Supreme Court Rejects Centre’s Challenge To Maintainability Of Meghalaya's Suit Challenging Provisions Of Lotteries Regulation Act

“We are not inclined to accept the contentions urged by the Union of India and some of the States, including the State of Kerala that this suit is not maintainable under Article 131 of the Constitution.”

A Bench comprising Justice Dinesh Maheshwari and Justice Sanjay Kumar determined the ambit of the dispute in the following terms -

“…the State of Meghalaya seeks to assert its right to do business in lotteries under Article 298B and its executive powers to do so is subject to Parliamentary legislation, i.e., Act of 1998. The grievances raised in that context would constitute disputes falling squarely within the four corners of Article 131.”

The Attorney General for India R Venkataramani had raised a preliminary objection on maintainability. He was joined in his submission by Counsels of some other State Governments.

State of Meghalaya and State of Sikkim had approached the Supreme Court against the decision to ban their state lotteries in other states. It dispute emanates from the power conferred on State Government by the Centre under Section 5 of the Act to prohibit the sale of tickets of a lottery organised, conducted, or promoted by any other State.

The Attorney had informed the Bench that there are two conflicting decisions of the Supreme Court on whether a suit is maintainable to challenge a statutory provision. Eventually, it was referred to a larger Bench. He indicated that the decision of the larger Bench be awaited. Considering his submissions the Bench agreed to first hear the parties on the issue of maintainability.

With respect to the plea to await the decision of the reference before the larger Bench, the Division Bench noted that even if the decision of the larger Bench is to be awaited, it cannot be so that the suit be stayed in its entirety. In this regard the Bench referred to Section 10 of Code of Civil Procedure, 1908 (stay of suit) as a reasonable guiding light. Reliance was also placed on the Apex Court’s judgment in Indian Bank v. Maharashtra State Co-operative Marketing Federation wherein it had held -

“The object of the prohibition contained in section 10 is to prevent the courts of concurrent jurisdiction from simultaneously trying two parallel suits and also to avoid inconsistent findings on the matters in issue. The provision is in the nature of a rule of procedure and does not affect the jurisdiction of the court to entertain and deal with the later suit nor does it create any substantive right in the matters. It is not a bar to the institution of a suit. It has been construed by the courts as not a bar to the passing of interlocutory orders such as an order for consolidation of the later suit with earlier suit, or appointment of a Receiver or an injunction or attachment before judgment.”

In this regard the Bench concluded that interim relief such as order of injunction does not have to await the outcome of the reference before the larger Bench. It noted, ‘even if final determination of the question of maintainability in case the constitutional validity of the provisions is to be decided may depend upon decision of the larger bench, the supplemental proceedings in the present suit especially the ones relating to interim relief cannot be put on hold’

In view of the same, the Bench granted 4 weeks’ time to the contesting defendants to file their response in relation to the interim relief.

[Case Title: State of Meghalaya v. Union of India Original Suit No. 1/2021]

Citation : 2023 LiveLaw (SC) 427