In OS No. 1 of 2021 - SC- Section 10 CPC does not create a bar on passing of interlocutory orders, says Supreme Court while ruling that Meghalaya’s suit challenging the provision of Lotteries Regulation Act and Rules is maintainable & rejecting Centre’s contention on maintainability
Justice Dinesh Maheshwari and Justice Sanjay Kumar [11-05-2023]

Read Order: State of Meghalaya v Union of India

Simran Singh

New Delhi, May 12, 2023: While exercising its civil original jurisdiction, the Division Bench of Justice Dinesh Maheshwari and Justice Sanjay Kumar held that the State of Meghalaya  was entitled to take the case forward on merits and accordingly decided the preliminary objections in favour of the State vis-a-vis maintainability pertaining to its suit challenging the provisions of Lotteries (Regulation) Act, 1998 (‘Act of 1998’) and Lotteries (Regulation) Rules, 2010 (‘Rules of 2010’).

"We are not inclined to accept the contentions urged by the Union of India and some of the States, including the State of Kerala, that this suit is not maintainable under Article 131 of the Constitution.” observed the Bench

In the matter at hand, the State sought for a declaration that Section 5, 6, 7, 8 and 9 of the Act of 1998  and Rule 5 of the Rules of 2010, were ultra vires and unconstitutional. In addition to the declaratory reliefs, the State had also sought a perpetual injunction restraining the Union from issuing orders under Section 6 of the Act of 1998 in relation to the lotteries organised by it; a perpetual injunction restraining the Union from initiating or taking any penal action under Sections 7, 8 and 9, for violation of Sections 5 and 6 of the Act of 1998, in relation to the lotteries organised by it; and a perpetual injunction restraining the States and Union Territories, from prohibiting the sale of lottery tickets organised by it in their respective jurisdictions. Lastly, the State had also sought the suit costs against the contesting defendants.

R. Venkatramani, Attorney General and several of the impleaded States had contended that the suit was not maintainable. He brought the attention of the Court to the two conflicting judgments of the Supreme Court pertaining to the issue whether a suit challenging a statutory provision was maintainable or not. The issue in contention was referred to a larger bench  which was pending for consideration before the Supreme Court. Thus, the Court proposed to deal only with the issue of maintainability and the aspects supplemental to it. It took note of the fact that the State had sought to assert its right to do business in lotteries under Article 298(b) and its executive power to do so would be subject to parliamentary legislation, viz., the Act of 1998, the grievances raised by it in that context would constitute disputes which squarely fell within the four corners of Article 131 of the Constitution.

The Bench while referring to Indian Bank v Maharashtra State Cooperative Marketing Federation Limited , was of the view that even if the decision of the larger bench reference was to be awaited, the question, however, would remain as to whether nothing further could be done in the present suit until determination by larger bench. The Court answered the question in negative and stated that the suit could not be stayed in its entirety and referred to Section 10 of Code of Civil Procedure, 1908 (‘CPC’) as a reasonable guiding light.

The Court stated that by virtue of Section 10, CPC, a Court was prohibited from proceeding with trial of any suit in which the matter in issue was directly and substantially in issue in a previously instituted suit. The object of the prohibition contained in Section 10 CPC was to prevent the Courts of concurrent jurisdiction from simultaneously trying two parallel suits and to avoid inconsistent findings. However, this rule of procedure was held to be not affecting the jurisdiction of the Court to entertain and deal with the latter suit and does not create a bar to the institution of the suit. The Courts have reiterated that Section 10 CPC does not create a bar to the passing of interlocutory orders including those of injunction.

Thus, the Court was of the view that “even if final determination of the question of maintainability (in case the constitutional validity of the impugned provision was to be decided) may depend upon the decision of Larger Bench, the supplemental proceedings in the present suit, particularly those relating to the prayer of interim relief,  could not put on hold."

In view of the above, the Court held that it was unable to uphold the contention on behalf of the contesting defendants that the present proceedings ought to be held as not maintainable. Even  if final answer to this question was to await the decision of the larger bench, there was no bar to the passing of interlocutory orders such as that of injunction. Whether an injunction was  to be granted in the present case or no was a different matter.

With the above observation, the defendants were granted 4 week’s time to file their reply in relation to the prayer for interim relief.