TMI Blog1955 (1) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... re. The petitioners advertise their crossword prize competition in various publications in various places in India including the State of Bombay. The Legislature of the State of Bombay passed the Act, being Act 30 of 1952, which amended Act 54 of 1948, by which they purported to tax the gross receipts of petitioners No. 2 from the residents of Bombay who had submitted entries for the crossword competition, and by this Act also the Legislature imposed certain restrictions upon the manner in which petitioners No. 2 should carry on their activity in the State of Bombay. The petitioners by tins petition contended that the provisions in the Act taxing petitioners No. 2 and also imposing restrictions upon their activity was 'ultra vires' of the State Legislature, The petition was heard by Desai J. who held that certain provisions of the Act were 'ultra vires'. The State of Bombay has now come in appeal. 2. Several questions of the utmost importance both to the citizen and to the State have been agitated at the Bar. It may be that it is possible to dispose of tin's appeal on a very narrow ground, but both Mr. Seervai on behalf of the State of Bombay and Mr. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slature legislates in respect of a topic mentioned in the relevant list and the legislation goes beyond the State, then it would not be competent legislation, because then the Legislature is not legislating for the whole or any part of the State but it is legislating beyond its jurisdiction. If therefore a person affected by the legislation were to challenge it on the ground that he is affected by the legislation, although he or his business or the transaction in which he is engaged has no connection with the State at all, then it would be open to the Court to say that the legislation is extraterritorial in its effect. If then these two tests are satisfied that the legislation is competent in the sense that it is covered by a topic mentioned in the relevant list and also it is not extra-territorial, then the third question to be considered is whether the Constitution has placed any restrictions upon the power of the Legislature to legislate on that particular topic, because, as we shall presently point out, the scheme of the Constitution is with regard to many topics that after conferring legislative competence upon the State Legislature it has placed certain restrictions upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a lottery or prize competition contained in a newspaper or publication printed and published outside the State, the manager or agent of the publisher of such newspaper or publication in charge of its circulation or distribution is deemed to be a promoter of the lottery or prize competition for the purposes of the Act. Section 3 renders all lotteries and all prize , competitions unlawful subject to the provisions of the Act. Section 4 constitutes an offence the promoting of a lottery or a prize competition which is made unlawful by the provisions of the Act. Section 7 provides that a prize competition shall be deemed to be an unlawful prize competition unless a license in respect of such competition has been obtained by the promoter thereof. Section 8 provides for penalty for contravention of Section 7. Section 9 provides for the license which shall be granted by the Collector on payment of such fees and subject to such conditions and shall be in such form as may be prescribed. Section 12 deals with the levy of tax on lotteries and prize competitions and the tax provided for prize competition is a tax at the rate of 25 per cent, of the total sum received in respect of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vities, the contention of the State is that it is legislation dealing with the topic of betting and gambling in entry 34. Very learned arguments were advanced before us as to what is the proper connotation of the expression used by the Constituent Assembly in the Constitution in the VIIth Schedule, viz. betting and gambling. It may be pointed out that the parent Act was passed when the Government of India Act was in force and the amending Act was passed when our Constitution had been enacted. But as far as the question of legislative competence is concerned, the language used both in the Government of India Act and the Constitution is the same, viz., betting and gambling. 7. Mr. Manekshaw has urged that an Act dealing with prize competitions--and we are only concerned here with the provisions relating to prize competitions and not the provisions relating to lotteries--is not an Act which could be said to fall within the topic described in the VIIth Schedule as betting and gambling. Mr. Manekshaw says that these words must receive from us their strict legal connotation, and if we look at the legislative history it would be clear that prize competition is neither betting nor ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Indian Penal Code and that could well have been looked upon as a subject of criminal law falling in the Concurrent List. The correct approach for the construction and interpretation of the various entries in the VIIth Schedule has been laid down in a decision of this Court reported in -- Fram Nusserwanji Balsara v. State of Bombay' AIR 1951 Bom 210 (FB) (A). The relevant passage is at p- 213 : ...Now, in construing the various entries in this List, certain basic facts have to be borne' in mind. The Government of India Act gave to India a Federal Constitution with well defined legislative powers for the Centre and the Provinces and also a field of legislation with concurrent powers for both. The Provincial Legislature within the ambit of its own powers was sovereign and the powers conferred were to be construed as plenary powers. As far as possible an attempt was to be made to reconcile the various entries in the List, and in interpreting any particular entry the widest import was to be given to the language used by Parliament. The attempt of Parliament was to exhaust all spheres of legislative activity by enumerating all conceivable topics of legislation in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in entry 34. 9. Now, lottery has been defined in Halsbury, Vol. XV, page 525. A lottery has been described as a scheme for distributing prizes by lot or chance. Therefore, if there is a scheme under which prizes are to be given and the winner of the prize does 'not get it by reason of skill exercised by him, but obtains it merely by chance or by the drawing of lots, then that scheme would be a lottery as understood in the English law and would constitute gambling. The definition given by Halsbury requires perhaps a slight alteration or amendment as the English authorities themselves point out, with which we shall presently deal. It is not necessary to constitute a scheme a lottery that the prize should be distributed wholly by chance. In order to take the scheme out of the category of lottery it is essential that there must be a substantial element of skill, although that element may not be the preponderating element. If, as the authorities have pointed out, a mere scintilla of skill is displayed in order to enable the person competing for the prize to obtain the prize, then it would still be a lottery and would constitute gambling. As far as India is concerned, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether a particular scheme is a lottery or not and what are the real elements of a lottery. (II) the first case is -- 'Hall v. Cox' 1899 1 QB 198 (B). That was a case of a prediction of the number of births and deaths in London during a named week, and Smith L. J. in his judgment stated that the result no doubt depended largely on chance, but not entirely, and the cases show mat to constitute a lottery it must be a matter depending entirely upon chance. This decision is relied upon in order to contend that if there is any dement of skill at all, then the scheme would not fee a lottery. To the extent that Smith L. J. suggested that any skill, however trivial or however insubstantial, would be sufficient not to convert a scheme into a lottery although substantially the result would depend upon chance and not skill, the decision does not seem to have been followed or approved in subsequent decisions. 11. The nest is a decision reported in - 'Scott v. Director of Public Prosecutions' 1914 2 KB 868 (C). That was a case where certain amount of literary skill was involved in the competition, sod Lush J. points out (p. 877): .....The distinction is a very plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not on the terms that anybody shall exercise judgment in deciding which is the best and most skilful of the competitors' efforts, but on the terms that somebody shall perform the task of deciding which comes nearest to a secretly fixed standard. At page 426 the Lord Chief Justice observes : .....The solution which is to be adjudged to be correct is not to be picked out of the efforts of the competitors in competition with each other. It is to be the solution that is found, on examination, to coincide most nearly with a set of words chosen beforehand by somebody not known by a method, if any, not stated, that person being perfectly at liberty to act in an arbitrary, capricious, or even mischievous spirit. In other words, the competitors are invited to pay a certain number of pence to have the opportunity of taking blind shots at a hidden target. And Humphreys, J. went to the length of suggesting in his judgment that if the Judges who decided 'Scott v. Director of Public Prosecutions (C)', had the knowledge gained from cases which, have been decided since that case, they might have-come to a different conclusion, and the passage at page 429 is rather significan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it emerges from a close examination. And Humphreys J. winds up his judgment by putting this question: Does the skill, if skill is proved, really affect the result? And that according to the learned Judge is the real test which must be applied in order to determine whether prize was given by chance or by skill. Cassels J. in a brief judgment points out (p. 162) : .... .A scheme must be looked at as a whole. If chance predominates and is the one outstanding feature, then it comes within the definition of a lottery as laid down by the cases. For instance, it has been decided that it is mere chance that a person will solve a puzzle, of which there are several solutions, in exactly the same way that someone else has already solved it. 14. It is in the light of these judgments that we have, in. the first place, to consider whether the impugned legislation deals with lotteries, and in the next place to consider whether on the facts of this particular case the scheme promoted by the petitioner is a lottery. Turning to the Act for this purpose, what is urged by Mr. Manckshaw is that even in its wider sense this legislation does not merely deal with gambling, but it also deals wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich it has not already dealt with, and with regard to these competitions the Legislature qualified them by saying that in those competitions, in order that they should come within the definition of prize competition , success should not depend to a substantial degree upon the exercise o skill. In construing an Act of the Legislature, there is another important principle which must constantly be kept in mind. Not only must the Court be extremely reluctant to invalidate an Act, but the Court must always presume that a Legislature knows what its legislative competence is and what are the limitations upon its competence. It is only if there are clear unequivocal words in the statute which go to show that the Legislature has over-stepped its competence or' has travelled outside the limitations laid down in the Constitution that the Court will pronounce a legislation to be 'ultra vires'. 15. This principle was considered and applied by us in -- 'State v. Heman Alreja' AIR 1952 Bom 16 (F). In that case Bombay Act II of 1950 dealt; with requisitioning for any purpose, and on a plain construction of the Act that purpose would include both the purpose of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to draw a distinction between the case we have before/us and the case on the Hindu Women's Rights to Property Act. Mr. Manelcshaw says that in that case if Sir Maurice Gwyer had not given a limited interpretation to the expression property , then the legislation could not have fallen under any other entry, and it was because of that and to bring the legislation within the only topic which was possible that Sir Maurice Gwyer put a rather strained construction upon the expression property . Mr. Manekshaw says no such difficulty arises in this case because if the crossword competition does not constitute gambling as defined by the Legislature, although the legislation may not fall under Entry 34, it would still fall under Entry 26. In our opinion the distinction drawn by Mr. Manekshaw is not one of substance, because although the legislation may fall under Entry 26, it could only fall to the extent that the Legislature is dealing with trade and commerce within the State. To the extent that it is dealing with trade and commerce outside the State, it would not fall within the competence of the legislature under any entry in List II of the Seventh Schedule. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l degree upon the exercise of skill. Mr. Manekshaw says and rightly that our Legislature has given a much wider definition of prize competitions', that they have not confined prize competitions to competitions in which success does not depend to a substantial degree upon the exercise of skill, and therefore it would be erroneous to consider our Act as in 'pari materia' with the Betting and Lotteries Act. As we said before, if the matter really rested upon the construction of our Act and no question of the constitutionality of the Act arose, then very likely we would have been inclined to accept the construction suggested by Mr. Manekshaw. But not only are we- construing our Act but construing it so as to determine its constitutionality, and as we have already observed, different considerations and vitally different considerations arise when the question is merely of construction of an Act independently of its constitutionality and when the question is of the construction of an Act which involves its constitutionality. 18. The next question to be considered is whether the scheme promoted by the petitioners comes within the ambit of the Act and whether it satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on clearly establishes that the two clues furnished to the competitors are in most cases equally apt and equally appropriate. It seems to us- and we hope we are not being unfair to the petitioners that the whole object of this competition is to make the clues so apt and so appropriate that the competitor should be induced to send in as many entries as possible. It is because the competitor realises that one or the other solution is equally possible that he must take his chance to win the prize by submitting as many entries as possible. It is said that the solution is not previously prepared, that the solution is not arrived at by any chance, but the solution is the result of the careful deliberations of an adjudication committee. Not only the adjudication committee gives the solution, but subsequently publishes its reasons for arriving at those solutions, and therefore it is said that the competitor is expected to exercise his skill in order to satisfy the solution ultimately given by the adjudication committee which adjudication is based upon judgment and not merely upon chance. We have very carefully considered this argument, but it seems to us that the adjudication committ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature of this scheme. It may also be pointed out that even though the competitor may exercise skill in the sense that he may look at dictionaries and he may study encyclopedias in order to decide which of the two alternatives is the proper alternative, that skill displayed by him is not ultimately tested by the adjudication committee, nor does it in any way contribute to the result which is the awarding of tie prize. Mr. Palkhivala said that even in the case of the football competition the skill of the appellant who prepared the forecasts with regard to four matches did not contribute to the result in the sense that the matches were not won or lost by reason of the skill exercised by the appellant. But that is not the meaning of the skill affecting the result. What is meant by that expression is that if a competitor exercises skill he would have a better chance of winning the prize than a person who does not exercise skill or who exercises less skill. In the football case the appellant who had knowledge of football matches and who worked at the result of the four matches had a better chance of giving a correct forecast of the results than a person who did not have eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld study the process of the mind of the members of the adjudication committee and seek guidance and enlightenment from the reasons. We find it difficult to understand how the reasoning applied by the adjudication committee with regard to the solution of a particular clue can be of much help in the solution of an entirely different clue. The competitor would be as much groping in the dark with regard to the solution of an entirely new puzzle, whether he had the benefit of the reasons of the adjudication committee with regard to a previous solution or he had no such benefit. 21. There is one other feature of this competition which should be pointed out. It seems from the evidence that in order to determine who should get the first prize a procedure is followed which is not mentioned in the rules at all, and that procedure has been deposed to by Mr. McDonald, the competition editor of the petitioners. Now, unless a person is an expert in prize competitions, which we do not claim to be, it is rather difficult to follow the intricacies of this evidence. But what emerges broadly from what Mr. McDonald has said with regard to this aspect of the matter is that in selecting the win ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of drawing lots but is the chance of a particular competitor giving solutions which conform to the ultimate decision of the adjudication committee more than other competitors. 22. Therefore, in our opinion, the impugned legislation deals with lotteries, and the scheme pro-motet! by the petitioners is a lottery, and therefore the Act is applicable to them. 23. In this view of the case perhaps it would be unnecessary to consider the alternative submissions made by Mr. Seervai that even if the topic of legislation was not betting and gambling, it was entertainment or amusement or in the further alternative luxuries. If we are wrong in the view that we take that this legislation deals with the topic of betting and gambling, then we are not prepared to accept the contention of Mr. Seervai that this legislation deals with entertainment and amusement or with luxuries. The entertainment and amusement contemplated by entry 33 of List II with regard to legislation and entry 62 of List II with regard to taxes is not the subjective entertainment or amusement which a person may receive by solving a crossword puzzle or by indulging in any other mental or intellectual pleasure. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. The nature of the lax imposed under Section 10A is a tax on the gross receipts from the entry fees paid by the people in the State of Bombay. It is suggested by Mr. Seervai that the mode of collection of a tax cannot affect the nature of the tax. In making that submission he is perfectly right. It would be open to the Legislature to impose a gambling or betting tax and to provide a particular mode for its collection. For instance, it would be open to the Legislature to tax the competitor and to provide that that tax should be collected not from him but from the petitioners, and what Mr. Seervai says is that in effect and in substance what Section 12A does is that instead of asking the competitor to pay the tax, the tax is paid by the petitioners on the gross return. When we analyse the nature of this tax, it is impossible for, us to accept the contention that the tax is on the betting or on he person who lays the bet, and the petitioners merely act as the collecting agents of the State. If the legislation had provided that each competitor shall pay a certain percentage of his entrance fee as tax or that he shall pay so much amount as tax per entry, and if the legislation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be imposed in various ways. Let us take the case of a profession. A lawyer may be charged a certain fixed sum every year because he is carrying on a profession, and it is correct that he may have to pay this tax whether he receives any briefs and whether he has any income or, not. But he may also be charged on the amount of fees that he receives without taking into consideration his expenditure, his outgoings, etc., and that this is so is made amply clear by the limitation that the Constitution has put upon the power of the State Legislature to impose a tax under entry 60, which limitation is to be found in Article 276(2). But before. we come to that limitation,, it is necessary to look at Article 276(1) which makes it clear what the nature of this tax is, and that article provides: Notwithstanding anything in Article 246, no law of the Legislature of a State relating to taxes for the benefit of the State-or of a municipality, district board, local board or other local authority therein in respect of professions, trades, callings or employments shall be invalid on the ground that it relates to a tax on income. It is precisely because the Constituent Assembly wished to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taxed on net income. It is perfectly true that the Income Tax which a resident in India pays is tax on income as computed according to the, provisions of the Income Tax Act But that does not mean that if Parliament so thought fit - and we sincerely hope it will never so think fit - to tax gross income, it would not have the competence to do so. Mr. Seervai says that-it would be ultra vires the Parliament and also of the State Legislature to tax gross income, and therefore he wants us to infer that what is taxed in the hands of the petitioners is not gross income, but it at all it is a tax on net income. As it happens, the petitioners have pointed out in this case that they are paying 15 per cent, tax to the Mysore State, and that if they were to pay 25 per cent, tax as imposed by Section 12A, they would have to suffer a loss. Therefore in that sense the State is taxing the gross income in the hands of the petitioners irrespective of what their expenses may be, what their outgoings may be and whether they make profits or not. 27. Therefore, in our opinion, the tax imposed by the. State under S- 12A is not a tax on betting or gambling. It is a tax on the business of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e waste of hard earned money on the part of the poor people. These are all very proper submissions and we are entirely with Mr. Seervai in taking the view that the State would be perfectly justified in saving the poor people from' themselves, safeguarding their hard earned money, and preventing temptations being offered to them to make easy money without any work. If the Legislature had prohibited this particular business of lotteries or made it illegal, then we could have understood the righteous indignation of Mr. Seervai. But it hardly lies in his mouth to take up his moral attitude, when the Legislature by this Act not only legalises the business, not only permits the business to be run, but actually wishes . to make money out of that business. It is true that Section 3 of the Act says : Subject to the provisions of this Act, all lotteries and all prize competitions are unlawful. But if the prize competitions comply with the provisions of the Act, if they obtain a license, if they carry out' the conditions of the license, and they pay the tax imposed by the provisions of the Act, then the State, far from looking with disfavour upon this type of activity, perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering did not permit the business of lotteries nor did the State attempt to make revenue out of lotteries. Therefore these sentiments and these opinions can have no bearing on a legislation which permits and Anr. particular business. Indeed, -it would be wrong on our pant to take a view contrary to the view which the Legislature has taken that this particular activity is not against public policy. 31. Therefore, we must grant to the petitioners' business all the rights to which they are entitled under the Constitution as much as to any other business. No distinction can be made between the business of the petitioners because it is a business of promoting lotteries and any other business which has the attributes of a more correct and virtuous activity. 32. Now, what is contended by the petitioners is that in imposing a tax, even assuming it is as ambling tax, and in imposing restrictions upon their activities, the Legislature has contravened the provisions of Article 301 of the Constitution which provides : Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. It is: not disputed by the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State policy which are not justiciable. Apart from articles which fail in Part IV, every other article in the Constitution must be given its legal and constitutional effect. Every other article is justiciable, and if any right flows under any article other than the articles in Part IV, the Court must give effect to that right and grant adequate relief to the person who is entitled to that right. Therefore, whatever the proper interpretation of Article 301 may be, in our opinion it is entirely un tenable to suggest that it was inserted by the Constituent Assembly in the Constitution as merely a pious resolution not intended to be given effect to. ' Therefore;, if it is intended to be given effect to it constitutes a clear restriction upon the legislative competence both of Parliament and of the State Legislature, because it should be noted that Article 301 is only made subject to the other provisions of this Part, which is Part XIII, and not subject to the other provisions of the other Parts of the Constitution. Therefore the legislative competence of Parliament and the State Legislature must be read subject to Article 301. In other words, neither Parliament nor the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould also be included in Article 303(1). Article 303(2) again carves out an exception to the restriction placed under Article 303(1) and that empowers Parliament to give preference or to discriminate between State and State if it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. This exception only applies to Parliament and there is no exception to the restriction put upon the State Legislature under Article 303(1). Then comes Article. 304 which is non- obstinate clause both to Article 301 and Article 303 and it emJ powers the Legislature of a State under clause (a) to. impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject so, however, as not to discriminate between goods so imported and goods so manufactured or produced, and under clause (b) to impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within the State as may be required 'in the public interest. There is a proviso to Clause (b) and that proviso is that no Bill or amendment for the purposes of Clause (b) shall be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate taxation. Now, if Article 301 did not deal with taxation at all and freedom of inter-State trade and commerce did not imply freedom from taxation, then it is difficult to understand how the learned Chief Justice could have said that the principle of freedom of inter-State trade and commerce was made to give way before the State power of imposing lion-discriminative taxes. 36. It is next contended by Mr. Seervai that the provisions of Part XIII are identical with the provisions of Section 297 of. the Government of India Act, and it has been held that those provisions only constitute a restriction with regard to the entry in the Seventh Schedule relating to trade and commerce and does not constitute a restriction in respect of any other entry. In other words, Mr. Seervai contends, that if the Legislature is legislating under entry 00 and imposing a tax on gambling, the inter-State trade and commerce provisions of the Constitution do not constitute a restriction on the legislative activity of the State Legislature. • It is only when the subject-matter of the legislation is trade and commerce that Part XIII constitutes a restriction just as Section 297 of the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no provision in the Government of India Act corresponding to Article 301. If our view is right as to the interpretation of Article 301, then a new, additional and important! right has been conferred by the Constitution, which right did not exist in the Government of India Act, and that right is the right of trade, commerce and intercourse throughout the territory of India being free. Therefore it is erroneous to suggest that in construing Article 301 we should look to the language of Section 287 of the Government of India Act which is in entirely different language. It is equally erroneous to suggest that we must construe Article 301; in the light of Section 297 of the Government of India Act, when we must bear in mind, as we said before, that Section 297 was of a limited application whereas Article 301 deals with a very important and wide subject, viz., freedom of trade. 37. It is next urged by Mr. Seervai that the only article which we must look at for the purpose of determining what are the restrictions upon the legislative competence of the Legislature is Article 303 and that article merely prevents the State Legislature from passing any law of a discriminatory or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich only operates when goods are produced or manufactured in the State and similar goods are imported from another State, and says Mr. Seervai that the taxing power of the State is unaffected if similar goods are not manufactured or produced in the State and goods are imported from another State. To accept that contention would again involve our reading Article 304 as containing a restriction upon the legislative competence of the Legislature. If that were the correct reading of Article 304, then Mr. Seervai would be right. But as we have already pointed out we look upon Article 301 as the main and principal restriction and Article 304(a) as an exception which expressly empowers the State Legislature to pass laws limited to the case coming under Article 304(a). Mr. Seervai, expressed some surprise that the Constitution makers should have prevented a State Legislature from imposing tax on goods imported from other States where no question of discrimination or preference arose and where similar goods were not manufactured or produced in the State itself. If the underlying principle of the- Constitution is free trade, then States should be prevented from raising, as it were, cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , previous sanction of the President, did receive his subsequent assent after it was passed on November 11, 1952. It has been urged by Mr. Manekshaw that the proviso requires the previous sanction and not the subsequent assent. The object of the proviso is that the President, who has to look after the interest of India as a whole, must apply his mind to any restriction imposed, by a Legislature- of an individual State upon freedom of trade. But even assuming the previous sanction was not given by the President, if the Act is again submitted to him for his assent, it would still be open to him to consider the provisions of the Act. But the matter is set at rest by the express provision in the Constitution contained in Article 255 which provides ; No Act of Parliament or of the Legislature of a State specified in Part A or Part B of the First Schedule, and no provision in any such Act, shall be invalid by reason only that some recommendation or previous sanction required by this Constitution was not given, if assent to that Act was given (a) ...by the President. Mr. Manekshaw has drawn our attention to- a recent decision of the Supreme Court reported in - 'Saghir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Article 801 the State cannot restrict free trade by imposition of tax. If a tax was always justifiable on the ground that it is in public interest and is is a reasonable restriction, then Article 301 must be read to mean that the freedom of trade contemplated by Article 301 is a freedom apart from imposition of taxation by the State Legislature. We have already pointed: out that we are unable to take that view of Article 301, and if we are right in the view we take of Article 301-, then a tax cannot be justified 'per se' but it must be justified on some other ground than the ground of raising of revenue. As the State; as we have pointed out, failed to point out any consideration justifying the tax in the sense in which we have indicated, we must hold that the impugned Act does not satisfy the conditions laid down in Article 304(b). 40. Turning to the other restrictions, they are to be found in Form H which has been prepared under the Rules framed under the Act, and this Form lays down the conditions which a licensee has to satisfy, and the main conditions are : 1. That the licensee, shall not offer in respect of any one prize competition prizes .of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese restrictions may be in the interest of the public and may have been imposed in order to protect the public from the evil effects of temptation to indulge in gambling on a large scab. We have carefully looked at these restrictions and! we are satisfied that these restrictions are necessary to protect the poor man who may be induced to part with his hard earned income in pursuit of a remote and hypothetical gain. Take the first restriction. As far as Bombay is concerned, the petitioners cannot give a prize exceeding ₹ 30,000. This seems to us to be very necessary because if large prizes are advertised, the temptation to gamble is all the greater. A human being is so credulous that he will not be deterred by the difficulties in his way if he has some chance of becoming rich quickly and without effort, and there will be less temptation to enter into a competition if the prize is a small one than if it is a large one. It is only from tins point of view that the State has imposed this restriction and we see no reason why the State should not impose it. With regard to limitation upon holding prize competitions, it .is again imposed from the same point of view. IE there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-section is: the form of licence and the fees on payment of which and the conditions subject to which a licence shall be granted under section 9- But there is no indication anywhere in the Act as to what the conditions should be subject to which the license should be granted. Therefore, these restrictions, although in our opinion they fall under Article 304(b) and are reasonable and in public interest, suffer from the infirmity of not having been assented to by the President. Under the circumstances we must come to the conclusion that Form H and the restrictions complained of are ultra vires of the Legislature. 44. The next question to which we must turn our attention - and it is also a question of considerable importance and of on little difficulty - is the position of a corporation qua fundamental rights. If the case falls under Article 304(b) no difficulty arises, but it has been argued in the alternative by Mr. Manekshaw that even if Article 304(b) does not apply the petitioners are entitled to complain of these restrictions under Article 19(1)(g), and what is urged is that the petitioners are entitled to carry on their do or business and that these restrictions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... citizenship is a creation of municipal law, and it is only Parliament by municipal law that can determine who is a citizen. It would be perfectly competent to Parliament, by legislation to provide that a corporation, satisfying certain conditions should be deemed to be a citizen for the purpose of Article 19(1), but Parliament has not done so. But the very curious anomaly that arises is that when we turn to some of the provisions of Article 19(1) it is impossible to contend that it could ever have been the intention of the Constituent Assembly that the rights guaranteed by those provisions were not to apply to corporations but only to individual citizens. Take two of the rights guaranteed under Article 19(1) and (g). Can it be suggested that a corporation which, let us assume, is Indian in every sense of its term-its shareholders are Indians, its directors are Indians, its capital is Indian - that such a corporation should not have the right under Clause (1) to acquire, hold and dispose of property, or under Clause (g) to practise any occupation, trade or business? Mr. Seervai says that it is an unfortunate omission, but we are not legislating and we ought not to make good t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airanjilitl Chovydhuri v. Union of India' [1950] 1 SCR 869 . In the judgment of Mukherjea J- at p. 52 the learned Judge says: ....the fundamental rights guaranteed by the Constitution are available not merely to individual citizens but to corporate bodies as well except where the language of the provision or the nature of the right compels the inference that they are applicable only to natural persons. It is true that the Supreme Court was not dealing with the question we are considering, but we are unable to accept Mr. Seeivai's suggestion that Mukherjea J, was only thinking of those fundamental rights which are guaranteed to every person and not fundamental rights which are guaranteed to a citizen. What Mukherjea J. emphasises is that we must look at the content of the fundamental right and if you find that the nature of that right is such that it is not possible to confine, it merely to natural persons then the Court must come to the conclusion that a corporation is as much entitled to that right as an individual citizen. If that be the true test, as we have already pointed out, tins content of the freedom contained in Article 19(1)(f) and (g) far from inducing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernative was for the benefit of the petitioners themselves. But the petitioners are wrong headed enough not to appreciate the advantage conferred upon them and have challenged this provision. It is offends against Article 14, then it is clear that the State cannot exercise the power under this part by Section 12A. As the power has in fact not been exercised, no question of our issuing any writ or order or direction in respect of this arises. 49. The learned Judge has also held in his judgment that Section 12 of' the impugned Act is ultra vires of the State Legislature. That section deals with business within the State and the petitioners are in no way affected by that section. Whether as a result to this judgment Section 12 can be looked upon as having been properly or competently! enacted is another matter. But the challenge to Section 12 cannot be made by the petitioners who are in no way affected by it, The Court does not express academic opinion when nobody is aggrieved by any action on the part of the Legislature or the executive, and therefore with respect to the learned Judge it was unnecessary for him to have pronounced upon the validity of Section 12. 50. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have also taken the view that the tax, even assuming it is a tax on betting, cannot be justified because it does not fall under Article 304(b). We have differed, with respect, from the learned Judge when he finds as a fact that the scheme in question is not a lottery, and therefore we have come to the conclusion that the Act applies to the scheme promoted by the petitioners. But the petitioners have, succeeded in challenging the impugn ed provisions because,-as already pointed out, the restrictions contained in the Act controlling the business cannot be justified because they do not satisfy the proviso to Article 304(b) and the tax imposed on them cannot be justified on the grounds already indicated. We have agreed with the learned Judge that the petitioners' business is a business which is entitled to the rights guaranteed to them under the Constitution and also the view that he has taken with regard to the provisions contained in Part XIII of the Constitution. The learned Judge has taken the view that if the petitioners' business or activity was a lottery, then the provisions of Part XIII would not apply to this activity. We have pointed out that although the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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