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2023 (11) TMI 672 - HC - Indian LawsConstitutional validity of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 - HELD THAT - The petitioners are challenging the Act of 2022, namely the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022. The impugned Act is enacted in the backdrop of the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 (hereinafter referred to as the Amendment Act of 2021 ), which had sought to ban online games such as rummy and poker played with stakes or money. The said Amendment Act of 2021 was struck down in its entirety by this Court and was declared as ultra vires the Constitution of India under the detailed judgment dated 03.08.2021 in the case of Junglee Games 2021 (8) TMI 1377 - MADRAS HIGH COURT . The intention and object of promulgating the impugned legislation, no doubt, appears to be laudable and bonafide. However, mere intention and bonafides would not be sufficient to uphold the legislation. The legislation has to withstand the test of legislative competence and should be free from manifest arbitrariness. The same will also have to be viewed on the premise of the rights of the parties being trampled or otherwise - The State is empowered to legislate in respect of the Entries in List II of the VII Schedule. Entry 34 of the State List includes betting and gambling . The State certainly has the authority to legislate in respect of betting and gambling. This Entry 34 of the State List viz , betting and gambling was the subject matter of consideration before the Apex Court in catena of cases. In the present case, the platform provider or the game provider is charging a fixed sum and is not claiming shares in the profits. If the game providers have been claiming shares in the profits, then that would be a different situation altogether, but here, a fixed percentage of sum is charged - The State has relied upon its power to legislate in view of Entry 1 and Entry 6 of the State List. Entry 1 of the State List deals with public order and Entry 6 of the State List deals with public health, sanitation, hospitals and dispensaries. The concern expressed by the State about public health of its citizens is but natural. The State has to take care of the public health of its citizens. Section 5 of the impugned Act authorises the authority, by notification and with the previous approval of the Government, to make regulations to carry out the provisions of the Act namely, time limit, monetary limit, age restriction or such other restrictions in regard to playing of online games. The State certainly has the power to regulate online games of skill. It can control and regulate the games of skill. The State can provide for the time limit, that the game may not be played after a particular time and it would have the necessary infrastructure and expertise to take all the measures that the games would not be played within the State after a particular time. It can also regulate the age restriction and other aspects. The same would be within the competence of the State. The impugned Act, in its entirety, need not be held to be ultra vires . It is held that the State is competent to legislate to the extent of prohibiting online gambling, i.e., games of chance, at the same time, it has got the authority to regulate online games of skill. The definition of online gambling under Section 2(i) of the impugned Act shall be read as restricted to games of chance and not games involving skill. Section 2(l)(iv) of the impugned Act would not be entirely valid. The games of rummy and poker are games of card, but are games of skill. Section 2(l)(iv) is being read down, to mean, it excludes games of skill viz ., rummy and poker - Having held that the State has got the authority to legislate on online games of chance, as gambling would be betting on the games of chance, it is not necessary to declare Sections 7, 8 and 9 of the impugned Act as ultra vires . The prayer to declare the entire impugned Act of 2022 as ultra vires is negated. The Schedule of the impugned Act, including the games of rummy and poker, are set aside. Sections 2(i) and 2(l)(iv) of the impugned Act shall be read as restricted to games of chance and not games involving skill, viz ., rummy and poker. Petition allowed in part.
Issues Involved:
1. Constitutional validity of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022. 2. Legislative competence of the State to enact the impugned Act. 3. Distinction between games of skill and games of chance. 4. Impact of the impugned Act on fundamental rights under Article 19(1)(g) of the Constitution of India. 5. Regulation of online games and the role of the State. Summary: Issue 1: Constitutional Validity of the Act The petitioners challenged the constitutional validity of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022. The Act was enacted to address public welfare and health concerns associated with online gambling and gaming. The petitioners argued that the Act arbitrarily categorized skill-based games like rummy and poker as games of chance, contrary to established legal precedents. Issue 2: Legislative Competence The Court examined whether the State Legislature had the competence to enact the impugned Act under Entry 34 of List II (State List) of the VII Schedule of the Constitution of India, which includes "betting and gambling." The Court held that the State has the authority to legislate on betting and gambling but must distinguish between games of skill and games of chance. The Court noted that games of skill, such as rummy and poker, cannot be classified as gambling. Issue 3: Distinction Between Games of Skill and Games of Chance The Court relied on various judgments, including those of the Supreme Court, which have consistently held that rummy and poker are games of skill. The Court emphasized that the State failed to provide substantive evidence to prove that online versions of these games are games of chance. The Court noted that the inclusion of rummy and poker in the Schedule of the Act as games of chance was erroneous and contrary to legal precedents. Issue 4: Impact on Fundamental Rights The petitioners argued that the impugned Act violated their fundamental rights under Article 19(1)(g) of the Constitution of India, which guarantees the right to practice any profession or carry on any occupation, trade, or business. The Court held that the State can regulate online games of skill but cannot impose a blanket ban on them. The Court noted that the State's concerns about public health and order could be addressed through reasonable regulations rather than prohibitions. Issue 5: Regulation of Online Games The Court recognized the State's power to regulate online games of skill under Entry 26, List II of the Constitution, which pertains to "Trade and Commerce." The Court suggested that the State could impose reasonable regulations regarding time limits, age restrictions, and other aspects of online gaming. The Court upheld the State's authority to know about online game providers operating within its jurisdiction to ensure they are not indulging in games of chance. Conclusion: The Court partly allowed the writ petitions, holding that the impugned Act need not be declared ultra vires in its entirety. The Court set aside the inclusion of rummy and poker in the Schedule of the Act as games of chance and read down Sections 2(i) and 2(l)(iv) to exclude games of skill. The Court upheld the State's power to regulate online games of skill and suggested framing reasonable regulations to address public health and order concerns.
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