TaxTMI 
TaxTMI 
2005 (12) TMI 559
X X X X Extracts X X X X
X X X X Extracts X X X X
.... free zone from online and internet lotteries. By reason of the said notification sale of all computerized and online lottery tickets marketed and operated through vending machines, terminals, electronic machines and through internet in the State of Karnataka became prohibited with immediate effect. Writ Proceedings : The States of Sikkim and Meghalaya together with its agents filed writ petitions before the Karnataka High Court, challenging the legality and/or validity of the said notification, inter alia, on the ground that the State of Karnataka, having itself been organizing lotteries, could not have imposed the said ban having regard to the decision of this Court in M/s B.R. Enterprises etc. v. State of U.P. & Ors. etc. [(1999) 9 SCC 700]. The contention of the State of Karnataka, on the other hand, was that online lotteries had nothing to do with the conventional lotteries and as the State of Karnataka has put an embargo on online lotteries without any discrimination, B.R. Enterprises (supra) cannot be said to have any application. A preliminary objection was taken on behalf of the State that as the dispute involved in the writ petitions related to two State Gover....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etitioner No.2 and its agents have spent more than Rs. 100 crores for the establishment of the network of retail computer lottery outlet. The sale from computerized online and internet lotteries in the State of Karnataka was presently approximately Rs. 90 lacs per day." Submissions : Mr. Soli J. Sorabjee, the learned Senior Counsel appearing on behalf of the Appellants, relying inter alia upon the decisions of this Court in State of Bihar v. Union of India [(1970) 1 SCC 67], State of Rajasthan & Ors. etc. v. Union of India & Ors. [(1977) 3 SCC 592], State of Karnataka v. Union of India & Anr. [(1977) 4 SCC 608] and Union of India v. State of Rajasthan [(1984) 4 SCC 238], at the outset submitted that the principles laid down therein clearly demonstrate inapplicability of Article 131 of the Constitution of India where along with the State Governments private parties are also added as Petitioners or Respondents. The Appellants, it was urged, being statutory agents of the States were persons aggrieved by the impugned action of the State of Karnataka in their own right and, thus, the writ petition filed by them with the State Governments were maintainable and, in that view of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ia enacted Lotteries (Regulation) Act, 1998. 'Lottery' has been defined in Section 2(b) of the Act to mean : "2(b) "lottery" means a scheme, in whatever form and by whatever name called, for distribution of prizes by lot or chance to those persons participating in the chances of a prize by purchasing tickets." Sections 3 and 4 of the said Act lay down the conditions subject to which the State Governments could organize, conduct or promote lotteries. By reason of Section 4 of the Act, distributors and selling agents are said to have been given statutory status. Section 6 thereof confers power of prohibition expressly on the Central Government. Section 5 of the Act reads as follows : "5. Prohibition of sale of tickets in a State.-A State Government may, within the State, prohibit the sale of tickets of a lottery organized, conducted or promoted by every other State." Sub-sections (3) of Section 7 of the Act provides for penal provision in the following terms : "(3) If any person acts as an agent or promoter or trader in any lottery organized, conducted or promoted in contravention of the provisions of this Act, or sells, distributes or purchases the ticket o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on the validity of the said notification. The learned Single Judge, as noticed hereinbefore, held that they did not have any such right. On the other hand, the Division Bench was of the opinion : " May be, the appellants also got adversely affected with the prohibition imposed by the State of Karnataka but it is only incidental because they are the agents of the State of Sikkim and can have their rights only through their principal ." We cannot subscribe to the said view. 'Agent' has been defined in Section 182 of the Indian Contract Act, 1872, to mean a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the 'principal'. Section 185 of the Contract Act postulates that no consideration is necessary to create an agency. The authority of an agent may be express or implied in terms of Section 186 thereof. Section 202 of the Contract Act provides that where the agent has himself an interest in the property which forms the subject- matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it was dismissed. There, there was no contract entered into between the plaintiff and the defendant. The plaintiff was merely the manager for others and the words used by Willes, J., in his judgment, to which our attention was called, do not assist the plaintiff's contention. He says the proper person to bring the action is the person whose right has been violated. Though there are certain exceptions to the general rule, for instance, in the case of agents, auctioneers or factors, these exceptions are in truth more apparent than real, &c. The real proposition of law, which these and other cases establish, is that where an agent enters into a contract as such, if he has interest in the contract, he may sue in his own name." Yet again in Mallhu v. Megh Raj [AIR 1920 Lah. 196], it was held : "The only point calling for consideration in this application for revision is whether the plaintiff is debarred under S. 230, Contract Act from maintaining the suit. It is true that part of the wheat belonged to one Khem Lal and was sold by the plaintiff as Khem Lal's agent, but the other part was the plaintiff's own wheat, so that he had an interest in the contract, and the law ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wed in the Indian Courts as well." The Lahore High Court had also the occasion to deal with the said question in Firm Hardayal Mal Mohri Lal v. Kishan Gopal Jhanji [AIR 1938 Lah 673], wherein Tek Chand, J. opined : "These documents therefore do not affect the matter. This is clearly a case of an "agency coupled with interest" and therefore the ordinary rule laid down in S.230 is inapplicable. It is settled law in England and as observed by Pollock and Mulla in their Commentary on the Indian Contract Act (Edn.6) page 638 : The like rule is laid down by Indian Courts that where an agent enters into a contract as such if he has an interest in the contract he may sue in his own name. This is not a real exception to the rule laid down at the beginning of the Section, the agent being in such a case virtually a principal to the extent of his interest in the contract." In Subodh Gopal Bose v. Province of Bihar [AIR 1950 Patna 222] a Division Bench of the Patna High Court considered the question, and upon noticing a large number of decisions, laid down law in the following terms : "There is another aspect of the case which has a more direct bearing on this question. In the su....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... It is, therefore, impossible to say that the legal right of the appellant was not infringed by the provisions of the impugned Act. In the circumstances, as the appellant's personal right to manage the Company and to receive remuneration therefor had been infringed by the provisions of the statute, it had locus standi to file the petition under Article 226 of the Constitution." Once it is held, in view of the aforementioned pronouncement that the Appellants had legal rights to challenge the validity or otherwise of the said notification issued by the State of Karnataka, there cannot be any doubt whatsoever that they would have independent rights to maintain the writ application. We may consider the question from another angle. If the agent was to be prosecuted for violation of the term of the notification, he could challenge the validity thereof. A fortiori, a quia timet application would also be maintainable. A person must be held to have access to justice if his right in any manner whether to carry on business or threat to his liberty is infringed. Access to justice is a human right. In Dwarka Prasad Agarwal (D) By LRs. v. B.D. Agarwal and Others [(2003) 6 SCC 230....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urts have been adopting a liberal approach in dealing with the cases or dislodging the claim of a litigant merely on hypertechnical grounds. If a person approaching the court can satisfy that the impugned action is likely to adversely affect his right which is shown to be having source in some statutory provision, the petition filed by such a person cannot be rejected on the ground of his not having the locus standi. In other words, if the person is found to be not merely a stranger having no right whatsoever to any post or property, he cannot be non-suited on the ground of his not having the locus standi." The Appellants were not mere strangers. Maintainability of the suit before this Court : For determining the question as regard maintainability of the suit before this Court, it is necessary to consider as to whether the appellants herein whether independently or together with their principals could maintain a suit. In view of a large number of decisions of this Court, evidently, they could not. Even the States of Sikkim and Meghalaya filed suits against the State of Karnataka in this Court, the independent right of the Appellants herein to maintain independent action....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er category specified in clauses (a), (b) and (c). In State of Karnataka v. Union of India [(1977) 4 SCC 608], this Court observed : " It has to be remembered that Article 131 is traceable to Section 204 of the Government of India Act. The jurisdiction conferred by it thus originated in what was part of the federal structure set up by the Government of India Act, 1935. It is a remnant of the federalism found in that Act. It should, therefore, be widely and generously interpreted for that reason too so as to advance the intended remedy. It can be invoked, in my opinion, whenever a State and other States or the Union differ on a question of interpretation of the Constitution so that a decision of it will affect the scope or exercise of governmental powers which are attributes of a State. It makes no difference to the maintainability of the action if the powers of the State, which are Executive, Legislative, and Judicial, are exercised through particular individuals as they necessarily must be. It is true that a criminal act committed by a Minister is no part of his official duties. But, if any of the organs of the State claim exclusive power to take cognizance of it, the State,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Constituent Assembly to consider and report on the constitution and powers of the Supreme Court suggested "that the Supreme Court, like the Federal Court under the 1935 Constitution, would be the best available forum for the adjudication of all disputes between the Union and a unit and between one unit and another and proposed that the court should have an exclusive original jurisdiction in such disputes". (Vide The Framing of India's Constitution A Study by Shri B. Shiva Rao at p. 483). Considered in the light of the foregoing the conclusion becomes inevitable that disputes of the nature involved in this case could not have been in the contemplation of the framers of the Constitution when they adopted Article 131 of the Constitution." Conclusion : The Division Bench of the High Court accepted the position that the Appellants herein are statutory agents but it evidently failed to take into consideration the status of the Appellants vis-`-vis their contractual rights and obligations with their principal coupled with their individual rights to maintain their writ petitions in proper perspective. It is no doubt true that had the State of Sikkim or the State of Meghalaya in....