Karnataka High Court Issues Interim Order Permitting Bangalore Turf Club To Conduct Horse Races, Betting Activities

The Karnataka High Court by way of interim relief has permitted carrying on all on-course and off-course horse racing and betting activities at the Bangalore Turf Club, subject to provisions of the Mysore Race Course Licensing Act 1952 and the Rules framed thereunder.

A single-judge bench of Justice S R Krishna Kumar passed the interim order.

The court gave the direction while hearing the petitions filed by Bangalore Turf Club and others which had challenged the order dated 06.06.2024 passed by the Additional Chief Secretary, Home Department, by which it had rejected the applications filed by petitioners for conducting racing activities.

The petitioners argued that the impugned order is illegal, arbitrary, discriminatory, irrational and unreasonable apart from being violative of principles of natural justice as opposed to the doctrine of proportionality.

Further, they argued that the BTC has cancelled the permits/licenses of the bookmakers/accused persons and undertaken not to issue any more permits/licenses if BTC is permitted to carry on racing and betting activity. So it was stated that the BTC undertook to abide by the terms and conditions to be imposed by the State Government for the purpose of permitting BTC to carry on racing and betting activity.

Moreover, it was stated that the petitioner's life and livelihood are dependent on the racing and betting activity being carried on by the BTC as per the annual racing fixtures/calendar and the impugned orders refusing to grant license has resulted in severe and tremendous financial loss to the petitioners as well as the employees of the BTC.

The State government opposed the plea saying that as per the provisions of the Licensing Act and Rules, the BTC was wholly responsible for illegal betting being carried on within its premises, which was sufficient to justify rejection of the application for grant of license.

The grant of license for racing and betting by the respondents was purely discretionary in nature and the petitioner – BTC does not have a vested right to demand a grant of license, it was argued.

Further, it was stated that various illegalities such as benami transactions, non-deposit of collection of money in cash, non-deposit of GST from punters, non-raising of invoices as required under the Betting Tax Act, non-payment of TDS, permitting unlicensed bookmakers and punters in carrying on betting activity and also permitting some of the accused against whom criminal proceedings are pending were some of the circumstances taken into account by respondents to refuse grant of license in favour of BTC.

Findings:

The bench on going through the order and arguments held that the petitioners had made out a prima facie case, the balance of convenience was in their favour and they would be put to irreparable injury and hardship pending disposal of the petitions against the impugned orders passed by the Home Department and Finance Department of the State of Karnataka refusing to grant licenses for racing and betting activities.

Court said that such orders by the State were wholly illegal, arbitrary, discriminatory, irrational and unreasonable apart from being violative of principles of natural justice opposed to the doctrine of proportionality and deserve to be stayed.

The bench reasoned that it is well settled that horse racing is a game where winning depends substantially and preponderantly on skill as held by the Apex Court and consequently, the respondents were not entitled to refuse a licence on the ground that petitioners were carrying on illegal racing and betting activities.

Further, it said, “Respondents have refused grant license in favour of BTC on the ground that illegal activities are being carried on by the bookmakers against whom criminal proceedings have been initiated; in this context, it is relevant to state that the Licensing Act and Rules do not provide for any nexus or connection between grant/issuance of licenses and the alleged illegal activities of the book makers and criminal cases pending against them and consequently, the said circumstances could not have been made the basis for refusal to grant/issue license in favour of the petitioners.”

Then it held that a perusal of the impugned orders passed by the State would indicate that the same were not relevant for the purpose of grant of license and the said reasons were untenable and without any basis.

In this regard, it is significant to note that there is also no connection or nexus whatsoever between the alleged nonpayment of GST, income tax etc., and the grant of license and in the absence of any material to establish a violation of the provisions contained in the Licensing Act and Rules or the conditions of license granted earlier, the Court said.

It also observed that the impugned orders also indicate that the respondents had arbitrarily placed reliance upon money said to have been found on the date of a raid that took place which was not relevant for the purpose of issuance of racing and betting license.

The court also noted that even after the alleged raid conducted in the BTC premises on 12.01.2024, pursuant to which, an FIR was registered, the respondents themselves granted licences in March 2024 in favour of BTC and consequently the State was estopped from relying upon the very same criminal proceedings to refuse a licence for April 2024 onwards in favour of the petitioners.

The bench said, “The impugned orders completely ignore the undisputed fact that BTC was not arraigned as an accused in the criminal proceedings and as such, the said criminal proceedings could not have been relied upon by the State to refuse licences in favour of BTC by passing the impugned orders which are liable to be stayed on this ground also.”

"The entire racing and betting activities of the petitioners, which was hitherto being carried on continuously and uninterruptedly for decades, has now come to a complete standstill and a grinding halt thereby resulting in irreparable injury and hardship not only to the petitioners but also to the race horses themselves who are lying idle without their regular racing activity, which would cause ailments, diseases etc., to the race horses which is sufficient to indicate that the balance of convenience is in favour of the petitioners,” the Court concluded while passing the interim order.

Appearance: Senior counsel SS Naganand, Senior counsel Sriranga S, Advocates Sumana naganand, Arihant Sungay and Ashwini N Ravindra for BTC.

Case Title: BANGALORE TURF CLUB LIMITED VS. STATE OF KARNATAKA AND OTHERS

Case No: WP NO. 13503/2024 Connected Cases: WP NO. 13528/2024, WP NO. 13575/2024, WP NO. 14556/2024, WP NO. 15294/2024

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