No prize chit or money circulation scheme be permitted, rules HC

8220;We are of the view that the conduct of prize chits or benefit schemes, by whatever name they call, should be totally banned in the larger interest of the public8221;, the bench observed.

Holding that there was no proper scheme and there was no transparency at all from the beginning to till the end, the bench said that the prize chits or money circulatiion schemes benefit primarily the promotors and do not serve any social purpose. They are prejudicial to public interest and adversely affect the efficacy of fiscal and monetary policy of the country.

There has been a clamour for banning such schemes. This stems largely from the malpractices indulged in by the promotors and also the possible exploitation of such schemes by unscrupulous elements to their own advantage, the judges said adding that suitable legislative measures should be taken, if the existing enactments are considered inadequate.

The advertisements themselves show the inducement to lure the innocent people by offering fabulous prizes. The advertisements are to seduce the poor and unwary people by unscrupulous racketeers and to play upon the gambling instinct to get rich through the prizes.

The judges said that on the declaration of sale of the Malars by the respective promoters, the authority may collect all the information and data regarding the actual sales in each centres through the respective agents and work out the actual sale by examining the books of accounts. Appropriate action must be taken in the event of the accounts not being properly maintained.

The authority can concentrate on the aspect whether the prize chit primarily benefit the promoters or serve any social purpose. The examination has to be done as to whether actually skill is involved. If so, how and what is the degree of skill required or whether it is only to exploit the people by unscrupulous elements.

The authority is to probe into the contract between the promoters and the sponsorers regarding the proposed prizes and examine the financial features and evasion of tax, if any. Such materials should be furnished to the tax authorities to enable them to probe into that aspect and to prevent unlawful gain and tax evasion on the quantum of income derived by the promoters.

The authority should also probe as to whether there is transgression of the procedures contemplated in the Acts and take appropriate steps if they are violated. The steps should be taken to prevent the promoters from penetrating the urban and rural areas to tap the small savings of the poor and ignorant villagers.

Appropriate announcements have to be made through the media to educate the public not to subscribe to such Malars and the consequences on them and the promoters. Stringent action must be taken not to permit hereafter any such prize chits, which are prohibited by the Acts, the bench said.

Recording the undertaking given by the counsel for the dailies and weeklies that they will not resort to this kind of activity in future and that this will be the last, the bench said that if an element of substantial degree of skill actually exists, the promoters may be permitted to conduct the draws in the presence of top officials such as secretaries, heads of departments and respective district collectors and superintendents of police, to ensure transparency in the draw of prizes.