5 Jun 2014

Kerala High Court directs payment of prize money to Mumbai lottery winner

In a recent order dated 29th May 2014 in Saroj Subash Nagori v. Director of State Lotteries & Others [Writ Petition (Civil) No. 13331 of 2014], the Kerala High Court single bench headed by Justice AM Shaffique directed payment of winning amount to Saroj Subash Nagori (petitioner), a winner of lottery draw based in Mumbai overruling the respondents contentions that winning amount cannot be granted to residents outside Kerala.

The petition related to winning of second prize in a lottery conducted by the state of Kerala and the petitioner submitted her winning ticket to the monitoring committee for claiming the prize money of Rs. 5,00,000/- in terms of Rule 9 of the Kerala Paper Lotteries (Regulation) Rules, 2005. However the monitoring committee rejected the claim stating that no travel documents were provided by the petitioner and since it is not permitted to sell lotteries outside the state of Kerala, the claim deserves to be rejected. Specific reference was made to Rule 6(4) of the Kerala Lottery Rules which states that lottery agents shall sell tickets outside the state of Kerala. Further the government claimed that appeal did not lie to the High Court by way of writ petition but the petitioner could have appealed the decision of the monitoring committee within 30 days.

The High Court rejected the contentions of the government stating that there was no statutory provision for barring non-residents of the state of Kerala from claiming lottery winnings either under the Lotteries (Regulation) Act, 1998 or Rules framed thereunder. The Court further noted that the restriction under Rule 6(4) is only for lottery agents and not for purchaser of lottery tickets. The Court also stated that the only inquiry that can be made is with regard to the genuineness of the lottery ticket under Rule 9 of the aforementioned lottery rules.

The list of documents to be submitted and procedure for claiming the prize are enshrined under Rule 9 and the authorities cannot go beyond the prescribed rules. The rules also provide for forensic inquiry of the lottery tickets to determine the legitimacy of the tickets. The Court also noted that not not disbursing the prize amount would amount to unlawful enrichment by the state and thus directed the state government to pay the prize amount to the petitioner.

While the decision is a first decision of a High Court to direct disbursement of winning amount, the latest decision may be in conflict with some previous case laws which were not referred in the decision. For instance in PA Peter v. State of Kerala [Writ Petition (Civil) No. 2913 of 2007], the Kerala High Court noted that it was not possible to direct the government to guarantee the stipulated prize amount and the government is justified in reducing the prize amount or postponing the draw of lotteries.The Court noted that wagering contracts are not enforceable in courts of law as per Section 30 of the Indian Contract Act, 1872 and hence prize amount cannot be guaranteed by the state. The court further held any guaranteeing of prize amounts to be against public policy and struck down Rule 9 (1) of the Kerala Paper Lotteries (Regulation) Rules, 2005 which made such a guarantee as unconstitutional.

In Subhash Kumar Manwani v. State of Madhya Pradesh [AIR 2000 MP 109] the Madhya Pradesh High Court also refused to entertain an appeal for recovery of prize won by lottery as wagering agreements were void under Section 30 of the Contract Act and no suit could be entertained for recovery of such prize amounts in courts.

While it could be argued that the recent Nagori decision is different on facts from the other two precedents as it relates to procedural matters of disbursement of prize winnings under the Kerala Lottery Rules, it is surprising that there was no reference to Section 30 of the Contract Act by either parties or the Courts to bar the claim. Further the Court also did not cite the two High Court decisions making it unclear whether further petitions to claim lottery winnings would be entertained by High Courts in exercise of its writ jurisdiction, since civil suits for recovery of lottery prizes are clearly barred by the Contract Act.

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