RESPONDENT: UNION OF INDIA ETC. DATE OF JUDGMENT24/09/1980 KRISHNAIYER, V.R. KRISHNAIYER, V.R. PATHAK, R.S. REDDY, O. CHINNAPPA (J) CITATION: 1981 AIR 504 1981 SCR (1) 801 1980 SCC (4) 507 CITATOR INFO : D 1982 SC 949 (62,79) R 1987 SC1023 (29,40) RF 1988 SC 492 (8) ACT: Prize Chits and Money Circulation Schemes(Banning) Act, 1978 (43 of 1978) & Constitution of India 1950, Arts. 14, 19(1) (g) and List III Entry 7Parliament whether competent to enact legislationAct whether constitutionally valid. Constitution of India 1950, Art. 32Petition under Court's function not to give advisory opinion. HEADNOTE: Prize Chits are one type of saving schemes. In Prize Chits the organiser collects subscription in one lump sum or by monthly instalments spread over a specified period from the subscribers to the schemes. Periodically, the numbers allotted to the members holding the tickets or units are put to a draw and the member holding the lucky ticket gets the prize either in cash or in the form of an article of utility, such as a motor car, scooter etc. Once a person gets the prize, he is very often not required to pay further instalments and his name is deleted from further draws. In case members do not get any prize, the schemes usually provide for the return of subscription paid by the members with or without an additional sum by way of bonus or premium at the end of the stipulated period. As the flood of funds flowing through these prize chits benefited only the organisers of such schemes, and the total number of people victimised by these projects were considerable and injury to the community substantial, the Central Government set up a Study Group which went into the operation of these schemes. The Report of the Study Group demonstrated the many sinister effects and also exposed the antisocial impact upon the community by the operation of such schemes, and recommended to the State to intervene and interdict. The Central Government thereupon undertook legislation for curbing the effect of the operation of these schemes by enacting the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. The petitioners in their writ petitions under Article 32 of the Constitution assailed the aforesaid statute: (1) contending that a package of proper safeguards would adequately protect the community, a total ban being recklessly excessive, unintelligently overbroad and, therefore, unconstitutional, under Article 19(1)(g), (2) conventional chits and prize chits are substantially similar and, therefore, permission to continue 'conventional chits' and prohibition of prize chits was discriminatory under Article 14, (3) there is a discriminatory exemp 802 tion from the operation of the prohibition in regard to those categories of prize chits which fall within section 11, and (4) the legislation being aimed at prize chits and intended to ban lotteries, would fall within the State List, Entry 34 List II and Parliament cannot enact such a law under Entry 7 of List III. Dismissing the writ petitions, ^ HELD: (1) (i) There is a sufficient justification for undertaking legislation restricting the freedom to fleece through prize chits. [810E]. (ii) The legislation cannot be struck down on the score of Art. 19(1)(g) of the Constitution. [811F] (iii) The requirements of Art. 19(6) are, the reasonableness of the restriction upon the fundamental right to trade, the measure of reasonableness being the compelling need to promote the interest of the general public. [810H] 2. Conventional chits and prize chits are different categories with different financial features and different damaging effects. There is, therefore, no force in the plea of violation of Article 14. [812A] 3. A bare reading of section 11 makes it clear that the exempted categories do not possess the vices of private prize chits. What are 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 Cooperatives covered by s. 11, are subject to public control. Charitable and educational institutions are exempted only if they are notified by the State Government in consultation with the Reserve Bank. There is, therefore, suff