Whereas the Government of Maharashtra propose to organise a State lottery;
And whereas the Central Government has no objection to it;
Now, therefore, the President is pleased to permit the Government of Maharashtra to conduct a State lottery, subject to the condition that the tickets of the lottery shall not be sold in another State without the permission of the Government of that State.
The President is further pleased to entrust to the Government of Maharashtra under Clause (1) of Article 258 of the Constitution the executive power of the Union in respect of lotteries organised by that Government.
Deputy Secretary to the Government of India.
10. It was after this entrustment of executive power of the Union to the Government of Maharashtra 'in respect of lotteries organised by that Government' that the Government of Maharashtra proceeded to issue the Press release and thereafter the individual communications, earlier referred to, making it known that the sale of lottery tickets of other States was banned in the State of Maharashtra.
11. The source of power for the ban is claimed to be the entrustment of power by the President under Article 258(1) of the Constitution. But the terms of the entrustment do not justify the claim. The entrustment of power, as is seen, is only 'in respect of lotteries organised by that Government'. The expression 'that Government' in the context of the entrustment of power to the Government of Maharashtra can only mean the Government of Maharashtra and no other. Nor can it ever be that such executive power as the Union Government may possess in respect of the trading, business or, for that matter, any other activity of the Government of one State may be entrusted to the Government of another State. That would be destructive of the very scheme and structure of our Constitution. The Government of Maharashtra cannot therefore purport to ban the sale of lottery tickets of other States by virtue of the entrustment of power under Article 258(1) of the Constitution.
12. It is then said that the permission granted to each State to conduct its lotteries is expressly subject to the condition that the tickets of the lottery shall not be sold in another State without the permission of the Government of that State. We have already pointed out that Article 298 of the Constitution extends the executive power of every State to the carrying on of any trade or business even if such trade or business is one with respect of which Parliament alone has the exclusive power to make laws, subject to the stipulation that such executive power of the State shall be subject to Parliamentary legislation. It is true that in view of Entry 40 of List I of the VIIth Schedule to the Constitution Parliament has exclusive power to make laws with respect to 'Lotteries organised by the Government of India or the Government of a State', that Article 73 of the Constitution extends the executive power of of the union to the matters with respect to which Parliament has power to make laws and, therefore, the executive power of the Union must extends to the subject 'Lotteries organised by the Government of India or the Government of a State'. But the executive power of the union, by the very opening words of Article 73, is 'subject to the provisions of this Constitution'. It follows that the executive power of the Union with respect to lotteries organised by the Government of a State has necessarily to be exercised subject to the provisions of the Constitution, including Article 298, which expressly extends the executive power of the State to the carrying on of any trade or business subject only to legislation by Parliament if the trade or business is not one with respect to which the State legislature may make laws. It is to be noted that Article 298 does not open with the words 'subject to the provisions of the Constitution', as does Article 73. Reading and considering Articles 73 and 298 together, as they should indeed be read and considered, it is clear that the executive power of a State in the matter of carrying on any trade or business with respect to which the State legislature may not make laws is subject to legislation by Parliament but is not subject to the executive power of the union. That is why we mentioned earlier that the Government of a State is not required to obtain the permission of the Union Government in order to organise its lotteries, in the absence of Parliamentary legislation. Even assuming that such permission is necessary, we do not see how a condition imposed by such permission that lottery tickets of one State may not be sold in another State may be enforced by the other State. The other State has no power to make laws in regard to the lotteries by the first State. Its executive power, by virtue of Article 298, extends to lotteries organised by itself but not to lotteries organised by the other State. If a State acts in breach of the condition imposed by' the President while entrusting power under Article 258, it is open to the President to revoke the permission or to take such further or other action as may be constitutionally permissible but it cannot possibly enable the Government of the other State to do a thing about it except to complain, perhaps, to the Union Government. The Government of India is quite obviously alive to the position that there is no way of enforcing the stipulation that lottery tickets of one State shall not be sold in another except by Parliament making a law in that behalf. The awareness is revealed by the last sentence in the letter dated July 1, 1968 which says,
I am to add that in order to achieve this object an amendment of Section 294-A IPC is being undertaken to make sale of tickets, without the consent of the State Government concerned, a penal offence.
The proposed amendment is yet to see the light of day.
13. A submission which appears to have found favour with the High Court of Bombay in Kamal Agency v. State : AIR 1971 332 and the High Court of Madras in H.G. Jain v. State of Tamil Nadu AIR 1973 Mad 402 was that in Entry 40 of List I and the respective local Acts, a lottery organised by a State must be construed to refer to a lottery lawfully organised by a State and that if a lottery is not lawfully organised by a State it would not fall within Entry 40 of List I but would fall under the head 'gambling' under. Entry 34 of List II and the State legislature would then be empowered to legislate in respect of the same. Where the State Legislature could thus legislate, it was said, the State Government could take executive action in respect of lotteries organised by another State if they were unlawful. The Gujarat and Andhra Pradesh High Courts have dissented from this view. In Special Civil Application No. 1309 of 1970 Bhagwati, C.J. presiding over a Division Bench of the Gujarat High Court and in L.B. Paradise Lottery center v. State : AIR1975AP50 one of us silting singly in the Andhra Pradesh High Court have explained that there is no justification for first reading the word 'lawfully' into Entry 40 of List I and then proceeding to interpret the expression 'Lottery lawfully organised' as meaning a lottery organised persuant to the entrustment of executive power of the Union under Article 258 of the Constitution. It was observed 'legislative power cannot be fed into Entry 34, by feeding the word 'lawful' into Entry 40 of List I and thus artificially restricting the scope of Entry 40'. It was pointed out that if the Government of a State organised a lottery without the entrustment of executive power as contemplated by Article 258 or in disregard or defiance of any condition that may have been imposed while entrusting executive power under Article 258 it would never be a matter for the legislature of one State to take upon itself the power to declare unlawful the lottery run by the Government of another State; and even less so could the Government of a State declare unlawful a lottery run by the Government of another State and thereafter ban the sale of the tickets of the lotteries organised by that State, In the Madras case it was also observed that the entrustment order carried with it all powers which the State Government might take to realise the maximum collection. We cannot subscribe to this view. That would really amount to the entrustment of vital legislative powers to the State Government which would be constitutionally impermissible. We do not think it necessary to refer in any further detail to the decisions of the Gujarat, Andhra Pradesh, Bombay and Madras decisions except to say that we generally agree with the reasoning in the Gujarat and Andhra Pradesh decisions and disagree with the reasoning in the Bombay and Madras decisions. In the result we allow the Write petitions and direct the State of Maharashtra to forbear from giving effect to the ban on the sale or distribution of tickets of lotteries organised by other States. There is no order regarding to costs.