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Issues: (i) Whether the Government of Maharashtra could, under Article 258(1) of the Constitution, impose a ban on the sale in Maharashtra of lottery tickets organised by other States. (ii) Whether the expression "Lotteries organised by the Government of India or the Government of a State" in Entry 40 of List I could be confined to lawfully organised lotteries so as to permit State action against lotteries of another State.
Issue (i): Whether the Government of Maharashtra could, under Article 258(1) of the Constitution, impose a ban on the sale in Maharashtra of lottery tickets organised by other States.
Analysis: Entry 40 of List I places lotteries organised by the Government of India or a State within the exclusive legislative field of Parliament. In the absence of Parliamentary legislation, a State may itself conduct lotteries by virtue of Article 298, but its executive power extends only to the carrying on of its own trade or business and remains subject to the constitutional distribution of powers. The entrustment order under Article 258(1) related only to lotteries organised by the Government of Maharashtra and could not authorise Maharashtra to regulate or prohibit lotteries organised by other States. The executive power of the Union or a condition attached to permission could not be used by one State to control the lottery activities of another State.
Conclusion: The ban imposed by the Government of Maharashtra on the sale of other States' lottery tickets was without constitutional authority and could not be sustained.
Issue (ii): Whether the expression "Lotteries organised by the Government of India or the Government of a State" in Entry 40 of List I could be confined to lawfully organised lotteries so as to permit State action against lotteries of another State.
Analysis: The Court rejected the attempt to read the word "lawfully" into Entry 40 of List I. Once lotteries organised by a State are brought within Entry 40, they do not revert to Entry 34 of List II merely because another State considers them unauthorised or disapproved as a matter of policy. A State Legislature cannot enlarge its competence by recasting the constitutional entry, and a State Government cannot declare another State's lottery unlawful and then prohibit the sale of its tickets. The proper constitutional remedy for breach of any condition attached to permission lay elsewhere, not in unilateral action by another State.
Conclusion: Entry 40 could not be narrowed by implication, and Maharashtra had no power to treat other States' lotteries as falling within its own regulatory field.
Final Conclusion: The writ petitions succeeded, and Maharashtra was directed to forbear from enforcing the ban on sale or distribution of lottery tickets organised by other States.
Ratio Decidendi: Where the Constitution assigns a subject to Parliament's exclusive legislative field, a State cannot, by executive action or by recasting constitutional language, assume regulatory power over that subject or over the activities of another State.
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