1978]1SCR1 and UNION OF INDIA v. STATE OF RAJASTHAN, : [1985]1SCR700 contend that whenever a private party is impleaded or involved in a dispute between the two States, Article 131 of the Constitution of India cannot be made applicable and requests the Court to overrule the objections of the State.
9. Per contra, learned Govt. Advocate Sri Anand contends that facts involved in the aforesaid judgments and facts involved in these Writ Petitions are altogether different. According to him, petitioners 2 & 3 in the first batch of petitions and petitioners 2 to 4 in the second batch of Writ Petitions are claiming right through the State of Meghalaya and State of Sikkim and that they have no individual right to challenge the notification dated 24.7.2004. He further contends that State of Meghalaya and State of Sikkim only to bring the Writ Petitions within the jurisdiction of this Court, have arrayed their agents as parties. According to him, it is the domain of a particular State either to organize or to conduct or to promote the sale of lottery and no individual can run a lottery as per the provisions of the Act. Petitioners 2 & 3 and petitioners 2 to 4 in these petitions are only mere agents of State of Meghalaya and State of Sikkim and they have no independent right to question the action of State of Karnataka. Therefore, he contends that the judgments relied upon by the learned Senior Counsel are distinguishable and cannot be made applicable to the facts of the present cases and requests this Court to uphold his contention.
10. According to the learned Senior Counsel appearing for the petitioners, in view of the judgment in the case of B.R. Enterprises, State Government cannot issue a notification differentiating and classifying different types of lotteries and thereby prohibiting the sale of online and internet lotteries in the State of Karnataka. They mainly relied upon para-85 and 87 of the said judgment which reads as follows
'85. There are two parts of the attack of the delegation of power to the State under Section 5. The latter part, by which it can prohibit sale of lottery tickets organized by every other State which leaves no scope of any discretion on the States to discriminate from one State to other. So if it decides no lottery tickets of any State to be sold it cannot pick or choose from one State to the other. One it, as a policy, decides to prohibit the sale of lottery tickets of other states it must prohibit every other State, that is no say, all the States and such a delegation cannot be said to be either abdication of the legislative power of Parliament, or to be unbridled or unguided. As we have said looking to the nature of the subject and object of the Act which is to help each State in its endeavour to run State lotteries which would include starting or closing its lotteries and when a State wants to have lottery - free zone in its State, then such a delegation to ban lottery of every other State cannot be said to be invalid. To the first part, there are two interpretations, one on the plain reading of Section 5, a State may run its own lottery yet may prohibit the sale of lotteries of other States. This construction leads to discrimination and opens for criticism of unbridled delegation. The submission further is, if the ban of sale of lottery tickets of every other State is as a public policy, affecting the morality and resultant ill effect on its subject then there is no justification that the State may run its own lottery affecting the very subject for which the power is exercised prohibiting the lotteries of other States. It is true, if such an interpretation is accepted then this submission has a force. On the other hand, on behalf of the Union the submission is that the language of the section has to be read down. The decision to have its lottery or not to have its lottery has to be in the public interest. Every decision to have either lotteries authorised by the State or organised by the State has to in public interest. May be for collection of public revenue or for a public purpose. It has been held in Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly AIR para 093:
There must be no injury or harm to the public interest, public good and public welfare. Thus the decision to run State lottery has to be made with the conscience (sic Consciousness) of its evil consequences on its subject. Thus before deciding the State has to equate the public welfare with the injury on its public. It may be in a given case within the limitation of its financial capacity with the need of the hour it has to decide to run its own lotteries to augment its revenue in the larger interest of the public which if weighed with the evil consequences on its subject, the public welfare gains more by running it then the evil consequences on its subject overweighing. This exercise has to be by each State, the Union not coming in its way. It is for each State to decide what is its public welfare and what constitutes an injury to the public interest. Rattan Chand Hira Chand v. Askar Nawaz Jung SCC para-17 holds, what constitutes public interest or welfare would depend upon the time. The social milieu in which the contract is sought to be enforced would decide the factum, the nature and the degree of injury.
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 organized 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 substance. This would mean that the State would 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.'
They further contend that lottery means a scheme in whatever form and by whatever name called. Therefore, they contend that whether it is called as conventional/paper lottery or online and internet lottery, State Government cannot dissect, differentiate and classify different types of lotteries. According to them, Internet and online lottery falls within the definition of Section 2(b) of the Act, therefore, State Government having allowed to sell conventional/ paper lotteries, cannot prohibit one type of lottery viz., internet and online lottery. According to them, act of the State is contrary to the judgment of the Hon'ble Supreme Court in B.R. Enterprises Case. They further contend there is no difference between conventional/paper lottery and online lottery. According to them, due to advanced technology, State of Karnataka, State of Meghalaya, State of Sikkim and other States started selling lotteries through computer terminals and customer can choose his own combination of numbers on the lottery and in case declared numbers match the chosen number or a part thereof as per the concerned scheme, customer who have chosen the same combination numbers win the prize, however, in case of a particular combination of number, if there are more than one winner, prize money would be shared amongst such members. Therefore, they contend that running of online and Internet lotteries cannot be considered as different from conventional/paper lottery and State of Karnataka cannot differentiate online lottery from conventional/paper lottery and requests the Court to quash the notification.
11. Per contra, relying upon the same judgment, learned Govt. Advocate contends that when Supreme Court rendered the judgment in B.R. Enterprises Case, there was only one type of lottery viz., conventional/paper lottery, therefore Hon'ble Supreme Court held that as long as State permits to sell its own lottery, has no power to prohibit the sale of other State lotteries. According to him, State of Karnataka has declared the State as a free zone from online and internet lotteries and when the State has banned its own lotteries, petitioners cannot contend that there is contravention of Section 5 of the Act and notification is in utter violation of the law declared by the Hon'ble Supreme Court in B.R.Enterprises case. According to him, arguments put forth by the learned Senior Counsel could have been appreciated by this Court provided Karnataka State had allowed to organize online and Internet lotteries within the State of Karnataka and thereby prohibiting the sale of online and internet lotteries of other States. Therefore, he requests this Court to negative the contention urged by the learned Senior Counsel for the petitioners. To support his argument, he has placed reliance on the judgment of the Supreme Court in STATE OF U.P. AND ANR. v. SYNTHETICS AND CHEMICALS LTD. AND ANR., : 1993(41)ECC326 wherein it is held as under:
'Constitution of India - Article 141 - 'law declared' - Decision not express, not founded on reasons nor proceeding on consideration of the issue, held, cannot be deemed as 'law declared' - Precedent Jurisprudence.'
Relying upon this judgment, learned Govt. Advocate contends that Hon'ble Supreme Court in B.R. Enterprises case, had no occasion to deal with the question whether State can ban a particular type of lottery. Relying upon this judgment, he contends that the law declared by the Hon'ble Supreme Court in B.R.Enterprises case cannot be made applicable to the present case. Per contra, learned Senior Counsel for the petitioners relying upon the judgment of the Hon'ble Supreme Court in DIRECTOR OF SETTLEMENTS, A.R AND ORS. v. M.R.APPARAO AND ANR., : [2002]2SCR661 contend that this Court cannot overlook the binding decision of the Hon'ble Supreme Court in view of Article 141 of the Constitution of India. Therefore, they request the Court to reject the arguments advanced by the learned Govt. Advocate
12. Having heard the learned counsel for the parties, following points will emerge for the consideration of this Court in these petitions:
1. Whether this Court can entertain the Writ petitions in view of Article 131 of the Constitution of India?
2. Whether the notification dated 24.7.04 is in violation of Section 5 of the Act and contrary to the law laid down by the Hon'ble Supreme Court in B.R. Enterprises Case?
13. In order to appreciate the rival contentions, this Court has to examine whether the judgments relied upon by the learned Counsel for the respective parties are to be examined by this Court. In STATE OF BIHAR v. UNION OF INDIA AND ANR. (Supra) (State of Bihar had filed a suit before the Hon'ble Supreme Court by invoking Article 131 of the Constitution of India against the Union of India and Hindustan Steel Ltd. contending that due to negligence and deliberate action of servants of both the defendants, there was short delivery of iron and steel material ordered by the State of Bihar. Since State of Bihar was seeking relief against the 2nd defendant Hindustan Steel Ltd., held that Article 131 cannot be attracted in view of the relief sought against a private party. In STATE OF RAJASTHAN AND ORS. v. UNION OF INDIA : [1978]1SCR1 , action taken under Article 356(1) of the Constitution of India was called in question but the Hon'ble Supreme Court held that State Government is different from the person who represent the State and therefore held that Article 131 cannot be attracted to the facts and circumstances of the said case. Similarly, in UNION OF INDIA v. STATE OF RAJASTHAN : [1985]1SCR700 , Union of India contended that a suit instituted before a Civil Court by the State; claiming damages under Section 80 of the Railways Act was not maintainable and that the dispute between the State and the Union of India had to be adjudicated by the Hon'ble Supreme Court as per Article 131 of the Constitution. But the Hon'ble Supreme Court held that such a dispute cannot be entertained by the Hon'ble Supreme Court as it was an ordinary dispute of commercial in nature and further held that civil suit filed by the State against the Union of India was maintainable.
14. From the above discussion it is clear that whenever a relief is sought either by an individual or against an individual, Article 131 cannot be attracted. But in the instant case, organizing, conducting and promoting of lottery is an exclusive domain of the State Government or Union of India. Lotteries can be organised as per the provisions of the Act. In other words, no individual can organise or promote a lottery. Organising and promoting of a lottery is fully controlled by the Act. Prohibition of sale of a ticket in a State can be made only by the State Government under Section 5 of the Act. If a particular State Government prohibits the sale and organization of lotteries of other States, same can be questioned either by the aggrieved State or by the Union of India. In such actions, no individual can question the action of a State prohibiting the sale of lottery tickets of other States. In other words, no legal right is vested with an individual and such a legal right is granted to a State under the Act. The acid test to be conducted in these cases is whether petitioners 2 & 3 in the first batch of Writ Petitions and petitioners 2 to 4 in the second batch of Writ Petitions can alone challenge the notification issued by the State of Karnataka banning internet and online lottery. Admittedly, they have no right to do so. They are claiming right through the State of Meghalaya and Sikkim as the agents of those two States in order to adjudicate the dispute which has arisen between the State of Karnataka and State of Meghalaya and State of Sikkim, presence of these petitioners viz., petitioners 2 & 3 in the first batch and petitioners 2 to 4 in the second batch of Writ Petitions are not required. When they are neither necessary nor proper parties to adjudicate the matter in controversy, as the State of Meghalaya and State of Sikkim are challenging the notification of the State Government contending that the same is contravening the provisions of Section 5 of the Act, this Court has to hold that legal right granted to the State of Meghalaya and Sikkim has been curtailed by the State of Karnataka as per the present notification. In other words, it is a dispute between the Karnataka State and other States which can be adjudicated only under Article 131 of the Constitution of India.
15. According to the learned Govt. Advocate, State of Meghalaya and Sikkim have arrayed their agents as co-petitioners only to bring the Writ Petitions before this Court and to avoid Hon'ble Supreme Court by invoking Article 131 of the Constitution of India. For what purpose, agents of State of Meghalaya and Sikkim have been arrayed as parties before this Court, need not be examined by this Court since agents of States of Meghalaya and Sikkim cannot on their own challenge the notification issued by the State of Karnataka. When they have no right to challenge the States of Meghalaya and Sikkim, have to challenge the action of the State of Karnataka only before the Hon'ble Supreme Court under Article 131 of the Constitution of India. In the circumstances, point No. 1 has to be held against the petitioners and this Court has no jurisdiction to entertain the Writ Petitions.
16. In view of the finding of this Court on Point No. 1, it may not be appropriate for this Court to express its view on point No. 2.
17. In the result, these petitions are dismissed as not maintainable. Parties to bear their costs.