M/S. B.R. ENTERPRISES ETC. ETC. versus STATE OF U.P. AND ORS. ETC. ETC.

Citation: [1999] 2 S.C.R. 1111 · Decided: 07-05-1999 · Supreme Court of India · Bench: K. VENKATASWAMI · Disposal: Disposed off
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Judgment (excerpt)

M/S. B.R. ENTERPRISES ETC. ETC. 
v. 
STATE OF U.P. AND ORS. ETC. ETC. 
MAY 7, 1999 
[K. VENKATASWAMI AND A.P. MISRA JJ.] 
The Lotteries (Regulation) Act, 1998--Section 5-Lotteries-Ingredients 
of-State lotteries-Conduct of lotteries by States-Nature of-Held, State 
lotteries also fall within the ambit of gambling. 
Constitution of India-Articles 298, 301 and 303-Trade-Meaning 
of-Ccmduct of lotteries by States-Held, is not Trade-The Lotteries 
(Regulation) Act, 1998--Section 5. 
Constitution of India -Articles 14 and 303-Discrimination-Lotteries 
A 
B 
c 
of Bhutan Government allowed under a Treaty-Sale of Bhutan Lottery D 
subject to laws in India-States given power to prohibit sale of lotteries of 
other States-Held, the prohibition on lotteries would apply even to Bhutan 
Lotteries-No discrimination~The Lotteries (Regulation) Act, 1998-
Section 5. 
The Lotteries (Regulation) Act, 1998--Section 5-Power to the States E 
to prohibit sale of lotteries of eve1y other State-No discretion to pick and 
choose States while imposing prohibition-Held, there is no unbridled 
delegation or discrimination-Constitution of India-Articles 14 and 303-
Discrimination. 
The Lotteries (Regulation) Act, 1998--Section 5-Power to States to p 
prohibit sale of lotteries of every other State-Can be exercised only when 
the State prohibits its own lottery-Otherwise, it would be discriminatory-
Constitution of India-Articles 14 and 303. 
Interpretation of Statutes-Principle of reading down-Exercise of 
The Lotteries (Regulation) Act, 1998--Section 4(aj(g) and (h)-Held, G 
not arbitrary. 
Words and Phrases-Trade-Business-Lottery-Meaning of 
The Lotteries (Regulation) Act, 1998 was enacted by the Parliament 
"to regulate the lotteries and to provide for matters connected therewith and H 
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SUPREME COURT REPORTS 
[1999] 2 S.C.R. 
A incidental thereto." Section 2(b) of the said Act defined lotteries as a scheme 
for distribution of prizes by a Jot or chance. Section 3 prohibited organisation 
of State lotteries without following the conditions stipulated under sub-
sections (a) to (k) of Section 4 of the Act. Section 4 of the Act laid down 
conditions that would make the conduct of lotteries fair and credible. Section 
B 4(a) of the Lotteries (Regulation) Act prohibited offer Of prizes on any pre-
announced number or on the basis of a single digit. Section 4(g) required 
that the place of draw shall be located within the State concerned. Section 
4(h) prohibited more than one draw in a week. Section 5 of the Lotteries 
(Regulation) Act provided that "a State Government may, within the State, 
prohibit the sale of tickets of a lottery organised, conducted or promoted by 
C every other State." Section 7 of the Act makes contravention of the provisions 
of the Act a penal offence. 
The State of U.P., exercising its power under Section 5 of the Lotteries 
(Regulation) Act, banned the State lotteries of all other States in the State 
ofU.P. This order of the State ofU.P. was challenged in various High Courts. 
D The Gujarat High Court upheld the validity of the Lotteries (Regulation) Act 
whereas the Guahati High Court struck down the provisions of the Lotteries 
(Regulation) Act as ultra vires. The aggrieved parties filed appeals by way 
of Special Leave Petition before this Court. Along with the Special Leave 
Petitions, a Writ Petition and few Transfer Petitions involving the same 
E question of law were also heard by this Court. 
F 
Before this Court, those who sought to challenge the validity of the 
Lotteries (Regulation) Act raised, inter alia, the following contentions :-
1. When a State undertakes the sale of lottery tickets, it does so for 
public good and therefore, the sale loses its pernicious nature, ceases to be 
gambling and becomes 'trade' under Article 302 of the Constitution of India 
and is no more res extra commercium. 
2. The word 'trade' used in Article 298 of the Constitution of India has 
to be given the same meaning as 'trade' used in Article 301 of the Constitution 
G of India. If State lotteries are not 'trade' under Article 301 of the Constitution 
oflndia, it would not be 'trade' under Article 298 of the Constitution of India 
too. In that event State would have no power to run its own lotteries until the 
Parliament makes law in that respect. Thus, lotteries organised by the State 
has to be treated as 'trade'. 
H 
3. The Lotteries (Regulation) Act is discriminatory piece of legislation 
-' 
B.R. ENTERPRISES v
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