Nagaland moves Supreme Court against Kerala government's rules regulating lotteries of other States; Supreme Court issues notice

The Supreme Court on Tuesday sought the Kerala government's response to a plea filed by the Nagaland government challenging the validity of rules framed by the former, regulating lotteries conducted by other States in Kerala [State of Nagaland and ors vs State of Kerala and ors]..A Bench of Justices KM Joseph and Hrishikesh Roy issued notice on the petition after hearing Solicitor General (SG)Tushar Mehta..The plea has filed through and drawn by advocate Rohini Musa, who assisted the SG in the matter. The petition has challenged a May 2021 of the Kerala High Court which upheld the validity of the Kerala Paper Lotteries (Regulation) Amendment Rules, 2018. The High Court had observed that a host State's competence in enacting rules for something it faces the brunt of cannot be questioned, as it cannot remain a mute spectator or helpless against the same.The Rules seeks to monitor, regulate and penalize the lotteries as conducted by other States within Kerala. The Rules inter alia provide for the appointment of Secretary to Government, Taxes Department, as the authority for the conduct of all or any particular lotteries run, organized, or promoted by another State.Such authority would have the power to monitor the sale of all lotteries run/ organized/ promoted by other States and an organizing State would need to furnish for the approval of the Taxes Department of the State of Kerala, various details. The plea before the top court said that the Rules go against the basic notions of federalism envisaged in the Constitution, and are also in direct violation of the Lotteries (Regulation) Act and Rules. "The Rules, are directly and in blatant and express violation of the Lotteries (Regulation) Rules, 2010 and are in fact, nothing but another means by the State of Kerala to keep out competition, to ferret out the commercial and trade secrets of other States that are successful in the running of their lottery schemes, and is in direct violation of the provisions of the Lotteries (Regulation) Act, 1998," the plea stated.The Kerala High Court judgment has effectively allowed the State of Kerala to remain a monopoly in respect of the sale of lotteries within the State of Kerala even though the Supreme Court has clearly held that once a State is not a lottery free zone, it cannot directly or indirectly stop/ restrict/ control/ regulate the sale of other States’ lotteries within its own territory, it was contended.The power to make laws on and regulate lotteries conducted in various States is exclusively with parliament as per Entry 40 of the Union List and precedent, Nagaland submitted."The States of the Union of India can organize, conduct and promote lotteries only as per the decision of the Union of India in view of the Entry 40 of the Union List of Constitution of India," the plea said.The High Court judgment if permitted to stand, would threaten the very federal structure of the Constitution of India and the powers of each and every State government, as conferred under the Lotteries (Regulation) Act, 1998 and the Lotteries (Regulation) Rules 2010, to frame, market, conduct, organize, promote and sell it’s own lottery schemes, it was submitted.