- (1.) Pursuant to resolutions passed by the legislatures of several States under Art. 252 cl. (1) of the Constitution, Parliament enacted Prize Competitions Act, (42 of 1955), hereinafter referred to as the Act, and by a notification issued on 31-3-1956, the Central Government brought it into force on 1-4-1956. The petitioners before us are engaged in promoting and conducting prize competitions in different States of India, and they have filed the present petitions under Art. 32 questioning the validity of some of the provisions of the Act and the rules framed thereunder.
(2.) It will be convenient first to refer to the provisions of the Act and of the rules, so far as they are material for the purpose of the present petitions. The object of the legislation is, as stated in the short title and in the preamble, 'to provide for the control and regulation of prize competitions.' Section 2 (d) of the Act defines 'prize competition' as meaning any competition (whether called a cross-word prize competition, a missing-word prize competition, a picture prize competition or by any other name), in which prizes are offered for the solution of any puzzle based upon the building up, arrangement, combination or permutation of letters, words or figures.' Sections 4 and 5 of the Act are the provisions which are impugned as unconstitutional, and they are as follows: "4. No person shall promote or conduct any prize competition or competitions in which the total value of the prize (whether in cash or otherwise) to be offered in any month exceeds one thousand rupees : and in every prize competition, the number of entries shall not exceed two thousand. 5. Subject to the provisions of S. 4, no person shall promote any prize competition or competitions in which the total value of the prize or prizes (whether in cash or otherwise) to be offered in any month does not exceed one thousand rupees unless he has obtained in this behalf a licence granted in accordance with the provisions of this Act and the rules made thereunder.' Then follow provisions as to licensing, maintaining of accounts and penalties for violation there of. Section 20 confers power on the State Governments to frame rules for carrying out the purpose of the Act. In exercise of the powers conferred by this section, the Central Government has framed rules for Part C States, and they have been, in general, adopted by all the States. Two of these rules, namely, Rules 11 and 12 are impugned by the petitioners as unconstitutional, and they are as follows: 11. Entry fee. - (1) Where an entry fee is charged in respect of a prize competition, such fee shall be paid in money only and not in any other manner. (2) The maximum amount of any entry shall not exceed Rs. 1/- where the total value or the prize or prizes to be offered is rupees one thousand but not less than rupees five hundred; and in all other cases the maximum amount of an entry fee shall be at the following rates, namely - (a) as, 8/- where the total value of the prize or prizes to be offered is less than rupees five hundred but not less than rupees two hundred and fifty, and (b) as, 4/- where the total value of the prize or prizes to be offered is less than rupees two hundred and fifty. 12. Maintenance of Register. - Every licensee shall maintain in respect of each prize competition for which a licence has been granted a register in Form C and shall, for the purpose of ensuring that not more than two thousand entries are received for scrutiny for each such competitions, take the following steps, that is to say, shall - "(a) arrange to receive all the entries only at the place of business mentioned in the license; (b) serially number the entries according to their order of receipt; (c) post the relevant particulars of such entries in the register in Form C as and when the entries are received and in any case not later than the close of business on each day., and (d) accept for scrutiny only the first two thousand entries as they appear in the register, in Form C and ignore the remaining entries, if any, in cases where no entry fee is charged and refund the entry fee received in respect of the entries in excess of the first two thousand to the respective senders thereof in cases where an entry fee has been charged after deducting the cost (if any) of refund."
(3.) Now, the contention of Mr. Palkhiwala, who addressed the main argument in support of the petitions, is that prize competition as defined in S. 2 (d) would include not only competitions in which success depends on chance but also those in which it would depend to a substantial degree on skill; that the conditions laid down in Ss. 4 and 5 and Rr. 11 and 12 are wholly unworkable and would render it impossible to run the competition, and that they seriously encroached on the fundamental. right of the petitioners to carry on business; that they, could not be supported under Art. 19(6) of the Constitution as they were unreasonable and amounted, in effect, to a prohibition and not merely a regulation of the business; that even if the provisions could be regarded as reasonable restrictions as regards competitions which are in the nature of gambling, they could not be supported as regards competitions wherein success depended to a substantial extent on skill, and that as the impugned law constituted a single inseverable enactment, it must fail in its entirety in respect of both classes of competitions. Mr. Seervi who appeared for the respondent, disputes the correctness of these contentions. He argues that prize competition' as defined in S. 2 (d) of the Act, properly construed, means and includes only competitions in which success does not depend to any substantial degree on skill and are essentially gambling in their character, that gambling activities are not trade or business within the meaning of that expression in Art. 19 (1) (g), and that accordingly the petitioners are not entitled to invoke the protection of Art. 19 (6); and that even if the definition of 'prize competition' in S. 2 (d) is wide enough to include competitions in which success depends to a substantial degree on skill and Ss. 4 and 5 of the, Act and Rr. 11 and 12 are to be struck down in respect of such competitions as unreasonable restrictions not protected by Art. 19(6), that would not affect the validity of the enactment as regards the competitions which are in the nature of gambling, the Act being severable in its application to such competitions.;