Lottery-Prize competitions, if and when of a gambling nature - Legislation taxing promoters of such competition carried on through newspaper printed and published outside the State - Validity - Test - Territorial nexus - Gambling, if trade and commerce within the meaning of the Constitution - Constitutionality of enactment - Bombay Lotteries and Prize Competition Control and Tax Act (Bom. LIV of 1948), as amended by the Bombay Lotteries and Prize Competition Control and Tax (Amendment) Act (Born. XXX of 1952), ss. 2(1) (d), 12A-Constitution of India, Arts. 19 (1)(g), 301.

The first respondent was the founder and Managing Director of a company, the second respondent in the appeal, which was incorporated in the State of Mysore and conducted a Prize Competition called the R. M. D. C. Cross-words through a weekly newspaper printed and published at Bangalore. This paper had a wide circulation in the State of Bombay, where the respondent' set up collection depots to receive entry forms and fees, appointed local collectors and invited the people by advertisements in the paper to participate in the competitions. On November 20, 1952, the Bombay Legislature passed the Bombay Lotteries and Prize Competitions Control and Tax (Amendment) Act of 1952, and widened the scope of the definition of 'prize competition' contained in s. 2(l)(d) of the Bombay Lotteries and Prize Competition Control and Tax Act of 1948, so as to include prize competitions carried on through newspapers printed and published outside the State and inserted a new section, s. 12A, levying a tax on the promoters of such competitions for sums collected from the State. Thereupon, on December I 8, 1952, the respondents moved the High Court of Bombay under Art. 226 of the Constitution and contended that the Act as amended and the Rules framed thereunder in so far as they applied to such prize competitions were ultra vires the State Legislature and violated their fundamental rights under Art. 19(i)(g) and freedom of inter-State trade under Art. 301 of the Constitution. The single Judge who heard the matter in the first instance as also the court of appeal found in favour of the respondents, though on somewhat different grounds, and the State of Bombay preferred the appeal. The principal question canvassed in this Court related to the validity or otherwise of the impugned Act. It was contended on behalf of the appellant that the impugned Act "'Its a law relating to betting and gambling and as such was covered by Entries 34 and 62 of List II in the Seventh Schedule to the Constitution, whereas the contention of the respondents was that the Act was with respect to trade and commerce and came under Entries 26 and 60 of that List.