1. Introduction
The Madras High Court ("HC") recently suppressed those amendments to the Tamil Nadu Gaming Act, 1930 ("TN Act") which had forced a sweeping boycott in the State of Tamil Nadu ("State") on all games (counting online games) played for stakes. The boycott was forced recently by bringing already exempted skill games inside the ambit of 'gaming' as defined in the TN Act. The HC held that not exclusively were the amendments violative of the central right to a profession, business, trade, or occupation, but on the other hand, were past the legislative competence of the State governing body under the applicable authoritative entry of 'gambling and betting' as given under the Constitution of India ("Constitution").
2. Background
In November 2020, the Governor of Tamil Nadu declared The Tamil Nadu Gaming and Police Laws (Amendment) Ordinance, 2020 ("Ordinance") which amended the TN Act. The Ordinance broadened the TN Act, which governs gaming and gambling in the State, to the online medium and nullified the current exclusion for games of skills accordingly prohibiting all games played for stakes.
The Ordinance was soon followed and replaced by The Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 ("Amendment Act") which was enacted in February 2021 and had provisions indistinguishable from the Ordinance.
A prominent online gaming platform Junglee Games India Pvt. Ltd. recorded the first among different other writ petitions in the HC in December 2020, initially challenging the protected legitimacy of the Ordinance and from there on of the Amendment Act basically on the grounds of violation of the petitioner’s fundamental right to trade, occupation, business and profession under Article 19(1)(g) of the Constitution ("Article 19(1)(g) Rights"). Similar petitions were additionally recorded by other online gaming organizations including PlayGames24X7, Head Digital Works, and GamesKraft Technologies. This load of petitions was clubbed and heard together under the reason title of Junglee Games India Pvt. Ltd. and Anr. v. Territory of Tamil Nadu. In March this year, the All India Gaming Federation ("AIGF"), a not-revenue driven gaming industry body added itself as a party in the matter with the consent of the HC.
The petitioners mostly challenged the wide significance of "gaming" as enlarged by the Amendment Act (which currently incorporated all types of skill gaming), the authoritative capability of the State to direct skill games, and the arbitrariness of the Amendment Act in imposing a total prohibition on all games played for stakes.
3. ISSUES
The petitioners argued that the boycott imposed on the playing of games of skill for stakes is a direct violation of the law set by the Supreme Court that rivalries in games of skill are business exercises ensured under Article 19(1)(g) Rights. They likewise contended that the Amendment Act was disproportionate, clearly arbitrary, and had turned the object of the first TN Act on its head by imposing a total prohibition on all games played for stakes.
They additionally battled that games of skill have been judicially separated as particular from games of chance and that Entry 34 in List II ("Entry 34") viz. "Betting and gambling" is restricted to putting stakes on games of chance only, and thus, the state councils don't have any legislative capability to make laws on games of skill under this Entry 34.
In this way, the board issues before the HC were:
- Regardless of whether the Amendment Act is violative of the petitioner's Article 19(1)(g) Rights? ("Issue 1");
- Regardless of whether the Amendment Act is disproportionate and clearly self-arbitrary? ("Issue 2"); and
- Regardless of whether the State lawmaking body has the competence to legislate on games of skill under Entry 34? ("Issue 3").
4. ISSUE 1: VIOLATION OF FUNDAMENTAL RIGHTS
4.1 The HC struck down Part II of the Amendment Act which amended provisions of the TN Act as being violative of the petitioner's Article 19(1)(g) Rights.
The HC saw that however Article 19(6) licenses reasonable limitations on Article 19(1)(g) Rights, by imposing a wide-going cover boycott the State has totally neglected to meet the "least intrusive measure" test and, hence, the criticized amendments fall foul of Article 19(1)(g) of the Constitution.
5. ISSUE 2: TESTS OF PROPORTIONALITY AND MANIFEST ARBITRARINESS
5.1 The HC descended intensely on the Amendment Act and at various points, named it "overbearing", "unreasonable" and "manifestly arbitrary".
The HC noticed that by imposing a wide-going cover restriction on all games played for stakes (regardless of whether of skill or chance) only based on narrative proof of a couple of suicides and the subjective perception of the evil of addiction, the Amendment Act became disproportionate to the articles it set off to accomplish. The HC likewise held that the governing body had acted impulsively, irrationally, and without sufficient determining principles while enacting the Amendment Act and thus the Amendment Act had become clearly subjective.
The HC said there was a shortfall of any logical or experimental study to justify the Amendment Act and saw that the impugned amendments "might be believed to have been conceived out of a feeling of morality and a bid to play to the galleries in election season."
Observing the Statement of Objects and Reasons of the first TN Act, the HC said that no attempt was made by the State to demonstrate what constrained it to acquire such major changes to a rule that was initially expected to just check to bet on an outcome of chance.
6. ISSUE 3: LEGISLATIVE COMPETENCE OF THE STATES UNDER ENTRY 34
6.1 The HC held that "Gambling and betting" in Entry 34 must be perused as engaging the State government to just legislate on betting related to gambling, which thusly implies betting on games of chance, and ought not to be read as to provide the State with betting as a different legislative head.
The HC agreed with the contention of the petitioner's that the legislative competence of the State government under Entry 34 can't be broadened to incorporate inside it the ability to legislate on games of skills, however, saw that the State could sensibly claim such competence under different heads of legislation, for example, 'public order, 'trade and commerce inside the state' or 'sports, entertainment, amusements', if it could legitimize the requirement for and degree of such a law, and release the weight of proportionality.
Nonetheless, as well as keeping the entryway partially open for the State to guarantee legislative competence for setting limitations on games of skill under different heads of legislation (if they pass constitutional summon), the HC likewise held that State government could outline future laws "conforming to a constitutional sense of propriety" in the field of betting and gambling (subject to the understanding gave to this field in the judgment).
7. INDUSLAW VIEW
By this judgment, the past position under the first TN Act is restored, whereby there is a clear exception for games of skills under Section 11. However, the real money gaming administrators can continue their operations in the State, the relief might be short-lived as the new State government declared on the exceptionally following day after this judgment that it would soon bring another law to boycott online games like rummy and poker played for stakes.
Notwithstanding offered the viewpoints and the grounds on which the HC has struck down the Amendment Act, the State government won't just have to justify the requirement for any boycott that they might impose later on, yet will likewise need to prove the new law with observational proof and background research to show that the boycott satisfies the 'test of proportionality and that the boycott is the 'least intrusive' measure conceivable to control the alleged mischief.
Subsequently, it appears to be the HC has made the re-presentation of a sweeping boycott troublesome in the State and this is relied upon to have a positive effect for the industry remembering the prospective laws and amendments expected in different states like Uttar Pradesh, Karnataka, Rajasthan, and Madhya Pradesh.
Credits:
Mondaq
