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BR ENTERPRISES V. STATE OF UP (1999) 9 SCC 700

BR ENTERPRISES V. STATE OF UP (1999) 9 SCC 700

FACTS:

 Lotteries (Regulation) Act, 1998 Whether lotteries organized by the state is gambling in nature – whether it is trade and business within the meaning of Article 301-303 of constitution and get protection under Article 19(g) of constitution.

ISSUE:

  1. What is the nature and character of lotteries?
  2. Whether lotteries and gambling can fall within the meaning of word ‘trade' under Article 301 of constitution of India and get protection under Article 19(g) of the constitution?
  3. Difference between lotteries under entry 34, List II and a lottery organised by the state under entry 40, List I ?
  4. Whether the imposition of tax on gambling conceives itself gambling?
  5. Whether the decision of R.M.D.C v. Union of india applies?
  6. Can it be said that in state organised lotteries this element of gambling is excluded?

 

REFERRED CASE LAWS:

  1. M.D.C v. Union of India. AIR (1957)
  2. Gherulal parekh v Mahadeodas Maiya

OBSERVATION:

 

  • The Court first refer to the constitution Bench decision of this court in RMDC (supra), a leading case, it holds that gambling activities are in its very nature and essence extra commercium. They were considered to be a sinful and pernicious vice by the ancient seers and law givers of india. Supported this statement with the laws of England, Scotland,  US and Australia which has also deprecated the same.
  • In support of ancient law givers of India a reference was made to Rigveda ,Mahabharata and Manu where also it was totally prohibited because it destroys truth, honesty and wealth while some other law givers permitted it when conducted under the control of the state.
  • The Australian High Court did not think that lottery tickets can be regarded as goods or commodities entitled for protection under Australian constitution.
  • With reference to the history of lotteries in England, the learned judge quoted: “that it was impracticable for any person to conduct a lottery without achieving the status of a rogue and a vagabond”
  • These courts considered lottery as gambling and even where such lotteries were permitted under the regulating power of the state but were not given the status of ‘trade and
  • commerce” as understood at common parlance. Thus, the law in champion (supra) penalizing even carriage of lottery tickets from one state to another was upheld and the supreme court of US held that there is no constitutional right to gambling.

 

JUDGEMENT:

 

1.So far as lotteries are concerned, it can neither be denied nor has been denied that lotteries are form of gambling it inherently contains a chance with no skill, while trade contains skill with no chance.

 

2.Gambling would not fall within the meaning of word ‘trade’ under Article 301 of constitution and would not get protection under 19(g). As it recognized by all the countries that gambling by its very nature promises to make poor man a rich, to quench the thirst of economic distress draws them into the magnetic field of lotteries with crippling effect, which is repeatedly drawn back into the circle of lottery like drug addicts. In this context it is said how the constitution makers could ever have conceived to give protection under Article 19(g) or Article 301 of our constitution.

 

3.In this regard there is no Difference between lotteries under entry 34, list II and a lottery organised by state under entry 40, list I , when character of both the state organised lotteries and other are same by merely placing the apparels of the state with authority of law, would not make any difference,  it remains gambling as element of chance persist with no element of skill. Only difference is in one case, authority is that of state and in other, the parliament, that’s why, What is excluded from the penalizing consequences under Section 294A IPC is the lotteries authorised by the state not merely lotteries organised by the state.

 

4.The power of the state to raise revenue by levying taxes and fees should not be confused with the power of the state to prohibit or regulate the trade or business in question. The state exercises its two different powers on such occasions. Hence the mere fact that state levies taxes and fees to drives income from it, does not make the right to carry on trade or business a fundamental right,  or even a legal right when such trade or business is completely prohibited.

 5. No gambling could be commercium hence in our considered opinion the principle of RMDC case (supra) would equally be applicable even to the state organised lotteries

 6. There could possibly be no two opinions that even in the state lotteries the same element of chance remains with no skill.  It remains within the boundaries of gambling. It only inculcates faith to the participant of such lottery, that it is being conducted fairly with no possibility of fraud that all is fair and safe.