2004 (4) TMI 649 - HC - Indian Laws

Summary

Issues Involved:
1. Constitutionality of Sub-rule (3) of Rule 24 of the Kerala State Lotteries and On-line Lotteries (Regulation) Rules, 2003.
2. Validity and legality of the public notice dated 8.11.2003 issued by the Director of State Lotteries, Kerala.
3. Ultra vires nature of Sub-rule (3) of Rule 3 and Sub-rule (10) of Rule 24 of the Rules.
4. Jurisdiction of the High Court to adjudicate the dispute between the State of Kerala and other States.
5. Compliance requirements for marketing and selling lottery tickets within Kerala.

Detailed Analysis:

1. Constitutionality of Sub-rule (3) of Rule 24:
The appellants contended that Sub-rule (3) of Rule 24 is unconstitutional as it imposes a prohibition on marketing lotteries until appropriate orders are issued by the Secretary to Government, Taxes Department. The court held that the Rules were made by the Government of Kerala with competence and jurisdiction under Section 12 of the Lotteries (Regulation) Act, 1998. The Rules, including Sub-rule (3) of Rule 24, are regulatory measures to ensure compliance with the Act. Therefore, Sub-rule (3) is not unconstitutional.

2. Validity and legality of the public notice dated 8.11.2003:
The public notice cautioned the general public about potential cheating/fraud in lotteries run by other States, including On-line Lotteries. The court found that the Director of State Lotteries was competent and justified in issuing the notice to protect the public interest. The notice was deemed legal and necessary given the allegations of violations of the Act by other States' lotteries.

3. Ultra vires nature of Sub-rule (3) of Rule 3 and Sub-rule (10) of Rule 24:
The appellants argued that these provisions were ultra vires the Act. The court held that Sub-rule (3) of Rule 3, which vests the authority to monitor the sale of lotteries of other States, is a regulatory measure to ensure compliance with the Act. Sub-rule (10) of Rule 24, which allows temporary suspension of lottery sales pending Central Government action, is also regulatory and not a prohibition under Section 5 of the Act. Both provisions were found to be within the rule-making power of the Government of Kerala and not ultra vires.

4. Jurisdiction of the High Court:
The learned Advocate General argued that the High Court lacked jurisdiction to adjudicate disputes between States, which should be under the Supreme Court's purview as per Article 131 of the Constitution. However, since the court decided the claims on merits, it did not delve deeply into this jurisdictional issue.

5. Compliance requirements for marketing and selling lottery tickets within Kerala:
The court emphasized the necessity for other States to submit required documents and obtain approval from the Secretary to Government, Taxes Department, before marketing lotteries in Kerala. This regulatory framework ensures that lotteries comply with the Act, protecting public interest and preventing violations. The court rejected the appellants' argument that existing lotteries should be exempt from these requirements, stating that all lotteries must comply with the Rules post their enforcement.

Conclusion:
The court upheld the validity of Sub-rule (3) of Rule 24, Sub-rule (3) of Rule 3, and Sub-rule (10) of Rule 24 of the Kerala State Lotteries and On-line Lotteries (Regulation) Rules, 2003. It affirmed the legality of the public notice dated 8.11.2003 issued by the Director of State Lotteries, Kerala. The appellants were directed to comply with all provisions of the Act and Rules while marketing and selling lottery tickets within Kerala. The Writ Appeals were dismissed, and interim orders vacated.