B.R. Enterprises Etc, Etc vs State of the U.P. And Grs. Etc: Etc 

By –TANISHKA SAXENA (AMITY UNIVERSITY, LUCKNOW)

ABSTRACT

In this case, an order was passed by the state of UP banning the state lotteries of the other state from using the power that was provided under section 5 of the impugned ordinance act. After the order affected states invigorated the provision in different state’s high courts. While the Gujarat High Court upheld the legality, the Guwahati High Court held that several of its sections were ultra vires. The Supreme Court quashed the high court’s decision and upheld the legality of the impugned provisions. The court applied the legal regulations of the 16th century and emphasized the need to perceive the legislation’s historical context purpose and intent. In this case, multiple parties and common issues resulted in a composite decision. The role of the union government was also highlighted particularly regarding with relation to Article 302’s requirement for demonstrable public interest. ultimately. the court resolved the legal dispute around state lotteries and Ultimately, the Court’s arrangement resolved the legal disputes surrounding state lotteries and declared the opposing provisions to be constitutional and lawful.

CASE DETAILS

i)            Judgement Cause TitleB.R. Enterprises Etc, Etc v. State of U.P. and Grs. Etc: Etc
ii)            Case NumberAppeal ( civil ) 2747 of 1999
iii)            Judgement Date 07/05/1999
iv)            CourtSupreme court
v)            QuorumK Venkataswami and A.P. Misra
vi)            AuthorK Venkataswami and A.P. Mishra
vii)            Citation1999  9 SCC 700
viii)            Legal provisions involvedLotteries (Regulation) Ordinance, 1997 The Lotteries (Regulation) Act, 1998 Section5 of The impugned Ordinance Act Constitution of India Article 14Article 19(g)Article 301Article 303

INTRODUCTION AND BACKGROUND OF THE JUDGMENT

In India, the lottery has been a continuous issue with other states because it is used as a source of revenue generation while also facing issues related to its legality and regulation. The case of B.R. Enterprises v. State of  U.P. Etc sheds light on the dispute between states over the control and regulation related to lotteries and the constitutional legality of certain provisions in the Act of 1998 and the 1997 Lotteries (Regulation) Ordinance. This case raises questions about the extent of state freedom in these such matters, the impact of conflicting laws on inter-state trade and commerce, and the power of the union government to enact laws in this regard.

The Lotteries (Regulation) Act, 1998, under Entry 40, List I of the Constitution of India “A lottery organized by a state must be realized to refer to a lottery lawfully organized by a state, and if a lottery is not lawfully organized by a state, it would not fall within Entry 40 of List I but would fall under the heading ‘gambling’ under Entry 34 of List II, and the state legislature would then be empowered to legislate regarding the same. Where the State Legislature could thus legislate, the State Government could take executive action concerning lotteries organized by another state if they were unlawful.”[1]

 The legal arguments presented in this case revolve around the issue of constitutional provisions including articles 301, and 303 which govern trade, commerce, and restrictions on such activities between states. The case also touched on the historical context of lotteries in India, the difference between public and private states, and the implications of restrictions on lottery ticket sales organized by different states.

Ultimately, the Supreme Court upheld the validity of the impugned provisions and the Act, quashing any contrary decisions or interim orders. The judgment expressed gratitude to the counsels for their contributions and imposed costs on the parties.

FACTS OF THE CASE

1. The State of Uttar Pradesh passed the order banning the state lotteries of other states by power which are entrusted under section 5 of the impugned ordinance Act.

2. After this order, affected states opposed this ban in different high courts across the country. Then, the validity was upheld by the Gujarat High Court, and the Guwahati High Court declared its provisions to be Ultra vires

3. The fundamental question that was raised in this case that what is the character of state lotteries and whether they could be considered as trade and business within the constitution of India.

4. The arguments presented by the parties focused on the nature of lotteries, the impact of state authority on their pernicious nature, and the constitutional validity of the provisions under scrutiny.

   5. The court considered the historical perspective on lotteries, the legal and regulatory environment around gaming, and the interpretation of important parts of the constitution, such as parts 301, 302, and 303.

6. The issue focuses on the distribution of legislative power, discrimination, and the distinction between state and private lotteries about trade and commerce.

7. Upon resolution of the case, the court ruled that the provisions of the Lotteries (Regulation) Act 1998 and the Lotteries (Regulation) Ordinance 1997 that were challenged were legitimate.

LEGAL ISSUES RAISED IN THE CASE

  1. Whether the character of state lotteries could be considered as trade and business.
  2. Whether the provisions related to the validity of the Lotteries ordinance were acceptable with the Indian Constitution and the laws governing lotteries.

PETITIONER ’S ARGUMENTS

The petitioner’s counsel submitted that

  1. A prohibition on lottery ticket sales violates basic rights, such as the freedom of trade and enterprise (Article 19(1)(g)) and the right to equality (Article 14).
  2.  The lotteries are only the responsibility of the Union Government, the state government is without the legislative authority to control or prohibit lotteries held by other states.
  3. The ban on lotteries by the state of U.P. targets only some specific states and that is discrimination and violates the equality before the law.

RESPONDENT ARGUMENTS

Counsel for the Respondent submitted that

  1. The state government has the authority to control lotteries on issues related to morals, public welfare, or revenue generation.
  2. To safeguard its financial stability and commercial interests, the state government can govern, protect, and prohibit candidates from participating in lotteries in other states.
  3.  To prevent gambling-related problems and protect people from the harmful effects of lottery addiction, lotteries must be prohibited in other states.

Court’s Decision

The Supreme Court of India, after considering the arguments which were presented by the parties provided a comprehensive judgment. The court observed that in this case, various states and the Union Government were involved, and it decided to give judgment of all the petitions in a single judgment. The court determined the validity of the impugned section of the Lotteries (Regulation) Act 1998 and the Lotteries (Regulation) Ordinance 1997 and The court maintained the Gujarat High Court’s legality and overturned the Guwahati High Court’s decision, finding that multiple of its provisions were beyond the bounds of law. Any judgments or temporary orders that went against the Court’s decision were quashed. The various petitions transferred to the Court were disposed of in terms of the Court’s decision. The Court praised the experienced lawyers for their contributions to the case. There were also fees imposed on each of the parties.

RELATED LEGAL PROVISIONS

  • India’s constitution
  • Article 14: (Equality before law): “The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.”[1]
  • Article 19: “Protecting certain rights about freedom of speech and trade, etc.”[2]
  • Article 301: “Freedom of trade, commerce, and intercourse shall be free throughout the territory of India.”[3]
  • Article 303: Restrictions on the Union’s and the State’s ability to enact laws of trade and commerce”.[4]

JUDGEMENT

  • The Supreme Court held that state lotteries are a form of trade and commerce and are protected under the Constitution of India.
  • The Lotteries (Regulation) Act of  1998 concluded that there was no discrimination and that Article 14 of the Constitution was not violated.
  • However, Section 5 of the impugned OrdinanceAct, which empowers the state to prohibit lotteries conducted by others, was found to violate Articles 301 and 303 of the Constitution. This section restricts free trade and commerce.
  • The authority granted to the state to prohibit lotteries operated by other states was deemed to be an excessive amount of delegation and without specific guidelines.

RATIO DECIDENDI

1. Federalism and State Lotteries:

  • In this case, several states argued over the legality of clauses about state lotteries.
  • The issue was confined to state lotteries under Entry 40, List I of the Seventh Schedule of the Constitution of India.
  • The Union Government also joined the issue with one such set of states for upholding this act

2. Validity:

  • The Supreme Court held that the state lotteries are a form of trade and commerce and deserve constitutional protection.
  • The Lotteries (Regulation) Act, 1998, was found not to be discriminatory and did not violate Article 14 of the Constitution.

3. The Act’s Section 5:

  • However, Section 5 of the Act, which empowers the state to prohibit lotteries conducted by others, was declared to violate Articles 301 and 303 of the Constitution.
  • The Court found this section to be an excessive delegation of power without clear guidelines.

OBITER DICTA

  1. State Lotteries as a Form of Trade and Commerce:
  • The Court emphasized that state lotteries are a legitimate form of trade and commerce.
  • This recognition was crucial in establishing their constitutional protection.
  • Overextending of Power
  • The Court found Section 5 of the Lotteries (Regulation) Act, 1998 to be an instance of excessive delegation.
  • Another concern was the lack of clear regulations prohibiting lotteries conducted by others.
  •  Articles-301 and 303
  • The Court invoked Articles 301 and 303 of the Constitution while assessing the validity of the Act.
  • These articles deal with freedom of trade and commerce and restrictions on state powers.

CONCLUSION

  • The Court upheld the constitutional validity of the Lotteries (Regulation) Act, 1998, but declared Section 5 of the Act to be violative of Articles 301 and 303 of the Constitution
  • State lotteries have been recognized to be valid commercial activities deserving full constitutional protection.

REFERENCE

Important Case References:

1. The State of Bombay vs. R.M.D. Chamarbaugwala[1]

2. H. Anraj & Ors. Vs. State of the Maharashtra[2]

3 . Sesha Ayyar vs. Krishna Iyer [3]

Important Statutes and Legal Provisions:

  1. The 1997 Lotteries (Regulation) Ordinance
  2. Act of 1998 Regarding Lotteries (Regulation)

3. The Constitution of India – Article 19(1)(g), Article 14, Article 301 and Article 303

[1] The State Of Bombay vs R. M. D. Chamarbaugwala on 9 april, 1957. (n.d.). Retrieved March 24, 2024, from https://indiankanoon.org/doc/212098/

[2] H. Anraj and others etc vs state of maharashtra on 23 january, 1984. (n.d.). Retrieved March 24, 2024, from https://indiankanoon.org/doc/358833/

[3] H. Anraj and others etc vs state of Maharashtra on 23 January, 1984. (n.d.). Retrieved March 24, 2024, from https://indiankanoon.org/doc/358833/

[1] Article 14, constitution of India (1950)

[2] Article 19, constitution of India (1950)

[3] Article 301, constitution of India (1950)

[4] Article 303, constitution of India (1950)

[1] The Lotteries (Regulation) Act, 1998, under Entry 40, List I of the Constitution of India

https://indiankanoon.org/doc/358833/