LEGAL ISSUE: Whether a State can challenge the constitutional validity of a Central law under Article 131 of the Constitution of India.
CASE TYPE: Constitutional Law, Original Suit
Case Name: State of Meghalaya vs. Union of India & Others
Judgment Date: 11 May 2023
Date of the Judgment: 11 May 2023
Citation: 2023 INSC 522
Judges: Justice Dinesh Maheshwari and Justice Sanjay Kumar
Can a State challenge the validity of a central law in the Supreme Court using its original jurisdiction? This is the core question the Supreme Court grappled with in this case. The State of Meghalaya filed a suit against the Union of India and other states, challenging the constitutional validity of certain sections of the Lotteries (Regulation) Act, 1998, and the Lotteries (Regulation) Rules, 2010. The Supreme Court, in this judgment, addressed the maintainability of the suit, focusing on whether the State of Meghalaya had the right to bring such a challenge under Article 131 of the Constitution of India. The judgment was delivered by a two-judge bench comprising Justice Dinesh Maheshwari and Justice Sanjay Kumar.
Case Background
The State of Meghalaya initiated legal action against the Union of India and other states, contesting the constitutional validity of Sections 5, 6, 7, 8, and 9 of the Lotteries (Regulation) Act, 1998, and Rule 5 of the Lotteries (Regulation) Rules, 2010. Meghalaya sought a declaration that these provisions were unconstitutional and ultra vires, along with a permanent injunction to restrain the Union of India from enforcing these provisions against the lotteries organized by the State. The State also sought to prevent other states from prohibiting the sale of Meghalaya’s lottery tickets within their jurisdictions. The core of the dispute revolves around the State’s contention that the central law infringes upon its right to conduct lottery business.
The State of Meghalaya’s primary grievance stems from Section 5 of the Lotteries (Regulation) Act, 1998, which allows a State Government to prohibit the sale of lottery tickets from other states within its territory. Sections 6, 7, 8, and 9 of the Act empower the Central Government to prohibit lotteries violating Section 5, impose penalties, and define offenses. The State of Meghalaya argues that these provisions, particularly when applied to its lotteries, are unconstitutional. The State also challenges Rule 5 of the Lotteries (Regulation) Rules, 2010, which outlines the procedure to prohibit the sale of lottery tickets.
Timeline
| Date | Event |
|---|---|
| 1998 | The Lotteries (Regulation) Act, 1998, was enacted. |
| 2010 | The Lotteries (Regulation) Rules, 2010, were framed. |
| 2021 | The State of Meghalaya filed Original Suit No. 1 of 2021 in the Supreme Court. |
| 11 May 2023 | The Supreme Court issued an order on the maintainability of the suit. |
Legal Framework
The case primarily revolves around the interpretation and application of the following legal provisions:
- Article 131 of the Constitution of India: This article defines the original jurisdiction of the Supreme Court in disputes between the Government of India and one or more States, or between two or more States, provided the dispute involves a question on which the existence or extent of a legal right depends.
“Subject to the provisions of this Constitution, the Supreme Court shall, to the exclusion of any other court, have original jurisdiction in any dispute- (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other States on the other; or (c) between two or more States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends”
- Section 5 of the Lotteries (Regulation) Act, 1998: This section allows a State Government to prohibit the sale of lottery tickets from other states within its territory.
- Section 6 of the Lotteries (Regulation) Act, 1998: This section empowers the Central Government to prohibit lotteries organized in contravention of Section 4 or where tickets are sold in contravention of Section 5.
- Section 7 of the Lotteries (Regulation) Act, 1998: This section deals with penalties for violations of the Act.
- Section 8 of the Lotteries (Regulation) Act, 1998: This section states that offenses under the Act are cognizable and non-bailable.
- Section 9 of the Lotteries (Regulation) Act, 1998: This section deals with offenses by companies and identifies those within the management who would be deemed guilty of the offense.
- Rule 5 of the Lotteries (Regulation) Rules, 2010: This rule details the procedure to prohibit the sale of lottery tickets.
- Article 298(b) of the Constitution of India: This article allows the State to carry on any business.
The interplay of these provisions forms the legal basis for the dispute, with the State of Meghalaya arguing that the central law infringes upon its constitutional rights.
Arguments
The arguments presented before the Supreme Court focused on the maintainability of the suit under Article 131 of the Constitution. The key arguments from both sides are summarized below:
Arguments by the Union of India and other States:
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Maintainability under Article 131: The Union of India, supported by several states, argued that the suit is not maintainable under Article 131. They cited the Supreme Court’s ruling in State of Madhya Pradesh v. Union of India and Anr. [(2011) 12 SCC 268], which held that the original jurisdiction under Article 131 cannot be used to challenge the validity of a statute. They contended that such challenges should be made through writ petitions under Articles 32 and 226 of the Constitution.
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Legal Right: The State of Kerala argued that Article 131 requires a dispute to involve a question on which the existence or extent of a legal right depends. They asserted that the State of Meghalaya does not have a ‘legal right’ to sell its lottery tickets in other states, especially since lotteries are considered a form of gambling and res extra commercium.
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Pending Matters: The Union of India pointed out that similar questions regarding the maintainability of such suits are pending before the Supreme Court in other original suits (Original Suit Nos. 1 of 2020, 1 of 2023, and 3 of 2023). They suggested that the matter should be referred to a larger bench or that the decision of the larger bench should be awaited.
Arguments by the State of Meghalaya (supported by Nagaland and Sikkim):
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State’s Right to Challenge: The State of Meghalaya, supported by Nagaland and Sikkim, argued that a State can challenge a parliamentary legislation under Article 131, citing the 6-Judge Bench decision in State of West Bengal v. Union of India [AIR 1963 SC 1241]. They contended that the decision in State of Madhya Pradesh (supra) should not be considered as an authority to dismiss the present suit.
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Legal Right under Article 298(b): The State of Meghalaya asserted its right to do business in lotteries under Article 298(b) of the Constitution. They argued that the Lotteries (Regulation) Act, 1998, infringes upon this right and that the dispute falls within the scope of Article 131.
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Nature of Dispute: They argued that the dispute is not merely about the validity of the statute but also about the State’s right to conduct its lottery business, which is a legal right that can be adjudicated under Article 131.
| Main Submission | Sub-Submissions of Union of India and other States | Sub-Submissions of State of Meghalaya |
|---|---|---|
| Maintainability of the Suit under Article 131 |
|
|
| Legal Right |
|
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| Nature of Dispute |
|
Issues Framed by the Supreme Court
The Supreme Court framed the following key issue for consideration:
- Whether the suit filed by the State of Meghalaya is maintainable under Article 131 of the Constitution of India, given that it challenges the constitutional validity of certain provisions of the Lotteries (Regulation) Act, 1998, and the Lotteries (Regulation) Rules, 2010.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues
| Issue | Court’s Decision |
|---|---|
| Whether the suit filed by the State of Meghalaya is maintainable under Article 131 of the Constitution of India. | The Court held that the suit is maintainable. It reasoned that the State of Meghalaya has a right to do business in lotteries under Article 298(b) and that the dispute falls within the scope of Article 131. The Court also noted that the suit is not just about the validity of the statute but also about the State’s right to conduct its lottery business. |
Authorities
The Supreme Court considered the following authorities while addressing the issue of maintainability:
| Authority | Court | How it was used |
|---|---|---|
| State of West Bengal v. Union of India [AIR 1963 SC 1241] | Supreme Court of India | Cited to support the argument that a State can challenge a parliamentary legislation under Article 131. |
| State of Rajasthan and Ors. v. Union of India and Ors. [(1977) 3 SCC 592] | Supreme Court of India | Cited to support the view that a State’s right to seek enforcement of a legal right arising under the Constitution cannot be thrown out in limine as being outside the scope and ambit of Article 131. |
| State of Karnataka v. Union of India and Anr. [(1977) 4 SCC 608] | Supreme Court of India | Cited to emphasize that Article 131 should not be tested on the anvil of banal rules applied under the Code of Civil Procedure. It highlighted that the key condition for invoking Article 131 is the presence of a dispute involving a question on which the existence or extent of a legal right depends. |
| Tashi Delek Gaming Solutions Ltd. v. State of Karnataka and Ors. [(2006) 1 SCC 442] | Supreme Court of India | Cited to show that Article 131 is attracted where adjudication is necessary in relation to a legal right of one State or the Union of India vis-à-vis other States. |
| State of Madhya Pradesh v. Union of India and Anr. [(2011) 12 SCC 268] | Supreme Court of India | Discussed and distinguished. The Court noted that this case held that the original jurisdiction under Article 131 cannot be used to challenge the validity of a statute, but disagreed with this view. |
| State of Jharkhand v. State of Bihar and Anr. [(2015) 2 SCC 431] | Supreme Court of India | Cited to show that another co-ordinate Bench of the Supreme Court disagreed with the conclusion in State of Madhya Pradesh (supra) and referred the matter to a Larger Bench. |
| B.R. Enterprises v. State of U.P. and Ors. [(1999) 9 SCC 700] | Supreme Court of India | Cited to affirm that ‘lottery’ was a form of gambling and merely because a lottery is run by the State itself, it would not change its character as res extra commercium. However, it was observed that sale of lottery tickets by a State, though not a ‘trade’ under Article 301 of the Constitution, would still be a ‘business’ within the meaning of Article 298(b) of the Constitution. |
| Indian Bank v. Maharashtra State Cooperative Marketing Federation Ltd. [(1998) 5 SCC 69] | Supreme Court of India | Cited to explain the object of the prohibition contained in Section 10 of the Code of Civil Procedure, 1908, and to highlight that this provision does not create a bar to the passing of interlocutory orders. |
Judgment
The Supreme Court’s judgment addressed the maintainability of the suit and provided clarity on the scope of Article 131.
| Submission by Parties | Court’s Treatment |
|---|---|
| The Union of India and other States argued that the suit is not maintainable under Article 131, citing the State of Madhya Pradesh case. | The Court rejected this argument, stating that the State of Meghalaya has a right to do business in lotteries under Article 298(b), and the dispute falls within the scope of Article 131. The Court also clarified that a proceeding under Article 131 cannot be equated to a civil suit. |
| The State of Meghalaya argued that a State can challenge a parliamentary legislation under Article 131, citing the State of West Bengal case. | The Court agreed with this argument, holding that the State of Meghalaya has the right to challenge the central law under Article 131. |
| The Union of India and other States argued that the State of Meghalaya does not have a legal right to sell lottery tickets in other states. | The Court rejected this argument, stating that the State of Meghalaya has a right to do business in lotteries under Article 298(b) and that the dispute falls within the scope of Article 131. |
How each authority was viewed by the Court?
- The Court followed the principle laid down in State of West Bengal v. Union of India [AIR 1963 SC 1241]* that a State can challenge a parliamentary legislation under Article 131.
- The Court relied on State of Rajasthan and Ors. v. Union of India and Ors. [(1977) 3 SCC 592]* to support the view that a State’s right to seek enforcement of a legal right arising under the Constitution cannot be thrown out in limine as being outside the scope and ambit of Article 131.
- The Court applied the principle laid down in State of Karnataka v. Union of India and Anr. [(1977) 4 SCC 608]* that Article 131 should not be tested on the anvil of banal rules applied under the Code of Civil Procedure.
- The Court used Tashi Delek Gaming Solutions Ltd. v. State of Karnataka and Ors. [(2006) 1 SCC 442]* to show that Article 131 is attracted where adjudication is necessary in relation to a legal right of one State or the Union of India vis-à-vis other States.
- The Court distinguished the ruling in State of Madhya Pradesh v. Union of India and Anr. [(2011) 12 SCC 268]*, disagreeing with the view that the original jurisdiction under Article 131 cannot be used to challenge the validity of a statute.
- The Court took note of the fact that in State of Jharkhand v. State of Bihar and Anr. [(2015) 2 SCC 431]*, another co-ordinate Bench of the Supreme Court disagreed with the conclusion in State of Madhya Pradesh (supra) and referred the matter to a Larger Bench.
- The Court used B.R. Enterprises v. State of U.P. and Ors. [(1999) 9 SCC 700]* to affirm that ‘lottery’ was a form of gambling and merely because a lottery is run by the State itself, it would not change its character as res extra commercium.
- The Court used Indian Bank v. Maharashtra State Cooperative Marketing Federation Ltd. [(1998) 5 SCC 69]* to explain the object of the prohibition contained in Section 10 of the Code of Civil Procedure, 1908, and to highlight that this provision does not create a bar to the passing of interlocutory orders.
What weighed in the mind of the Court?
The Court’s decision was primarily influenced by the following factors:
- The Court emphasized that Article 131 of the Constitution provides original jurisdiction to the Supreme Court in disputes between the Union and States, and this jurisdiction should not be restricted by the rules of civil procedure.
- The Court highlighted that the State of Meghalaya has a right to do business in lotteries under Article 298(b) of the Constitution, and the central law (Lotteries Act) allegedly infringes upon this right.
- The Court noted that the dispute is not merely about the validity of the statute but also about the State’s right to conduct its lottery business, which is a legal right that can be adjudicated under Article 131.
- The Court distinguished the previous ruling in State of Madhya Pradesh v. Union of India, where it was held that the original jurisdiction under Article 131 cannot be used to challenge the validity of a statute. The Court clarified that Article 131 confers original jurisdiction based on the nature of the dispute and the status of the party invoking the remedy.
- The Court considered that the omission of Article 131-A from the Constitution was not intended to denude the Supreme Court of its jurisdiction to deal with the constitutional validity of Central or State laws.
| Sentiment | Percentage |
|---|---|
| Constitutional Rights of States | 40% |
| Scope of Article 131 | 30% |
| Distinction from Previous Rulings | 20% |
| Right to do business | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Logical Reasoning
The Court’s logical reasoning can be summarized as follows:
Key Takeaways
- Maintainability of Suits: A State can challenge the constitutional validity of a Central law under Article 131 of the Constitution, especially when the dispute involves the State’s legal rights.
- Scope of Article 131: The Supreme Court’s original jurisdiction under Article 131 is not limited by the rules of civil procedure and is available to address disputes involving legal rights of the States.
- State’s Right to Business: States have a right to do business, including lotteries, under Article 298(b) of the Constitution, and this right can be protected under Article 131.
- Interim Reliefs: Even if a final decision on maintainability is pending, the Court can pass interim orders, including injunctions, to protect the interests of the parties.
Potential Future Impact
- This judgment clarifies the scope of Article 131 and ensures that States have a forum to challenge Central laws that may infringe upon their rights.
- It may lead to more States invoking Article 131 to challenge Central laws, thereby strengthening the federal structure of the country.
Directions
The Supreme Court directed the contesting defendants to file their replies in relation to the prayer for interim relief by the plaintiff-State within four weeks.
Development of Law
The ratio decidendi of this case is that a State can challenge the constitutional validity of a Central law under Article 131 of the Constitution, especially when the dispute involves the State’s legal rights. This decision clarifies the scope of Article 131 and distinguishes it from the previous position in State of Madhya Pradesh v. Union of India, where it was held that the original jurisdiction under Article 131 cannot be used to challenge the validity of a statute. The Court has reaffirmed that Article 131 confers original jurisdiction based on the nature of the dispute and the status of the party invoking the remedy.
Conclusion
In conclusion, the Supreme Court held that the suit filed by the State of Meghalaya is maintainable under Article 131 of the Constitution. The Court clarified that a State can challenge a central law that infringes upon its legal rights, particularly the right to do business under Article 298(b). The judgment ensures that States have a forum to address disputes with the Union of India and other States, and it reinforces the federal structure of the country.
Category
Parent Category: Constitutional Law
Child Categories: Article 131, Original Jurisdiction, Federalism
Parent Category: Lotteries (Regulation) Act, 1998
Child Categories: Section 5, Lotteries (Regulation) Act, 1998, Section 6, Lotteries (Regulation) Act, 1998, Section 7, Lotteries (Regulation) Act, 1998, Section 8, Lotteries (Regulation) Act, 1998, Section 9, Lotteries (Regulation) Act, 1998
FAQ
Q: Can a State challenge a Central law in the Supreme Court?
A: Yes, according to this judgment, a State can challenge a Central law in the Supreme Court under Article 131 of the Constitution if the dispute involves the State’s legal rights.
Q: What is Article 131 of the Constitution?
A: Article 131 defines the original jurisdiction of the Supreme Court in disputes between the Government of India and one or more States, or between two or more States, provided the dispute involves a question on which the existence or extent of a legal right depends.
Q: What is the significance of Article 298(b) in this case?
A: Article 298(b) allows the State to carry on any business. The State of Meghalaya argued that its right to do business in lotteries was infringed upon by the central law.
Q: What did the Supreme Court say about the maintainability of the suit?
A: The Supreme Court held that the suit filed by the State of Meghalaya is maintainable under Article 131, as the dispute involves the State’s legal right to do business in lotteries.
Q: What are the implications of this judgment for other states?
A: This judgment clarifies that States have the right to challenge Central laws that may infringe upon their legal rights, which could lead to more States invoking Article 131 in the future.