Karnataka High Court permits Bangalore Turf Club to resume horse racing and betting (for now)

The Karnataka High Court on Tuesday temporarily permitted Bangalore Turf Club (BTC) to resume on-course and off-course horse racing and betting. [Bangalore Turf Club Limites v. State of Karnataka and Ors]

Justice SR Krishna Kumar observed that the State government orders refusing racing and betting licenses to the Club were violative of the principles of natural justice.

“The impugned orders are violative of principles of natural justice and the same deserve to be stayed not only on account of lack of sufficient and reasonable opportunity being granted to the BTC but also on account of the show cause notice lacking material particulars and being inadequate which amounts to denial of principles of natural justice warranting interference by this Court.”

The Court was hearing a batch of writ petitions challenging the Home Department’s order refusing a racing license and the Finance Department’s order refusing a betting license to BTC. Both orders were passed on June 6.

The petitioners highlighted that racing and betting activities had been carried out for over a century without hindrance. They also referred to previous High Court proceedings where BTC had been favoured.

It was argued that more than 20,000 people directly and indirectly depend on horse racing and that it produces more than ₹1 crore tax daily.

On the other hand, the State argued that BTC was wholly responsible for the illegal betting being carried out, which led to refusal of the license. BTC does not have a vested right to be granted a license, it submitted.

The State further contended it had faced a loss of ₹296 crore on account of tax evasion.

The Court determined that the petitioners had made out a prima facie case and that the balance of convenience was in their favour. Thus, it said that if the orders were not stayed, the petitioners would face irreparable injury.

Based on Supreme Court’s decision in Dr KR Lakshmanan v. State Of Tamil Nadu And Anr, the Court observed that horse racing is a game where winning depends substantially and preponderantly on skill, and consequently, the State was not entitled to refuse license on the ground that the petitioners were carrying on illegal racing and betting activities.

The Court noted that the licenses were refused on the ground of illegal activities being carried out by bookmakers who are now facing criminal proceedings. However, based on the Licensing Act and Rules, such circumstances could not have been made the basis for refusal to grant or issue license.

“A perusal of the impugned orders passed by the respondents – State will clearly indicate that the same are neither relevant, material or germane for the purpose of grant of license and the said reasons are untenable and without any basis,” the Court added.

It further observed that the government’s order ignored the fact that BTC was not arraigned as an accused in the criminal proceedings, and as such, the proceedings could not have been the basis of rejection of licenses.

“Though the impugned orders allege violation of the provisions of the Licensing Act and Rules, necessary material particulars and details in this regard are conspicuously absent in the impugned orders; it follows therefrom that the bald, vague, cryptic, laconic, unreasoned and non-speaking allegations made in the impugned orders in the regard is yet another circumstance that would vitiate the impugned orders,” it added.

The Court clarified that all these were prima facie findings based on which it determined that if interim orders were not passed, people as well as horses in the industry would face irreparable loss and hardship.

Accordingly, the Court stayed orders under challenge until further notice and allowed BTC to carry out racing and betting activities subject to terms and conditions in a previously issued license and also subject to complying with the provisions of the Mysore Race Course Licensing Act and Mysore Race Course Licensing Rules. It also gave the State liberty to monitor, supervise and regulate the racing and betting activities of the petitioners by taking necessary steps.

The petitioners were represented by Senior Advocates SS Naganand, KN Phaneendra, Ravi B Naik and DR Ravishankar.

The State was represented by Advocate General K Shashi Kiran Shetty.