1994 (4) TMI 394 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of Tamil Nadu's prohibition on the sale of lottery tickets from other States.
2. Definition and characteristics of a lottery "organised" by a State.
3. Impact of the prohibition on the economic resources of smaller States like Sikkim.
4. Applicability of the prohibition to other States' lotteries.
5. Constitutional validity of Bihar's ban on lottery tickets.

Summary:

1. Validity of Tamil Nadu's Prohibition:
The executive order GOMs No. 1101 dated 6-10-1989 by Tamil Nadu prohibits the sale of lottery tickets from other States. The order allows only lotteries organised by the Government of Tamil Nadu, the Government of India, or other State Governments, while prohibiting private lotteries.

2. Definition and Characteristics of a Lottery "Organised" by a State:
The Court examined whether the lottery claimed to be organised by the State of Sikkim meets the criteria of a State-organised lottery. Essential characteristics include:
- Tickets printed by or at the instance of the State Government.
- State itself selling the tickets, possibly through agents.
- Sale proceeds credited to the State funds.
- Draws conducted by the State.
- Unclaimed prize money reverting to the State.

The concept of "royalty" paid by an agent is inconsistent with the principal-agent relationship, indicating enfranchisement rather than agency.

3. Impact on Smaller States like Sikkim:
The State of Sikkim argued that prohibiting the sale of its lottery tickets in Tamil Nadu would severely impact its economic resources. However, the Court held that the State has the power to regulate the sale of lottery tickets not organised by the Union or other States. Sikkim can evolve an acceptable scheme and seek protection of its rights through the court.

4. Applicability to Other States' Lotteries:
The schemes of lotteries from Mizoram, Nagaland, Arunachal Pradesh, Goa, and Kerala are similar to Sikkim's. All interim and interlocutory orders of stay in favor of these States are vacated, with the stay continuing till 5-5-1994 for already sold tickets. The Court prima facie found that Mizoram's lottery scheme does not meet the required criteria and dismissed the stay application.

5. Constitutional Validity of Bihar's Ban:
The Bihar Ban on Lottery Ordinance, 1993, prohibits the sale of lottery tickets in the State. The High Court recognized the distinction between lotteries "organised" by the State and those merely authorised by it. The State of Bihar appealed, and the Supreme Court stayed the High Court's judgment pending final disposal. Respondents can apply to the State Government to determine if their lotteries are "organised" by the State, with the State making a speaking order based on the criteria indicated in the Tamil Nadu matter.

The stay on the High Court's judgment will operate from 12-5-1994, and no tickets for draws after 11-5-1994 shall be sold from 12-5-1994 onwards, except as permitted by the Finance Secretary.