Holding

Agents coupled with interest have an independent right to challenge the notification, and Article 131 does not preclude their locus standi; therefore the writ petitions are maintainable.

Summary

The appellants, lottery agents of the State of Sikkim, had invested heavily in an online lottery network in Karnataka. Karnataka issued a notification under Section 5 of the Lotteries (Regulation) Act, 1998 prohibiting online lotteries, which threatened the appellants' business and exposed them to penal liability under Section 7(3). The agents filed writ petitions under Article 226 challenging the notification, but the Karnataka High Court dismissed them on the ground of lack of locus standi and the applicability of Article 131. The Supreme Court held that agents coupled with interest possess an independent legal right to sue and that Article 131 does not bar their standing in a writ petition. Consequently, the writ petitions were deemed maintainable and the High Court's order was set aside.

Issues considered

The writ petitions filed by private agents are maintainable despite the bar of Article 131.
Whether agents coupled with interest have locus standi to challenge a statutory notification affecting their business.
Interpretation of the scope of Article 131 of the Constitution with respect to private parties.
Whether the notification issued under Section 5 of the Lotteries (Regulation) Act, 1998 is valid.
Whether the agents can sue in their own name under Sections 202 and 230 of the Indian Contract Act, 1872.

Legislation cited

Constitution of Indias. Article 12, s. Article 131, s. Article 226
Indian Contract Act, 1872s. 182, s. 185, s. 186, s. 202, s. 230
Lotteries (Regulation) Act, 1998s. 4(c), s. 5, s. 7(3)

Subjects

Article 131Article 226locus standiagents coupled with interestLotteries (Regulation) Actonline lottery banContract Act sections 202 and 230writ petition maintainabilityfederalismstate vs private party

Judgment

A MIS. TASHI DELEK GAMING SOLUTIONS LTD. AND ANR.
V.
STA TE OF KARNATAKA AND ORS.

DECEMBER 8, 2005

B [S.B. SINHA AND P.P. NAOLEKAR, JJ.]

Constitution of India, 1950-Artic/e 226-Appellants, lottery agents of
the State of Sikkim, had invested in online lottery networks in Karnataka-
C State of Karnataka banned online lotteries by a notification-Writ petition
filed by appellants together with State of Sikkim challenging validity of the
said notification-Maintainability of-Locus standi of appellants-Held:
Appellants would suffer huge losses if the notification is implemented and
face prosecution/or violation thereof-They are agents coupled with interest
whose right to carry on business was affected-Hence, had an independent
D right to question validity of the notification by filing writ petition-Lotteries
(Regulation) Act, 1988-Section 5-Contract Act, 1872-Sections 202 &
230.

Constitution of India, 1950-Artic/e 131-Jnapplicability of-To suits
where citizens or private bodies are parties, either jointly or in the alternative
E with a State or the Union Government-Enlarged definition of "State" under
Art.12 does not extend to Art.131-Even a statutory corporation is not a
State within meaning of the said provision.

Contract Act, 1872___..:.sections 202 and 230-Right of agent to sue or
be sued-Held: An agent coupled with interest has a right to sue-He may
F in certain situations be sued as regards his own liabilities independent of
his principal.

The States of Sikkim and Meghalaya commenced on line lotteries in the
State ofKarnataka. Appellants- lottery agents of the State of Sikkim, invested
G huge amounts for setting up on line lottery networks in the State of Karnataka.
But, subsequently by a notification issued under Section 5 of the Lotteries
Act, online lottery came to be prohibited in the State of Karnataka. The said
Act postulated that in the event an agent violated any notification issued by
the State, it would face penal consequences. States of Sikkim and Meghalaya
together with the Appellant-agents filed writ petitions challenging validity of
H 670
TASH! DELEK GAMING SOLUTIONS LTD. v. STATE OF KARNATAKA 67 J

the said notification in High Court. High Court held that as the dispute involved A
in the writ petitions related to two State Governments, the writ petitions were
not maintainable in view of the constitutional bar under Article 131 of the
Constitution, and also that the appellant age1_1ts had no locus standi to maintain
the writ petitions since they did not have any independent right in that behalf.
Hence the present appeals.
B
Allowing the appeals, the Court

HELD: 1.1. The Appellants were appointed as agents of the State, which
were governed by contract, in terms whereof, they had invested a huge amount
In the event the impugned notification is implemented, the Appellants would
not only lose a huge amount of money which they have invested but also would C
be liable to pay compensation to a large number of work force appointed by
them in view of the fact that they would have to close their business. The
Appellants are the agents coupled with interest. Such agencies are
contemplated under the laws of contract [678-F, G)

1.2. An agent coupled with interest has a right to sue. He may in certain D
situations be sued as regard his own liabilities independent of his principal.
Section 202 of the Contract Act, 1872 provides that where the agent has
himself an interest in the property which forms the subject-matter of the
agency, the agency cannot, in the absence of an express contract, be terminated
to the prejudice of such interest. The right of an agent to sue or be sued in E
its own name, is governed by Section 230 of the Contract Act but the second
part of the said provision does not envisage a situation where the right of an
agent is protected in terms of Section 202 of the Contract Act.
[679-D-E; 680-B)

1.3. If by a statutory provision the right of an agent to carry on his F
business is affected, he may, in his own right maintain an action. Once it is
held, that the Appellants had legal rights to challenge the validity or otherwise
of the said notification issued by the State of Karnataka, there cannot be any
doubt whatsoever that they would have independent rights to maintain the writ
application. [680-B; 683-C)

Subrahmania Pattar v. Narayanan Nayar, ILR 24 Mad 130; Mallhu v. G
Megh Raj, AIR (1920) Lah. 196; Coor/a Spinning & Weaving Mills v.
Val/abhdas, AIR (1925) Bom. 547; R.P. Kharas v. Bawanji Narsi AIR (1926)
Sind 6; Durga Prasad Manna Lal v. Cawnpore Flour Mills, AIR (1929) Oudh
417; Firm Hardayal Mal Mohri Lal v. Kishan Gopal Jhanji AIR (1938) Lah
673 and Subodh Gopal Bose v. Province of Bihar, AIR (1950) Patna 222, H
672 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A approved.

Calcutta Gas Company (Proprietary) Ltd. v. State of West Bengal and
Ors., AIR (1962) SC 1044 = [1962] Supp. 3 SCR 1, relied on.

2.1. Further, ifthe agent was to be prosecuted for violation of the term
B of the notification, he could challenge the validity thereof. A fortiori, a quia
timet application would also be maintainable. A person must be held to have
access to justice if his right in any manner whether to carry on business or
threat to his liberty is infringed. Access to justice is a human right.
[684-A)

C 2.2. The High Court was not correct in holding that they had no personal
right to enforce despite the fact that they would suffer injuries or would
otherwise be prejudiced by the notification issued by the State ofKarnataka.
It would, therefore, not be correct to contend that they could enforce their
rights only through their principal and not independently. The Appellants had
a legal right to carry on business. Such a right having been impugned by
D reason of the impugned notification, a writ petition at their instance was
maintainable. (684-E, F)
2.3. If the Appellants had a legal right, they could seek redressal for
violation thereof before an appropriate forum. The locus standi to maintain a
writ application even otherwise has received liberal interpretation. (684-G)
E 2.4. Even if the States of Sikkim and Meghalaya filed suits against the
State of Karnataka in this Court, the independent right of the Appellants to
maintain independent action before the appropriate forum could not have been
taken away. (685-F]
Dwarka Prasad Agarwal (D) By LRs. v. B.D. Agarwal and Ors., (2003)
F 6 SCC 230 and Ghulam Qadir v. Special Tribunal, (2002) 1 SCC 33, relied
on.
3.1. The High Court accepted that the Appellants are statutory agents
but it evidently failed to take into consideration the status of the Appellants
vis-a-vis their contractual rights and obligations with their principal coupled
G with their individual rights to maintain their writ petitions in proper
perspective. It is no doubt true that had the State of Sikkim or the State of
Meghalaya intended to sue the State of Karnataka independently, in terms of
Article 131 of the Constitution of India the only forum where the dispute
between them could have been resolved is this Court alone but when such a
H lis is brought by the State jointly with their agents who had also independent
TASHI DELEK GAMING SOLUTIONS LTD. v. STATE OF KARNATAKA 673

cause of action and had a legal right to maintain writ application questioning A
the legality and/or validity of the said notification issued by the State, a suit
in terms of Article 131 of the Constitution of India would not have been
maintainable.1688-F, G, HI

3.2. Article 131 will not be applicable where citizens or private bodies
are parties either jointly or in the alternative with the State or the Government B
of India. The enlarged definition of 'State' under Article 12 would not extend
to Article 131 of the Constitution. Even a statutory corporation is not a State
within the meaning of the said provision. (678-E)

3.3. The Appellants were not busy bodies. They had an interest in the
subject-matter of the writ petition. They were, thus, not merely strangers C
having no right whatsoever in the matter. It has not been contended, nor could
it be contended that the Appellants are mere smoke screens of the States of
Sikkim and Meghalaya. In absence of such a plea and in view of the fact that
the Appellants not been held to be mere strangers without having any legal
right, the writ petitions were maintainable. (689-A, BJ D
State of Bihar v. Union of India, [1970) 1 SCC 67; State of Rajasthan
& Ors. etc. v. Union of India & Ors., (19771 3 SCC 592; State of Karnataka
v. Union of India & Anr., (1977) 4 SCC 608 and Union of India v. State of
Rajasthan (1984) 4 SCC 238, relied on.
E
4. Keeping in view the fact that the Appellants are out of business, the
High Court is requested to consider the desirability of disposing of the writ
petitions as expeditiously as possible. 1689-C)

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7308-7309 of
~ F
From the Judgment and Order dated 16.3.2005 of the Karnataka High
Court in W.A. Nos. 5116-5117 of2004.
WITH
C.A. Nos. 7310-7312 of2005. G
Soli J. Sorabjee, K.K. Venugopal, Sudhir Chandra Agarwala, Dayan
Krishnan, Nikhil Nayyar, Gautam Narayan, Shyam Morjani, Ankit Singhal,
Rishi Agrawala, Mahesh Agarwal, Ankur Talwar and E.C. Agrawala for the
Appellants.
H
674 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A Sanjay R. Hegde, Anil K. Mishra and A. Rohen Singh for the
Respondents.

The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted.
B
Introduction :

Scope and ambit of Article 131 of the Constitution of India is in question
in these appeals, which arise out of a common judgment and order dated
16.03.2005 passed by a Division Bench of the Kamataka High Court in Writ
C Appeal Nos.5516-5117 of2004 and Writ Appeal Nos.29-31 of2005, whereby
and whereunder the appeals preferred by the Appellants herein were dismissed.

Background facts

It is not in dispute that the States of Sikkim and Meghalaya commenced
D on line lotteries, inter alia, in the State of Karnataka. It is, however, otherwise
a lottery playing State. In exercise of its power conferred upon it under
Section 5 of the Lotteries (Regulation) Act, 1998 (for short, 'the Act') a
declaration was made that the State of Karnataka shall be free zone from
online and internet lotteries. By reason of the said notification sale of all
computerized and online lottery tickets marketed and operated through vending
E machines, terminals, electronic machines and through internet in the State of
Kamataka became prohibited with immediate effect.

Writ Proceedings:

F The States of Sikkim and Meghalaya together with its agents filed writ
petitions before the Karnataka High Court, challenging the legality and/or
validity of the said notification, inter alia, on the ground that the State of
Karnataka, having itself been organizing lotteries, could not have imposed the
said ban having regard to the decision of this Court in Mis B.R. Enterprises
etc. v. State of UP. & Ors. etc., [1999] 9 SCC 700.
G
The contention of the State of Karnataka, on the other hand, was that
online lotteries had nothing to do with the conventional lotteries and as the
State of Karnataka has put an embargo on online lotteries without any
•'
discrimination, B.R. Enterprises, (supra) cannot be said to have any application.

H A preliminary objection was taken"on behalf of the State that as the
TASHIDELEK GAMING SOLUTIONS LTD. v. STATEOF KARNATAKA [SINHA, J.j 67 5

dispute involved in the writ petitions related to two State Governments, the A
writ petitions were not maintainable, in view of the constitutional bar under
Article 131 of the Constitution of India. The said contention was upheld by
a learned Single Judge of the High Court holding, inter a/ia, that the agents
of the State of Sikkim and State of Meghalaya had no locus standi to maintain
the writ petitions in view of the fact that they did not have any independent B
right in that behalf. The agents of the State of Sikkim preferred an intra-court
appeal thereagainst The State of Meghalaya and its agents thereafter also
preferred writ appeals.

Contentions of the writ petitioners :

The contention of the Appellants herein being agents and distributors C
of the State of Sikkim is as under :

Section 4(c) of the Act permits the State Governments to sell tickets
either itself or through distributors or selling agents and in terms thereof the
Fir.st Appellant Mis Tashi Delek Gaming Solutions Ltd, was appointed by the D
State of Sikkim as an agent for sale of on line lotteries. The Second Appellant,
Pan India Network Infravest Pvt. Ltd., is a distributor of the First Appellant.

It was contended that the Appellants herein have invested a huge
amount of 300 crores for setting up the online lotteries network infrastructure
and 861 retail outlets therefor. They have been paying sales tax and other E
taxes running into crores of rupees to the Respondent-State and have entered
into diverse third party arrangements with distributors and retailers. It was
contended that by reason of the impugned notification, their investments
made in this behalf would go totally waste and they would be seriously
prejudiced as they have borrowed funds from banks and financial institutions
on which interest is mounting manifold. F
The State of Meghalaya and its agent, Mis Best & Co. in their writ
petition, inter alia, contended :

"The petitioner State for the purposes of sale of the online and
internet lotteries appointed Petitioner No. 2 & 3 as its agent/sub agent G
to sell the said internet and online lotteries in various States.
Accordingly, the agent appointed other persons, retailers etc. for the
purposes of establishing computerized retail outlets in the State of
Karnataka. At present there are 1000 number of retail outlets of the
Petitioner State in the State of Karnataka and more than 30000 number H
676 SUPREME COURT REPORTS (2005) SUPP. 5 S.C.R.

A of persons are dependent on the said business. The Petitioner No.2
and its agents have spent more than Rs. I 00 crores for the establishment
of the network of retail computer lottery outlet. The sale from
computerized·online and internet lotteries in the State of Karnataka
was presently approximately Rs.90 lacs per day."

B Submissi9ns :
Mr. Soli J. Sorabjee, the learned Senior Counsel appearing on behalf of
the Appellants, relying inter a/ia upon the decisions of this Court in State
of Bihar v. Union of India, [1970] I SCC 67, State of Rajasthan & Ors. etc.
v. Union of India & Ors., [ 1977] 3 SCC 592, State of Karnataka v. Union of
C India & Anr., [1977] 4 SCC 608 and Union of India v. State of Rajasthan,
[1984] 4 sec 238, at the outset submitted that the principles laid down therein
clearly demonstrate inapplicability of Article 131 of the Constitution of India
where along with the State Governments private parties are also added as
Petitioners or Respondents. The Appellants, it was urged, being statutory
D agents of the States were persons aggrieved by the impugned action of the
State of Karnataka in their own right and, thus, the writ petition filed by them
with the State Governments were maintainable and, in that view of the matter,
the findings of the Division Bench to the effect that the Appellants could not
enforce or vindicate their rights under the contract of agency with the State
of Sikkim is erroneous.
E
Our attention, in this behalf, was drawn to Section 7(3) of the Act to
show that the Act contains a penal provision. In terms of the notification
issued by the State of Karnataka, if the Appellants herein continue to sell
online lottery tickets, the same would attract the penal provision contained
F in Section 7(3) of the Act and in that view of the matter, it cannot be said
that the Appellants have no legal right to enforce and/or they are otherwise
not aggrieved by the notification issued by the State of Kamataka enabling
them to maintain a writ application.

It was submitted that in view of a decision of this Court in Ghulam
G Qadir v. Special Tribunal & Ors., [2002] I SCC 33, the Appellants herein
being not merely strangers had a right to maintain the writ application.

Mr. K.K. Venugopal, the learned Senior Counsel, supplemented the
submissions of Mr. Sorabjee contending that as the Appellants are agents
coupled with interest, they could sue or be sued in their own names.
H
TASHIDELEKGAMING SOLUTIONS LTD. v. STATE OF KARNATAKA [SINHA, J.] 677

Mr. Sanjay R. Hegde, the learned counsel appearing on behalf of the A
· State of Kamataka, on the other hand, submitted that for the purpose of
determining the maintainability of the writ petition, it was necessary to
determine the nature of rights of the agents of the State. It was argued that
the State Governments having exercised their executive power to carry on
business in lotteries, the activities prohibited by the State of Karnataka being B
a matter between two States could be adjudicated upon by this Court alone
as the dispute related to the legal character involving t\\'O different States.

Mr. Hegde urged that Article 131 of the Constitution, in view of the
doctrine of federalism should receive wide and expansive definition and in
this case as one State asserts that it had the right to carry on business in C
another State, which had been denied, the essential nature of dispute must
be held to have occurred between two States.

Issue:

The short question which arises for consideration is as to whether the D
writ petitions filed by the Appellants herein were maintainable.

The Act:

The Parliament of India in terms of Entry 40 List l of the Seventh
Schedule of the Constitution of India enacted Lotteries (Regulation) Act, E
1998. 'Lottery' has been defined in Section 2(b) of the Act to mean:

"2(b) "lottery" means a scheme, in whatever form and by whatever
name called, for distribution of prizes by lot or chance to those
persons participating in the chances of a prize by purchasing tickets."

Sections 3 and 4 of the said Act lay down the conditions subject to
F
which the State Governments could organize, conduct or promote lotteries. By
reason of Section 4 of the Act, distributors and selling agents are said to have
been given statutory status. Section 6 thereof confers power of prohibition
expressly on the Central Government.
G
Section 5 of the Act reads as follows :

"5. Prohibition of sale of tickets in a State.-A State Government may,
within the State, prohibit the sale of tickets of a lottery organized,
conducted or promoted by every other State."
H
678 SUPREME COURT REPORTS (2005] SUPP. 5 S.C.R.

A Sub-sections (3) of Section 7 of the Act provides for penal provision
in the following terms:

"(3) If any person acts as an agent or promoter or trader in any
lottery organized, conducted or promoted in contravention of the
provis!ons of this Act, or sells, distributes or purchases the ticket of
B such lottery, he shall be punishable with rigorous imprisonment for a
term which may extend to two years or with fine or with both."

Article 131 Scope and Ambit :

Article 131 of the Constitution of India postulates that this Court to the
C exclusion of any other court shall have o~iginal jurisdiction in any dispute
between the Government of India and one or more States; or between the
Government of India and any State or States on one side and one or more
other States on the other; or between two or more States. We in this case are
not concerned with the proviso to the said Article. The said Article would
D be attracted where adjudication is necessary in relation to a legal right of one
State or the Union of India vis-a-vis other States, as the case may be.
Indisputably, the expression 'legal right' has received liberal interpretation by
this Court from time to time. However, it is now well-settled by vari.ous
decisions of this Court that this Article will not be applicable where citizens
or private bodies are parties either jointly or in the alternative with the State
E or the Government of India. The enlarged definition of 'State' under Article
12 would not extend to Article 131 of the Constitution. It is also not in dispute
that even a statutory corporation is not a state within the meaning of the said
provision.

Locus of the Appellants :
F
The Appellants herein were appointed as agents of the State, which
were governed by contract, in terms whereof, they had invested a huge
amount. If the statements made in the writ petitions to which we have adverted
to hereinbefore are correct, in the event the impugned notification is
implemented, the Appellants would not only loose a huge amount of money
G which they have invested but also would be liable to pay compensation to
a large number of work fo~ce appointed by them in view of the fact that they
would have to close their business. The Appellants are the agents coupled
with interest. Such agencies are contemplated under the laws of contract. The
Act also postulates that in the event an agent viol!ltes the notification issued
H by the State, he would face the penal consequences laid down therein. The
TASH! DELEK GAMING SOLUTIONS LTD. v. STATE OF KARNATAKA [SINHA,J.] 679

'notification has the force of law. In the aforementioned backdrop, the question A
which arises for consideration is as to whether the Ai>pellants herein had any
independent right to question the validity of the said notification.

The learned Single Judge, as noticed hereinbefore, held that they did
not have any such right. On the other hand, the Division Bench was of the
opinion: B
" ... May be, the appellants also got adversely affected with the
prohibition imposed by the State of Kamataka but it is only incidental
because they are the agents of the State of Sikkim and can have their
rights only through their principal... .. "
c
We cannot subscribe to the said view.

'Agent' has been defined in Section 182 of the Indian Contract Act,
1872, to mean a person employed to do any act for another or to represent
another in dealings with third persons. The person for whom such act is done,
or who is so represented, is called the 'principal'. Section 185 of the Contract D
Act postulates that no consideration is necessary to create an agency. The
authority of an agent may be express or implied in terms of Section 186
thereof. Section 202 of the Contract Act provides that where the agent has
himself an interest in the property which forms the subject-matter of the
agency, the agency cannot, in the absence of an express contract, be terminated E
to the prejudice of such interest. The right of an agent to sue or be sued in
its own name, is governed by Section 230 of the Contract Act, which reads
as under :

"230. Agent cannot personally enforce, nor be bound by, contracts
on behalf of principle.- In the absence of any contract to that effect F
an agent cannot personally enforce contracts entered into by him on
behalf of his principal, nor is he personally bound by them."

The second part of the said provision does not envisage a situation
where the right of an agent is protected in terms of Section 202 of the Contract
Act. We have noticed hereinbefore that Section 4(c) of the Act envisages G
appointment of agents, which empowers the State Government to sell the
tickets either itself or through distributors or selling agents. Such distributors
or selling agents may also be companies or body corporates. Section 7(3) of
the Act, as noticed hereinbefore, provides for a penal consequence. If any
person acts as an agent or promoter or trader in any lottery, he may be H
680 SUPREME COURT REPORTS [2005] SUPP. S S.C.R.

A subjected to punishment if he sells, distributes or purchases tickets of such
lottery in contravention of the provisions of the said Act, which may include
any notification issued under Section 5 of the Act.

Right to Sue :

B An agent coupled with interest has a right to sue. He may in certain
situations be sued as regard his own liabilities independent of his principal.

The right of an agent having interest to sue or be sued in its own name
came up for consideration before the Madras High Court in Subrahmania
Pattar v. Narayanan Nayar [ILR 24 Mad 130] wherein it was held:
c
"It was argued before us that by the document in question the
plaintiff became an agent with interest, and that he, therefore, had a
right to sue in his own name and Williams v. Millington; Robinson
v. Rutter; Gray v. Pearson; and other cases and text-books were cited
in support of this proposition, and Pestanji Mancharji Wadia v.
D Matchett; was also cited as a further authority for the same proposition.
The proposition as stated is in our judgment too wide. In Williams v.
Millington; and Robinson v. Rutter; the agents who were held entitled
to sue were agents who had made the contract with the defendant as
auctioneers, and it was held that, though they had contracted as
E agents having an interest, they were entitled to sue in their own
names. In Gray v. Pearso the plaintiffs suit was dismissed. There,
there was no contract entered into between the plaintiff and the
defendant. The plaintiff was merely the manager for others and the
words used by Willes, J., in his judgment, to which our attention was
called, do not assist the plaintiffs contention. He says the proper
F person to bring the action is the person whose right has been violated.
Though there are certain exceptions to the general rule, for instance,
in the case of agents, auctioneers or factors, these exceptions are in
truth more apparent than real, &c. The real proposition of law, which
these and other cases establish, is that where an agent enters into a
contract as such, if he has interest in the contract, he may sue in his
G
own name."

Yet again in Mallhu v. Megh Raj, AIR (1920) Lah. 196], it was held:

"The only point calling for consideration in this application for revision
is whether the plaintiff is debarred under S. 230, Contract Act from
H
TASHI DELEK GAMING SOLUTIONS LTD. v. STATE OF KARNATAKA [SINHA, J.] 681

maintaining the suit. It is true that part of the wheat belonged to one A
Khem Lal and was sold by the plaintiff as Khem Lal's agent, but the
other part was the plaintiffs own wheat, so that he had an interest
in the contract, and the law is that when an agent enters into a
contract, he may sue thereon in his own name if he has an interest
in the contract."
B
The question again came up for consideration before the Bombay High
Court in Coor/a Spinning & Weaving Mills v. Vallabhdas, AIR (1925) Born.
54 7, wherein it was opined :

"It was next argued on behalf of the defendants that the suit was
defective and must have been dismissed unless and until the Mill C
Company was added. In other words, that the Mill Company were
necessary and not merely proper parties. The plaintiffs, on the other
hand, contended that the selling agents had here a beneficial interest .
in the completion of the contract, and could accordingly sue in respect
of it. This rule extends in England to auctioneers and factors, and is D
thus expressed in Bowstead on Agency, 7th Edn., p. 431 :-

"An agent may sue in his own name on contracts made by him
on behalf of his principal in the following case, namely ..... (b)
where, as in the case of factors and auctioneers, he has a special
property in or lien upon, the subject-matter of the contract, or has E
a beneficial interest in the completion thereof,"

The Sind Court had also an occasion to consider the said question in
R.P. Kharas v. Bawanji Narsi AIR (1926) Sind 6, wherein the law was stated
in the following terms :

"The case of an agent who has an interest in the contract made F
by him as such is not within the rule. He is the person to sue, and
he is liable to be sued on the contract. An auctioneer or factor being
in possession of his employer's goods having a lien on them for his
charges and advances is in this position. An auctioneer may be sued
for non-delivery of the goods sold and he may sue the buyer for the G
price."

In Durga Prasad Manna Lal v. Cawnpore Flour Mills, AIR (1929)
Oudh 417, upon referring to the provisions of the Indian Contract Act, it was
held:
H
682 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A "The three cases mentioned in this section in which a contract to
that effect may be presumed are by no means exhaustive. Thus there
can be no difficulty in presuming such a contract in a case in which
the agent has an interest in the transaction. Apart from this the
position of an agent in such a case is virtually that of a principal to
the extent of the interest, which he has in the contract. This rule is
B based upon general principles and not on any technicalities peculiar
to the English Law. It has been followed in the Indian Courts as well."

The Lahore High Court had also the occasion to deal with the said
question in Firm Hardayal Mal Mohri Lal v. Kishan Gopal Jhanji, AIR
C (1938) Lah 673, wherein Tek Chand, J. opined:

"These documents therefore do not affect the matter. This is
clearly a case. of an "agency coupled with interest" and therefore the
ordinary rule laid down in S.230 is inapplicable. It is settled law in
England and as observed by Pollock and Mulla in their Commentary
D on the Indian Contract Act (Edn.6) page 638 :

The like rule is laid down by Indian Courts that where an agent
enters into a contract as such if he has an interest in the contract he
may sue in his own name. This is not a real exception to the rule laid
down at the beginning of the Section, the agent being in such a case
E virtually a principal to the extent of his interest in the contract."

In Subodh Gopal Bose v. Province of Bihar, AIR (1950) Patna 222 a
Division Bench of the Patna High Court considered the question, and upon
noticing a large number of decisions, laid down law in the following terms :

"There is another aspect of the case which has a more direct
F
bearing on this question. In the suit the main relief which the appellant
has claimed (as disclosed by the plaint) is a declaration that the
appellant is entitled to quarry lime stone and manufacture lime from
the Murli hill As a mere local agent of the lessee company, the
appellant has no such right of suit. An agent who has some interest
G in the property may be a qualified interest-can maintain an action to
protect that interest (see Whittingham v. Bloxham,(1831) 172 E.R. 841:
(4 Car. & P. 597). In Smith's Leading Cases, Vol. II, p. 395 (12th Edn.)
the following statement of the law is made:

"But it is not merely in cases where the agent has contracted in
H ';,,h~~ own name for an unnamed principal that he has a right, at law, to
TASHI DELEK GAMING SOLUTIONS LTD. v. STATE OF KARNATAKA [SINHA, J.) 683

sue upon the contract, when he has made a contract in the subject- A
matter of which he has a special property, he may, even though he.
contracted for an avowed principal, sue in his own name."

Legal Right :

If by a statutory provision the right of an agent to carry on his business B
is affected, he may, in our considered opinion, in his own right maintain an
action. The question came up for consideration before this Court in Calcutta
Gas Company (Proprietary) Ltd. v. State of West Bengal and Ors., AIR (l 962) •
SC I 044 = [I 962) Supp. 3 SCR I. Therein a question arose as to whether the
petitioner therein who had a right to manage the Oriental Gas Company for
a period of 20 years and to receive remuneration for the same could question C
the vires of the law whereby the said Oriental Gas Company was taken over
as a result whereof, his right to continue in the business was affected. It was
held that the Petitioner Company had such a right, stating :

" .. .It is not necessary in this case to decide whether under the said. D
agreement the appellant was constituted as agent or managing agent
or a servant of Oriental Gas Company. Whatever may be its character,
by reason of Section 4 of the impugned Act, it was deprived of certain ·
legal rights it possessed under the agreement. Under the agreement,
the appellant had the right to manage Oriental Gas Company for a ·
period of 20 years and to receive remuneration for the same. But under E
Section 4 of the impugned Act, it was deprived of that right for a
period of five years. There was certainly a legal right accruing to th~
appellant under the agreement and that was abridged, if not destroyed,
by the impugned Act. It is, therefore, impossible to say that the legal
right of the appellant was not infringed by the provisions of the
impugned Act. In the circumstances, as the appellant's personal right F
to manage the Company and to receive remuneration therefor had
been infringed by the provisions of the statute, it had locus standi
to file the petition under Article 226 of the Constitution."

Once it is held, in view of the aforementioned pronouncement that the G
Appellants had legal rights to challenge the validity or otherwise of the said
notification issued by the State of Kamataka, there cannot be any doubt
whatsoever that they would have independent rights to maintain the writ
application.

We may consider the question from another angle. H
684 SUPREME COURT REPORTS (2005) SUPP. 5 S.C.R.

A If the agent was to be prosecuted for violation of the term of the
notification, he could challenge the validity thereof. A fortiori, a quia timet
application would also be maintainable. A person must be held to have access
to justice if his right in any manner whether to carry on business or threat
to his liberty is infringed. Access to justice is a human right.

B In Dwarka Prasad Agarwal (D) By LRs. v. B.D. Agarwal and Ors.,
[2003] 6 SCC 230, this Court opined:

" .... A party cannot be made to suffer adversely either indirectly or
directly by reason of ari order passed by any court of law which is
not binding on him. The very basis upon which a judicial process can
c be resorted to is reasonableness and fairness in a trial. Under our
Constitution as also the international treaties and conventions, the
right to get a fair trial is a basic fundamental/human right. Any
procedure which comes in the way of a party in getting a fair trial
would be violative of Article 14 of the Constitution of India. Right to
D a fair trial by an independent and impartial Tribunal is part of Article
6(1) of the European Convention for the Protection of Human Rights
and Fundamental Freedoms, 1950 [See Clark (Procurator Fiscal,
Kirkcaldy) v. Kelly...."

The High Court, therefore, was not correct in holding that they had no
E personal right to enforce despite the fact that they would suffer injuries or
would otherwise be prejudiced by the notification issued by the State of
Karnataka. It would, therefore, not be correct to contend that they could
enforce their rights only through their principal and not independently. The
Appellants had a legal right to carry on business. Such a right having been
F impugned by reason of the impugned notification, a writ petition at their
instance was maintainable.

Locus standi :

If the Appellants herein had a legal right, they could seek redressal for
G violation thereof before an appropriate forum. The locus standi to maintain
a writ application even otherwise has received liberal interpretation.

In Ghulam Qadir v. Special Tribunal, [2002] I SCC 33, this Court
observed

"38. There is 110 dispute regarding the legal proposition that the
H
TASH! DELEK GAMING SOLUTIONS LTD. v. STATE OF KARNATAKA [SINHA, J.] 685

rights under Article 226 of the Constitution of India can be enforced A
only by an aggrieved person except in the case where the writ prayed
for is for habeas corpus or quo warranto. Another exception in the
general rule is the filing of a writ petition in public interest. The
existence of the legal right of the petitioner which is alleged to have
been violated is the foundation for invoking the jurisdiction of the B
High Court under the aforesaid article. The orthodox rule of
interpretation regarding the locus standi of a person to reach the
court has undergone a sea change with the development of
constitutional law in our country and the constitutional courts have
been adopting a liberal approach in dealing with the cases or dislodging
the claim of a litigant merely on hypertechnical grounds. If a person C
approaching the court can satisfy that the impugned action is likely
to adversely affect his right which is shown to be having source in
some statutory provision, the petition filed by such a person cannot
be rejected on the ground of his not having the locus standi. In other
words, if the person is found to be not merely a stranger having no
right whatsoever to any post or property, he cannot be non-suited on D
the ground of his not having the locus standi."

The Appellants were not mere strangers.

Maintainability of the suit before this Court :
.E
For determining the question as regard maintainability of the suit before
this Court, it is necessary to consider as to whether the appellants herein
whether independently or together with their principals could maintain a suit.
In view of a large number of decisions of this Court, evidently, they could
not.
F
Even the States of Sikkim and Meghalaya filed suits against the State
of Karnataka in this Court, the independent right of the Appellants herein to
maintain independent action before the appropriate forum could not have
been taken away.

In State of Bihar v. Union of India and Anr., [1970] 1 sec 67, a G
Constitution Bench of this Court while deciding a case wherein the State of
Bihar had not only sued the Union of India but also Hindustan Steel Ltd. in
regard to negligence or deliberate action of servants of both the defendants
therein the matter of short delivery of iron and steel material ordered by the
State in connection with the construction work of Gandak Project, this Court H
686 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A held that such a suit shall not be maintainable, opining :

"Although Article 131 does not define the scope of the disputes
which this Court may be called upon to determine in the same way
as Section 204 of the Government of India Act, and we do not find
it necessary to do so this much is certain that the legal right which
B is the subject of dispute must arise in the context of the constitution
and the Federalism it sets up. However, there can be no doubt that
so far as the parties to the dispute are concerned, the framers of the
Constitution did intend that they could only be the constituent units
of the Union of India and the Government of India itself arrayed on
one side or the other either singly or jointly with another unit or the
c Government of India."

This Court further observed :

"Apart from these special provisions a dispute which falls within
the ambit of Article 131 can only be determined in the forum mentioned
D therein, namely, the Supreme Court of India, provided there has not
been impleaded in any said 'dispute any private party, be it a citizen
or a firm or a corporation along with a State either jointly or in the
alternative. A dispute in which such a private party is involved must
be brought before a court, other than this court having jurisdiction
E over the matter."

In State ofRajasthan and Ors. v. Union of India and Ors., [1977] 3 SCC
592], this Court opined : :

" ... The Article provides in so many terms in clauses (a), (b) and (c)
that the dispute must be between the Government of India and one
F
or more States, or between the Government of India and any other
State or States on one side and one or more other States on the other,
or between two or mpre States. It does not contemplate any private
party being arrayed as a disputant on one side or the other. The
parties to the dispute must fall within one or the other category
G specified in clauses (a), (b) and {c).

In State of Karnataka v. Union of India [1977] 4 SCC 608, this Court
observed :

"It has to be remembered that Article 131 is traceable to Section
H 204 of the Government of India Act. The jurisdiction conferred by it
TASHI DELEK GAMING SOLUTIONS LTD. v. STATEOF KARNATAKA [SINHA, J.] 687

thus originated in what was part of the federal structure set up by the A
Government of India Act, 1935. It is a remnant of the federalism found
in that Act. It should, therefore, be widely and generously interpreted
for that reason too so as to advance the intended remedy. It can be
invoked, in my opinion, whenever a State and other States or the
Union differ on a question of interpretation of the Constitution so that B
a decision of it will affect the scope or exercise of governmental
powers which are attributes of a State. It makes no difference to the
maintainability of the action if the powers of the State, which are
Executive, Legislative, and Judicial, are exercised through particular
individuals as they necessarily must be. It is true that a criminal act
committed by a Minister is no part of his official duties. But, if any C
of the organs of the State claim exclusive power to take cognizance
of it, the State, as such, becomes interested in the dispute about the
legal competence or extent of powers of one of its organs which may
emerge."

Yet again in Union of India v. State of Rajas than, [ 1984] 4 SCC 238, it
D
was observed :

"On a careful consideration of the whole matter in the light of the
decisions of this Court referred to above, we feel that Article 131 of
the Constitution is attracted only when a dispute arises between or E
amongst the States and the Union in the context of the constitutional
relationship that exists between them ·and the powers, rights, duties,
immunities, liabilities, disabilities etc. flowing therefrom. Any dispute
which may arise between a State in the capacity of an employer in a
factory, a manufacturer of goods subject to excise duty, a holder of F
a permit to run a stage carriage, a trader or businessman carrying on
business not incidental to the ordinary functions of Government, a
consumer of railway services etc. like any other private party on the
one hand and the Union of India on the other cannot be construed
as a dispute arising between the State and the Union in discharge of
their respective executive powers attracting Article 131 of the G
Constitution. It could never have been the intention of the framers of
the Constitution that any ordinary dispute of this nature would have
to be decided·exclusively by the Supreme Court. It is well to remember
that the constitutional proposals of the Sapru Committee advocated
the strengthening of the position of the Federal Court in India and H
widening its jurisdiction on the original side so that the Federal Court
';1

688 SUPREME COURT REPORTS [2005) SUPP. 5 S.C.R.

A could act as an interpreter and guardian of the Constitution and as
a tribunal for the determination of the disputes between the constituent
units of the Federation. The Joint Committee on Indian Constitutional
Refonns was also of opinion that the object of conferring exclusive
original jurisdiction on the Federal Court was that the disputes of the
kind. specified between the Federation and the Provinces as the
B
constituent units of the Federation should not be left to be decided
by courts of law of a particular unit but be adjudicated upon only by
the highest tribunal in the land which would be beyond the influence
of any one constituent unit. The Special Committee consisting of
Sriyuts S. Varadachariar, Alladi Krishnaswami Ayyar, B.L. Mitter, K.M.
c Munshi and B.N. Rau appointed by the Constituent Assembly to
consider and report on the constitution and powers of the Supreme
Court suggested "that the Supreme Court, like the Federal Court under
the 1935 Constitution, would be the best available forum for the
adjudication of all disputes between the Union and a unit and between
D one unit and another and proposed that the court should have an
exclusive original jurisdiction in such disputes". (Vide The Framing
of India's Constitution-A Study by Shri B. Shiva Rao at p. 483).
Considered in the light of the foregoing the conclusion becomes
inevitable that disputes of the nature involved in this case could not
have been in the contemplation of the framers of the Constitution
E when they adopted Article 131 of the Constitution."

Conclusion :

The Division Bench of the High Court accepted the position that the
F Appellants herein are statutory agents but it evidently failed to take into
consideration the status of the Appellants vis-a-vis their contractual rights
and obligations with their principal coupled with their individual rights to
maintain their writ petitions in proper perspective. It is no doubt true that had
the State of Sikkim or the State of Meghalaya intended to sue the State of
Kamataka independently; in terms of Article 131 of the Constitution of India
G the only forum where the dispute be~een them could have been resolved is
this Court alone but when such a lis is brought by the State jointly with their
agents who had also independent cause of action and had a legal right to
maintain writ application questioning the legality and/or validity of the said
notification issued by the State, a suit in terms of Article 131 of the Constitution
H of India would not have been maintainable.
TASHI DELEK GAMING SOLUTIONS LTD. v. STATEOFKARNATAKA[SINHA,J.] 689

The Appellants herein were not busy bodies. They had an interest in A
the subject-matter of the writ petition. They were, thus, not merely strangers
having no right whatsoever in the matter.

It has not been contended, nor could it be contended that the Appellants
are mere smoke screens of the States of Sikkim and Meghalaya. In absence
of such a plea and in view of the fact that the Appellants here not been held B
to be mere strangers without having any legal right, we are of the opinion that
the writ petitions were maintainable. The impugned judgment, therefore, cannot
be sustained, which is set aside accordingly.

The appeals are allowed.
c
Keeping in view the fact that the Appellants are out of business, the
High Court is requested to con~ider the desirability of disposing of the writ
petitions as expeditiously as possible and preferably within a period of two
months from the date of communication of this order. The Chief Justice of the
High Court, having regard to the importance of the question, may also consider D
the desirability of getting the matter heard out and disposed of by a Division
Bench ..

The Appellants are entitled to costs throughout. Counsel fee assessed
at Rs.25,000/- in each appeal.
E
v.s.s. Appeal allowed.