The Hindu : National : `States cannot frame rules on Central Act regulating lotteries'

Online edition of India's National Newspaper
Tuesday, May 18, 2004

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National

`States cannot frame rules on Central Act regulating lotteries'

By J. Venkatesan

NEW DELHI, MAY 17. The Supreme Court today restrained the Kerala Government and the State Director of Lotteries from suspending the sale of tickets of agents and distributors of online and paper lotteries of other States.

A vacation Bench, comprising Justice Ruma Pal and Justice D.M. Dharmadhikari, also restrained the State Government and other respondents from enforcing Rule 24 (3) of the Kerala State Lotteries and Online Lotteries (Regulations) Rules 2003 asking the agents and distributors of online and paper lotteries of other States to obtain the permission of the State Government.

The Bench passed the interim order on special leave petitions (SLPs) filed by the Meghalaya Government, the Indian Federation of Lottery Traders and the Allied Industries and other distributors.

The Bench, after hearing the Attorney-General, Soli Sorabjee, for the appellants and senior counsel for Kerala, P.P. Rao, said the same order that was passed by a Division bench of the Kerala High Court on December 19, 2003, while entertaining writ appeals would continue. When Mr. Rao said that most lottery agents had not submitted their schemes to the Government, the Bench said that they must do so.

(According to Rule 24 (3), no lottery shall be marketed until the Government issues appropriate orders, and the enforcement agency would be empowered to seize such tickets that are marketed before passing such orders).

Mr. Sorabjee argued that the State Government had no power to impose restrictions as stipulated under the provisions of the 2003 rules on a Central law, the Lotteries Regulation Act, 1998, as this amounted to usurping the powers of Parliament. If at all any regulation could be made, it was the Centre that had been vested with such powers.

The single judge had dismissed the writ petitions challenging the validity of the impugned rule, holding that the State Government had the authority to impose restrictions. On writ appeals, a Division Bench had on December 19 stayed the rule. However, it dismissed the appeals on April 28 and vacated the stay. The SLPs were directed against this judgment.

Mr. Sorabjee contended that Meghalaya had been conducting such lotteries for years and was earning a revenue of more than Rs. 4 crores a year. There was no provision under the Central Act conferring any power on a State Government to control or regulate lotteries organised or conducted by other States.

When Mr. Rao submitted that the State had the power to make rules, the Bench intervened and said that "when the Centre had permitted the lotteries, the State cannot frame rules on a Central Act regulating the lotteries as it would amount to encroaching on the powers of the Centre."

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