Supreme Court: In an original suit filed by State of Meghalaya (‘plaintiff- State') invoking the original jurisdiction of the Court under Article 131 of the Constitution of India, sought for declaration of the Sections 5, 6, 7, 8 and 9 of the Lotteries (Regulation) Act, 1998 (‘the Act of 1998'), and Rule 5 of the Lotteries (Regulation) Rules, 2010 (‘the Rules of 2010') as ultra vires and unconstitutional. The Division Bench of Dinesh Maheshwari and Sanjay Kumar, JJ., rejected the Union of India's plea against the maintainability of the suit and said that said suit was maintainable under Article
Background
In the matter at hand, the dispute arose from Section 5 of the Act of 1998 which prescribes that a State Government may prohibit the sale of tickets for a lottery organized, conducted or promoted by every other State within its territories. Section 6 of the Act of 1998 was challenged as it empowers the Central Government to prohibit a lottery organized, conducted or promoted in contravention of Section 4 or where tickets of such lottery are sold in contravention of Section 5, by an order published in the Official Gazette. The plaintiff- State assailed Sections 6, 7, 8 and 9 of the Act of 1998, as they pertain to contraventions of Section 5 of the Act of 1998. Rule 5 of the Rules of 2010 was also challenged as it details the procedure to prohibit the sale of lottery tickets, in terms of the provisions of the Act of 1998.
Thus, the plaintiff- State sought declaration of the impugned rules as unconstitutional. The plaintiff- State had also sought a perpetual injunction restraining the Union of India (‘UOI') from issuing orders under Section 6 of the Act of 1998 in relation to the lotteries organized by it; a perpetual injunction restraining the UOI from initiating or taking any penal action under Sections 7, 8 and 9, for violation of Sections 5 and 6 of the Act of 1998, in relation to the lotteries organized by it; and a perpetual injunction restraining the States and Union Territories from prohibiting the sale of lottery tickets organized by it in their respective jurisdictions.
Issue
Whether the present suit by the State of Meghalaya was maintainable?
Whether nothing could be done further in the present suit until determination of the similar questions pending before a Larger Bench?
Analysis
Before getting into the merits of the case, the Court had to decide on the issue of maintainability of the suit, as the UOI and other States had challenged the maintainability of the Suit.
The Court noted that in Tashi Delek Gaming Solutions Ltd. v. State of Karnataka, (2006) 1 SCC 442, the scope and ambit of Article 131 of the Constitution was dealt, and it was observed that Article 131 would be attracted where adjudication is necessary in relation to a legal right of one State or the Union of India vis-à-vis other States, as the case may be.
Placing its significance on 7-Judge Bench decision in State of Karnataka v. Union of India, (1977) 4 SCC 608, the Court said that though titled as a ‘suit', a proceeding under Article 131 of the Constitution of India cannot be likened to a civil suit under the Code of Civil Procedure, 1908 (‘CPC'). In any event, Section 9 CPC also grants wide jurisdiction to the Court to try all civil suits unless they are barred, either expressly or impliedly. The Court also noted that in State of Karnataka (supra) it was observed that there is a distinction between ‘State' and ‘State Government' and this distinction is evident from the language of Article 131 and, therefore, what has to be seen for the purpose of determining the applicability of that Article is whether any legal right of the State, as distinct from the State Government, is infringed.
The Court also referred to B.R. Enterprises v. State of U.P., (1999) 9 SCC 700, wherein it was observed that sale of lottery tickets by a State, though not a ‘trade' under Article 301 of the Constitution, would still be a ‘business' within the meaning of Article 298(b) of the Constitution. Dealing with Section 5 of the Act of 1998, the Court had also observed that it is only a State, which has decided as a policy in public interest to make itself a lottery-free zone, that can prohibit the sale of lotteries of other States within its territories. Therefore, a State conducting a lottery can claim a right to do so under Article 298(b) of the Constitution.
Therefore, the Court said that the case at hand could not be viewed as limited just to a challenge to the validity of certain provisions of the Act of 1998. Placing its reliance on previous decisions of the Court, the Court said that it was open for the Court to interpret the statutory provisions to effectively deal with the grievance of the States of Meghalaya, Nagaland and Sikkim with the provisions of the Act of 1998, which allegedly infringe their right to do business under Article 298(b).
Thus, the Court said that, at this stage, it would be premature to declare that this suit was not maintainable or to keep it on hold for all purposes, pending the decision of the Larger Bench. The Court also said that the Court was not inclined to accept the contentions urged by the UOI and some of the other States, including the State of Kerala, that this suit was not maintainable under Article 131 of the Constitution. Thus, the plaintiff-State was entitled to take the case forward on merits. The Court also said that the grievances raised by the plaintiff-State in the context of its right to do business in lotteries under Article 298(b), would constitute disputes, which fall squarely within the four corners of Article 131 of the Constitution.
With respect to the plea of UOI to refer the issue to a larger bench or to await the decision of the larger Bench as similar question was pending before a larger Bench, the Court said that it may be necessary to await the decision of the Larger Bench, but not otherwise, to decide the constitutional validity of the impugned provisions of the Act of 1998.
Further, the Court said that in any case, even if the decision in the Larger Bench reference was to be awaited, it is not the case that the suit should have been stayed entirely. The Court referred to the principles in Section 10 of the CPC, 1908, as a reasonable guiding light to answer the question that whether nothing could be done further in the present suit until determination by Larger Bench. The Court said that it has previously been explained that the object of the prohibition contained in Section 10 CPC is to prevent the Courts of concurrent jurisdiction from simultaneously trying two parallel suits and to avoid inconsistent findings. Section 10 is held not to affect the jurisdiction of the Court to entertain and deal with the latter suit and does not create a bar to the institution of the suit. It has also been previously and consistently held that Section 10 CPC does not create a bar to the passing of interlocutory orders including those of injunction.
Placing its reliance on Indian Bank v. Maharashtra State Coop. Marketing Federation Ltd., (1998) 5 SCC 69, the Court said that it leads to the position that even if final determination of the question of maintainability (in case the constitutional validity of the impugned provision is to be decided) may depend upon the decision of Larger Bench, the supplemental proceedings in the present suit, particularly those relating to the prayer of interim relief, cannot be put on hold.
Therefore, the Court concluded that:
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The present suit was maintainable, and
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even if the final answer to the question was to await the decision of the Larger Bench, there was no bar to the passing of interlocutory orders such as that of injunction. Whether an injunction is to be granted in the present case or not is a different matter and that shall be examined at the appropriate stage.
Thus, the Court ordered that the UOI and other States were open to file a reply to the prayer for interim relief by the plaintiff-State, if so chosen, within the period of four weeks.
[State of Meghalaya v. Union of India, 2023 SCC OnLine SC 613, Order Dated: 11-05-2023]
