Gambling

This article was written by Ayushi Kumari and further updated by Abha Singhal. In a legal landscape brimming with uncertainty and complexity, the gambling laws of India occupy a particularly fascinating place. The landmark judgement of R.M.D. Chamarbaugwalla vs. Union of India (1957) serves as an essential component of this exploration. This article explains the court’s decision and its impact on the gambling laws in the country, highlighting the ongoing debate between the games of skill and the games of chance. The authors have further explored the requirement of national legislation to approach and regulate gambling in the country.

Introduction

The Constitution of India, under Article 19(1)(g), guarantees the fundamental right to pursue any profession, business, or occupation, but this right is not absolute in nature. This very right clashes with the rights mentioned under the Prize Competitions Act, of 1955. This Act, which seeks to regulate and restrict competitions that involve a gambling element, raises issues and questions about its compatibility with fundamental rights. The landmark judgement of R.M.D. Chamarbaugwalla vs. Union of India (1957) is central to this issue. Going into the intricacies of this case will help us to understand how courts have struck a delicate balance between these competing interests of rights under the act and the fundamental rights. This Act attempts to strike a balance between protecting public morals and exploitation through gambling while safeguarding an individual’s right to conduct business. Here is where the distinction between skill-based competitions and pure gambling comes into the picture. Suppose a competition is solely based on chance, in that case, the Act’s restrictions may be justified, potentially coming under the ambit of reasonable restrictions as permitted by Article 19(6) of the Constitution. However, for competitions that are based on the element of skill, the argument that it infringes on fundamental rights becomes stronger, as the restrictions could be seen as hindering businesses and stifling innovation in the area of skill-based development. The issue further complicating this is the evolution of jurisprudence with respect to Article 19(1)(g) of the Constitution. In addition to this, the rise of online competitions in the present context necessitates a re-evaluation of the Act’s effectiveness. Could the act, drafted in the year 1955, restrict freedom of speech and expression in the digital age as well? Hence, a detailed analysis that considers the objectives, nature of the competition regulated by it, and evolving legal landscape is essential to determining whether this act constitutes a reasonable restriction on the fundamental right to carry out a business.

History of evolution of gambling laws in India

India has one of the most convoluted gaming and gambling histories in the world. During ancient times, gambling was considered a social activity for amusement, whether in daily life or during special occasions. A dice was discovered by archaeologists, who contend that it dates back to 3300 BC and is made up of terracotta and sandstone. Furthermore, there is substantial evidence that Indus Valley residents engaged in cockfighting and betting. It was also found that the remains of gambling boards and dice were traced back to the Harappan civilisation, proving that they had existed since 1000 BC. Even in the Rig Veda, a hymn by the name of ‘Gambler’s Lament,’ showed the popularity of gambling in Indo-Aryan society. To add more to this, as per Hindu texts, each side of the dice was named after the four yugas of the world. In Manusmriti, Verse 221, gambling was declared strictly forbidden, for it was held that it had the potential to destroy a kingdom in its entirety. Furthermore, gambling has also been regarded as the destroyer of truth, honesty, and wealth since ancient times. But with time, just like every game requires certain rules and provisions to be adhered to, gambling laws also evolved well before India got independence from the British regime, as elucidated below. 

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Pre-independence era

In pre-independent India, the Public Gambling Act of 1867, which was developed from both the Gaming Act of 1845 and the Betting Act of 1853 and was inherited from British rule, played a significant role in shaping and regulating gambling practices. The act was introduced to maintain public order and harmony as activities such as horse betting, which were prevalent, were associated with social evils such as crime and addiction. However, there wasn’t a complete ban; there were certain exceptions for games of skill such as tennis and bowling. However, the distinction was not clear, as activities like card games that might involve the element of skill were deemed illegal. 

Additionally, the British government, even after the act, conducted lotteries. The revenue generated from these lotteries was used for infrastructure projects. This presented a contradictory approach that on the one hand, the government profited from gambling while simultaneously outlawing private gaming establishments.

It was also put forth that there is a connection between India’s gambling culture and the economic expansion of the country in the 20th century. Some argue that the risk-taking spirit of taking part in the gambling culture fostered and encouraged the culture of entrepreneurship, while others argue that gambling drained the resources of the country and acted as a barrier to the sustainable economic growth and development of the country.

Post-independence era

Initially, there was confusion regarding gambling laws in India after British rule ended and the Constitution of independent India came into effect in January 1950. Since gambling and betting were largely the property of the state, only the state legislature had the authority to alter the laws. The state could also enact regulations governing the taxation of betting and gambling.

In general, India adhered to the provisions of the Public Gambling Act of 1867, with a few exceptions. The most notable change was the state’s overall control over gaming. 

The Gambling Act is a core law that has been accepted by some Indian states, while others have developed their own legislation to control and oversee gaming/gambling activities on their own land.  

Prize Competitions Act : an overview

The Prize Competitions Act of 1955, which is considered a sentinel in the area of Indian entertainment, is landmark legislation overseeing and regulating competitions involving prizes within the entertainment landscape.

It is a comprehensive gambling law that provides a platform to showcase skills and calibre in the realm of competitions and covers a wide range of prizes awarded through competition-based entertainment mediums such as puzzles, number games, picture games, and any other game that awards a prize through healthy competition. The purpose of this Act is to ensure fairness, prevent exploitation, and curb and control excessive spending by the participants.

The Act defines a “prize competition” as any competition (whether referred to as a crossword prize competition, a missing word prize competition, a picture prize competition, or any other name) in which prizes are awarded for solving a puzzle based on the construction, arrangement, combination, or permutation of letters, words, or figures. The Act also provides in Section 4 that no person shall promote or conduct any prize competition or competitions in which the total value of the prize or prizes to be offered in any month exceeds INR 1,000/- (Rupees One Thousand Only), and each prize competition may only have a maximum of 2,000 entries.

It is essential to note that this act only includes some types of prize competitions within its ambit. For instance, large-scale lotteries are usually governed by separate state or national laws with stricter compliance and control. Furthermore, competitions that heavily rely on skill and have comparatively higher prize values might not fall directly within the purview of this act. To conclude, the Prize Competitions Act of 1955 plays an essential role in regulating a limited segment of prize-based competitions/activities in India.

Now, let us delve into the case of R.M.D. Chamarbaugwalla v. Union of India (1957) for further analysis.

Details of the Case

Name of the Case: R. M. D. Chamarbaugwalla v. Union of India

Equivalent Citation: 1957 AIR  628, 1957 SCR 930

Court: Supreme Court Of India

Date of judgement: 9th April, 1957

Case type: Writ Petition

Petitioner: R. M. D Chamarbaugwalla 

Respondent: The Union of India

Bench: CJI Sudhi Ranjan Das, Bhuvaneshwar P. Sinha, P. B. Gajendragadkar,T. L. Venkatarama Iyer.

Law Involved: Prize Competition Act, 1955, Article 19 (1) and (6).

Facts of R.M.D. Chamarbaugwalla vs. Union of India (1957)

  1. In this case, the petitioners, who were advertising and running prize tournaments in various Indian states, challenged the constitutionality of the Prize Competitions Act (42 of 955), Sections 4 and 5, and Rules 11 and 12 framed under Section 20 of the Act. These petitions were filed in response to Article 32 of the Indian Constitution.
  2. Their argument was that a ‘prize competition,’ as defined in Section 2(d) of the Act, included not only gambling competitions but also those acts in which success depended to a significant degree on skill and that the sections and rules infringed on their (the petitioner’s) fundamental right to conduct business and therefore are violative of fundamental rights guaranteed to every individual under Article 19(6) of the Constitution. They also contended that the said part of the Act cannot be severed from it; hence, the entire Act should be declared invalid.
  3. Whereas, on behalf of the Union of India, it was argued that the definition, when properly understood, meant and comprised only gambling competitions and that even if that was not the case, the impugned provisions, being severable from the Act as contended in their application, were legitimate as far as gambling competitions were concerned.
  4. The petitions were tried alongside Civil Appeal No. 134 of 1956, which challenged the constitutionality of the Bombay Lotteries and Prize Competitions Control and Tax Act, 1948, on grounds similar to those presented in the current petitions.

Issues Involved

  1. Whether the Act applies to competitions that require substantial skill and are not in the nature of gambling, is based on the definition of “prize competition” in Section 2(d).
  2. And, if the act is applicable in the aforesaid competitions, then whether the ex-concessis invalid provisions of Sections 4 and 5 and Rules 11 and 12 relating to such competitions can be implemented on the principle of severability against competitions that are in the character of gambling.

Arguments of the parties

Petitioners

Mr. Chamarbaugwalla, the petitioner, laid down the argument that the nature of the prize competitions he promoted was not just solely based on the game of chance but also involved an element of calibre and skill, making the activity a legitimate business activity. He put forth before the honourable court that the restrictions imposed by the act, by curbing such skill-based activities, violated his fundamental right under Article 19(1)(g) of the Constitution of India.

Respondents 

The Union of India, the respondent in this case, argued that the competitions in contention are primarily of such a nature as to construe that they are a game of chance and fell under the ambit of gambling, which is subject to reasonable restrictions imposed by the state and is in no way a violation of the fundamental rights of the petitioner. The respondent invoked Article 19(6) of the Constitution, which allows for reasonable restrictions on an individual’s fundamental rights if they violate public morality and order in any way. In addition to that, the respondent’s whole argument centred around the social evils that are associated with gambling, such as exploitation, the potential for addiction, and disruption of public health and morality at large.

Judgement in R.M.D. Chamarbaugwalla vs. Union of India (1957)

  1. In the Civil Appeal No. 134 of 1956, which was heard concurrently with the petitions, it was found that “trade and commerce,” as defined by Article 19(1)(g) and Article 301 of the Constitution of India, are the only activities that can be considered authorised trading activities, and that gambling is res extra commercium, meaning it is outside the ambit of the concerned Articles of the Constitution of India. This essentially meant that the validity of restrictions imposed by Sections 4 and 5, and Rules 11 and 12 of the Prize Competitions Act could no longer be contested under Article 19(6) of the Constitution.
  2. The Court held that the distinction between the two types of competition is as distinct as the distinction between commercial and wagering contracts.
  3. On the facts, or at one glance, the Court stated that it may be difficult to discern whether a given competition belongs in one of the categories or not, but once the true nature of the competition is determined, it will fall into one of the categories.
  4. The challenged provisions were presumed to apply to all types of competitions by virtue of the definition in Section 2(d), and they were severable in their application to competitions in which accomplishment is not dependent on skill to any significant amount.
  5. At last, the Court held that both the contentions raised were clearly found to be against the petitioners. The petitions were dismissed with costs, as they did not amount to any merit.

The issue of whether the Act applies to competitions that require substantial skill and are not in the nature of gambling is based on the definition of “prize competition” in Section 2(d), the Honourable Supreme Court addressed this issue by saying the Prize Competition Act was deemed applicable to competitions based on a substantial degree of chance. These competitions were considered gambling and were deemed to fall under the purview of the act. The act, according to the court’s interpretation, wasn’t intended to regulate those competitions where success is largely dependent on knowledge and skill.

With regard to interpreting the legislative enactments, the Hon’ble Court took notice of the fact that the intention of the legislature is not solely derived from the literal meaning of the words used but also considers factors such as history, purpose, social and moral factors, and the mischief it seeks to address. Moreover, in this case, the doctrine of severability played a major role in the judgement given by the court. It was in dispute whether Sections 4 and Section 5 and Rules 11 and 12 of the Act are void in their application to those competitions in which success did not depend on any skill. Hence, it was to be decided by the court with reference to the application of the doctrine of severability that a statute that is void in part will be treated as void overall or whether the valid part is capable of enforcement. 

The doctrine of severability is further discussed in detail below.

What is the Doctrine of Severability

The other name for the doctrine of severability is the ‘doctrine of separability’. This doctrine provides that when any part of any statute comes in conflict with the fundamental rights of any individual as guaranteed under the Indian Constitution, then the courts will treat only the repugnant provision of the law in question as unlawful and not the entire statute/Act. 

As Article 13 of the Indian Constitution states: 

“All laws enforced in India, before the commencement of the Constitution, in so far as they are inconsistent with the provisions of fundamental rights shall to the extent of that inconsistency be void.”

Meaning thereby that all those laws that were present and enforceable in India before the adoption of the Indian Constitution and which are inconsistent with the provisions provided for it will be void up to the extent of their inconsistency.

Under this Article, the doctrine of severability can be construed in the following two ways:

  1. Article 13(1) of the Indian Constitution recognises all pre-constitutional laws and declares that any pre-constitutional legislation in force prior to the beginning of the Indian Constitution is void if it is incompatible with fundamental rights.
  2. Article 13(2) of the Indian Constitution requires the state to not pass any law that deprives or restricts the fundamental rights guaranteed in Part III of the Constitution, and any law that does so will be declared null and void.

However, if any provision of the statute that is incompatible with the Fundamental Right is necessary for the statute to function, i.e., if such a contested provision were absent, the entire statute would fall apart, and then, instead of a single provision, the entire statute would be declared void. 

Application of the Doctrine of Severability

The doctrine of severability essentially empowers the Indian judiciary to dissect legislation and assess whether it’s compatible and in coherence with the fundamental rights enshrined under the Indian Constitution. 

This doctrine of severability identifies the inconsistent portions of the legislation by examining the law in its entirety. Once the inconsistent and conflicting provision is identified, the Hon’ble Court removes or amends it. This process removes those parts that are unconstitutional while ensuring the provisions that are in consonance with the law stay put.

Some Illustrations of the Doctrine of Severability

The critical aspect of this doctrine of severability is to uphold the original intent behind the legislation. The court, while applying this doctrine, tries to preserve the main purpose of the law as much as possible.

The Indian Judiciary has applied the doctrine of severability in various landmark judgments of the country. Some of them are elucidated below:

In the case of A.K. Gopalan vs. the State of Madras (1950), the Prevention Detention Act was challenged, which allowed the authorities to detain individuals without trial, and that raised issue regarding the violation of the fundamental right to life and liberty as enshrined under Article 21 of the Constitution. The Hon’ble Court, while understanding the importance of preventive detention, identified several provisions as arbitrary, and hence only those provisions were held to be unconstitutional while the remaining provisions remained in effect.

Similarly, in the case of Naz Foundation vs. Government of NCT of Delhi (2009), Section 377 of the Indian Penal Code, 1860, was challenged before the court, which criminalised homosexuality. It was contended that the said section is discriminatory and violative of the fundamental right to equality under Article 14 of the Constitution. The Hon’ble Court applied the doctrine of severability and struck down the portion of the section that criminalised homosexual acts, leaving the rest of the section as it is.

The notion of severability was even utilised in the case of Minerva Mills vs. Union of India (1980), where Section 4 of the 42nd Amendment Act, 1976, was struck down for being outside of Parliament’s amending competence, while the rest of the Act was found lawful. Another well-known case is that of Kihoto Hollohan vs. Zachillhu (1992), sometimes also known as the defection case. In this case, paragraph 7 of the Tenth Schedule was deemed invalid because it violated the provisions of Article 368(2). However, the entire section was not ruled invalid.

How is the doctrine of severability related to R.M.D. Chamarbaugwalla vs. Union of India (1957)

The contention that led to the case was regarding the definition of prize competition as contained in Section 2(d) of the Act. The petitioners contended that the definition not only included acts that were gambling in nature but also acts that involved the personal skills of a person. Which, therefore, violated their fundamental right to carry on business as they were involved in acts that required substantial skill and were not gambling in nature. The petitioners have also contended that since the conditions imposed by Rules 11 and 12 with respect to the gambling acts were correct, they (the conditions) were not aligning with the acts involving skill, and hence, the Act should fail in its entirety. However, it was the respondent’s counsel that insisted and contended that the whole act need not be stuck down when the impugned part of it is severable from the rest of the Act without even affecting the whole Act.

In this case, the Court basically put forth two main issues to be discussed. First, whether the definition of prize competition under 2(d) included competitions that involve skill and which are not in the nature of gambling, and second, if it does, then restriction imposed by Sections 4 and 5 and Rules 11 and 12 be applied for those acts that are in the nature of gambling, with the help of the doctrine of severability.

The court in this case has referred to the case of the Bengal Immunity Company Limited vs. The State of  Bihar and Others, (1955), wherein the Court held that even if Section 2(d) of the Prize Competition Act consisted of a definition including both the acts, i.e., acts that can be regarded as gambling in nature as well as acts that involve substantial skill, they are still severable in their application because of the restrictions imposed by Rules 11 and 12 of the Act. Hence, it cannot be regarded as void with respect to the gambling competition.

In the present case, the Court decided the interpretation of Section 2(d) by referring to the circumstances that led to the making of this legislation. Moreover, the court had to apply the severability principle as to the application of Section 4 and Section 5, and Rules 11 and 12 of the Act, not only to the acts involving skill but also to the acts that did not depend on any skill. It came to the conclusion that the provisions challenged by the petitioners are severable in their application to competitions in which success is not based on skill in any significant way.   

Does prohibition on gambling violate fundamental rights under Article 19(1)(g)

To answer the question of whether a prohibition on gambling violates fundamental rights as enshrined under Article 19(1)(g) of the Constitution of India, it depends on the nature of the gambling activity involved. Article 19(1)(g) guarantees the right to practice any profession, trade, occupation, or business. It has been argued time and again that gambling is not entirely based on chance, the elements of skill, knowledge, and strategy constitute the activity of gambling as well, and such games are protected within the said article and are considered a legitimate business activity. To elaborate on this, it has also been argued that since gambling also involves the element of chance and luck, which is associated with the social evils of society such as addiction, and exploitation, there should be separate regulations to address those evils instead of banning the activity in its entirety. Several historical precedents have given varied judgments with respect to this debate, some of them are elucidated below: 

In the case of State of Andhra Pradesh vs. K. Satyanarayana (1968), the contention of challenging the legality of rummy was put forth before the court of law, wherein it was held that the game of rummy predominately involves skill and technique, which falls outside the purview of games of chance, hence, this game was held to be liable for protection under Article 19(1)(g).

In the case of All India Gaming Federation vs. State of Karnataka (2017), a case was filed to challenge the Karnataka Police Act, 1963, which prohibited online games that involved betting or wagering. The petitioners, who were offering games such as rummy and poker, argued before the court of law that these games involved a significant element of strategy and skill, and the complete ban on the same would violate the right of the petitioners under Article 19(1)(g). The court acknowledged the element of skill and emphasised the fact that there is a need to consider the overall nature of the activity, meaning that even if some skill was involved, if the element of chance predominantly determined the outcome, it would be considered gambling. Moreover, it recognised the potential negative consequences of the activity of gambling and held that the state’s interest in protecting and preserving public morality and order outweighed the petitioner’s case.

Recent developments related to gambling and related laws

In India, the world of gambling, specifically online gambling, has been experiencing a period of change and legal uncertainty due to the fact that there is no unified national legislation to govern the same. On the contrary, several states have taken vastly different approaches to governing the activities of gambling. For instance, in the state of Sikkim, under the Sikkim Online Gaming (Regulation) Amendment Act, 2009, the state government grants licences to operators of online gambling. The government also has the power to regulate the games offered, and the fees and taxes charged on them. This legislation makes Sikkim the only state in India to be allowed to permit and regulate online gambling in India.

On the contrary, states such as Tamil Nadu, under the legislation of the Tamil Nadu Gaming and Gambling Prohibition Act, 2022, have enforced a comprehensive ban on all forms of gambling. This includes games such as lottery betting (the exception being government-run lotteries), casino games, online betting, and card games involving rummy to gain money. The reasoning behind such a ban is to eradicate social evils associated with the activity, such as addiction, financial hardship, exploitation, and even potential criminal activities. The Andhra Pradesh government has also taken a similar stance under its legislation, the Andhra Pradesh Gaming ( Amendment) Act, 2020, only with the exception that Andhra Pradesh still allows betting on horse races on the rationale that it is a skill-based activity and not a game of chance. 

This leads us to the ongoing battle concerning the distinction between “games of skill” and “games of chance,” wherein even after several judgements as already elucidated above, there is still no consensus. This all points to the fact that there is a need for comprehensive national legislation that could bring some certainty and uniformity to the gambling landscape. A well-defined and clear set of rules is necessary to benefit the government.

Conclusion and way forward

In the given case of R.M.D. Chamarbaugwalla v. Union of India, the doctrine of severability played a significant role in determining whether the petitions should be allowed or not. The claim was made that a few provisions of the Prize Competition Act 1955 were affecting the petitioner’s fundamental right to carry on business guaranteed under Article 19(1)(g) and that the Act should be declared invalid. However, the court, by applying the said doctrine ruled that the Act is valid. The court’s decision in this case rested on one critical aspect before us. The court differentiated between gambling, which can be either skill-based or chance-based. It said the restrictions are to be allowed as long as they are on the games based on the element of chance, and it acknowledged the fact that the competitions that rely on skill might not be covered under the ambit of gambling.

Fundamental rights are indeed the exclusive rights given to every individual, however, whether infringement is taking place or not, must be taken into consideration before coming up with a conclusion. Infringement of the rights cannot be the sole reason for a petition to be sustained when there are other scenarios to take into consideration. Since there is a clear distinction between what is ‘trade and commerce’ as referred to in Article 19(1)(g) and certainly ‘gambling’ is different from ‘trade’ and the challenged provisions were severable from the rest of the Act, the petition was dismissed, declaring there was no infringement of any fundamental right.      

Moreover, the lack of unified national legislation on gambling complicates the scenario. As mentioned above, states have adopted contrasting approaches, with some permitting and regulating the gambling landscape in the country, while others have taken an extreme approach by completely banning the activity out of fear of encouraging social evils.  This inconsistency needs to be addressed as a priority.

Frequently Asked Questions (FAQs)

What is the doctrine of severability, and how did it apply in the case of R.M.D. Chamarbaugwalla vs. Union of India (1957)?

The doctrine of severability is a principle that permits courts to separate valid portions of legislation from invalid ones. In this case, the court applied this principle to uphold the Prize Competition Act’s core purpose, which is to regulate gambling, even though some parts might be considered invalid in the eyes of the law.

What are the factors that need to be considered to qualify something as a “game of skill” in the context of gambling in India?

There is no clear-cut definition as to which games/activities would qualify to be called games of skill, but the courts have considered factors such as:

Element of chance: how much does luck influence the outcome of the game?

Level of Expertise: If the concerned game require skill and knowledge to be successful?

Strategy: If the players can use strategic thinking and planning to win the game?

Level of Expertise: Does the game require knowledge or skill to be successful?

How is online gambling currently regulated in India?

Since there is no central legislation to govern gambling, be it offline or online, some states, such as Sikkim, Andhra Pradesh, etc., have their own specific laws, but not every state does. This has created a grey area for online gambling businesses in India.

References

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