Case: Srinivasa Enterprises and Others Vs. Union of India Etc

meticulous exceptions and has to proceed on broad categorisations, not singular individualisations.9. We give short shrift to the next contention based upon Art. 14. Broadly presented, the argument is that conventional chits and prize chits are substantially similar and, therefore, permission to continue conventional chits and prohibition of prize chits altogether may be discriminatory. We do not agree. Not only do the definitions show the differentiation between the two schemes, but the Raj Report also brings out the fact that conventional chits and prize chits are different categories with different financial features and different damaging effects . We see no force in the plea of violation of Art. 14.10. Equally untenable is the contention that there is a discriminatory exemption from the operation of the prohibition in regard to those categories of prize chits which fall within s. 11. It runs thus:11. Nothing contained in this Act shall apply to any prize chit or money circulation scheme promoted by-(a) a State Government or any officer or authority on its behalf; or(b) a company wholly owned by a State Government which does not carry on any business other than the conducting of a prize chit or money circulation scheme whether it is in the nature of a conventional c hit or otherwise; or(c) a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949, or a banking institution notified by the Central Government under section 51 of tha t Act or the State Bank of India constituted under section 3 of the State Bank of India Act, 1955, or a subsidiary bank constituted under section 3 of the State Bank of India (Subsidiary Banks) Act, 1959, or a corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, or a Regional Rural Bank established under section 3 of the Regional Rural Banks Act, 1976 or a co- operative bank as defined in clause (bii) of section 2 of the Reserve Bank of India Act, 1934; or(d) any charitable or educational institution notified in this behalf by the State Government, in consultation with the Reserve Bank.12. A bare reading of that provision makes it clear that the exempted categories do not possess the vices of private prize chits. For one thing, what ar e exempted are prize chits and money circulation schemes promoted by or controlled by the State Governments, the Central Government or the State Bank of India or the Reserve Bank. Even Rural Banks and Co-operatives covered by s. 11, are subject to public control. Likewise, charitable and educational institutions are exempted only if they are notified by the State Government in consultation with the Reserve Bank. There are enough arguments to justify the different classification of these items and their exemption cannot be called in question on the ground of violation of Art. 14. Reasonable classification wins absolution from the charge of discrimination if the differentia has a nexus with the statutory object.13. The final submission of Shri Venugopal was regarding legislative competency. He urged that legislation regarding lottery falls within the State List (Entry 34, List II) and Parliament cannot enact such a law under Entry 7 of List I II. Relying upon State of Bombay v. R.M.D. Chamarbugwala counsel contended that the present legislation was aimed at prize chits and intended to ban lotteries. Such an anti-lottery law could not be sustained under Entry 7 of the List III. We are not persuaded that in pith and substance the present legislation is one against lotteries. It deals with a special species of contracts with sinister features, although one such feature is the award of prizes to subscribers. While motives cannot validate or invalidate a legislation the core of the subject matter must govern competency. So viewed, it is easy to accept the submission of the Union of India that Parliament wanted to restrict and prohibit certain types of contracts because of the noxious element of gambling and lottery implicit therein and apt to entice the credulous and uncautious. We do not think it necessary to expand on the subject and the incidental impact on lotteries does not affect the vires of the Act .Judicial validation of a social legislation only keeps the path clear for enforcement. Spraying legislative socio- moral pesticides cannot serve any purpose unless the target area is relentlessly hit. We hope that this legislation enacted in response to expert recommendation and popular clamour will be implemented by dynamic State action.14. We wish to make it clear that the possible hardship that bona fide prize chit promoters may suffer on account of the total prohibition clamped down by this legislation can be relieved against by the Central Government acting under s. 12. The learned Solicitor General assured the court that the Union of India would take ameliorative measure to avoid unjust hardship, especially because it h ad power to do so under s. 12.15. Mr. M. M. Abdul Khader appearing in Writ Petition No. 1152 of 1979 argued that in his case ornaments and vessels were given as prizes and if strictly construed, his clients scheme did not fall within the scope of the Act. He wanted the court to declare so but we decline to do so, since under Art. 32 this Courts function is not to give advisory opinion to petitioners but to pronounce upon transgression of fundamental rights by State action. While there is no merit in his submission of procedural unreasonableness in the provisions of the Act, it is perfectly open to the writ petitioner to urge his plea that the Act does not apply to his scheme if he were prosecuted. We leave the matter at that Shri Parekh, as intervener, Shri Kanta Rao, appearing in Writ Petition No. 1546/79, Shri Subba Rao pressing Writ Petition No. 138/79 and Shri K.R.R. Pillai in W.P. No. 1152/79 have adopted the leading arguments of Shri Venugopal which we have rejected. All of them must share the same fate.16.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Surely, Art. 19(6) permits reasonable restrictions in the interest of the general public on the exercise of the right conferred by Art. 19(1)(g). It is a constitutional truism restrictions, in extreme cases, may be pushed to the point of prohibition if any lesser strategy will not achieve the purpose. Fundamental rights are fundamental, and so, no ban can be glibly imposed unless effective alternatives are unavailable. Counsel on both sides cited rulings for the two sides of the proposition but it is an act of supererogation to load judgments with or profusion precedential erudition to make out what is plain,twin requirements of Art. 19(6) are (a) the reasonableness of the restriction upon the fundamental right to trade, and (b) the measure of the reasonableness being the compelling need to promote the interest of the general public. Public interest, of course, there is. But the controversy rages round the compulsive necessity to extinguish the prize chit enterprises altogether as distinguished fromthem with severe conditions geared to protection of public interest. We have already indicated that the Raj Report does recommend a total ban on prize chits. In matters of economics, sociology and other specialised subjects, courts should not embark upon views of halflit infallibility and reject what economists or social scientists have, after detailed studies, commended as the correct course of action. True, the final word is with the court in constitutional matters but judges hesitate to rush in where even specialists fear to tread. If experts fall out, court, perforce, must guide itself and pronounce upon the matter from the constitutional angle, since the final verdict, where constitutional contraventions are complained of, belongs to the judicial arm. The alternative proposals to save the public from prize chit rackets attractively presented by Shri Venugopal do not impress us. In many situations, the poor and unwary have to be saved from the seducing processes resorted by unscrupulous racketeers who glamourize and prey upon the gambling instinct to get rich quick through prizes. So long as there is the resistless spell of a chance though small, of securing a prize, though on paper, people chase the prospect by subscribing to the speculative scheme only to lose what they had. Can you save moths from the fire except by putting out the fatal glow ? Once this prize facet of the chit scheme is given up, it becomes substantially a conventional chit and the ban of the law ceases to operate. We are unable to persuade ourselves that the State is wrong in its assertion, based upon expert opinions that a complete ban of prize c hits is anor excessive blow. Therefore, we decline to strike down the legislation on the score of Art. 19(1)(f) and (g) of the Constitution.We may not be taken to mean that every prize chit promoter is aIn deed, Shri Venugopal persuasively presented the case of his client to make us feel that responsible business was being done by the petitioner. May be. But when a general evil is sought to be suppressed some martyrs may have to suffer for the legislature cannot easily make meticulous exceptions and has to proceed on broad categorisations, not singulardo not agree. Not only do the definitions show the differentiation between the two schemes, but the Raj Report also brings out the fact that conventional chits and prize chits are different categories with different financial features and different damaging effects . We see no force in the plea of violation of Art.bare reading of that provision makes it clear that the exempted categories do not possess the vices of private prize chits. For one thing, what ar e exempted are prize chits and money circulation schemes promoted by or controlled by the State Governments, the Central Government or the State Bank of India or the Reserve Bank. Even Rural Banks andcovered by s. 11, are subject to public control. Likewise, charitable and educational institutions are exempted only if they are notified by the State Government in consultation with the Reserve Bank. There are enough arguments to justify the different classification of these items and their exemption cannot be called in question on the ground of violation of Art. 14. Reasonable classification wins absolution from the charge of discrimination if the differentia has a nexus with the statutoryare not persuaded that in pith and substance the present legislation is one against lotteries. It deals with a special species of contracts with sinister features, although one such feature is the award of prizes to subscribers. While motives cannot validate or invalidate a legislation the core of the subject matter must govern competency. So viewed, it is easy to accept the submission of the Union of India that Parliament wanted to restrict and prohibit certain types of contracts because of the noxious element of gambling and lottery implicit therein and apt to entice the credulous and uncautious. We do not think it necessary to expand on the subject and the incidental impact on lotteries does not affect the vires of the Act .Judicial validation of a social legislation only keeps the path clear for enforcement. Spraying legislative sociomoral pesticides cannot serve any purpose unless the target area is relentlessly hit. We hope that this legislation enacted in response to expert recommendation and popular clamour will be implemented by dynamic Statewish to make it clear that the possible hardship that bona fide prize chit promoters may suffer on account of the total prohibition clamped down by this legislation can be relieved against by the Central Government acting under s. 12. The learned Solicitor General assured the court that the Union of India would take ameliorative measure to avoid unjust hardship, especially because it h ad power to do so under s.wanted the court to declare so but we decline to do so, since under Art. 32 this Courts function is not to give advisory opinion to petitioners but to pronounce upon transgression of fundamental rights by State action. While there is no merit in his submission of procedural unreasonableness in the provisions of the Act, it is perfectly open to the writ petitioner to urge his plea that the Act does not apply to his scheme if he were prosecuted. We leave the matter at that Shri Parekh, as intervener, Shri Kanta Rao, appearing in Writ Petition No. 1546/79, Shri Subba Rao pressing Writ Petition No. 138/79 and Shri K.R.R. Pillai in W.P. No. 1152/79 have adopted the leading arguments of Shri Venugopal which we have rejected. All of them must share the same fate.