LEGAL ISSUE: Whether a State can challenge the validity of a Central law under Article 131 of the Constitution.

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: Original Suit No. 1 of 2021

Judges: Justice Dinesh Maheshwari and Justice Sanjay Kumar

Can a State challenge a Central law that it believes infringes upon its rights? The Supreme Court of India recently addressed this critical question in a case brought by the State of Meghalaya against the Union of India. The core issue revolved around whether a State can invoke the Supreme Court’s original jurisdiction under Article 131 of the Constitution to challenge the validity of a Central law, specifically concerning the Lotteries (Regulation) Act, 1998. This judgment clarifies the scope of Article 131, ensuring that States have a constitutional avenue to address perceived infringements on their rights. The bench comprised Justice Dinesh Maheshwari and Justice Sanjay Kumar.

Case Background

The State of Meghalaya filed an original suit in the Supreme Court of India challenging 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. The State argued that these provisions were ultra vires and unconstitutional, particularly concerning the State’s right to conduct its lottery business. The State sought a declaration that these provisions were unconstitutional and also sought a permanent injunction against the Union of India from prohibiting the sale of lottery tickets organized by the State and from taking any penal action against the State for violation of the said provisions. The State also sought an injunction against other States and Union Territories from prohibiting the sale of lottery tickets organized by Meghalaya in their respective jurisdictions.

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 of India.
11 May 2023 The Supreme Court issued an order on the maintainability of the suit.

Course of Proceedings

The Union of India and several States contested the maintainability of the suit, citing a previous Supreme Court ruling in State of Madhya Pradesh v. Union of India and Anr.: (2011) 12 SCC 268, which stated that the original jurisdiction under Article 131 of the Constitution cannot be used to challenge the validity of a statute. This view was contested by the State of Meghalaya and other supporting states, which argued that a 6-Judge Bench in State of West Bengal v. Union of India: AIR 1963 SC 1241 had previously allowed a State to challenge a parliamentary legislation under Article 131. The Court noted that similar questions were pending before larger benches in other cases. The Court decided to address the maintainability of the suit first, before delving into the merits of the case.

Legal Framework

The core legal framework in this case revolves around the following:

  • Article 131 of the Constitution of India:
    “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…” This article defines the Supreme Court’s original jurisdiction in disputes involving the Union and States or between States.
  • The Lotteries (Regulation) Act, 1998:
    • Section 5: Allows a State Government to prohibit the sale of lottery tickets organized by other States within its territory.
    • Section 6: 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: Prescribes penalties for violations of the Act, including imprisonment and fines.
    • Section 8: States that offences under the Act are cognizable and non-bailable.
    • Section 9: Deals with offences by companies and identifies those within management who would be deemed guilty.
  • Rule 5 of the Lotteries (Regulation) Rules, 2010: Details the procedure to prohibit the sale of lottery tickets.
  • Article 298(b) of the Constitution: Provides that the executive power of the Union and of each State shall extend to the carrying on of any trade or business.
See also  Supreme Court Dissolves Marriage Citing Irretrievable Breakdown, Orders ₹2 Crore Alimony (15 July 2024)

Arguments

The arguments presented by the parties can be summarized as follows:

Union of India and Contesting States:

  • Main Submission: The suit is not maintainable under Article 131 of the Constitution.

    • Sub-submission 1: The Supreme Court in State of Madhya Pradesh v. Union of India and Anr.: (2011) 12 SCC 268, ruled that the original jurisdiction under Article 131 cannot be used to challenge the vires of a statute.
    • Sub-submission 2: The dispute does not involve a legal right of the State of Meghalaya.
    • Sub-submission 3: The business of lotteries is a form of gambling (res extra commercium) and therefore, the State of Meghalaya cannot claim a legal right to conduct its lottery business in another State against the will of that State.

State of Meghalaya, Nagaland, and Sikkim:

  • Main Submission: The suit is maintainable under Article 131 of the Constitution.

    • Sub-submission 1: A 6-Judge Bench in State of West Bengal v. Union of India: AIR 1963 SC 1241 allowed a State to challenge a parliamentary legislation under Article 131.
    • Sub-submission 2: The decision in State of Madhya Pradesh (supra) is not an authority to say that the present suit is not maintainable.
    • Sub-submission 3: The State of Meghalaya has a right to do business under Article 298(b) of the Constitution and the provisions of the Lotteries (Regulation) Act, 1998 infringe this right.
Party Main Submission Sub-Submissions
Union of India and Contesting States Suit is not maintainable under Article 131
  • Article 131 cannot be used to challenge the vires of a statute (State of Madhya Pradesh v. Union of India)
  • No legal right of the State of Meghalaya is involved.
  • Lottery business is gambling (res extra commercium).
State of Meghalaya, Nagaland, and Sikkim Suit is maintainable under Article 131
  • A State can challenge a parliamentary legislation under Article 131 (State of West Bengal v. Union of India).
  • State of Madhya Pradesh (supra) is not an authority to say that the present suit is not maintainable.
  • State has a right to do business under Article 298(b), which is infringed by the Act of 1998.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

  1. Whether the suit filed by the State of Meghalaya is maintainable under Article 131 of the Constitution of India.

Treatment of the Issue by the Court

The following table demonstrates how the Court dealt with the issue:

Issue Court’s Decision Reason
Whether the suit is maintainable under Article 131 The suit is maintainable. The Court held that a State can challenge a Central law under Article 131 if it involves a legal right of the State. The Court distinguished the case from State of Madhya Pradesh v. Union of India and emphasized the State’s right to do business under Article 298(b).

Authorities

The Court considered the following authorities:

Cases:

Case Name Court Legal Point How Considered
State of West Bengal v. Union of India: AIR 1963 SC 1241 Supreme Court of India A State can maintain a challenge to a parliamentary legislation under Article 131. Relied upon to support the maintainability of the suit.
State of Rajasthan and Ors. v. Union of India and Ors.: (1977) 3 SCC 592 Supreme Court of India A State’s right to seek enforcement of a legal right under the Constitution cannot be thrown out as outside the scope of Article 131. Relied upon to support the maintainability of the suit.
State of Karnataka v. Union of India and Anr.: (1977) 4 SCC 608 Supreme Court of India Article 131 should not be tested on the anvil of banal rules applied under the Code of Civil Procedure. The sole condition for invoking Article 131 is that the dispute involves a legal right. Relied upon to emphasize that Article 131 is a self-contained code and not a civil suit.
Tashi Delek Gaming Solutions Ltd. v. State of Karnataka and Ors.: (2006) 1 SCC 442 Supreme Court of India 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. Relied upon to show that the expression ‘legal right’ has received a liberal interpretation.
State of Madhya Pradesh v. Union of India and Anr.: (2011) 12 SCC 268 Supreme Court of India The original jurisdiction under Article 131 is not permissible to challenge the vires of a statute. Distinguished and disagreed with, stating that it lost sight of the fact that Article 131 confers original jurisdiction on the basis of the status of the party.
State of Jharkhand v. State of Bihar and Anr: (2015) 2 SCC 431 Supreme Court of India Disagreed with the conclusion in State of Madhya Pradesh (supra), stating that the constitutionality of an enactment can be examined in an original suit under Article 131. Relied upon to highlight the disagreement with the decision in State of Madhya Pradesh (supra).
B.R. Enterprises v. State of U.P. and Ors.: (1999) 9 SCC 700 Supreme Court of India Lottery is a form of gambling (res extra commercium), but the sale of lottery tickets by a State is a ‘business’ under Article 298(b). Relied upon to establish the State’s right to conduct lottery business under Article 298(b).
Indian Bank v. Maharashtra State Cooperative Marketing Federation Ltd.: (1998) 5 SCC 69 Supreme Court of India Section 10 of the Code of Civil Procedure does not bar the passing of interlocutory orders. Relied upon to emphasize that the pendency of a similar issue before a larger bench does not bar the passing of interlocutory orders in the present suit.
See also  Supreme Court Rejects Belated Amendment to Plaint in Property Partition Suit: Vijay Hathising Shah vs. Gitaben Parshottamdas Mukhi (2019)

Legal Provisions:

  • Article 131 of the Constitution of India: Defines the original jurisdiction of the Supreme Court in disputes between the Union and States or between States.
  • Article 298(b) of the Constitution: Provides that the executive power of the Union and of each State shall extend to the carrying on of any trade or business.
  • Section 5 of the Lotteries (Regulation) Act, 1998: Allows a State Government to prohibit the sale of lottery tickets organized by other States within its territory.
  • Section 6 of the Lotteries (Regulation) Act, 1998: Empowers the Central Government to prohibit lotteries organized in contravention of Section 4 or where tickets are sold in contravention of Section 5.
  • Section 10 of the Code of Civil Procedure, 1908: Prohibits a court from proceeding with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit.

Judgment

The Court held that the suit filed by the State of Meghalaya is maintainable under Article 131 of the Constitution. The Court reasoned that:

Submission by Parties How the Court Treated the Submission
The suit is not maintainable under Article 131 of the Constitution. Rejected. The Court held that a State can challenge a Central law under Article 131 if it involves a legal right of the State.
The State of Meghalaya has no legal right to sell lottery tickets in other States. Rejected. The Court held that the State has a right to do business under Article 298(b) of the Constitution, which is infringed by the provisions of the Lotteries (Regulation) Act, 1998.

The Court also considered the following authorities:

Authority How the Court Viewed the Authority
State of West Bengal v. Union of India: AIR 1963 SC 1241 Relied upon to support the maintainability of the suit, as it allowed a State to challenge a parliamentary legislation under Article 131.
State of Madhya Pradesh v. Union of India and Anr.: (2011) 12 SCC 268 Distinguished and disagreed with, stating that it lost sight of the fact that Article 131 confers original jurisdiction on the basis of the status of the party.
State of Jharkhand v. State of Bihar and Anr: (2015) 2 SCC 431 Relied upon to highlight the disagreement with the decision in State of Madhya Pradesh (supra).
B.R. Enterprises v. State of U.P. and Ors.: (1999) 9 SCC 700 Relied upon to establish the State’s right to conduct lottery business under Article 298(b).
Indian Bank v. Maharashtra State Cooperative Marketing Federation Ltd.: (1998) 5 SCC 69 Relied upon to emphasize that the pendency of a similar issue before a larger bench does not bar the passing of interlocutory orders in the present suit.

What weighed in the mind of the Court?

The Court’s decision was primarily influenced by the following:

  • The Court emphasized the importance of Article 131 as a constitutional mechanism for resolving disputes between the Union and States.
  • The Court recognized that the State of Meghalaya had a legal right to conduct its lottery business under Article 298(b) of the Constitution.
  • The Court distinguished the present case from State of Madhya Pradesh v. Union of India, noting that the earlier decision had overlooked the fact that Article 131 confers original jurisdiction on the basis of the status of the party.
  • The Court highlighted the decision in State of West Bengal v. Union of India, which had allowed a State to challenge a parliamentary legislation under Article 131.
  • The Court noted that even if the final determination of the question of maintainability depended on the decision of a larger bench, the supplemental proceedings in the present suit, particularly those relating to the prayer for interim relief, could not be put on hold.
Sentiment Percentage
Constitutional Rights of States 35%
State’s Right to do Business 30%
Distinction from Previous Rulings 25%
Procedural Aspects 10%

Fact:Law Ratio

Category Percentage
Fact 20%
Law 80%

The Court’s reasoning was heavily influenced by legal considerations (80%), particularly the interpretation of Article 131 and the State’s right to business, with less emphasis on the specific factual aspects of the case (20%).

Logical Reasoning

Issue: Is the suit maintainable under Article 131?

↓

Consideration 1: Does the dispute involve a legal right of the State?

See also  Supreme Court clarifies Armed Forces Tribunal Jurisdiction in Secondment Cases: Lt. Col. Vijaynath Jha vs. Union of India (2018)
↓

Consideration 2: Does Article 131 allow a State to challenge a Central law?

↓

Consideration 3: Is the State’s right to business under Article 298(b) infringed?

↓

Conclusion: Yes, the suit is maintainable. The State has a legal right, and Article 131 allows the challenge. Previous rulings against this were distinguished.

Key Takeaways

  • States’ Rights: The judgment reinforces the right of States to challenge Central laws that they believe infringe upon their legal rights under the Constitution.
  • Scope of Article 131: The Supreme Court clarified that Article 131 is not merely a procedural provision but a substantive mechanism for resolving disputes between the Union and States.
  • Interim Relief: Even if the final determination of the question of maintainability is pending, the Court can pass interlocutory orders, such as injunctions, to protect the interests of the parties.
  • Business Rights: The judgment underscores the State’s right to conduct business under Article 298(b) of the Constitution, which includes the operation of lotteries.

Directions

The Court directed the contesting defendants to file their reply 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 validity of a Central law under Article 131 of the Constitution if it involves a legal right of the State. This judgment clarifies and reaffirms the scope of Article 131, ensuring that States have a constitutional avenue to address perceived infringements on their rights. This decision distinguishes itself from the previous decision in State of Madhya Pradesh v. Union of India, which had held that the original jurisdiction under Article 131 cannot be used to challenge the vires of a statute.

Conclusion

In conclusion, the Supreme Court’s order in State of Meghalaya vs. Union of India & Others upholds the State’s right to challenge the constitutionality of Central laws under Article 131 of the Constitution. The Court clarified that such a challenge is permissible when it involves a legal right of the State, particularly the right to conduct business under Article 298(b). The judgment ensures that States have a constitutional avenue to address perceived infringements on their rights, and it sets a precedent for future cases involving disputes between the Union and States. The Court’s decision allows the State of Meghalaya to proceed with its case on merits, subject to the final determination of the constitutional validity of the impugned provisions of the Lotteries (Regulation) Act, 1998.

Source: Meghalaya vs. Union of India