Plea in Sikkim High Court seeks ED probe, special audit into "illegal" manner in which lotteries are conducted in Sikkim

A petition has been filed before the Sikkim High Court against the manner in which lotteries are being conducted through distributor, Future Gaming and Hotel Services Pvt. Ltd. in Sikkim and other States.

. The petitioner, Jojo Jose, highlighted that following an agreement entered into on June 6, 2016, Future Gaming services was appointed as the sole distributor for lotteries in Sikkim.

. To date, it continues to hold its monopoly over the conduct of lotteries within Sikkim, it was pointed out. The lottery distribution activities by Future Gaming also extend to other States, the petition said.

. A Bench of Chief Justice Jitendra Kumar Maheshwari and Meenakshi Madan Rai issued notice in the matter last month. The case is slated to be herd next on May 6.

Advocates Sriram Parakkat, Deepak Prakash and Sangay Bhutia represented the petitioners.

. Appointment of Future Gaming as sole distributor borne out of collusion, claims petitioner . The State of Sikkim conducts lotteries through the Director of State Lotteries, Sikkim (DSSL) which is directly under the Finance, Revenue & Expenditure Department of the Government of Sikkim, the petititoner explains.

. For the purpose of appointing a distributor, a Notice Inviting Tender (NIT) was issued, following which Future Gaming & Hotel Services Pvt. Ltd. was selected for having the highest bid out of three bidders.

. It is the petitioner's case that the process of awarding the tender to Future Gaming for distributing lotteries for the DSSL was itself illegal as there was collusion amongst the bidders. The June 2016 agreement was also challenged as being void for allegedly violating the Lotteries (Regulation) Act, 1998 and the Lotteries Rules, 2010.

. Future Gaming holds monopoly in violation of Lotteries Act, says petitioner . The petitioner contended that under these Rules, there cannot be an exclusive distributor/selling agent and there must be numerous such Distributors. As such, the appointment of Future Gaming as the sole/exclusive Distributor violated the Lotteries Act and Rules and discourages competition, it was argued.

. The engagement of Future Gaming as the sole distributor for lotteries in the State of Sikkim has, in turn, resulted in Future Gaming gaining a monopoly over the activtiy, rather than the agreement acting as a means of licensing the activity, it was submitted.

. "The manner of selection of the Respondent No.3 (Future Gaming), as the sole distributor, and the consequent conduct of lotteries has resulted in privatisation/monopolisation of the lottery model of the State of Sikkim ... instead of being a mere agent/distributor, Respondent No. 3 has hijacked the entire lottery model, while wrongfully gaining wealth to the tune of thousands of Crores of Rupees annually- all of which is public money and which ought to have been utilised by the Government of the State of Sikkim and other State Governments for undertaking public welfare activities, " read the plea. . Future Gaming has laundered money to the tune of thousands of crores: Petitioner . It was further alleged that using its influence, Future Gaming laundered money to the tune of thousands of crores through the conduct of lotteries in violation of applicable rules, not only within Sikkim but in other States as well.

. The petitioner accused Future Gaming of paying only a negligible amount of money to the State in a whimsical manner while retaining sale proceeds for itself in violation of the applicable rules.

. While the State of Kerala is stated to have conducted only 1/16th of the number of lottery draws that Sikkim had in 2016-17, the Kerala government generated over 40 times the revenue generated by Sikkim in the same period, the petitioner submitted. In this regard, the petitioner referred to RTI queries which divulged that Kerala had conducted 366 lottery draws in the said period, while the DSSL conducted 5,939 draws.

. "However, for the month of August, 2017, the net revenue gained by the State of Kerala through the sale of lottery is Rs 130.56 crores, whereas, the net revenue gained by the State of Sikkim for the same time period is Rs 3.13 crores, as per the information received by the Petitioner through RTI from the State of Kerala and the State of Sikkim," the petitioner submitted.

. The petitioner also highlighted that the Enforcement Directorate had already registered a case against Future Gaming, following which the property of its Managing Director was reportedly attached.

. "As per the news articles, investigation of ED has revealed that “Santiago Martin and his associates made illegal gain to the extent of Rs. 910.3 Crore”. However, this is only the tip of the ice berg, as Respondent No. 3 and its officials have laundered more than Rs. 40,000 Crores with respect to the lottery business, and thus, a more thorough investigation by the ED is required, in light of the facts brought within the knowledge of this Hon‟ble Court by way of the present Petition," the petitioner added.

. Petitioner calls for ED probe, special audit . In this backdrop, the petitioner called for a probe by the Enforcement Directorate or for a special audit by the Central government through the Comptroller Auditor General or another Central agency into lottery schemes organised with Sikkim.

. The prayers made before the Sikkim High Court include, inter alia :

1. To declare Rules 3(6) and 3(10) of the Lotteries (Regulation) Rules, 2010, as unconstitutional for being ultra vires Section 4 of the Lotteries (Regulation) Act, 1998;

2. To declare the June 2016 agreement with Future Gaming as void;

3. To cancel the selection of Future Gaming as sole distributor of lotteries in Sikkim;

4. To direct the constitution of a Special Investigation Team comprising of officials from the Central Bureau of Investigation (CBI) or the Enforcement Directorate (ED) to probe the allegedly criminal or illegal activities of Future Gaming in relation to the conduct of lotteries in Sikkim, or

5. To direct the Central Government to conduct a special audit of the accounts of DSSL to guage the full extent of loss of revenue incurred by the Sikkim government and to recover the same from Future Gaming.

. The petitioner had earlier written to the Union Home Ministry on the issue, although it did not yield any response.

. Later, he moved a petition before the Delhi High Court. However, it was dismissed citing jurisdictional issues, prompting him to move the Sikkim High Court.

Plea in Sikkim High Court seeks ED probe, special audit into "illegal" manner in which lotteries are conducted in Sikkim

Areeb Uddin Ahmed

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