Kerala High Court DB Sets Aside Single Bench Judgment Which Quashed Rules Regulating Other-State Lotteries

The Kerala High Court has set aside the judgment of a Single Judge Bench that quashed the rules brought by the Kerala government to regulate sale of other-state lotteries.

The Judgment, pronounced today by a Division Bench of Justices SV Bhatti and Bechu Kurian Thomas, upheld the validity of the Rules.

"We are of the view that the except for rule 4(4) of the Amended Rules and to the extent indicated above, all the other rules enacted in 2018 by the State of Kerala are valid and do not contravene any provision of either the Constitution or the parent Act."

The Court upheld the State Government's competence to enact rules for monitoring the conduct of lotteries by the Organising State within the territory of the Host State. 

Additionally, the Court has asserted that Rules allowing the State Government (host state) to take action against the Organising State would be valid, since the Organising State could not unabashedly exploit the subject of the Host State. if the Host State forms an opinion that the conduct of lottery by an Organising State within the territorial jurisdiction of the Host State is in contravention of the Act or the Rules, then it need not wait until the Central Government takes a decision in that respect, the judgment makes clear.

In the event the organising state felt that the Host State was acting arbitrarily, it could seek redress in a Court of law, the judgment clarifies.

However, the Court held Rule 4(4) ultra vires, in so far as it pertained to lotteries organised by other states. The said Rule empowers the Secretary to Government, Taxes Department or any authority as constituted under Rule 4(4) to conduct all lotteries organised by other States. 

"The words "including lotteries run/organized/promoted by other States" in Rule 4(4) shall stand severed from the remaining provision of the Amended Rules and the severed portion is hereby held as ultra vires the Act..", the Bench held.

The petition before the Single Judge was filed by an agent selling lotteries of the State of Nagaland in Kerala (Future Gaming and Hotel Services Pvt Ltd vs State of Kerala and others). The petitioner challenged the amendments brought by the Kerala Government in 2018 to the Kerala Paper Lotteries(Regulation) Rules, 2005, which gave power to Kerala government authorities to regulate and control lotteries run by other states.

 "No state can exercise its authority by making Rules in such a way to impact upon authority of other States to organise, conduct and promotion of lottery. That power is exclusively given to the Central Government under Section 6(of Lotteries Regulation Act). The Central Government alone has the power to regulate, control and interfere with lotteries, if it is run in violation of law", a Single Judge Bench of Justice A Muhamed Mustaque had ruled then. 

Click here to download the judgment