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1996 (1) TMI 336 - SC - Companies LawWhat is gambling ? What is the meaning of the expression mere skill in terms of section 49A of the Madras City Police Act, 1888 (the Police Act), and section 11 of the Madras Gaming Act, 1930 (the Gaming Act)? Whether the running of horse races by the club is a game of chance or a game of mere skill ? Whether wagering or betting on horse races is gaming as defined by the Police Act and the Gaming Act ? Whether horse racing even if it is a game of mere skill is still prohibited under section 49A of the Police Act and section 4 of the Gaming Act? Whether the Madras Race Club (Acquisition and Transfer of Undertakings) Act, 1986 (the 1986 Act), gives effect to the policy under article 39(b) and (c) of the Constitution of India (the Constitution) and as such is protected under article 31(c) of the Constitution 1 If not, whether the 1986 Act is liable to be struck down as violative of articles 14 and 19(1)(g) of the Constitution? Held that - Allow the writ petitions and the civil appeal. The impugned judgment of the High Court is set aside. We hold and declare that horse racing is a game of mere skill within the meaning of section 49 of the Police Act and section 11 of the Gaming Act. Horse racing is neither gaming nor gambling as defined and envisaged under the two Acts read with the 1974 Act and the penal provisions of these Acts are not applicable to horse racing which is a game of skill. The 1986 Act is ultra vires article 14 of the Constitution and as such is struck down. We direct the committee of management under the Chairmanship of Justice S. Natarajan, appointed by this court, to hand over the management, functioning and operation of the club to a duly constituted management committee, under the memorandum and articles of association of the club, before March 31, 1996.
Issues Involved:
1. What is "gambling"? 2. What is the meaning of "mere skill" under section 49A of the Madras City Police Act, 1888, and section 11 of the Madras Gaming Act, 1930? 3. Whether the running of horse races by the club is a game of "chance" or a game of "mere skill"? 4. Whether "wagering" or "betting" on horse races is "gaming" as defined by the Police Act and the Gaming Act? 5. Whether horse racing-even if it is a game of "mere skill"-is still prohibited under section 49A of the Police Act and section 4 of the Gaming Act? 6. Whether the Madras Race Club (Acquisition and Transfer of Undertakings) Act, 1986, is protected under article 31(c) of the Constitution or is liable to be struck down as violative of articles 14 and 19(1)(g) of the Constitution? Detailed Analysis: 1. What is "gambling"? The judgment defines gambling as "the betting or staking of something of value, with consciousness of risk and hope of gain on the outcome of a game, a contest, or an uncertain event the result of which may be determined by chance or accident or have an unexpected result by reason of the better's miscalculations." It involves consideration, an element of chance, and a reward. A game of chance is determined entirely or in part by luck, whereas a game of skill depends on superior knowledge, training, attention, experience, and adroitness of the player. 2. What is the meaning of "mere skill" under section 49A of the Madras City Police Act, 1888, and section 11 of the Madras Gaming Act, 1930? The term "mere skill" is interpreted to mean "mainly and preponderantly a game of skill." The judgment refers to State of Andhra Pradesh v. K. Satyanarayana, where the game of rummy was held to be a game of mere skill due to the significant skill involved in memorizing cards and building up rummy. Thus, "mere skill" involves a substantial degree or preponderance of skill over chance. 3. Whether the running of horse races by the club is a game of "chance" or a game of "mere skill"? The court held that horse racing is a game where the winning depends substantially and preponderantly on skill. The judgment emphasizes that horse racing involves the assessment of a contestant's physical capacity and the use of evaluative skills. The training of horses, the expertise of jockeys, and the knowledge of the race conditions are significant factors that contribute to the outcome of the race, making it a game of skill rather than chance. 4. Whether "wagering" or "betting" on horse races is "gaming" as defined by the Police Act and the Gaming Act? The judgment concludes that wagering or betting on horse-racing-a game of skill-does not come within the definition of "gaming" in the two Acts. The court reasoned that "gaming" involves staking on chance where chance is the controlling factor, which is not the case in horse racing. 5. Whether horse racing-even if it is a game of "mere skill"-is still prohibited under section 49A of the Police Act and section 4 of the Gaming Act? The court held that section 49A of the Police Act and section 4 of the Gaming Act are not applicable to wagering or betting on horse races conducted within the club premises. These sections are intended to control gambling in public streets and bazaars, not within the regulated environment of a race club. 6. Whether the Madras Race Club (Acquisition and Transfer of Undertakings) Act, 1986, is protected under article 31(c) of the Constitution or is liable to be struck down as violative of articles 14 and 19(1)(g) of the Constitution? The court found that the 1986 Act does not have a nexus with the objectives of article 39(b) and (c) of the Constitution and thus cannot be protected under article 31(c). The Act was deemed discriminatory and arbitrary, violating article 14 of the Constitution. The court noted that the club does not own or control material resources of the community, nor does it affect the economic system in a manner that would justify its acquisition under the guise of public purpose. Conclusion: The Supreme Court declared that horse racing is a game of skill and not gambling. Consequently, betting on horse races conducted within the club premises does not fall under the definition of "gaming" in the Police Act and the Gaming Act. The Madras Race Club (Acquisition and Transfer of Undertakings) Act, 1986, was struck down as unconstitutional for being discriminatory and arbitrary, violating article 14 of the Constitution. The court directed the management committee to hand over the club's operations to a duly constituted management committee by March 31, 1996.
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