£-..-` , ,` -- :i..`l;i,"..:-':.': `` IN THE HIGH COURT OF SIKKIM WRIT PETITION (C) NO. 2 0F ZOOS 1. State ofsikkim, represented through the Principal Secretary, Finance Department, Government of Sikkim, Tashiling S e cretariat, Gangtok -737101, Sikkim. The Director, Sikkim State Lotteries, Gangtok, Sikkim. 3. M/s. Martin LotteryAgency Ltd., Daisy Plaza, 355-359, 6th Street, P.B. No. 2986, Gandhipuram, Coimbatore -641012. 4. M/s. Tashi Delek Gaming Solutions Pvt. Ltd., 135, Continental Building, Dr. Annie Beasant Road, Worli, Mumbai -400 018. 5. M/s. Playwin Infravent pvt. Ltd., No.443, Church Complex, Annasalai, 2nd Floor, Tajampet, Chennai -600 018. - VERSUS - ... Petitioners. 1. State of Tamil Nadu, through the Chief Secretary to the Government of Tamil Nadu, Chennai. . `\dr7, .+ pa,. Iii= The Director of Tamil Nadu Ralfles, LLA Building, 3rd Floor, 735, Anna Salai, Chennai -2. The Director General of Police, State of Tanil Nadu, Chennai. ... Respondents. Coram: Hon'ble Mr. Justice N. S. Singh, Judge. Present: Mr. S.P. Wangdi, Advocate General/Senior Advocate assisted by Mr. A. Moulik, Mr. J. 8. Pradhan, Mr. Karma Thinla.y and Mrs. L. Chakraborty, Advocates for the petitioners. Mr. V. Raghupatti, Govt. Pleader assisted by Mr. 8. Sharma, Advocate for the respondents. Date Of Decision: uliky 21, ZOOS. JUDGMENT Sinah. J. In this writ petition, the writ petitioners, five in number, questioned the validity of the impugned notification bearing G.O.Ms. No.20 dated 8th January 2003 issued by the Government of Tamil Nadu as in Annexure-P5 to the writ petition by contending inter alia, that the impugned notification is arbitrary, malafide, ultra-virus of the scheme of a.\drz the Lotteries (Regulation) Act, 1998 and also violative of Article 14 of the Constitution of India. In the said writ petition, the writ petitioners highlighted the following facts: - Sikkim a sovereign kingdom is merged with the Union of India as its 22nd State. Sikkim is a small mountainous State with difficult terrain and no mineral resources worth the name and also has no industries other than few small- scale industries. Since the State of Sikkim has limited resource-generating capacity, it is highly under-developed. The petitioner-State has been enhance is enga lotteries such as : exploring possibilities to generate and its own revenue by various means and ;ed in the business of organising and has formulated several schemes - (i) paper lotteries which are sold throughout the country by distributors, wholesalers, etc., (ii) On-line lottery organised by the petitioner-State and marketing through its marketing agent. In view of the limited resources and under- development, the petitioner-State with an object of raising additional revenues to be spent on welfare activities and developmental progralns of the State conceived the idea of floating an On-line lottery system in accordance with the Lotteries (Regulation) Act, 1998. Short term tender notice at National level were floated on 8th July, 9th July and loth July 2001 a.too`OYz inviting applications/quotations for said On- line lottery. Sealed Tenders were opened and technical and financial evaluations of the offer were examined by the tender committee. Agreement for the On-line lottery executed at Gangtok between the petitioner-State and M/ s. Tashi Delek Gaming Solutions Pvt. Ltd. whereby the said company was appointed as the Marketing Agent for the petitioner-State. Sikkim On-line lottery launched all over India. First draw held on 29th March 2002. Till now there has been about 58 draws of Super lotto and 48 draws of Thunder Ball and petitioner- State has earned revenue to the tune of Rs.73.32 crores approximately. Section 5 of the said Act is reproduced - "A State Govt. may, within the State, prohibit the sale of tickets of a lottery organised, conducted or promoted by another State". Section 6 - "The Central Govt. may, by order published in the Official Gazette, prohibit a lottery organised, conducted or promoted in contravention of the provisions of Section 4 where tickets of such lottery are sold in contravention of the provi.sions of Section 5". Q\tF7, These above provisions are more or less in consonance with the guidelines stipulated ,in the case of Suman Enterprises v. State of Haryana. Supporting the case of the petitioner-State and other petitioners, Mr. S. P. Wangdi, learned Advocate General and Mr. A. Moulik, learned counsel submitted thus - The Supreme Court in 8. R. Enterprises ti. State Of U.P. 8b ors. reported in (1999) 9 SCC 700 upheld the validity and vires of the Lotteries (Regulation) Act, 1998. In the above case the Supreme Court interpreted Section 5 to mean that the State can prohibit other State lotteries only if it does not conduct its own lotteries. As far as petitioner-State is concerned, it is carrying on the business of running the lotteries organised by it in strict conformity with the provisions of Section 4 of the said Act. When the Lottery Ordinance was in force, the State of Tamil Nadu under Section 5 of the said Ordinance passed G.O.Ms. No.1203 Home (Courts 11) Department dated 24th November 1997 prohibiting the sale of lottery tickets of other States from lst January 1998. Such a ban was imposed when the State of Talnil Nadu +.\6Tz was running its own lotteries. In 8. R. Enterprises case, the said G.O.Ms. was held to be invalid in view of the interpretation rendered by the Supreme Court on Section 5 of the Act. Under Section 12 of the Act, the State of Tamil Nadu framed the Tamil Nadu State Lotteries (Regulation) Rules, 2002 and the Tamil Nadu State On-line Lottery (Regulation) Rules, 2002. (Annexures P2 and P3). Rule 20 of the above Rules Annexure P2 is in contravention of Section 5, 6 and 12 of the Lotteries (Regulation) Act, 1998 enacted by the Parliament. Even if the lotteries are organised by any State Government in contravention of Section 4 of the Act, it is the Central Government alone which can prohibit such lotteries. Under Section 12 of the Act, the State Government has power to make Rules in respect of its own lotteries to ensure compliance of Section 4 of the Act. Respondent State of Tamil Nadu refused to accept the Sales tar from the sub agents of the petitioners on the ground that no approval of the State of Tamil Nadu has been obtained in compliance with the Tamil Nadu State Lotteries (Regulation) Rules, 2002. G.O.Ms. No.308 dated 9th September 2002 (Annexure P4) issued by the respondent-State, `\tyr, prescribing certain guidelines for sale of State lotteries in Tamil Nadu based on the Rules framed. Cumbersome procedures have been laid down as a device that it would not be possible for any other States to comply and operate in the Sta.te of Tamil Nadu. As such, the action in framing such cumbersome procedures are nothing but a colourable exercise of power and therefore, is arbitrary, unreasonable, malalide and beyond jurisdiction. Rule 20 and 21 of the said Rules 2002 has been framed in order to avoid competition and illegally prohibit the sale of tickets organised by other State Government. Under Rule 12 the officials of the State Government of Tamil Nadu sought for information relating to the conduct of Sikkim lotteries. Accordingly, the same were furnished by the petitioner-State. However, for a long time no order was passed and the petitioner- State was constrained to file Writ Petition No.36067 of 2002 in the High Court of Madras, challenging the validity of Rule 20 of the Rules. The Madras High Court by order dated 19th September 2002 directed that no prosecution or seizure of the lotteries or action under Rule 20 be effected without giving any fair and reasonable opportunity. +\dry j` Notification G.O.Ms. No.20 Home (Courts 11) Department dated 8th January 2003 (Annexure P5) issued by the respondent State of Tamil Nadu whereby the sale of lottery tickets including that of Tamil Nadu, within the territory of Tamil Nadu have been prohibited. Annexure P5 is absolutely arbitrary, capricious, malafide and in gross violation of principles of natural justice and other provisions of the Constitution. By issuing Annexure P5 the sale of lottery tickets of the petitioner-State have been brought to abrupt halt without following issuing any prior notice. Annexure P5 is violative of the law laid down in a. R. Enterprises case by the Supreme Court of India, as only sale of lottery is banned and the respondent-State has not declared itself as a lottery free zone and as the ban is only with regard to the sale of tickets and not from organi§ing it. The case of the wit petition is resisted and contested by the respondent-State of Tamil Nadu by filing Y counter affidavit. According to the respondents, the writ petition is not sustainable both in law and on facts inasmuch as the same State of Sikkim represented by its Director, State •\cyty of Sikkim Lotteries, Government of Sikkim at Gangtok filed similar writ petition being No.36067/02 challenging the validity of Rule 20 of the Tamil Nadu State Lotteries (Regulation) Rules, 2002 vide G.O.Ms. No.139, Finance (Raffles) Department, dated 19th April 2002 and when the said writ petition came up for orders before the Honfole Single Judge of Madras High Court, the Honfole Court passed an ad- interim order on 19th September 2002 to the effect that respondent-State shall not initiate any action under Rule 20 of the Tamil Nadu State Lotteries (Regulation) Rules, 2002, nor initiate any prosecution or seize the lotteries of the petitioner-State without giving any fair and reasonable opportunity to the petitioner. But in the meanwhile, the Government of Tamil Nadu has banned the sale of lotteries including that of Government of Tamil Nadu under the impugned notification dated 8th January 2003. Similar writ petitions and writ appeals were heard by the Honble Division Bench of the Madras High Court and those cases were disposed of finally with the following observations: - "(i) the impugned G.O.Ms. No.20 dated 8. 1 .2oo3 is valid. (ii) The impugned G.O.No.20, dated 8.1.2003 has got only prospective operation from 9.1.2003 and from that date onwards, no +.\ev\,t, 10 0' C, lottery ticket, either of State of Tamil Nadu or other States, shall be authenticated or subjected to sales tax. (iii) All such lottery tickets, either of the State of the Tamil Nadu or of other states and which have suffered the sales tax under the Tanil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) upto 8.1.2003 can be transferred by the Sale Agents to sub-agents (retailers) and they, in turn to the individual purchasers. (iv) The appropriate Authorities are directed to conduct draws of the lottery tickets mentioned in Clause (iii) above. (v) by conducting such draws as mentioned in clause (iv) above, the future dates of draws, which were already set beyond this date, shall be held on the said set dates while the dates of draws between 9.1.2003 and this date shall be rescheduled maintaining the same time span starting from tomorrow. All the Writ appeals and writ petitions are disposed of accordingly. No costs. Consequently, all the connected W.A.M.Ps and W.P.M.Ps are closed. It is also the case of the respondent-State of Tamil Nadu that against the common iJudgment of the Division +\orz 11 Bench of the Madras High Court, State of Mizoram and others filed appeals by way of Special Leave Petition before the Honble Supreme Court of India and the Apex Court by its order dated 7th February 2003 dismissed those 3 Special Leave Petitions being SLP(C) No.2302/03, SLP(C) No.2378/03 and SLP(C) No.1535/03. In other words, the impugned notification dated 8th January 2003 is a valid notification in the eye of law. Mr. V. Raghupatti, learned Government Pleader appearing for the State-respondents, submitted that since the Honble Supreme Court of India has upheld the Judgment of the Honble Division Bench of the Madras High Court, the present writ petition is not. maintainable/sustainable and liable to be dismissed that since any order or direction passed by the Honble Supreme Court of India will be binding on the authorities and the persons all over India in terms of Article 141 of the Constitution of India. It is also contended by Mr. V. Raghupatti, learned Government Pleader appearing for the respondent-State of Tamil Nadu that this Court (High Court of Sikkim) has no jurisdiction to entertain the above writ petition since no part of cause of action arises within the State of Sikkim since the lotteries have to be sold within the a.\prz 12 territory of State of Tamil Nadu for which cause of action will arise only within the territorial jurisdiction of Madras High Court. According to Mr. V. Raghupatti, learned Government pleader, there is no infirmity or illegality in the impugned notification dated 8th January 2003 as the Government of Tamil Nadu has banned the sale of lotteries including that of Government of Tamil Nadu by virtue of the impugned notification dated 8th iJanuary 2003 under the powers conferred by Section 5 of the Lotteries (Regulation) Act, 1998, in short, Act of 1998. At the hearing, Mr. S. P, Wangdi, learned Advocate General appearing for the State of Sikkim, replying to the arguments of Mr. V. Raghupatti, leaned Government Pleader submitted that by virtue of impugned notification dated 8th January 2003, the required revenue of the State of Sikkim has been severely affected as the sales of lottery tickets, i.e. the Sikkim State On-line Lotteries have been banned by the respondent-State. According to Mr. Wangdi, learned Advocate General, the draws of the on-line lotteries is held in Gangtok, Sikkim, the main prizes are paid by the State of Sikkim, and the revenue is deposited in the State of Sikkim and the `\drTz 13 impugned order of the respondent-State of Tamil Nadu was issued by the Government of Tamil Nadu which was received by the petitioner-State on 20th January 2003 at Gangtok and that being the position the cause of action in part, if not wholly, is arising within the territory of Sikkim and, therefore, this Court has the jurisdiction to entertain and hear the present writ petition. In support of his contention, the learned Advocate General has cited the judgment/decision of the Apex. Court in the case of Bipin Chandra Lakhera v. Union of India & Anr. passed in Civil Appeal No.1036 of 2001 arising out of SLP(C) No.14563 of 2000 and contended that in that case, the High Court` of Sikkim, by virtue of related judgment dated 12th May 2000 passed in Writ Petition No.542 of 1998 between Bipin Chandra Lakhera v. Union of India & ors., held that it was not at all essential for the petitioner to allege and prove to claim the reliefs prayed for in the petition that the impugned orders were communicated to him in Sikkim and in that case, the impugned orders were passed in Delhi and the authority that passed the order is not located within the jurisdiction of the Court and accordingly, the said writ petition was dismissed. However, the Apex Court, examining the matter, held that the High Court committed serious error in holding the application to be not maintainable on the ground of territorial jurisdiction and on +,\cF7, 14 the basis of the fact that the petitioner is serving at Sikkim and was served with the impugned order while serving at Sikkim. Mr. Wangdi, the learned Advocate General produced the copies of the related judgment and order of the Apex Court as well as the High Court of Sikkim. Having heard the learned counsel for the petitioners and the learned Government Pleader for the State-respondents in the related issue of maintainability, I have no hesitation to come to the conclusion that the High Court of Sikkim has territorial jurisdiction in the matter. But so far the validity of the impugned notification dated 8th January 2003 is concerned, I am of the view that there is no illegality or infirmity in the impugned notification or violation of the related provision of the Act of 1998 and the Rules framed thereunder by the Government of Tamil Nadu for the following reasons: - From the available materials on record it is revealed that the State of Sikkim represented by its Director, State of Sikkim Lotteries, Government of Sikkim filed a writ petition No.36067/02 challenging the validity of Rule 20 of the Tamil Nadu State Lotteries (Regulation) Rules, 2002 in G.O.Ms. No.139, Finance (Raffles) Department, dated 19th April 2002 and in that case, the learned Single Judge of Madras High Court passed ad interim. order dated 19th +\cyT7, 15 September 2002 in the connected misc. petitions (ref. Writ Petition No.36067/02) and in the meanwhile, the Government of Tamil Nadu has banned the sale of lottery tickets organized, conducted or promoted by every State including the State of Tamil Nadu vide impugned notification dated 8th January 2003 by invoking the provision of Section 5 of the Lotteries (Regulation) Act, 1998 and that being the position, similar writ petitions and writ appeals were heard by the Division Bench of Madras High Court. State of Sikkim represented by its Director, Sikkim State Lotteries, Government of Sikkim, Gangtok is one of the party-appellant in Writ Appeal No.3446 of 2002. In those writ appeals and writ petitions, there were three main / contentious issues which are as follows: - (1) Whether the impugned G.O.Ms.No.20 Home (Courts 11) Department dated 8th January 2003 is unconstitutional and invalid; (2) If the impugned G.O. is valid, whether the same acts only prospectively prohibiting the sale of lottery tickets from 9th January 2003 onwards and cannot affect the lottery schemes announced up to 8th January 2003 and the tickets meant and issued therefore. (3) In any event, can the lotteries which have been purchased upto 8th January 2003 be `\Ofz 16 brought within the protective umbrella of the doctrines of legitimate expectation and promissory estoppel. and those issues were examined by the learned Division Bench of Madras High Court and the Madras High Court held thuS:- (i) the impugned G.O.Ms. No.20 dated 8th January 2003 is valid; (ii) the impugned G.O.Ms. No.20 dated 8th January 2003 has got only prospective operation from 9th January 2003 and from that date onwards, no lottery ticket, either of State of Tamil Nadu or other States, shall be authenticated or subjected to sales tax; (iii) all such lottery tickets, either of the State of Tamil Nadu or of other States and which have suffered the sales tax under the Tamil Nadu General Sales Tax Act upto 8th January 2003, can be transferred by the sole agents to sub-agents (retailers) and they, in turn, to the individual purchasers ; (iv) the appropriate Authority/ies are directed to conduct draws of the lottery tickets mentioned in clause (iii) above; (v) by conducting such draws as mentioned in clause (iv) above, the future dates of draws, +\6rz 17 which were already set beyond this date, shall be held on the said set dates while the dates of draws between 9th January 2003 and this date shall be re-scheduled maintaining the same time span starting from tomorrow. In the said cases, the Division Bench of Madras High Court held that the impugned notification in the present writ petition dated 8th January 2003 is valid vide,common LJudgment dated 24th iJanuary 2003 passed in W.A. Nos.3358, 3446, 3627 of 2002 and W.P. Nos.44221, 43409 of 2002 and others. The validity of the said common Judgment of the Division Bench of Madras High Court was questioned by the State of Mizoram and two agents of State of Bhutan and Arunachal Pradesh by way of Special Leave Petition before the Honble Supreme Court of India and)the Honble Supreme Court by its order dated 7th February 2003, dismissed those Special Leave Petitions, namely SLP(C) No.2302/03, SLP(C) No.2378/03 and SLP(C) No.1535/03. The copies of the related common Judgment and Orders passed by Madras High Court as well as the Apex Court find its place in the record of this case as the respondent-State filed those documents which are marked as Annexure Dl and D2 to the connected application dated 21st March 2003. The factum of filing of writ appeal by the State of Sikkim before the Madras `\o+z 18 High Court is not disclosed in the present writ petition. On the other hand, the learned Advocate General for the State of Sikkim contended that the order dated 7th February 2003 passed by the Honble Supreme Court in the connected SLP cases mentioned above is not binding and as such, this Court can decide the present writ petition on its own merit. The learned Advocate General contended that as the said order of the Apex Court is an order of dismissal of the Special Leave Petition without any reasons, it cannot be deemed to be declaration of law in terms of Article 141 of the Constitution of India. Supporting his contention the learned Advocate General has relied upon the decision of the Apex Court render +n Skate Of U.P. & Anr. v. Sgrt±hcties and Cherwicc.ts Iitd. a Anr. reported in /]991/ 4 SCC J39. I could not agree with the submission advanced by the learned Advocate General on this issue as the Division Bench of Madras High Court held that the impugned notification dated 8th Jariuary 2003 is valid and the Special Leave Petitions preferred by the petitioners concerned were dismissed. This shows that the common Judgment of Madras High Court was affirmed by the Apex Court. Law is implied in the instant case in hand. It may be mentioned that a power conferred by a statute often contains express absence of or in a.\6rz, d conditions for its exercise and in the addition to the expressed conditions there 19 are also implied cases, the relate is short in form, involved in the c its definite conni or Tribunal rej appellant(s). In onditions for exercise of the power. In some order and judgment of the Court, though it is implied for its legal value on the issue se(s). In legal term, the word "czismiss" has Eation, implying a final disposal by a Court }ting the case of the party/petitioner(s)/ er words, it speaks about the rejection of a case or claim mate by the party concerned. Ftirther the word "dismissed", meaning of which is manifest and evident with the party who filed the petition or appeal lost his or her case. According to me, the case law cited by the learned Advocate General for the State of Sikkim does not support the case of the writ petitioners. In that case, State o/ U.P. tJ. SgutJle€€cs and! Chemicals Ltc!. (supra), the Apex Court held thus - A decision which is not express and is not founded on reasons nor it proceeds on consideration of issue cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141. Uniformity and consistency are core of judicial discipline. But that which escapes in the judgment without an:y occa.ston is not rati.o decidendi. In 8. Shcma Rao v. Urtion Terri:tory Of Pondieherry it was observed, `it is trite to say that a decision is binding not because of its conclusions but in regard to its ratio and the principles, laid down therein'. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration of law or authority of a general nature binding as a precedent." `f\ty, 20 The same principle of law is also followed by the Apex Court in a case between 4rn€t Dczs I/. State oJ Bzhar reported in /2000/ 5 SCC 488. It is made clear that the Apex Court considered the related cases and those writ appeals and writ petitions were dismissed. This shows that the said common iJudgment of the Madras High Court is valid and apart from that the Apex Court dealt with the point of law involved in those cases and the related issues were examined in the said Special Leave Petitions and thereafter, the Apex Court dismissed these cases. According to me, the order dated 7th February 2003 passed by the Apex Court in SLP(C) No.2302/03, SLP(C) No.2378/03 .and SLP(C) No.1535/03 is