All India Gaming Federation Vs State of Karnataka (Karnataka High Court)
Held by High Court
1. The provisions of Sections 2, 3, 6, 8 & 9 of the Karnataka Police (Amendment) Act 2021 i.e., Karnataka Act No.28 of 2021 are declared to be ultra vires the Constitution of India in their entirety and accordingly are struck down.
2. The consequences of striking down of the subject provisions of the Karnataka Police (Amendment) Act 2021 i.e., Karnataka Act No.28 of 2021 shall follow. However, nothing in this judgment shall be construed to prevent an appropriate legislation being brought about concerning the subject i.e., ‘Betting & gambling’ in accordance with provisions of the Constitution.
3. A Writ of Mandamus is issued restraining the respondents from interfering with the online gaming business and allied activities of the petitioners.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The tickling tone for this judgment can be set by what Lord Denning had humoured in TOTE INVESTORS LTD. vs. SMOKER1: “…The defendant has in the past occasionally had a wager on a horse-race. Today she has been taking part in another game of chance or skill – the game of litigation…”
All these petitions by the companies & individuals involving substantially similar questions of law & facts seek to lay a challenge to the validity of the Karnataka Act No.28 of 2021 (hereafter ‘Amendment Act’) whereby the Karnataka Police Act, 1963 (hereafter ‘Principal Act’) has been amended; the cumulative effect of these amendments, according to them, is the criminalization of playing or facilitating online games. After service of notice, the respondents having entered appearance through the learned Advocate General have filed their common Statement of Objections and Addl. Statement of Objections resisting the challenge.
II. A BRIEF DESCRIPTION AS TO WHO THE PETITIONERS ARE:
Petitioners in W.P.No.18703/2021 and W.P.No.19322/2021 are the societies registered under the Societies Registration Act. Petitioners in W.P.No.18729/2021, W.P.No.18732/2021, W.P.No.18733/2021, W.P.No.18738/2021, W.P.No.18803/2021, W.P.No.18942/2021, W.P.No.19241/2021 and W.P.No.22371/2021 are the companies incorporated under the Companies Act. Petitioners in W.P.No.19271/2021 and W.P.No.19450/2021 are the individuals. Some of the petitioners in the petitions filed by the companies happen to be Directors. All the petitioners are associated with online gaming in one or the other way. These games are rummy, carom, chess, pool, bridge, cross-word, scrabble and fantasy sports such as cricket, etc.
III. GROUNDS OF CHALLENGE BRIEFLY STATED:
The challenge to the Amendment Act is structured inter alia on the following grounds:
(i) Lack of legislative competence since the Amendment Act does not fit into Entry 34, List II, Schedule VII of the Constitution of India vide CHAMARBAUGWALA-I2, CHAMARBAUGWALA-II3, K.SATYANARAYANA vs. STATE OF ANDRHA PRADESH4 & K.R.LAKSHMANAN vs. STATE OF TAMIL NADU5.
(ii) Violation of Article 21 since playing games & sports falls within the umbrella of ‘right to life & liberty’ that has been stretching precedent by precedent and violation of doctrine of privacy vide K.S.PUTTASWAMY vs. UNION OF INIDA6.
(iii) Violation of fundamental right to freedom of speech & expression guaranteed under Article 19(1)(a) since playing games & sports of skill is a facet of speech & expression and that criminalizing apart from amounting to unreasonable restriction, is incompetent under Article 19(2).
(iv) Violation of fundamental right to profession/business guaranteed under Article 19(1)(g) read with Article 301 i.e., incompetent & unreasonable restriction vide CHINTAMAN RAO vs. STATE OF MADHYA PRADESH7, FAROOQ vs. STATE OF MADHYA PRADESH8, game of skill not being a res extra commercium (CHAMARBAUGWALA-II, supra) and embargo being de hors Article 19 (6).
(v) Manifest arbitrariness SHAYARA BANO vs. UNION OF INDIA9 since the Amendment Act fails to recognize the blatant normative difference between a ‘game of skill’ and a ‘game of chance’, in gross derogation of Chamarbaugwala Jurisprudence of more than six decades.
(vi) The impugned legislative measure is a result of excessive paternalism & populism. The State is imposing its own notion of morality on the free & rational citizens by clamping a blanket ban on online games of skill. This is constitutionally unsustainable.
Petitioners in support of their case also press into service several other decisions of the Apex Court and of some High Courts which will be discussed in due course.
IV. RESPONDENTS’ OBJECTIONS TO THE PETITIONS:
The respondents oppose the petitions on the grounds as summarized below:
(i) There was a Public Interest Litigation in W.P.No.13714/2020 seeking a direction for legislatively banning all forms of online gambling & online betting; a Division Bench of this Court vide order dated 31.3.2021 directed the respondent-State to take a stand on the matter and accordingly, the Chief Secretary, Govt. of Karnataka had filed an affidavit to the effect that the State would come out with a legislation. The impugned Amendment Act has come on the Statute book pursuant to the assurance given to the Court.
(ii) In the preceding two decades or so, because of digital revolution, there has been a proliferation of online gaming platforms which engage in ‘betting & wagering’ unbound by time & place unlike traditional betting, and this has proved disastrous to the public interest in general and public order & public health in particular. The menace of cyber games having reached epic proportions, the police in the past three years or so, have registered about 28,000 cases, all over the State. Several persons have committed suicide and millions of families have been ruined. Therefore, the Amendment Act is made criminalizing wagering, betting or risking money on the unknown result of an event, be it a game of chance or a game of skill. The persons owning these premises or online platforms wherein such games are played are also liable to be punished. The State derives legislative power under Article 246 read with Entries 1, 2, 6 & 34 of State List as widely interpreted by the Apex Court.
(iii) Amendment Act introduces clarificatory provisions to the effect that the provisions relating to gaming apply to online gaming & platforms, as well. Apart from making the offences cognizable & non-bailable, it makes the punishment more stringent commensurating with the gravity of the offence. However, if persons merely play a game of chance or a game of skill without risking cash or kind, they do not fall in the net of penal provisions.
(iv) The petitioners lack both the locus standi and the cause of action, there being no coercive action initiated against anyone of them or against anyone who made use of their online gaming platforms. Ordinarily, anticipatory relief of the kind cannot be granted by a constitutional Court.
(v) Those of the petitioners who happen to be the companies incorporated under the erstwhile Companies Act, 1956 or the present Companies Act, 2013, being juristic persons cannot avail the fundamental rights guaranteed under Article 19(1) of the Constitution.
(vi) In support of their submission, the respondents inter alia bank upon the decisions of Apex Court in JILUBHAI NANBHA KACHAR vs. STATE OF GUJARAT10, GODFREY PHILLIPS INDIA LTD. vs. STATE OF UTTAR PRADESH11, M.J SIVANI vs. STATE OF KARNATAKA12, HIGH COURT OF GUJARAT vs. GUJARAT KISHAN MAZDOOR PANCHAYAT13, BHARAT HYDRO CORPORATION LTD vs. STATE OF ASSAM14, VARUN GUMBER vs. UNION TERRITROY OF CHANDIGARH15, B.P.SHARMA vs. UNION OF INIDA16, SYSTOPIC LABORATORIES vs. DR.PREM GUPTA17, etc.
V. Having heard the learned counsel for the parties and having perused the Petition Papers, and after adverting to the Rulings cited at the Bar, we are inclined to grant indulgence in the matter for the following reasons:
1. AS TO WHAT THE IMPUGNED TEXTUAL CHANGES TO THE AMENDMENT ACT DOES TO THE PRINCIPAL ACT:
For ease of understanding, what the Principal Act prior to 2021 Amendment was and what it has become post Amendment, their relevant comparative texts are furnished in the following comparative tabular forms. Whatever has been added to or deleted from the Principal Act is shown in bold italics:
TABLE-1
