Full Judgment Text
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PETITIONER:
SRINIVASA ENTERPRISES & ORS.
Vs.
RESPONDENT:
UNION OF INDIA ETC.
DATE OF JUDGMENT24/09/1980
BENCH:
KRISHNAIYER, V.R.
BENCH:
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 7-Parliament whether competent
to enact legislation-Act whether constitutionally valid.
Constitution of India 1950, Art. 32-Petition 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
anti-social 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.
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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 over-broad 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, sufficient justification
to justify the different classification of these items and
their exemption cannot be called in question on the ground
of violation of Art. 14. [812G-H; 813A]
4. In pith and substance the present legislation is not
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. [813 C-D]
5. In matters of economics, sociology and other
specialised subjects, courts should not embark upon views of
half-lit infallibility and reject what economists or social
scientists have, after detailed studies, commanded as the
correct course of action. 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. [811B-C]
6. 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
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categorisations, not singular individualisations. [811G]
7. 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. This legislation enacted in
803
response to expert recommendation and popular clamour is to
be implemented by dynamic State Action. [813E-F]
8. 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 Section 12. [813F]
9. Under Article 32 the Court’s function is not to give
advisory opinion but to pronounce upon transgression of
fundamental rights by State action. [813H-814A]
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition Nos. 711, 138,
1152 & 1546 of 1979.
(Under Article 32 of the Constitution)
K. K. Venugopal and A. Subha Rao for the Petitioners in
WP Nos. 138, 711 of 79.
M. M. Abdul Khader, M. A. Feroze, M.R.K. Pillai and K.
R. Rajasekharan Pillai for the Petitioner in WP No. 1152/79.
B. Kanta Rao, P. Ram Reddy and G. Narayana Rao for the
Petitioner in WP No. 1546/79.
K. Parasaram, Solicitor-Genl and Miss A. Subhashini for
the Respondent (Union of India).
P. Ram Reddy and G. N. Rao for the Respondents in WP
No. 1546/79.
K. R. Nambiar for Respondent No. 3 in WP No. 1152/79.
P. H. Parekh, C. B. Singh & Rajian Karanjawala for the
Intervener in WP No. 711/79.
The Judgment of the Court was delivered by
KRISHNA IYER, J.-Section 2(e) of the Prize Chits and
Money Circulation Schemes (Banning) Act. 1978 (Act 43 of
1978) (for short, the Act) defines a ’Prize chit’
inclusively:-
2. In this Act, unless the context otherwise requires,-
*
(e) "prize chit" includes any transaction or
arrangement by whatever name called under which a
person collects whether as a promoter, foreman, agent
or in any other capacity, monies in one lump sum or in
instalments by way of contributions or subscriptions or
by sale of
804
units, certificates or other instruments or in any
other manner or as membership fees or admission fees or
service charges to or in respect of any savings, mutual
benefit, thrift, or any other scheme or arrangement by
whatever name called, and utilises the monies so
collected or any part thereof or the income accruing
from investment or other use of such monies for all or
any of the following purposes, namely:-
(i) giving or awarding periodically or
otherwise to a specified number of subscribers as
determined by lot, draw or in any other manner,
prizes or gifts in cash or in kind whether or not
the recipient of the prize or gift is under a
liability to make any further payment in respect
of such scheme or arrangement;
(ii) refunding to the subscribers or such of
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them as have not won any prize or gift, the whole
or part of the subscriptions, contributions or
other monies collected, with or without any bonus,
premium, interest or other advantage by whatever
name called, on the termination of the scheme or
arrangement, or on or after the expiry of the
period stipulated therein,
but does not include a conventional chit;
The quintessential aspects of a prize chit are that the
organizer collects moneys in lump sum or instalments,
pursuant to a scheme or arrangement, and he utilises such
moneys as he fancies primarily for his private appetite and
for (1) awarding periodically or otherwise to a specified
number of subscribers, prizes in cash or kind and (2)
refunding to the subscribers the whole or part of the money
collected on the termination of the scheme or otherwise. The
apparent tenor may not fully bring out the exploitative
import lurking beneath the surface of the words which
describe the scheme. Small sums are collected from vast
numbers of persons, ordinarily of slender means, in urban
and rural areas. They are reduced to believe by the blare of
glittering publicity and the dangling of astronomical
amounts that they stand a chance-in practice, negligible-of
getting a huge fortune by making petty periodical payments.
The indigent agrestics and the proletarian urbanites,
pressured by dire poverty and doped by the hazy hope of a
lucky draw, subscribe to the scheme although they can ill-
afford to spare any money. This is not promotion of thrift
or wholesome small savings because the poor who pay, are
bound to continue to pay for a whole period of
805
a few years over peril of losing what has been paid and, at
the end of it, the fragile prospects of their getting prizes
are next to nil and even the hard-earned money which they
have invested hardly carries any interest. They are eligible
to get back the money they have paid in driblets, virtually
without interest, the expression ’bonus’ in s. 2(a) being an
euphemism for a nominal sum. What is more, the repayable
amount being small and the subscribers being scattered all
over the country, they find it difficult even to recover the
money by expensive, dilatory litigative process.
Since there are a large number of prize chits all over
the country which have almost become a pan-Indian epidemic
and since the total number of people victimised by these
projects are considerable the injury to the community is
substantial, so that a welfare state dedicated to the
Directive Principles of Part IV has to awake and protect the
vulnerable sector. Another weighty factor which has alerted
the State into action is that the flood of funds flowing
through prize chits benefit the organisers of such schemes
who have no social responsibility for national productivity
and in their hands is easy money with little developmental
benefits or attractive returns for the poor investors.
The noxious net cast by the prize chit promoters was
large and the State moved to stop this menace. Many a little
makes a mickle, and those small sums collected from a
substantial number of subscribers accumulated into huge
resources which otherwise would ordinarily have been
available for national development. The grim picture of the
luckless many who were losing their money, appetized by
gambling prospects, and the sterilization of people’s
resources which were siphoned off by private adventurists
through prize chits to the detriment of national development
ignited the impugned legislation.
Such is the case of the State as justification for
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enacting what is contended for as unconstitutional for three
reasons which we will presently examine. The Union of India
has furnished socio-economic data to help the court
appreciate how expert opinion had been collected before
launching on the prohibitory legislation. A study group
headed by Dr. J. S. Raj made a report to the Central
Government wherein pointed reference was made to prize chits
and allied schemes. The report devoted a whole chapter to
prize chits, savings schemes, and others of their ilk and
exposed the modus operandi of such schemes and their anti-
social impact upon the community and recommended to the
State to intervene and interdict.
806
We may quote briefly to bring home tersely the trauma
inflicted by lucky draw schemes on the host of luckless
illiterates succumbing (perhaps astrologically) to the prize
mania:
....It was observed that several companies
conducting prize chits, benefits or savings schemes or
lucky draws claimed themselves to be either mutual
benefit financial companies (by enrolling subscribers
as ’associate’ members under the directions as they
stood prior to January 1, 1973) or as chit fund
companies and thus contended that the subscriptions
collected by them were not ’deposits’ as defined in the
directions and hence not subject to any ceiling
restrictions.....
Modus Operandi of Prize Chits/Benefit or Savings Schemes or
Lucky Draws
6.3. Companies conducting the above types of
Schemes are comparatively of a recent origin and of
late, there has been a mushroom growth of such
companies which are doing brisk business in several
parts of the country, especially in big cities like
Ahmedabad, Bangalore, Bombay, Calcutta and Delhi. They
have also established branches in various States. These
companies float schemes for collecting money from the
public and the modus operandi of such schemes is
generally as described below:
The company acts as the foreman or promoter
and collects subscriptions in one lump sum or by
monthly instalments spread over a specified period
from the subscribers to the schemes. Periodically,
the numbers allotted to 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. The schemes usually provide for the
return of subscriptions paid by the members with
or without an additional sum by way of bonus or
premium at the end of the stipulated period in
case they do not get any prize. The principal
items of income of these companies are interest
earned on loans given to the subscribers against
the security of the subscriptions paid or on an
unsecured basis as also loans
807
to other parties, service charges and membership
fees collected from the subscribers at the time of
admission to the membership of the schemes. The
major heads of expenditure are prizes given in
accordance with the rules and regulations of the
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schemes, advertisements and publicity expenses and
remuneration and other perquisites to the
directors.
The financial fall-outs of these schemes were also
examined by the Study Group to demonstrate how the promoter-
companies were gargantuan and were swallowing up huge
surpluses from the public who lost interest on their
subscriptions, and, sometimes, even the principal amounts
paid :
.... Even if the company offers some amount by way
of bonus or premium to the subscribers at the time of
refund of their subscriptions and allowing for
reasonable expenditure on publicity, commission to
agents, etc., a sizeable balance will still be left
with the company. This is exclusive of the amounts
which the company might be collecting by way of
membership fees and service charges from the
subscribers and also of the amounts which it might be
appropriating in respect of the subscriptions on
forfeited tickets on which there will be no future
liability for refund to the members at the end of the
scheme. It will thus be obvious from the foregoing that
such schemes confer monetary benefit only on a few
members and on the promoter companies.
There is reference in the Study Group report to other
studies conducted by the Reserve Bank which also
demonstrated the many sinister effects upon the community on
account of proliferous prize chits-benefits schemes.
(a) the companies had advanced sizeable amounts to
the directors or their relatives or firms in which they
were interested as partners, directors or as commission
agents and there were practically no repayments of the
loans;
(b) the books of account had not been maintained
satisfactorily;
(c) close relatives of the directors had been
employed in the companies as members of the staff or as
agents on high salaries;
808
(d) In one case, it was observed that a scheme
announced by a company in which collections had been
made was withdrawn subsequently without notice to the
subscribers and no refunds of the subscriptions already
received had been made to the subscribers. Prize moneys
had not been paid to all the subscribers who had won
the prizes; and
(e) subscriptions were shown to have been refunded
in the books of account of a company but doubts have
been expressed by the Inspecting Officer about the
genuineness of the payments in view of certain
attendant circumstances. There have also been
allegations that some companies had resorted to certain
malpractices in drawing the names of prize winners.
........ in the absence of any authoritative judicial
pronouncement on the subject, we are not sure whether
the activities of companies conducting price chits,
etc., are clearly prohibited by the existing
legislations.
6.10. It has been reported that resources of prize
chits are used for wasteful spending and hoarding
commodities and that these schemes "enable certain
persons to convert tax-evaded income into accounted
money. The persons concerned pay a premium to the
promoters in return for the facility." It has also been
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stated that "there are a number of agents who go about
contacting persons who are likely to face the problem
of saving their income from the tax authorities. The
prize chit pass books issued to them under different
names become their passports for travelling from black
money territory to the white money area-the easiest and
surest way of using ill gotten wealth. Besides, by
their misleading names and companies the prize chit
companies divert private savings into their personal
drains, thus disrupting the national economy.
6.11. From the foregoing discussion, it would be
obvious that prize chits or benefit schemes benefit
primarily the promoters and do not serve any social
purpose. On the contrary, they are prejudicial to the
public interest and also adversely affect the efficacy
of fiscal and monetary policy. There has also been a
public clamour for banning of such schemes; this stems
largely from the malpractices indulged in by the
promoters and also the possible exploitation of such
schemes by unscrupulous elements to their own
advantage. We
809
are, therefore, of the view that the conduct of prize
chits or benefit schemes by whatever name called should
be totally banned in the larger interests of the public
and that suitable legislative measures should be taken
for the purpose if the provisions of the existing
enactments are considered inadequate. Companies
conducting prize chits, benefit schemes, etc., may be
allowed a period of three years which may be extended
by one more year to wind up their business in respect
of such schemes and/or switch over to any other type of
business permissible under the law.
(emphasis added)
The learned Solicitor General drew our attention to
cases where the notorious abuses by prize promoters had
attracted judicial notice. In particular, he cited a
decision of the Gujarat High Court in Navjivan Trading
Financing Pvt. Ltd. Thakkar, J. while dealing with the
social anguish at the exploitative spectacle, said :
The facts speak for themselves so eloquently that
no further discussion is called for and it is
unnecessary to demonstrate any further that the company
is in such a precarious condition and the financial
condition is so very ugly that there is no possibility
whatsoever of the company ever being in a position to
pay its debts. It is not in a position to-day and, even
in future, it is not likely to be in a position to
discharge the debt burden. In fact, the deficit will go
on increasing and for aught we know, more innocent
persons would be trapped meanwhile. The contributors
from whom collections are made are persons with
extremely limited financial means and are petty
subscribers who cannot possibly afford to take recourse
to legal proceedings. It would be cheaper for them to
abandon their claims than to make recourse to legal
proceedings and incur expenses for court-fees and
advocates’ fees, apart from the inconvenience involved
therein.
With special reference to malpractices of prize chits
promoters the learned Judge drove home the point;
Where the company is not producing or
manufacturing any goods and is not rendering any
service useful to the society, where the whole purpose
of its existence appears to be to provide the directors
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with an opportunity to enrich themselves at the cost of
petty subscribers who in the hope of getting some
prizes or rewards and better returns on their hard
earned
810
savings (sometimes they may even resort to borrowing in
the hope of getting rich quickly) become contributories
to various schemes floated by the company, the matter
stands on a different footing. In a case like the
present where the main activity of the company consists
in tempting and roping in innocent persons in the
scheme by publishing tantalizing advertisements,
greater harm would ensue by refusing to pass an order
of winding up than by passing an order of winding up.
In fact, to wind up such company would be an act of
social service, for, thereby, several innocent persons
would be saved from being trapped by a company of this
nature. Alas, as discussed earlier, the time taken in
affording reasonable opportunity to the company in
obeisance to the principles of natural justice has been
utilised by the company to collect lakhs of rupees from
the innocent subscribers merely in order to enrich the
directors in an unjust fashion. Under the
circumstances, there is no scope for hesitation or
reluctance in winding up the company which the court
ordinarily feels when dealing with some manufacturing
unit.
(emphasis added)
There is sufficient justification for undertaking
legislation restricting the freedom to fleece through prize
chits. Indeed, Shri Venugopal did not seriously contest this
position. The thrust of his argument was that his client was
a well-behaved prize chit organizer, above board in all
respects, and so, a package of proper safeguards would
adequately protect the community and a total ban was
recklessly excessive, unintelligently over-broad and,
therefore, unconstitutional.
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, profound.
The 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.
811
But the controversy rages round the compulsive necessity to
extinguish the prize chit enterprises altogether as
distinguished from hand-cuffing them 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
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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 chits is
an over-kill or 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 a blood-sucker. Indeed, 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 singular
individualisations.
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
812
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.
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 chit 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 that 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
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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.
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 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 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
813
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.
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
III. 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.
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 had power to do so
under s. 12.
Mr. M. M. Abdul Khader appearing in Writ Petition No.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 11
1152 of 1979 argued that in his case ornaments and vessels
were given as prizes and if strictly construed, his client’s
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 Court’s function
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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.
State lotteries escalating year after year and enticing
proletarian sections of the people across the States are
dubious in morality and ruinous in impact. Moreover, a
detailed study may disclose the diminishing returns and
increasing establishment expenses, menace to peaceful life
and a traffic and dubious consequences. So much so, a second
look at the propriety of these State-run schemes and
reversion to the old stance of the State setting an anti-
lottery example, is worthwhile from many angles.
For the reasons given above, we dismiss all the Writ
Petitions, leaving the parties to bear their own costs.
N.V.K. Petitions dismissed.
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