TaxTMI 
TaxTMI 
2022 (2) TMI 1368
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.... tickling tone for this judgment can be set by what Lord Denning had humoured in TOTE INVESTORS LTD. vs. SMOKER (1968) 1 QB 509: "...The defendant has in the past occasionally had a wager on a horse-race. Today she has been taking part in another game of chance or skill - the game of litigation..." 2. All these petitions by the companies & individuals involving substantially similar questions of law & facts seek to lay a challenge to the validity of the Karnataka Act No. 28 of 2021 (hereafter 'Amendment Act') whereby the Karnataka Police Act, 1963 (hereafter 'Principal Act') has been amended; the cumulative effect of these amendments, according to them, is the criminalization of playing or facilitating online games. After service of notice, the respondents having entered appearance through the learned Advocate General have filed their common Statement of Objections and Addl. Statement of Objections resisting the challenge. II. A BRIEF DESCRIPTION AS TO WHO THE PETITIONERS ARE: 3. Petitioners in W.P. No. 18703/2021 and W.P. No. 19322/2021 are the societies registered under the Societies Registration Act. Petitioners in W.P. No. 18729/2021, W.P. No. 18732/202....
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.... State is imposing its own notion of morality on the free & rational citizens by clamping a blanket ban on online games of skill. This is constitutionally unsustainable. 5. Petitioners in support of their case also press into service several other decisions of the Apex Court and of some High Courts which will be discussed in due course. IV. RESPONDENTS' OBJECTIONS TO THE PETITIONS: 6. The respondents oppose the petitions on the grounds as summarized below: (i) There was a Public Interest Litigation in W.P. No. 13714/2020 seeking a direction for legislatively banning all forms of online gambling & online betting; a Division Bench of this Court vide order dated 31.3.2021 directed the respondent-State to take a stand on the matter and accordingly, the Chief Secretary, Govt. of Karnataka had filed an affidavit to the effect that the State would come out with a legislation. The impugned Amendment Act has come on the Statute book pursuant to the assurance given to the Court. (ii) In the preceding two decades or so, because of digital revolution, there has been a proliferation of online gaming platforms which engage in 'betting & wagering' unbound by....
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....RATORIES vs. DR. PREM GUPTA (1994) Supp. 1 SCC 160, etc. V. Having heard the learned counsel for the parties and having perused the Petition Papers, and after adverting to the Rulings cited at the Bar, we are inclined to grant indulgence in the matter for the following reasons: 1. AS TO WHAT THE IMPUGNED TEXTUAL CHANGES TO THE AMENDMENT ACT DOES TO THE PRINCIPAL ACT: For ease of understanding, what the Principal Act prior to 2021 Amendment was and what it has become post Amendment, their relevant comparative texts are furnished in the following comparative tabular forms. Whatever has been added to or deleted from the Principal Act is shown in bold italics: TABLE-1 (AMENDMENT TO DEFINITION CLAUSE i.e., SECTION 2) PRE-AMENDMENT POST AMENDMENT (1) Clause 3 of Section 2: "Common Gaming House"; means a building, room, tent, enclosure, vehicle, vessel or place in which any instruments of gaming are kept or used for the profit or gain of the person owning, occupying, or keeping such building, room, tent, enclosure, vehicle, vessel or place, or of the person using such building, room, tent, enclosure, vehicle, vessel or place, whether he has....
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....ng or betting,' includes the collection or soliciting of bets, the receipt or distribution of winnings or prizes, in money or otherwise, in respect of any act which is intended to aid or facilitate wagering or betting or such collection, soliciting, receipt or distribution, any act or risking money, or otherwise on the unknown result of an event including on a game of skill and any action specified above carried out directly or indirectly by the playing any game or by any third parties. (3) Clause 11 of Section 2: "Instruments of Gaming" includes any article used or intended to be used as a subject, or means of gaming, any document used for intended to be used as a register or record or evidence of any gaming, the proceeds of any gaming and any winnings or prizes in money or otherwise distributed or intended to be distributed in respect of any gaming. Clause 11 of Section 2: "Instruments of Gaming" includes any article used or intended to be used as a subject or means of gaming, including computers, computer system, mobile app or internet or cyber space, virtual communication device, electronic applications, software and accessory or means of online gaming, any documen....
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....mobile application or internet or any communication device as defined in the Information Technology Act, 2000 (Central Act 21 of 2000)] opens, keeps or uses the same for the purpose of gaming,-- (vi) on any transaction or scheme of wagering or betting in which the receipt or distribution of winnings or prizes in money or otherwise is made to depend on chance or [skill of other]; (vii) On any act on risking money or otherwise on the unknown result of an event including on a game of skill; or] (7) Section 79: Keeping common gaming house, etc. shall, on conviction, be punished with imprisonment which may extend to one year and with fine: Provided that,-- (a) for a first offence, such imprisonment shall not be less than three months and fine shall not be less than five hundred rupees; (b) for a second offence, such imprisonment shall not be less than six months and fine shall not be less than five hundred rupees; and (c) for a third or subsequent offence, such imprisonment shall not be less than nine months and fine shall not be less than one thousand rupees. Section 79: Keeping common gaming house, etc. shall, on conviction, be punished with imprisonment which ....
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....extent referred to in section 80 and all moneys found on such person shall be forfeited to the Government. Section 87: Gaming in public streets.--Whoever is found gaming or reasonably suspected to be gaming or aiding or abetting such gaming in any public street, or thoroughfare, or in any place to which the public have or permitted to have access or in any race-course shall, on conviction, be punished with imprisonment which may extend to six months or with fine which may extend to ten thousand rupees, or with both and where such gaming consists of wagering or betting, any such person so found gaming shall, on conviction, be punishable in the manner and to the extent referred to in section 80 and all moneys found on such person shall be forfeited to the Government. (10) Section 114: Penalty for entering area from which person has been directed to remove himself.--Notwithstanding anything contained in section 61, any person who, in contravention of a direction issued to him under sections 54, 55, 56 or 63 enters the area from which he was directed to remove himself, shall on conviction, be punished with imprisonment for a term which may extend to two years, but shall not, e....
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.....2021. The Amendment Act introduces an expansive definition of 'gaming' under Section 2(7) by including all online games which involve all forms of wagering or betting. The definition of the term 'wagering or betting' itself is widened to engulf even a game of skill involving money or otherwise, however, excluding horse racing subject to certain conditions. Similarly, it expansively alters the definitions of 'common gaming house' under Section 2(3), 'wagering or betting' in Explanation (i) to Section 2(7), 'instruments of gaming' under Section 2(11), 'online gaming' under Section 2(12A), 'place' under Section 2(13). Thus, the amendment encompasses in its fold games of skill too, offered to users through the online platforms/portals/applications played with monetary stakes or not. (b) Section 78(1)(vi) & (vii) post amendment proscribe the act of running online gaming platforms offering games of skill to its users. These expanded definitions are the building blocks of penal provisions such as Sections 78, 79, 80, 87, 114 & 128A. The net effect of Amendment Act is: owners of online gaming houses, providers of online gami....
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....avaas gambles away his kingdom, brothers, wife Draupadi and lastly himself to his cousins i.e., Kauravaas and all they as stipulated go to woods. Yaajnavalkya Smriti has a verse which states that son should not pay the paternal debt that was contracted for the purpose of liquor, lust or gambling. Kaatyaayana Smriti states that gambling, if cannot be stopped in the kingdom, should be discouraged by imposing tax. Manusmriti injuncts that gambling & betting, the king shall exclude from his realm since those two vices may cause the destruction of kingdom; a wise man should not practise them even for amusement. Kautilya of arthashaastr fame treats all gamblers as cheats and therefore suggests severe punishment. A great Tamil book by Thiruvalluvar 'Tirukkural' fumes against gambling. (d) John Dunkley's 'Gambling: A social & moral problems in France', 1958 Edn. discusses about the historicity of gambling in France. In 17th - 18th centuries, French cities were attracting gamblers from all over Europe and the Resolution on Hazardous Games was passed way back in the year 1697 providing general guidelines on how to gamble and for easing the problems associated wit....
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....ist of do's & don'ts that address the making of government policies. Article 47 directs prohibition of liquors & injurious drugs. It is relevant to mention that the Apex Court in KHODAY DISTILLERIES vs. STATE OF KARNATAKA (1995) 1 SCC 574, observed that the trade or business in liquor is a res extra commercium since the said commodity is inherently harmful and that law can completely ban its trade. Article 48 inter alia directs proscription of cow slaughter. However, there is no such prohibition expressly or impliedly suggested in respect of gambling although power to legislate concerning the same avails to the State vide Entry 34, List II, Schedule VII of the Constitution, as would be discussed infra. VIII. AS TO LEGISLATIVE COMPETENCE & WIDER INTERPREATION OF LEGISLATIVE ENTRIES: (a) The most important feature of Federal Constitutions like ours is the distribution & sharing of legislative power between the Centre and the States. Our Constitution has bodily adopted this scheme of Government of India Act, 1935 with small verbal changes, and with substantially enlarged legislative Lists enacted in Schedule VII; "Betting and gambling" was the term employed in Entr....
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....e fields of law making. These Entries are mere legislative heads of enabling character designed to define and delimit the respective areas of legislative competence of the Union and the States. The legislative Entries in whichever List they occur should be interpreted with the 'widest amplitude' as observed in JILUBHAI NANBHA KACHAR, supra. The purpose of the enumeration of legislative power is not to define or delimit the description of law that the Parliament or the State Legislatures may enact in respect of any of the subjects assigned to them. Such a power constitutionally given is plenary in its content & quality. The enumeration is made to name a subject for the purpose of assigning to that power. The names or descriptions employed in legislation are usually of the briefest kind; it is more so when it comes to the constitutions. In this regard what Gray J., of US Supreme Court more than a century ago observed in JUILLIARD vs. GREENMAN (1883) 110 US 421, becomes instructive. "The Constitution ... by apt words of designation or general description, marks the outlines of the powers granted to the National Legislature; but it does not undertake, with the precision and det....
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.... that substantially the Amendment Act being pari materia with the statutes of other States, the approach of this Court to the matter needs to be consistent with the relevant decisions of several High Courts in the country. They also notified that some of these have been affirmed by the Apex Court on challenge. Justice Oliver Wendell Holmes in TOWNE vs. EISNER 245 US 418 (1918), had said "A word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and time in which it is used...". The two words namely "Betting" and "gambling" as employed in Entry 34, List II have to be read conjunctively to mean only betting on gambling activities that fall within the legislative competence of the State. To put it in a different way, the word "betting" employed in this Entry takes its colour from the companion word "gambling". Thus, it is betting in relation to gambling as distinguished from betting that does not depend on skill that can be regulated by State legislation; the expression "gambling" by its very nature excludes skill. It is chance that pervasively animates it. This interpretation of the....
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....the Prize Competition Act, 1955, which defined "Prize Competition" to take within its embrace not only the competitions in which success depended on chance but also those wherein success depended to a substantial extent on the skill of player. What is observed in CHAMARBAUGWALA-I becomes further clear by the following observations in this case: "...If the question whether the Act applies also to prize competitions in which success depends to a substantial degree on skill is to be answered solely on a literal construction of s. 2(d), it will be difficult to resist the contention of the petitioners that it does. The definition of 'prize competition' in s. 2(d) is wide and unqualified in its terms. There is nothing in the working of it, which limits it to competitions in which success does not depend to any substantial extent on skill but on chance...that competitions in which success depends to a substantial extent on skill and competitions in which it does not so depend, form two distinct and separate categories ... The distinction between the two classes of competitions has long been recognised in the legislative practice of both the United Kingdom and this country....
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....definition of "gaming" to include "wagering on games of skill", that hitherto enjoyed constitutional protection. Having considered CHAMARBAUGWALAS-I & II, K. SATYANARAYANA and some notable decisions of foreign jurisdictions, the Court succinctly stated the difference between a game of chance and a game of skill, as under: "3. The new Encyclopedia Britannica defines gambling as "The betting or staking of something of value, with consciousness of risk and hope of gain on the outcome of a game, a contest, or an uncertain event the result of which may be determined by chance or accident or have an unexpected result by reason of the better's miscalculations". According to Black's Law Dictionary (Sixth Edition) "gambling involves, not only chance, but a hope of gaining something beyond the amount played. Gambling consists of consideration, an element of chance and a reward... Gambling in a nut-shell is payment of a price for a chance to win a prize. Games may be of chance, or of skill or of skill and chance combined. A game of chance is determined entirely or in part by lot or mere luck. The throw of the dice, the turning of the wheel, the shuffling of the cards, are all....
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....aid "It is undoubtedly a game of skill and not a game of chance." The matter was carried upward to the Apex Court in SLP (Criminal) No. 43346/2019 which came to be dismissed on 13.12.2019. (iii) The Division Bench of Hon'ble High Court of Madras in JUNGLEE GAMES INDIA PRIVATE LIMITED vs. STATE OF T.N. , having extensively discussed the two CHAMARBAUGWALAS and K. SATYANARAYANA as further developed in K.R. LAKSHMANAN, has invalidated Act 1 of 2021 which had amended the Tamil Nadu Gaming Act, 1930, as being ultra vires the Constitution. The observations at paragraph 125 of the judgment are profitably reproduced below: "It is in such light that "Betting and gambling" in Entry 34 of the State List has to be seen, where betting cannot be divorced from gambling and treated as an additional field for the State to legislate on, apart from the betting involved in gambling. Since gambling is judicially defined, the betting that the State can legislate on has to be the betting pertaining to gambling; ergo, betting only on games of chance. At any rate, even otherwise, the judgments in the two Chamarbaugwala cases and in K.R. Lakshmanan also instruct that the concept of bet....
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....of skill, is not a game of chance, but is only a game of skill and that it does not cease to be one even when played with stakes. As a corollary of this, a game not involving substantial degree of skill, is not a game of skill but is only a game of chance and therefore falls within the scope of Entry 34 in the State List. XI. AS TO THE VIEW OF FOREIGN JURISDICTIONS ABOUT GAMES OF SKILL: (i) In UNITED STATES OF AMERICA vs. LAWRENCE DICRISTINA 886 F. Supp. 2d 164, decided in 2012, the Second US Circuit of Appeal, New York, tossed out the conviction and vacated the indictment of Mr. Lawrence who ran the warehouse wherein the poker game Texas Hold' Em was played. He was taking 5 % of each nights earning to cover the cost of his staff & profit for himself. In this game, the pot went not to the luckiest among the participants, but to the most deft i.e., the player who could guess his opponents' intentions and disguise his own, make calculated decisions on when to hold & fold, and quickly decide how much to wager. A waitress floated around with food & drinks and play lasted until breakfast. Judge Jack B. Weinstein held that poker is more a game of skill than a game of ....
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.... that M.J. SIVANI recognises a functional difference between actual games and virtual games. This case was decided on the basis of a wider interpretation of the definition of 'gaming' in the context of a legislation which was enacted to regulate the running of video parlours and not banning of video games; true it is that the Apex Court treated certain video games as falling within the class of 'games of chance' and not of 'games of skill'. However, such a conclusion was arrived at because of manipulation potential of machines that was demonstrated by the reports of a committee of senior police officers; this report specifically stated about the tampering of video game machines for eliminating the chance of winning. This decision cannot be construed repugnant to Chamarbaugwala jurisprudence as explained in K.R. LAKSHMANAN. We are of a considered view that the games of skill do not metamorphise into games of chance merely because they are played online, ceteris paribus. Thus, SIVANI is not the best vehicle for drawing a distinction between actual games and virtual games. What heavily weighed with the Court in the said decision was the adverse police report. I....
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.... (b) The expression "Public order" in the State List implies an activity which affects the public at large and therefore, individual instances that do not generate public disorder may not fit into the same. The Apex Court in BANKA SNEHA SHEELA vs. STATE OF TELANGANA at para 13 observed: "There can be no doubt that for 'public order' to be disturbed, there must in turn be public disorder. Mere contravention of law such as indulging in cheating or criminal breach of trust certainly affects 'law and order' but before it can be said to affect 'public order', it must affect the community or the public at large." Added, the cases registered by the police are for the games that have eventually become offences after the amendment which is put in challenge and therefore, much cannot be derived from the factum of such registration. It is also relevant to quote the observations of the Apex Court in SUPT. CENTRAL PRISON vs. RAM MANOHAR LOHIA (1960) 2 SCR 821: "... The distinction does not ignore the necessity for intimate connection between the Act and the public order sought to be maintained by the Act. The restriction made 'in the interest of public ....
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....ver, that per se does not lend credence to the contention that the policy considerations of International Organizations like WHO functioning under UN aegis or recognition, should necessarily influence the interpretation to be placed on the constitutional provisions in general and the legislative Entries in the State List, in particular. Article 51 of the Constitution inter alia directs fostering respect for international law and treaty obligations. This direction essentially addresses the Parliament and the Central Government inasmuch as the power to legislate in respect of matters concerning International Conferences, Treaties and Agreements is exclusively vested in the Parliament vide Article 253 read with Entry 97 of the Union List. Entry 14 of this List confers on the Union Parliament exclusive power to make laws with respect to "entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries". Also Entry 10 of that List provides for 'Foreign affairs; all matters which bring the Union into relation with any Foreign Country'. Article 253 is intended to make it clear that the power to enter into ....
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....l, trade secrets, and trademarks. This development of the law was inevitable. The intense intellectual and emotional life, and the heightening of sensations which came with the advance of civilization, made it clear to men that only a part of the pain, pleasure, and profit of life lay in physical things. Thoughts, emotions, and sensations demanded legal recognition, and the beautiful capacity for growth which characterizes the common law enabled the judges to afford the requisite protection, without the interposition of the legislature." The freedoms guaranteed inter alia under Articles 19 & 21 have been broadening from precedent to precedent, needs no elaboration. The right to speech & expression has expanded to include even a right to vote vide UNION OF INDIA vs. THE ASSOCIATION FOR DEMOCRATIC REFORMS (2002) 5 SCC 294. Similarly, the march of law from A.K. GOPALAN vs. STATE OF MADRAS (AIR 1950 SC 27) to K.S. PUTTASWAMY, supra has broadened the contours of right to life & personal liberty, exponentially. Several rights guaranteed in Part III of the Constitution are no longer treated as water tight compartments, since they have correlative content and each illuminates the ....
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....and information often becomes elusive. Games arguably may not convey a discernible message, but even the non-cognitive forms of expressions can be a means of promoting self-development and therefore, do not readily fall within the 'unprotected category of expression.' The interactivity of online games does not cut their status as expression, but enhances the expressive impact of a medium. Playing of games creates a mood as an abstract art, apart from causing a subtle shaping of thoughts which characterizes all artistic expression. These provisions of our constitution having become expansive by the judicial process do not deny protection to 'abstract painting, avant-garde music and nonsensical poetry'. Therefore, the games of skill fall within the protective contours of Article 19(1)(a) & Article 21, of course subject to reasonable restriction by law. (d) Judge Antonin Scalia of US Supreme Court had famously remarked, "If you had to pick...one freedom...that is the most essential to the functioning of a democracy, it has to be the freedom of speech." In SECRETARY, MINISTRY OF INFORMATION AND BROADCASTING, GOVERNMENT OF INDIA AND OTHERS vs. CRICKET ASSOCIATIO....
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....o doubt, be solely guided by the decisions of the Supreme Court of the United States of America. But in order to understand the basic principles of freedom of speech and expression and the need for that freedom in a democratic country, we may take them into consideration...". The above observations of Hon'ble E.S. Venkataramiah J. justifiably prompt us to look to how the American law of freedom of speech & expression has been shaped by judicial process over the decades. (b) In 1915, the US Supreme Court in MUTUAL FILM CORPORATION vs. INDUSTRIAL COMMISSION OF OHIO 236 US 230, was considering the validity of Ohio statute that required distributors to submit their films to the Board of Censors before they could be presented for the public view. The Court had held that motion pictures were not a form of expression eligible for constitutional protection under the First Amendment. However, after 37 years, this view was laid to rest in JOSEPH BURSTYN, INC vs. WILSON 343 US 495 (1952) wherein it has been observed that the motion pictures do not fall outside the category of 'unprotected expression' in terms of First and Fourteenth Amendments. (c) Till ....
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....O REASONABLE RESTRICTION UNDER ARTICLE 19(2) ON RIGHT TO SPEECH & EXPRESSION UNDER ARTICLE 19(1)(a) AND REGULATION OF PERSONAL LIBERTY UNDER ARTICLE 21: (a) What a former Associate Justice of the US Supreme Court, Anthony Kennedy observed in UNITED STATES vs. PLAYBOY ENTERTAINMENT GROUP, INC., 529 U.S. 803 (2000) is worth quoting: "When a student first encounters our free speech jurisprudence, he or she might think it is influenced by the philosophy that one idea is as good as any other, and that in art and literature, objective standards of style, taste, decorum, beauty, and esthetics are deemed by the Constitution to be inappropriate, indeed unattainable. Quite the opposite is true. The Constitution no more enforces a relativistic philosophy or moral nihilism than it does any other point of view. The Constitution exists precisely so that opinions and judgments, including esthetic and moral judgments about art and literature, can be formed, tested, and expressed. What the Constitution says is that these judgments are for the individual to make, not for the Government to decree, even with the mandate or approval of a majority. Technology expands the capacity to ch....
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....roducing: "Those who won our independence believed that the final end of the state was to make men free to develop their faculties, and that in its government the deliberative forces should prevail over the arbitrary. They valued liberty both as an end and as a means. They believed liberty to be the secret of happiness and courage to be the secret of liberty. They believed that freedom to think as you will and to speak as you think are means indispensable to the discovery and spread of political truth; that without free speech and assembly discussion would be futile...They recognized the risks to which all human institutions are subject. But they knew that order cannot be secured merely through fear of punishment for its infraction; that it is hazardous to discourage thought, hope and imagination; that fear breeds repression; that repression breeds hate; that hate menaces stable government; that the path of safety lies in the opportunity to discuss freely supposed grievances and proposed remedies..." XVIII. AS TO 'SCARE ARGUMENT' OF THE STATE VS. RESEARCH STUDIES AND EMPIRICAL DATA: (a) The vehement contention of learned Advocate General appearing for t....
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....the Harvard Study on internet gambling i.e., "The road less travelled: Moving from distribution to determinants in the study of gambling epidemiology", Can J Psych. 2004; 49 (8) (504-516) concludes: "Both, the online gaming industry and the field of research on the health risks of this form of gambling are in their infancy. It is, therefore, premature to assume that Internet gambling will have deleterious health effects. The next phase of research will be vital to better understanding how to interpret "disordered" patterns and testing the effectiveness of responsible gaming interventions." (iii) Professor Malcolm K. Sparrow, John F. Kennedy School of Government, Harvard University, in his research study titled "CAN INTERNET GAMBLING BE EFFECTIVELY REGULATED? MANAGING THE RISKS (2009)" writes: "Some studies have claimed an association between increased gambling exposure and increased incidence of problem gambling. In addition, commentators have suggested that the increased accessibility inherent in online gambling magnifies such risks. However, more recent studies specific to online gambling, most conducted since the advent of legal and regulated online ga....
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....Court was dealing with games of chance and its ill-effects, and not with the games of skill which happen to be the jugular vein of these Writ Petitions. (b) As internet gaming/online gaming in the form of business continues to evolve exponentially, participation increases, particularly among young people who are comparatively more familiar with the new technology. It is likely that the problems associated with such games may surface in due course. Regulation of online gaming based upon study & research will have to evolve to further the understanding of the impact of this mode of access based on the experience and incidence of behavioral addictions & disorders. This should be a data driven exercise to be undertaken on empirical evidence. Theoretical models for betting & gaming and problem gambling have been developed on the basis of traditional gaming, largely not considering the recent emergence of internet modes. It is important to revisit these conceptual models to verify if they account for pathological gambling among internet users and whether any new variables or interactions should be included to explain the emergence of problems associated with online gaming. This ....
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....ndisputably intertwined with the social and private lives of the citizenry world over. Online gaming too is a product of technological advancement. Online games as contra-distinguished from gambling are also a form of expression and partake the character of business. It may be also a pursuit of happiness that falls within the contours of liberty & privacy of an individual. As already stated above, placing an absolute embargo on this may take away any positive development and benefit that the State may be able to achieve by otherwise balancing the competing interests of the society and the individual. It may be said that while the State has a vested and legitimate interest in the protection of its citizenry, the individual too has a vested right to partake in the recreation of gaming in exhibition of individual skills albeit responsibly. Therefore, a regulation in this regard ought to include technological solutions in the field, in order to better enable a safe and responsible gaming behavior & environment. The integration of data science & governance, corporate social responsibility and individualized responsible gaming programs and/or other regulations may allow legal development....
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....e Amendment Act. He contends that the policy of proscribing cyber games is a matter left to the legislative wisdom and the writ Court should loathe to interfere. (c) Learned advocates appearing for the petitioners do not much dispute that the State has power to regulate the business activities, as provided under Article 19(6). They contend that in view of CHINTAMAN RAO & MOHD. FAROOQ supra, the onus lies on the State to demonstrate the reasonableness of restrictions and that where the restriction amounts to absolute embargo, this onus is onerous vide NARENDRA KUMAR vs. UNION OF INDIA (1960) 2 SCR 375. They draw attention of the Court to the observations of Madras High Court in JUNGLEE GAMES, supra, to the effect that the State has not adopted the 'least intrusive approach test' and therefore, the Amendment Act should be voided. They also invoke the doctrine of proportionality for the invalidation of impugned legislative measure. (d) The online gaming activities played with stake or not do not fall within the ambit of Entry 34 of the State List i.e., 'Betting and gambling', if they predominantly involve skill, judgment or knowledge. They partake the....
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....e a universal pattern of reasonableness. What the Apex Court said in CHINTAMAN RAO, supra is worth adverting to: "The phrase 'reasonable restriction' connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word 'reasonable' implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in that quality". (f) In a recent decision i.e., INTERNET & MOBILE ASSN. OF INDIA vs. RESERVE BANK OF INDIA (2020) 10 SCC 274, while striking down a complete prohibition of crypto currency by the Reserve Bank of India, the Apex Court observed: "The parameters laid down in Md. Faruk are unimpeachable. While testing the validity of a law imposing a restriction on the carrying on of a business or a profe....
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....gislation when it comes to this ground of challenge under Article 14...The test of manifest arbitrariness, therefore, as laid down in the aforesaid judgments would apply to invalidate legislation as well as subordinate legislation under Article 14. Manifest arbitrariness, therefore, must be something done by the legislature capriciously, irrationally and/or without adequate determining principle. Also, when something is done which is excessive and disproportionate, such legislation would be manifestly arbitrary. We are, therefore, of the view that arbitrariness in the sense of manifest arbitrariness as pointed out by us above would apply to negate legislation as well under Article 14." (g) The Amendment Act puts games of skill and games of chance on par, when they are poles asunder, in the light of obtaining jurisprudence. The games of skill, in addition to being a type of expression, are entitled to protection under Article 19(1)(g) by virtue of their recognition as business. There are competing interests of State and the individual, which need to be balanced by employing known principles such as doctrine of proportionality, least restrictive test & the like. A line has t....
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....nts of economic rights such as rights to profession, property, etc. Our Constitution modelled on the principle of 'limited government' normally frowns upon the measures which stultify & negate these invaluables, whether acquired by Man or gifted by his Maker. On the contrary and ideally speaking, State in the larger public interest has to create an atmosphere which nurses them. Story of civilizations is replete with instances of bonsaing of economies in communities that failed to do this. An absolute embargo on the business activities runs the risk of invalidation, unless the State produces relevant material for the ouster of 'least restrictive test'. This test is normally employed as a 'Litmus Test' in judicial review of State action in all civilized jurisdictions. (j) The Apex Court in INDIAN EXPRESS supra extended protection to the Press with the following reasoning: "...Newspaper industry enjoys two of the fundamental rights, namely the freedom of speech and expression guaranteed under Article 19(1)(a) and the freedom to engage in any profession, occupation, trade, industry or business guaranteed under Article 19(1)(g) of the Constituti....
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.... AS TO WHETHER CHAMARBAUGWALA JURISPRUDENCE HAS LOST RELEVANCE DUE TO ADVANCEMENT OF SCIENCE & TECHNOLOGY: (a) Learned Advocate General appearing for the State in his imitable style and vociferously contended that: the provisions of an organic Constitution like ours have to be construed keeping in view contemporary socio-economic developments and the new challenges associated with the same. There has been a paradigm shift in the whole lot of activities in the society owing to advancement of science & technology. New implications and difficulties are cropping up in the society justifying innovative ventures on the part of the State to effectively manage them. A greater leverage needs to be conceded to the State in devising appropriate measures for curbing the menace of online gaming. He passionately submitted that what was true of things that happened in the bygone decades i.e., when CHAMARBAUGWALAS were decided, need to be examined afresh. In support of this, he cites the decision in SIVANI supra contending that the absolute embargo on videogames has been upheld by the Apex Court, despite CHAMARBAUGWALAS. He also refers to a Public Interest Litigation in W.P. No. 13714/202....
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....ortune. XXI. AS TO DISCRIMINATION AND VIOLATION OF EQUALITY UNDER ARTICLE 14: (a) Learned Advocates appearing for the petitioners are justified in complaining that the Amendment Act is violative of Article 14 of the Constitution inasmuch as it does not recognize the long standing jurisprudential difference between a 'game of skill' and a 'game of chance' which animates the scheme of the Principal Act, even post-amendment. Consequently, in the eye of Amendment Act, the persons who play games of chance and the persons who play the games of skill (in terms of predominance test) unjustifiably made to constitute one homogenous class. Our Constitution does not permit things which are different in fact or opinion to be treated in law as though they were the same. The doctrine of equality enshrined in Article 14 is violated not only when equals are treated unequally but also when un-equals are treated equally disregarding their difference vide E.P. ROYAPPA vs. STATE OF TAMIL NADU AIR 1974 SC 555 wherein the Apex Court observed: "... The basic principle which therefore informs both Articles 14 and 16 is equality and inhibition against discrimination. Now....
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....ntifiable between the differentia of and the object sought to be achieved by such a classification vide STATE OF WEST BENGAL vs. ANWAR ALI SARKAR AIR 1952 SC 75. (c) Learned Advocate General pressed into service the decision in SHREYA SINGHAL, supra to justify classification between 'actual games' and 'virtual games' and that the Amendment Act that would focus the latter would not suffer any infirmity on the touchstone of equality clause. He contends that there is an intelligible differentia between online media and offline media as recognized by the Apex Court and therefore, the legislature in its wisdom has chosen to proscribe the online games since they are injurious to public interest. True it is that, the Apex Court treated online media being different from offline. However, such a differential treatment was in the context of distinction that lies between dissemination of information via traditional media and dissemination of information via online media. Whilst there are multiple layers of prior editorial control in case of publication through traditional media, such layers may not exist in the case of publication of information through online media, ....
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....ion of 'gaming' as amended, suffers from the vice of over-inclusiveness/over-broadness of the idea of gaming as enacted in the charging provisions of the Act that are animated by CHAMARBAUGWALA Jurisprudence. The content of 'gaming' as capsuled under Section 2(7) thus bruises the legislative intent enacted in Section 176 ab inceptio and continued post-amendment, for protecting a class of citizens who plays the games of skill and therefore, fits into the text & context of this provision. (b) In SHAYARA BANO vs. UNION OF INDIA (2017) 9 SCC 1, the Hon'ble Supreme Court broke a new ground i.e., 'manifest arbitrariness' for the invalidation of plenary legislations, as well. Following observation therein is profitably reproduced: "101. It will be noticed that a Constitution Bench of this Court in Indian Express Newspapers v. Union of India, (1985) 1 SCC 641, stated that it was settled law that subordinate legislation can be challenged on any of the grounds available for challenge against plenary legislation. This being the case, there is no rational distinction between the two types of legislation when it comes to this ground of challenge und....
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....rom the following observations of the Hon'ble Madras High Court in JUNGLEE GAMES, supra: "120. It is true that, broadly speaking, games and sporting activities in the physical form cannot be equated with games conducted on the virtual mode or in cyberspace. However, when it comes to card games or board games such as chess or scrabble, there is no distinction between the skill involved in the physical form of the activity or in the virtual form. It is true that Arnold Palmer or Severiano Ballesteros may never have mastered how golf is played on the computer or Messi or Ronaldo may be outplayed by a team of infants in a virtual game of football, but Viswanathan Anand or Omar Sharif would not be so disadvantaged when playing their chosen games of skill on the virtual mode. Such distinction is completely lost in the Amending Act as the original scheme in the Act of 1930 of confining gaming to games of chance has been turned upside down and all games outlawed if played for a stake or for any prize." XXIII. AS TO INCHOATE CAUSE OF ACTION: RIGHTS UNDER ARTICLE 19(1)(a) & (g) NOT AVAILING TO JURISTIC PERSONS: (a) The vehement contention of learned Advocate General ....