A) ABSTRACT / HEADNOTE (150–250 words)

The respondents, who operated prize competitions through a newspaper in Bangalore, contended that such activities were lawful trade or commerce and protected under Articles 19(1)(g) and 301 of the Indian Constitution. They asserted that the Act violated their fundamental rights and inter-State trade freedoms.

The Court, however, upheld the constitutionality of the impugned Act, concluding that the legislation fell squarely under Entry 34 (betting and gambling) and Entry 62 (taxes on betting and gambling) of List II in the Seventh Schedule, and not under Entries related to trade or commerce. It found that prize competitions that did not depend substantially on skill were inherently gambling and, hence, not entitled to constitutional protection as a trade or business. The doctrine of territorial nexus was invoked to affirm Bombay’s jurisdiction, emphasizing that the presence of depots, agents, and circulation of promotional material in Bombay sufficed to establish nexus.

Keywords: Prize competitions, Gambling, Territorial nexus, Legislative competence, Article 19(1)(g), Article 301, Entry 34, Entry 62, Bombay Act 1948, Constitutionality.

B) CASE DETAILS

i) Judgement Cause Title: The State of Bombay v. R. M. D. Chamarbaugwala & Another

ii) Case Number: Civil Appeal No. 134 of 1956

iii) Judgement Date: 9th April, 1957

iv) Court: Supreme Court of India

v) Quorum: S. R. Das C.J., Venkatarama Ayyar J., B. P. Sinha J., S. K. Das J., P. B. Gajendragadkar J.

vi) Author: S. R. Das, Chief Justice

vii) Citation: AIR 1957 SC 699; 1957 SCR 874

viii) Legal Provisions Involved:

• Articles 19(1)(g), 301, 304(b), 245, 246 of the Constitution of India

• Entries 34, 60, 62 of List II, Seventh Schedule

• Bombay Lotteries and Prize Competition Control and Tax Act, 1948 (as amended by Act XXX of 1952)

• Sections 2(1)(d), 12A of the Bombay Act

ix) Judgments Overruled by the Case: None explicitly overruled.

x) Case is Related to: Constitutional Law, Taxation Law, Public Law, Administrative Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case stemmed from a direct constitutional challenge to the legislative competence of the Bombay State to regulate and tax prize competitions originating outside its territorial boundaries but soliciting entries from within the State. The respondent, R. M. D. Chamarbaugwala, was the promoter and managing director of a company registered in Mysore, which published the “Sporting Star”, a newspaper hosting the R.M.D.C. Crosswords competitions. These competitions reached residents of Bombay through agents, depots, and widespread newspaper circulation. The impugned 1952 Amendment Act expanded the scope of the existing 1948 Act to include such inter-state prize competitions and imposed taxes under Section 12A. The respondents moved the Bombay High Court under Article 226, challenging the Act on multiple constitutional grounds, prompting this pivotal Supreme Court decision on the interplay between territorial nexus, gambling, and trade under Indian constitutional law.

D) FACTS OF THE CASE

The respondents ran a crossword-based prize competition through a weekly newspaper published from Bangalore. This competition gained significant traction in Bombay where agents collected fees and entries. To curb such inter-state competitions, the Bombay Government amended the 1948 Act to bring such activities within its tax net. The respondents challenged this legislative extension, asserting their activity was lawful business protected under Article 19(1)(g) and intra-national trade under Article 301. They also argued that taxing these competitions amounted to a tax on profession or calling under Entry 60, and therefore could not exceed Rs. 250 per annum under Article 276(2). The Bombay High Court ruled in their favour, prompting the State’s appeal to the Supreme Court.

E) LEGAL ISSUES RAISED

i) Whether the prize competitions conducted by the respondents constituted “gambling” or a legitimate business protected under Article 19(1)(g).

ii) Whether the State of Bombay had the legislative competence to tax prize competitions conducted via newspapers published outside the State.

iii) Whether the impugned Act contravened Articles 301 and 304(b) of the Constitution guaranteeing freedom of inter-State trade.

iv) Whether Section 12A was ultra vires as it violated the tax cap in Article 276(2) applicable to professions and callings.

v) Whether there existed a sufficient territorial nexus between the State and the respondents’ activities to justify the tax.

F) PETITIONER/APPELLANT’S ARGUMENTS

i) The counsels for the State of Bombay contended that:

• The legislation falls within Entry 34 (Betting and Gambling) and Entry 62 of List II, validating the imposition of tax under Section 12A[1].

• The impugned competitions lacked the essential skill element and were thus gambling, not a legitimate trade or calling entitled to protection under Article 19(1)(g)[2].

• Gambling was extra commercium and never intended to be protected under the freedom of trade under Article 301[3].

• The promoters had established depots, collectors, and advertisements in Bombay, which fulfilled the requirement of territorial nexus, justifying extraterritorial operation[4].

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that:

• Their prize competition involved substantial skill, making it a lawful business venture under Article 19(1)(g)[5].

• The activity was commercial in nature and protected as inter-State trade under Article 301, and the Bombay legislature could not legislate beyond its borders[6].

• The tax levied exceeded Rs. 250 and thus was ultra vires under Article 276(2), as it constituted a tax on profession/calling under Entry 60[7].

• They argued the absence of a strong territorial nexus since their business originated in Mysore, and Bombay was merely a site for circulation.

H) RELATED LEGAL PROVISIONS

i) Article 19(1)(g) – Right to practice any profession, or to carry on any occupation, trade or business
ii) Article 301 – Freedom of trade, commerce, and intercourse throughout the territory of India
iii) Article 304(b) – State restrictions on inter-State trade must be reasonable and in the public interest
iv) Entry 34, List II – Betting and Gambling
v) Entry 60, List II – Taxes on professions, trades, callings, and employments
vi) Entry 62, List II – Taxes on betting and gambling
vii) Article 276(2) – Tax limit on professions, trades, callings

I) JUDGEMENT

a. RATIO DECIDENDI

i) The Court held that all categories of competitions defined in Section 2(1)(d) were of gambling nature, and the Act was thus valid under Entry 34. It clarified that the phrase “solution is or is not prepared beforehand” did not broaden the scope to cover games of skill[8].

ii) Section 12A imposed a tax not on profession, but on gambling proceeds; hence it fell under Entry 62, not Entry 60, and was not subject to Article 276(2)[9].

iii) The doctrine of territorial nexus applied as the competitions had real and substantial connections with Bombay. Collection of fees, advertisements, and depots located in Bombay made the operation intrastate in effect[10].

iv) Gambling activities were res extra commercium, and thus not protected under Articles 19(1)(g) or 301[11].

b. OBITER DICTA 

i) The Court observed that inter-State activities can be regulated by a State law if territorial nexus exists. Further, it expressed caution while relying on foreign constitutional precedents, emphasizing that Article 301 should not be equated with Section 92 of the Australian Constitution or similar provisions of the U.S. Constitution[12].

c. GUIDELINES 

• Gambling is not a protected trade or commerce under the Constitution.

• Prize competitions involving chance are inherently gambling unless skill substantially predominates.

• State laws can validly apply to out-of-state activities if territorial nexus is shown.

• Taxes levied on gambling activities are within the State’s competence under Entry 62, without the Rs. 250 limit.

J) CONCLUSION & COMMENTS

The Chamarbaugwala judgment remains a constitutional milestone that clarified the boundaries of legislative competence, especially in regulating cross-border activities. By affirming that gambling is extra commercium, the Court insulated it from the protective canopy of fundamental rights and trade freedoms. It harmonized state autonomy under List II with the federal structure, asserting that territorial nexus need not be absolute ownership or presence but must be real and substantial. The ruling has since become a touchstone in delineating state jurisdiction over inter-state economic conduct, and its principles continue to influence debates on regulation of lotteries, online gaming, and digital betting platforms.

K) REFERENCES

a. Important Cases Referred

[1] Coles v. Odhams Press Ltd., L.R. (1936) 1 K.B. 416
[2] Elderton v. Totalisator Co. Ltd., (1945) 2 All E.R. 624
[3] State of Travancore-Cochin v. The Bombay Co. Ltd., (1952) SCR 1112
[4] P. P. Kutti Keya v. State of Madras, AIR 1954 Mad 621
[5] Bank of Toronto v. Lambe, (1887) 12 AC 575
[6] Rex v. Caledonian Collieries Ltd., (1928) AC 358
[7] The King v. Connare, (1939) 61 C.L.R. 596
[8] Commonwealth of Australia v. Bank of New South Wales, (1950) AC 235
[9] Champion v. Ames, 47 L.Ed. 492
[10] United States v. Kahriger, 97 L.Ed. 754

b. Important Statutes Referred

• Constitution of India: Articles 19(1)(g), 245, 246, 276(2), 301, 304(b)

• Seventh Schedule: Entries 34, 60, 62 of List II

• Bombay Lotteries and Prize Competitions Control and Tax Act, 1948

• Amendment Act of 1952 (Bombay Act XXX of 1952)

• Bombay Lotteries and Prize Competitions Control and Tax Rules, 1952