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Lucky, but not so legal

Submitted by-Vidushpat Singhania

The Government of India on November 8 took the bold initiative of declaring two high value notes—Rs 500 and Rs 1000—as no longer legal. This demonetisation initiative led to a rapid increase in online payments, use of credit and debit cards, RuPay payments and use of other mobile wallets. In a move to encourage transition to digital payments, NITI Aayog, the government’s think tank, decided to introduce a scheme with daily, weekly and mega awards for consumers and merchants based on a lucky draw. The awards are to be offered through two schemes: Lucky Grahak Yojana for consumers and Digi-Dhan Vyapar Yojana for merchants. This scheme seeks to give away prizes worth Rs 340 crore through awards of Rs 1,000 for 15,000 winners and weekly prizes worth Rs 1,00,000, Rs 10,000 and Rs 5,000. For the merchants’ scheme, the weekly prizes are likely to be worth Rs 50,000, Rs 5,000 and Rs 2,500. Totally, there could be 7,000 weekly awards for customers and merchants. It is laudable that this scheme is proposed by the NITI Aayog after demonetisation. However, these schemes are likely to fall within the ambit of ‘lottery’ under the Lotteries Act 1998.

According to the Act, lottery encompasses any scheme in whatever form, for distribution of prizes by lot or chance, to those persons participating in the chance of a prize by purchasing a ticket. In this scheme, the consumers and merchants who have used electronic payment modes are the only ones eligible to participate. So, the participants of the ‘lucky draw’ would have contributed towards the scheme through the charges applicable on such digital transactions, which could be considered equivalent to a ticket purchase.

Moreover, since the prizes would be awarded on the basis of drawing lots, the programme would meet all the requisites for being classified as a lottery. However, as per the Lotteries Act and decisions of the Supreme Court in B.R Enterprises case and All Kerala Online Lottery Dealers Association case, lottery schemes cannot be offered in states which have declared themselves to be lottery-free states or states where a particular kind of lottery is prohibited. This brings us to an important question.