The Director, Kerala State Lotteries Directorate & Others v. Ramachandran

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR & THE HONOURABLE MR. JUSTICE SHAJI P.CHALY MONDAY, THE 09TH DAY OF NOVEMBER 2020 / 18TH KARTHIKA, 1942 WA.No.219 OF 2020 (AGAINST THE JUDGMENT IN WP(C) NO. 28064/2019) ## APPELLANTS/RESPONDENTS IN THE W.P(C): - 1 THE DIRECTOR, KERALA STATE LOTTERIES DIRECTORATE OF STATE LOTTERIES, VIKAS BHAVAN, THIRUVANANTHAPURAM-695033. - 2 THE SECRETARY(TAXES) SECRETARIAT, THIRUVANANTHAPURAM-695001. - 3 THE DEPUTY DIRECTOR (SALES SECTION) KERALA STATE LOTTERIES, DIRECTORATE OF STATE LOTTERIES, VIKAS BHAVAN, THIRUVANANTHAPURAM-695033. - 4 THE DISTRICT LOTTERY OFFICER, DISTRICT LOTTERY OFFICE, CIVIL STATION, THRISSUR-680003. BY SENIOR GOVERNMENT PLEADER MR. SURIN GEORGE IPE ## RESPONDENT/PETITIONER IN THE W.P(C): RAMACHANDRAN, AGED 63 YEARS, CHERIYANATH HOUSE, PANAMUKK, NEDUMPUZHA, KOORKKANCHERRY, THRISSUR-680007. BY ADV. SRI. BINU PAUL THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 09.11.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A. 219/2020 2 ## **JUDGMENT** Dated this the 9[th] day of November, 2020 ## **S. Manikumar, CJ** Being aggrieved by the direction of the learned single Judge in the judgment dated 05.12.2019 in W.P.(C) No.28064 of 2019, that the District Lottery Officer, Thrissur, respondent No.4 therein, should make a provision for distribution of tickets to persons like the writ petitioner/respondent herein, as per their demands, who eke out a living by selling the same, this _intra court_ appeal is filed 2. Facts leading to the filing of instant appeal are that the writ petitioner/respondent herein, an authorised lottery agent, has been conducting a lottery agency at Thrissur. His grievance is that though he is a registered agent, he was not issued with sufficient number of lottery tickets by the 4[th] respondent. Hence, he filed W.P.(C) No.28064 of 2019 seeking for the following reliefs: (i) To issue a writ of mandamus or any other writ, order or direction, directing the 4[th] respondent, to issue lottery tickets to the petitioner, without any discrimination and, in accordance with the stipulations contained in the Kerala Paper Lottery (Regulation) Rules, 2005. (ii) To issue a writ of mandamus or any other writ, order or direction, directing respondents 1 to 3, the Director, Kerala State Lotteries, Directorate of State Lotteries; Secretary (Taxes); and Deputy Director W.A. 219/2020 3 (Sales Section), to ensure the availability of lottery tickets to the petitioner. 3. In the writ petition, the petitioner has stated that agents engaged in black marketing (illegal wholesale agents), are selling lottery tickets in black market with the aid and knowledge of respondents 3 and 4. In such circumstances, he submitted Exhibits-P1 & P2 petitions before the respondents 1 to 4 dated 05.10.2019 and 07.10.2019 respectively, which according to him, are pending. Before the writ court, the petitioner has contended that issuance of lottery tickets to the agents does not depend upon the discretion of the respondents 3 and 4, but it is governed by rules and regulations. 4. Appellants have resisted the writ petition by filing a statement on 20.11.2019, wherein it was contended that petitioner is a lottery agent since 25.11.2015 and he used to purchase a lesser number of lottery tickets in the basic slab of 2000 tickets. The petitioner purchased tickets only upto the draw conducted on 28.03.2016 and he did not purchase thereafter, upto 26.02.2019. From 26.02.2019 onwards, he has purchased lottery tickets upto 09.04.2019. Thereafter, on 19.10.2019, he submitted an application before the 4[th] respondent. On 02.11.2019, Annexure-R2(a) reply was given to the petitioner stating that he has not approached the 4[th] respondent since 09.04.2019 for purchasing tickets. The reply further states that the petitioner is not W.A. 219/2020 4 an agent purchasing lottery tickets regularly from the 4[th] respondent and hence, not possible to allot tickets, as requested by him. 5. Appellants have further stated that the department of State lotteries is conducting six weekly lotteries worth Rs. 30/- and one weekly lottery worth Rs. 50/-, and the number of tickets is being enhanced from time-to-time, according to the demand prevailing in the market. At that time, lottery tickets worth Rs. 30/- were printed in 105.6 lakhs and Rs. 50/- tickets in 75 lakhs and distributed among the agents through various lottery offices. As the tickets are printed according to the demand from the market, the number of tickets unsold is very low or all the tickets are printed in full. Hence, it may be noted that the department is giving preference in allotting the tickets to those agents, who purchase tickets regularly. It is not possible to keep tickets in the lottery offices for allotting tickets to the agents, who are not regular. The Director of State Lotteries have issued guidelines to ensure tickets to the new agents and agents, who purchase less number of tickets. 6. Appellants have further stated that the State Lotteries Department is selling lotteries through its registered lottery agents only. The department allots lottery tickets to the registered agents with different discounted slab rates, i.e., agents who purchase upto 2000 would get 24% discount on their purchase, agents who purchase above W.A. 219/2020 5 2000 and upto 10000 would get a discount of 24.50%, and those agents who take above 1000 tickets would get a discount of 25.25% for tickets worth Rs. 30/-. For tickets priced at Rs. 50/-, the discount is fixed at 24% upto 5000 and 25% above 5000. Moreover, the agents, who purchase regularly for a longer period, are getting more tickets gradually, according to the enhancement of printing quantity from time- to-time. The lottery agents sell out tickets through their sub agents and in retail. The department is concerned only with its registered agents. Any lottery seller, whether he is a lottery agent or not, can choose to purchase tickets from other agents. The Department can only view this as a situation where the person degrades himself as a hawker and in the process, aids in fetching rich dividends for the agent. It is to aid the agents, who purchase tickets in lower slabs, and to ensure that they get their share of tickets, the Department has issued guidelines from time-to-time. 7. Appellants have further contended that the printed tickets are distributed among the agents according to their demands and the availability of tickets in Lottery Offices. The Director of State Lotteries has issued guidelines, in order to ensure tickets to the agents who purchase tickets at variable slab rates. Since they have acted in accordance with rules and regulations governing the lottery and ensuring natural justice to all agents registered under the Department W.A. 219/2020 6 of State Lotteries, the appellants prayed to dismiss the writ petition as devoid of merits. 8. After considering the submissions and the materials on record, writ court disposed of the writ petition with certain directions as stated supra. Being aggrieved, instant appeal is filed on the following grounds: A. Writ petitioner/respondent cannot have any legally enforceable right under Art.19 of the Constitution, since the business of lottery is essentially res extra commercium. This is a regulated commodity and, therefore, there is no freedom given in marketing or purchase of lotteries and it operates under the stringent supervisional control of the relevant statutory provisions, which if interfered by the court, will dilute the entire scheme envisaged. Therefore, the impugned judgment, which gives an unfettered power to the petitioner, to purchase the lottery tickets, if he is regularly purchasing tickets for 3 months, would be prejudicial to the interest of the State, which controls the sale of the lottery tickets. B. Lottery is essentially gambling. Lotteries do not come under the definition of goods, trade or service, which, therefore, predominantly stop the petitioner in the Writ Petition from making a legal claim, as against the State to grant him more lottery tickets as a matter of right. The petitioner has no _locus standi_ even to make such a complaint before the appellants. Mere expression of interest to purchase lottery tickets at his whims and fancies do not entitle the petitioner for a legally valid claim as against the appellants. In such circumstances, writ court W.A. 219/2020 7 has erred in granting a claim which was legally not enforceable. C. Furthermore, petitioner did not exhaust the alternative remedy under Section 6 of the Lotteries Act, 1998, before approaching the writ court under Article 226 of the Constitution of India. The question of maintainability though raised during the course of argument was ignored by the learned Single Judge, while deciding the writ petition. D. The business of lottery is being governed strictly in terms of the Lotteries (Regulation) Act, 1998 and the rules framed thereunder. In **Union of India v. Martin Lottery Agencies Ltd.** , [(2009) 12 SCC 209, the Hon'ble Supreme Court has held that the law as on today recognizes the lottery to be gambling. The holding that lottery is essentially gambling makes it an act of "res extra commercium. Organizing a lottery by the State is permitted, since it is an economic activity, so as to raise the revenue and that raising of revenue by the State by itself cannot amount to rendition of any service. Service has been defined as service of any description which is made available to the potential users and includes the provisions of services in connection with the business of any industrial or commercial matters like banking, communication, tax, financing, transport, real estate, material storage, processing, entertainment, amusement, repair etc. Trade also has been defined as any trade, business, industry, distribution, storage or control of goods, and includes the provision of any service. The Competition Act, 2002 would be applicable to legitimate trade and goods, to ensure competition in the market to W.A. 219/2020 8 protect the interest of the consumers and freedom to trade, which is res extra commercium. E. State, in exercise of its executive powers, has made laws imposing reasonable restrictions/classifications for group of businesses, within the territory, to attain particular results in giving effect to it's policies. The classification need not be constituted as an abstract of scientific exclusion and inclusion. These classifications are justified, since it is on the basis of these classifications that Government exercise it's policies. The State has the power of determining who should be regulated as a class, for the purpose of legislation and in relation to the law enacted on a particular subject. The classification postulates a rational nexus/ basis and it should have an intelligible _differentia_ from the object sought to be achieved. Here the legislative policy is clear and definite without any ambiguity. F. The regulations imposed by Circular No. SLTY/89/2019S2 dated 01.11.2019 of the first appellant is reasonable restrictions imposed on those agents, who were not purchasing the tickets regularly, and to promote new agents and agents with disabilities. Therefore, it is not a discriminatory policy. The direction of the learned Single Judge in the impugned judgment to make provisions for distribution of tickets to persons like the petitioner as per their demand is, therefore, unsustainable, as the conducting of lottery which is res-extra commercium, is concerned, there is no inequality, discriminatory practice or unreasonable classification in the circular which has been properly communicated to the petitioner through W.A. 219/2020 9 ## Annexure-R2(a) letter. G. State can impose limitations and restrictions in the conduct of lotteries and these restrictions are different in nature from those imposed on the trade or business to legitimate activities and goods and articles, which are res commercium. If Courts are interfering in the executive domain by diluting the limitations/restrictions, the policies of the State will be diluted. The State can definitely adopt any legitimate method for selling the lotteries, with a view to maximize its revenue so long as the method adopted is not discriminatory. Imposing a reasonable restriction does not prevent the writ petitioner from carrying on business activities which will hamper his rights under Article 19(1)(g) of the Constitution of India. Even if it is assumed that such a right is available to the writ petitioner, in the matter of sale of lotteries, the protective umbrella of Article 19(1)(g) is not available. In such circumstances, the restrictions imposed by the appellants is not in any way discriminatory. The writ court has failed to appreciate the fact that the 4[th] respondent could have affected the distribution of the ticket only in a fair and equitable manner and could not have acceded to the unfair demands of the petitioner. For the above grounds, the appellants prayed for dismissal of the impugned judgment. 9. Inviting our attention to the letter No. SLTY/89/2019-S2 dated 16.11.2019 of the Director, State Lotteries, appellant No.1, Mr. Surin George Ipe, learned Senior Government Pleader, submitted that as per the letter, if request for allotment of lottery tickets is received from W.A. 219/2020 10 those agents, who are not taking lottery tickets regularly, and those, who had not renewed their agency, tickets need be issued to them, subject to availability only. 10. Referring to the averments made in the counter affidavit, the learned Senior Government Pleader further submitted that the respondent purchased lottery tickets for the draw conducted on 28.03.2016 and, therefore, did not purchase tickets upto 28.02.2019. He also submitted that the respondent purchased lottery tickets from 26.02.2019 to 09.04.2019, and thereafter, did not purchase lottery tickets for nearly six months. On 19.10.2019, he made an application for which a reply [Annexure-R2(a)] dated 02.11.2019 was also given. According to the learned Senior Government Pleader, Circular No. SLTY/89/2019-S2 dated 17.09.2020 is squarely applicable to the case of the respondent. 11. Placing reliance on the decision in **Union of India v. Martin Lottery Agencies Ltd.** [(2009) 12 SCC 209], learned Senior Government Pleader submitted that trading in lottery is _res extra commercium_ . For the abovesaid reasons, he prayed to interfere with the impugned judgment. 12. _Per contra_ , to sustain the impugned judgment, Mr. Binu Paul, learned counsel for the respondent, submitted that the respondent has made representations, highlighting the irregularities and as a lottery W.A. 219/2020 11 agent, he is entitled to purchase tickets. Holding that refusal is not justified, writ court in the judgment impugned has issued directions, which does not require interference. 13. Heard learned counsel for the parties and perused the material on record. 14. Annexure-R2(a) letter sent by the District Lottery Officer, Thrissur, to the respondent reads thus: “Dated: 02.11.2019 From District Lottery Officer, Thrissur. To Shri. Ramachandran, S/o Venugopala Menon, Cheriyanath, Panarmukku, Nedupuzha, Koorkkancherry, Thrissur. Gentleman, Sub: District Lottery Office, Thrissur - Sales Division - Application submitted requesting for more Lottery Tickets - Furnishing of Reply - Regarding. - Ref: 1. Your application dated 09.10.2019. 2. Circulars issued from time to time by the Director of State Lottery in relation to sale of Lottery Tickets. Your attention is invited to the references cited above. The application made by you cited as reference No.(1) above, seeking sale of Lottery Tickets to you, to this office was examined when it was revealed that you were allowed Agency on 25.11.2015, that thereafter till 28.03.2016 you have been purchasing Tickets from this office. It is also seen W.A. 219/2020 12 that during this year, you had appeared in this office for purchase of Tickets from 26.02.2019 to 09.04.2019 only. It is understood that you do not permanently purchase Lottery Tickets from the Thrissur District Office, as an Agent, from this circumstance. Only for those Agents, who purchase Tickets from this office on a perpetual basis, that Tickets are sold from this office in bulk, subject to the various conditions issued under the circulars issued from time to time. It is also noticed that neither you nor any other agents have made an application to this office, seeking sale of Lottery Tickets in excess quantity till this date. It is only because of your ineligibility to get tickets in excess quantity, which consideration is accorded to the permanent agents, that you are supplied with a minimum quantity of tickets, as an individual. As this is only in accordance with the Rules, it is hereby informed that it is not possible to supply the quantity of Tickets sought for by you in the application. Details of Tickets purchased by you from this office are annexed. Yours faithfully, Sd. District Lottery Officer, Thrissur.” 15. Letter No. SLTY/89/2019-S2 dated 16.11.2019 sent by the Director, State Lotteries, State Lottery Directorate, Thiruvananthapuram, to all the District Lottery Officers, reads thus: “No. SLTY/89/2019-S2 State Lottery Directorate Vikas Bhavan, Thiruvananthapuram Phone-0471-305193 email: Kerala Lotteries @ gmail.com Dated: 16.11.2019 Director, State Lotteries W.A. 219/2020 13 To All District Lottery Officers Assistant District Lottery Officers of All Lottery Sub Offices (through UMS) Sir, Sub:- Kerala State Lottery Directorate - Sales DepartmentTicket distribution- regarding If requests for allotment of lottery tickets are received from those agents who are not taking lottery tickets regularly and those who have not renewed their agency, tickets need be issued to them subject to availability only. Sincerely Sd/Join Director” 16. The State Lottery Director, as per the circular dated 17.09.2020, has issued certain guidelines as regards issuance of tickets to new agents, and it reads thus: “No. SLTY359/2019-S1 State Lottery Directorate Vikas Bhavan, Thiruvananthapuram Phone-0471-2305193 e-mail: Kerala Lotteries @ gmail.com Dated: 17.09.2020 ## **Circular** Sub:- Kerala State Lottery Directorate – Sales DepartmentGuidelines regarding issuance of tickets to new agents. Ref:- Letter from this office dated 27-07-2020 Those agents who had taken new lottery agencies are approaching this office requesting to allot more tickets. In the above circumstances, following guidelines are to be adhered while issuing tickets to new agencies. 1. During the first month of agency maximum number of tickets to be allotted will be three hundred. W.A. 219/2020 14 2. After one month three times of the allotted tickets (maximum 900) subject to availability 3. After two months from the date of issuance of agency three times of the tickets which are issued (maximum 2700) subject to availability. 4. In the case of new agencies increase in allotment should be made only in a structured manner. 5. To those agents, who had taken tickets for more than one year these guidelines are to be followed. Sd/State Lottery Director With Approval Sd/Sheeba Mathew Deputy Director (Sales Department)” 17. Lotteries (Regulation) Act, 1998, is an Act to regulate the lotteries and to provide for matters connected therewith and incidental thereto. In exercise of the powers conferred by sub-section (1) and (2) of Section 12 of the Lotteries (Regulation) Act, 1998 (Central Act 17 of 1998), the Government of Kerala have framed the Kerala Paper Lotteries (Regulations) Rules, 2005. 18. Rule 4 of the rules speaks about conduct of lottery and the same reads thus: “ **4** . **Conduct of Lottery** .- (1) The Director of State Lotteries shall be responsible for the conduct of Kerala State Paper Lotteries in accordance with the provisions of the Act. (2) The Director may appoint an agent or number of agents for the sale of paper lottery in the State subject to the provisions contained in the Act and the Rules. W.A. 219/2020 15 [(3) The Director shall appoint sole selling agents by open bidding for sale of Kerala State Lotteries in other States in India which are not lottery free zones. He shall also decide the State in which Kerala State Lotteries can be marketed. Such sole selling agents shall be appointed by the Director through the tender committee comprised by the Secretary to Government (Tax Department), Secretary to Government (Finance Expenditure), Secretary to Government (Finance Resources) and the Director as members with the Director as the Convenor. The terms and condition for the bid document shall be decided by the Director.]” ## 19. Rule 5 of the rules speaks about grant, renewal and cancellation of agency and it reads thus: ## “ **5. Grant, renewal and cancellation of agency** .- (1) Any Person desirous of obtaining an agency for sale of lottery tickets may apply in Form No. II to the District Lottery Officer by remitting a fee of Rs. 400 (Rupees Four hundred only) in cash. The agency may be renewed for further calendar years by submitting an application in Form No. II to the District Lottery Officer who granted the agency, on payment of a renewal fee of Rs. 100 (Rupees One hundred only) in cash. The agency which is not renewed by the end of the subsequent calendar year of grant of agency, shall stand cancelled automatically by the end of such year. In the event of such cancellation, fresh application for agency has to be preferred; Provided that those persons who were continuing as agents or were having valid agency at the time of prohibiting sale of all lottery tickets in the State of Kerala vide notification No. G.O. (P) 11/2005/TD. dated 27-1-2005 published as R.O. No. 73/2005 in the Kerala Gazette Extraordinary No. 169 dated 27-1-2005 shall be deemed to have been granted W.A. 219/2020 16 agency under these rules. Such persons who had remitted fees prescribed under the then existing rules shall be deemed to have remitted such fees under these rules- (2) Identity cards shall be issued to every agent with district code number for each district. Duplicate card shall be issued on payment of Rs. 50 Rupees Fifty only. Where the card is damaged or irrecoverably lost.” ## 20. Rule 6 of the rules speaks about duties and responsibilities of Lottery Agent and it reads thus: ## “ **6. Duties and Responsibilities of Lottery Agent.** - An agent may sell lottery Tickets through any number of subagents, retailers and sellers appointed by him. He shall be responsible for the proper compliance of the Act and Rules by the persons working under him. The agent shall also be liable to keep and produce on demand all particulars of subagents, retailers and sellers under him for certification to the Director or the District Lottery Officer or to any authorized Officer.” ## 21. Rule 7 of the rules speaks about sale of lottery tickets and it ## reads thus: “ **7. Sale of Lottery Tickets** .- (1) Lottery tickets shall be sold to agents at the face value after making such agency discount as determined by the Government. Tickets will be sold to agents either on cash payment or by exchange of prized tickets. (2) The sale proceeds of tickets shall be credited to the general revenue of the State. The tickets once sold will not be taken back. W.A. 219/2020 17 (3) Before issuing the tickets the seal of the office through which the tickets are sold shall be affixed on the reverse side of the ticket before sale, so as to get it impressed both on the ticket and on the counterfoil. The counterfoil shall be cut off and kept in the concerned offices from where the tickets were sold. (4) Tickets of each lottery shall be released on such date as may be fixed by the Director. (5) The stock and issue of the tickets shall be maintained in Forms Nos. III, IV and V. (6) Tickets shall be issued only from the respective district of registration. However an Agent who buys tickets worth face value of Rupees One Lakh from his District of Registration will be allowed to purchase tickets from other districts also based on the certificate/authorisation issued from the District of registration in Form No. VI. (7) The unsold tickets shall be kept under safe custody after making a 'V' cut on the number in the right side portion. The unsold tickets and the counterfoils of the sold tickets shall be disposed as per the orders issued by the Government. The details of such tickets shall be recorded in a Register in Form No. VII.” ## 22. Rule 10 of the rules speaks about interpretation and the ## same reads thus: “ **10. Interpretation** .- If any question, doubt or dispute arises regarding the interpretation of any of these rules or mattes not expressly provided in these rules the same will be referred to Government by the Director and the decision of the Government thereon shall be final.” W.A. 219/2020 18 23. From the facts narrated above, it could be deduced that the respondent has purchased lottery tickets for the draw on 28.03.2016. From 28.03.2016 to 26.02.2019, he has not purchased any lottery tickets. 24. Material on record further shows that during the period from 26.02.2019 upto 09.04.2019, the respondent has purchased lottery tickets. After a gap of six months, he has made a request to purchase lottery tickets. The above facts substantiate the contention of the appellants that the respondent was not regularly purchasing lottery tickets. 25. On a perusal of Annexure-R2(a), it is evident that the respondent has not made any application for purchase of lottery tickets during the period between 28.03.2016 to 26.02.2019. No materials have been produced before the writ court to substantiate that the respondent has made applications, as per the statutory provisions and that, there was refusal to supply. Thus, the respondent has not satisfied the principles for issuance of a writ of Mandamus. That apart, on a perusal of the materials produced by the appellants, it could be seen that the appellants indeed have referred to certain circulars, as regards the sale of lottery tickets. In the light of the above discussion, we are of the view that the direction issued by the writ court in the impugned judgment, requires W.A. 219/2020 19 interference. Therefore, this Writ appeal is allowed and the impugned judgment is quashed. We make it clear that setting aside the impugned judgment will not stand in the way of the respondent from making application for purchase of lottery tickets, if he has any right under the statutory provisions and circulars, and if any such application is made, the same shall be considered, in accordance with law. ## **Sd/S.MANIKUMAR CHIEF JUSTICE** **Sd/SHAJI P.CHALY JUDGE** krj /TRUE COPY/ P.A. TO C.J.