Pritam Kumar Razak, a petty worker with the locomotive workshop in
Jamalpur, Bihar, was a happy man, content with what he had in life—a
secure job, a caring wife and two lovely children. He had no bad habits
except, perhaps, one: he spent a lot of money on buying lottery tickets,
hoping someday Lady Luck would smile on him and make him rich
overnight.
Sure enough, the fateful day dawned on 6 December 1991. Ticket
number SA-763447, which he had bought for the bumper draw of the All
India Deaf and Dumb Society Lotteries, run under the aegis of the Andhra
Pradesh (AP) government, was declared the winner of the first prize of Rs
51 lakh. Now, Rs 51 lakh at that time—or for that matter even now—was a
lot of money. Pritam’s jubilation knew no bounds and he celebrated by
distributing sweets amongst his friends and neighbours, who were more
envious than happy for him. Both his wife and he began to plan how they
would invest the money to secure their children’s future, after setting aside
some money for themselves. They would perhaps take that elusive trip to
Goa, a place they had heard so much about and dreamt of visiting some day.
Little did they realize that one should never count one’s chickens before
they hatch.
An excited Pritam went to meet the manager of the local branch of the
State Bank of India, who processed his claim—as was the procedure
prescribed to claim winnings in the said lottery—and sent the winning
ticket along with other necessary documents to the society’s office in New
Delhi. Interestingly, the society responded by sending two different
acknowledgements of receipt: one to the bank and the other to Pritam. The
communication he received said that the society had received all necessary
documents except the winning ticket, whereas the bank was informed that
all documents had been duly received.
A disturbed Pritam Kumar entered into a protracted correspondence with
the society stating that his bank had sent them the winning ticket, but his
protests were to no avail. After running from pillar to post, he was advised
to approach the Crime Branch of the Delhi Police where Assistant
Commissioner of Police (ACP) S.M. Bhaskar heard his complaint and
immediately sensed foul play. He deputed Sub-inspector (SI) O.P. Sagar to
look into the matter.
A case of cheating, criminal conspiracy and theft was registered on the
basis of Pritam’s complaint and an investigation was launched. The SI
interrogated the employees concerned of the All India Deaf and Dumb
Society in Delhi, who denied having received the winning ticket. It came to
light that they had outsourced the running of the lottery to M/s Popular
Ventures & Capitals Private Limited, who in turn had appointed M/s Bharat
Lottery as their sole selling agent.
SI Sagar, the investigating officer (IO), was surprised when Praveen
Kumar Jolly of Bharat Lottery said that the winning ticket had never been
printed. Thus, the fraud perpetrated by Jolly was evident. The IO reported
his findings to ACP Bhaskar, who instructed him to get to the bottom of the
case by visiting Hyderabad and contacting the lottery department officials
of the AP government since the Deaf and Dumb Society claimed to have
the department’s approval.
When the SI inquired of the officials whether they had authorized the
society to conduct the lottery, he was in for another shock. The society had
been given permission to run a lottery only for its own members and not for
the general public. Thus, the lottery that was being run by the society was
unlawful.
As the probe went deeper, layer after layer of fraudulent activities began
to emerge. The society had never approached the AP government for
permission to hold a bumper draw. It conducted the bumper draw without
the government’s approval and had also printed on the tickets that it was a
government-approved draw of lots. No government official was present
when the draw was carried out. Therefore, the society had given the public
the false impression that it was organizing a lottery that had the approval of
the AP government, when in reality it was running a private, unauthorized
and fraudulent lottery.
There was yet another act of chicanery involved. The scheme ostensibly
envisaged a total of twenty-four lakh tickets, and this information was
printed on the back of the tickets. In reality, the organizers printed only
2,40,000 tickets. However, when the draw for the winning tickets was done,
the numbers of all twenty-four lakh tickets were included whereas only
2,40,000 tickets had been sold. This meant that chances of the balance
21,60,000 unsold/unprinted tickets remained with the organizers, which was
90 per cent! Further, if any one of the printed tickets were to win a prize, it
would only be of Rs 50 each, as had been decided beforehand by the
organizers.
Thus, assuming that all printed tickets were sold, they would yield Rs
1,20,00,000, whereas only Rs 12,000 was to be paid by way of prizes. In
this manner, a single draw yielded a profit of Rs 1,19,80,000 to the
organizers, which was shared amongst the selling agents, the organizing
company and the society. The figures were mind-boggling, and with
hundreds of lotteries under operation with multiple daily draws in quite a
few of them, the Crime Branch was sitting on the tip of an enormous
iceberg. There was a lottery scam running across the country, cheating
millions of people of their hard-earned money, and the Crime Branch had to
do everything it could to stem the rot.
*
I had completed an eventful three-year stint as the deputy commissioner of
police (DCP), south district, in August 1992 and was desperate for a change
of assignment. District jobs can get stressful and tedious after a while, and I
was a tad weary and longing for a change, having carried the yoke for over
three years. I requested the then commissioner of police (CP), M.B.
Kaushal, to transfer me out, and he very kindly posted me as DCP, Crime
Branch of the Delhi Police, an assignment after my heart. To my good
fortune, the multi-crore lottery scam came my way within just over a month
of my joining, and it turned out to be one of the most satisfying
investigations of my career.
As the word spread about the Pritam Kumar Razak lottery fraud case,
many more complainants who had been cheated similarly began to
approach the Crime Branch. During the investigation of each case, newer
and more bizarre ways employed by the lottery operators to cheat people
began to emerge. One such case was that of Jasminder Singh, a resident of
Bhagat Singh Market in New Delhi, who had won a prize in a daily draw of
the Jeevan Rekha lottery, ostensibly run under the aegis of the Government
of Manipur.
When Jasminder approached the lottery owners with his winning ticket,
he was informed that there had been a mistake in the printing of the results
in the newspapers. It was claimed that the results of Jeevan Rekha and
Vijay Rekha had been erroneously interchanged, and it was an innocent
printing error. Usually, when a purchaser of lottery tickets reads in the
papers that his ticket number has not figured in the list of prizes, he destroys
the tickets. Now, with this interchanging of the results many genuine
prizewinners would have thrown their tickets away. Jasminder Singh,
however, went to the police station in Karol Bagh to register a complaint
that he had been cheated of Rs 1 lakh. The local police directed him to
approach the Crime Branch as we had already investigated a case of lottery
fraud.
When the case came to us, we learnt that M/s Guru Nanak Agency, Karol
Bagh, run by one S.K. Sethi, was the sole selling agent for Manipur State
Lotteries. They paid Rs 18,000 as fixed royalty on each of the daily draws
of Jeevan Rekha, Bhagya Rekha, Vijay Rekha and Bhagya Rekha Super—
four lotteries run by them for the Manipur government. Thus, the organizers
paid a fixed royalty of Rs 2,10,00,000 per annum to the Manipur
government.
S.K. Sethi defrauded unsuspecting lottery ticket buyers by interchanging
the results of Jeevan Rekha and Vijay Rekha lotteries in the newspapers.
Generally, members of the public go by the results published in the
newspapers. By interchanging the results of the two lotteries, Sethi made a
wrongful gain of Rs 2.5 crore in one single draw.
Readers can extrapolate the amount of money Sethi would have made by
adopting this modus operandi when the draw of lots took place every day.
Not even in one case did Sethi issue a corrigendum. After registering a case
based on the complaint made by Jasminder Singh and conducting a detailed
investigation, we arrested S.K. Sethi on 11 November 1992 and chargesheeted
him for cheating and criminal breach of trust.
Yet another complainant, Jagdish Lal of Faridabad, bought Hast Rekha
lottery ticket number 3851501, which was declared the first prize winner in
the draw of lots in June 1993. The prize amount was Rs 1 lakh. Much like
Pritam Kumar Razak of Jamalpur, he sent his claim through a nationalized
bank, but the organizing agent did not pay him a single penny on the ground
that the ticket in question was never printed. When Jagdish Lal persisted
with his questioning of the organizing agent, he was threatened with
criminal action for forgery.
S.K. Sethi was once again the organizing agent. We recovered Jagdish
Lal’s prizewinning ticket from Sethi’s office. Additional charges were
pressed against Sethi, who had already been arrested by the Crime Branch
in the earlier case.
Complaints of lottery frauds committed by resorting to a wide variety of
modus operandi continued to pour in. Ved Prakash Saxena of Bareilly
complained that he was denied payment of the first prize of the Bharat
Raffle Deluxe Lottery on his winning ticket number 321138, which
amounted to Rs 2 lakh. M/s Guru Nanak Lotteries of Karol Bagh had
organized the draw in May 1993. Here again, the organizing agent
questioned the genuineness of the ticket Saxena produced and shooed away
the claimant by threatening him with criminal action for forgery. When the
matter reached the Crime Branch, the office of Guru Nanak Lotteries was
searched and the winning ticket recovered. V.S. Sethi, a brother of S.K.
Sethi, was arrested in this case.
Another lottery agency, M/s APS Agencies, was investigated on the basis
of a complaint received at the police station on Deshbandhu Gupta Road,
New Delhi. In this case, the company was not only cheating ticket buyers of
their rightful prize money but was also forging its accounts, showing false
transactions in its books and evading taxes amounting to crores of rupees.
The said agency was the sole organizer of Matka Sone Ka (MSK) and
Matka Motiyon Ka (MMK)—two daily lotteries authorized by the Punjab
government. The company was also authorized to supply paper for the
printing of tickets while M/s Druck Grafen India Private Limited was
contracted for printing the tickets.
The book of accounts revealed that M/s Druck Grafen procured the paper
from APS Agencies and printed tickets at the rate of Rs 1500 per lakh.
Nearly Rs 23 lakh was paid as expenditure on paper to APS Agencies and
Rs 30 lakh was shown as printing charges. Further scrutiny of records
revealed that one M/s Krishna Paper Mart supplied the paper to APS
Agencies. However, investigations revealed that M/s Krishna Paper Mart
was a non-existent firm and its registered office was the residence of a
private citizen. The sales tax office also confirmed that no such firm had
been allotted the sales tax number that the books of Druck Grafen reflected
as belonging to their ‘paper supplier’. Further, mandatory government
papers meant for transportation of stationery from Delhi to Patiala did not
carry any central sales tax or local sales tax numbers. It was clear that the
bogus firm had not supplied any stationery, and all the bills in the books of
Druck Grafen concerning M/s Krishna Paper Mart were fraudulent.
APS Agencies’ books revealed that Rs 23 lakh had been paid to M/s
Krishna Paper Mart for the supply of paper and Rs 30 lakh to Druck Grafen
for the printing of lottery tickets. Since Krishna Paper Mart was a fictitious
entity, the paper could not have been procured from them. Investigations
also revealed how this money had been swindled by dubious bank dealings
carried out by APS Agencies and Druck Grafen. Needless to say, no taxes
had been paid to the exchequer for these dealings.
To top it all, APS Agencies denied its lottery winners access to prize
money by one trick or the other. The winning buyer had to claim his or her
money within forty-five days of the announcement of the prize and had to
make the claim through the office of the Punjab State Lotteries. The office,
after ascertaining the genuineness of the tickets, was supposed to send the
claim to APS Agencies, which would make the money available to the
lottery office that would then disburse the money to the winner. The lottery
department of the Punjab government furnished a list of 246 draws of
Matka Sone Ka and 102 draws of Matka Motiyon Ka. It was astonishing to
find that only thirty-one claims for prize money out of 246 draws of MSK
and fifteen claims out of 102 draws of MMK were made. A total of only Rs
5 lakh stood disbursed out of the Rs 6.91 crore that was kept reserved for
prizes. The balance amount of Rs 6.86 crore had been swindled. It was also
clear that officials of the Punjab lottery department had not supervised the
conduct of lotteries closely, and were, perhaps, part of the scam.
It was no surprise, therefore, that officials of the lottery departments of
various states, including Punjab, were camping in Delhi during our
investigation, trying their best to twist our arms. Since our superiors
supported us and we stood our ground, we had little difficulty in
withstanding the pressure tactics. Interestingly, many media houses came
forward in support of the lottery operators as their advertising revenues
were being negatively affected by our investigation.
The above-mentioned facts relate to only a handful of cases investigated
by the Crime Branch. It would not be incorrect to say that similar frauds
existed in all 137 lotteries being run in Delhi, out of which quite a few had
daily draws. We estimated that countrywide, around Rs 55,000 crore of
people’s money had been swindled in the lottery scam. We arrived at this
figure by working backwards after obtaining the aggregate of royalties that
the state governments had received from lottery operators. No government
agency, no civil society organization, or, for that matter, no section of the
media had taken notice of this scam of humongous proportions. The reasons
were simple and straightforward. The lottery departments of various state
governments, whose responsibility it was to regulate such lotteries, were
themselves party to the scam and had a vested interest in perpetuating the
malpractices. The victims were poor, powerless and faceless citizens of the
country, who could be turned away or silenced easily by any agency they
approached with their grievances. The lottery operators, government
officials and unscrupulous politicians made tons of money at the cost of the
poorest of the poor. It is no surprise that when their unbridled run at making
easy money came to an abrupt end—as will be described later—most of the
lottery operators shut shop and invested their ill-gotten money in real estate
and other capital-intensive enterprises.
*
When someone buys a lottery ticket, they do so under the impression that a
reasonably fair chance to win a prize exists. However, investigations into
the above cases revealed that the odds were heavily against the ticket
buyers as the sellers of this chance manipulated the conduct of lotteries in
such a way that they cornered the odds and the bulk of the proceeds of the
lottery went into their own pockets. The buyers received prizes only on the
rarest of rare occasions. To understand the malpractices in this trade, I
decided to probe the matter in great depth with my team and studied every
modus operandi adopted by lottery operators and catalogued them. But
before I go into the outcome of this investigation, let us understand the legal
aspect of the situation.
In its legal and popular sense, ‘lottery’ means distribution of prizes by
lots or chance. It is the purchase of this chance that is the essence of a
lottery. The distinction between lottery and gambling is subtle as both are
games of chance. But gambling is a game played by and in the presence of
all participants while in the case of a lottery, the presence of participants is
both unnecessary and superfluous. In gambling, there may be a display of
some skill, as in rolling a dice or the like. In a lottery, the participants
merely buy chance, the happening of which is beyond their control. The
mischief of gambling affects only the actual players whereas in a lottery it
is widespread. The US Supreme Court observed:
Experience has shown that the common forms of gambling are comparatively innocuous when
placed in contrast with the widespread pestilence of lotteries. The former are confined to a few
persons and places, but the latter infests the whole community. It enters every class, it preys
upon the hard earnings of the poor, and plunders the ignorant and the simple.*
The law reprobates gambling as well as the lottery because both promote
the circulation of money that is the fruit of labour by chance, a practice that
is both unjust and unequal. Furthermore, gambling and lottery encourage
the squandering of hard-earned money, which leads to incalculable misery.
They are, moreover, in opposition to honest labour and thrift, upon which
the happiness of society depends. An English court called ‘keepers of
lotteries as a class of rogues and vagabonds’, and they are, in fact, so.
Lotteries are mostly intended to inveigle people into purchasing worthless
things or parting with their money with no return, to the advantage of the
lottery keeper. As such, a lottery is a fraudulent public practice because it
leads people to pay for a game in which there is no subtlety—namely, that
the lottery keeper keeps the biggest prize.
The subject of lottery figures in the Union list of the Constitution of India
in Entry No. 40 of the Seventh Schedule. However, curiously, the Centre
had not legislated on the subject, thereby leaving the ground clear for a
free-for-all situation. This was the beginning of all the troubles in the Indian
context. If the Central government had spelt out the dos and don’ts for the
lottery trade and had enabled law enforcement agencies to come down
heavily on violations, the large-scale loot of people would have stopped. In
the absence of any legislation, some state governments, such as Andhra
Pradesh and Karnataka, enacted their own laws. For instance, Section 3 of
the Andhra Pradesh Lotteries Act of 1968 declares that all lotteries are
unlawful. However, under Section 24, the Act gives some exemptions to a
lottery whose net proceeds are to be used for charitable or educational
purposes. Under the garb of this provision, several lotteries run by
unscrupulous individuals got authorizations from the AP government and
ran private lotteries. Some such lotteries that came to adverse notice were:
1. All India Deaf and Dumb Society
2. Visakhapatnam District Cricket Association
3. Urban and Rural Development Scheme
4. Share Medical Care
Section 294 A of the Indian Penal Code provides that running of any lottery
that is not a state lottery or a lottery authorized by the state government is
an offence. However, Section 294 A is non-cognizable and bailable, which
means that the police cannot take action without a court’s permission and
the accused, if arrested, has to be released on bail immediately.
By several judicial pronouncements and orders of the government, both
state and Central, only a lottery that is initiated and managed by the state
government is permissible. The rest come under the category of private
lotteries, which are banned.
However, the trick of the trade was to somehow get an authorization from
the lottery department of a state government for running a lottery, for which
a small amount of royalty was paid to state authorities. Regrettably, the
lottery departments, having given such authorization, ceded control to the
private lottery operators. Nobody knew when and where the draws were
held; nobody knew who attended the draws and whether any representative
of the government was present. Thus, the lottery operators could do what
they wanted.
The second and most reprehensible act of chicanery was to print far
fewer tickets than were declared in the scheme. For instance, if the scheme
envisaged twenty lakh tickets, only two lakh tickets were printed. Further,
not all two lakh tickets printed were sold. However, when the draws took
place, not only were all twenty lakh ticket numbers approved by the lottery
department concerned included, but also included were the unsold ticket
numbers, reducing the chance of a valid ticket buyer winning a prize by
more than 90 per cent. All chances accruing out of unprinted and unsold
tickets stayed with the lottery operator. Thus, over 90 per cent of the time,
the prizewinning tickets were those that were with the operator himself.
If even against these adverse odds a valid ticket buyer won a prize, the
lottery operator would turn away such a ticket holder, claiming that the
ticket was never printed and the claimant was producing a forged ticket.
The poor man was threatened with legal action for forgery. At the beginning
of this story we saw how lottery organizers shooed away Pritam Kumar
Razak of Jamalpur and Jasminder Singh of New Delhi, denying them their
legitimate prize money and holding on to every penny of the cash paid by
ticket buyers from across the country.
Emboldened by the lack of oversight by government officials, the lottery
operators adopted a more depraved method: they printed and sold only
forged tickets. When the draws were conducted, the numbers used were of
another series, which had been approved by the government lottery
department. So the numbers of the tickets sold were not used in the draw at
all. That meant the buyers had zero chance of winning and all the proceeds
of the ticket sales went directly into the pockets of the operators.
An even more diabolical way of cheating lottery ticket buyers was to
interchange the results of two lotteries, thereby denying prizes to legitimate
prizewinners. This method of cheating came to light, as narrated earlier in
this chapter, when the results of Jeevan Rekha and Vijay Rekha were
deliberately interchanged. Here again, the organizers conveniently pocketed
all sale proceeds.
By adopting these tactics, the lottery operators denied disbursement of
prizes, especially prizes of higher denominations, to any genuine ticket
holder.
*
On 31 May 1993, four lottery operators from Delhi were returning from
Kohima in a private taxi when the insurgent group, People’s Liberation
Army (PLA) of Manipur, gunned them down. The PLA had warned the
Manipur government of direct action against lottery operators if the
government failed to ban them. The PLA felt, and perhaps rightly so, that
innocent Manipuri people had been cheated by non-Manipuri private lottery
organizers for several years. Their contention was that while lakhs of people
from Manipur had bought lottery tickets, not a single Manipuri had ever
received a prize because of fraud in the conduct of lotteries. The PLA had
urged the Manipur government to stop lottery trade in their state. However,
when after several warnings the state government did not take any action,
they resorted to this killing.
Criminal incidents related to the lottery trade occurred in different parts
of the country from time to time. In some cases, lottery operators resorted to
killing fellow operators out of professional rivalry and in turf wars. In
others, lottery ticket buyers, having lost their hard-earned money,
committed suicide.
Since a lot of data emerged during our investigations, I decided to collate
them in the form of a monograph that bore the same title as the present
chapter. Besides a detailed note on the various modus operandi adopted by
the lottery operators, it had copies of all relevant government orders, a list
of lottery operators, the number of draws held by them, the prizes
disbursed, etc. The monograph was in high demand by various state police
forces, lottery department officials and police stations in Delhi. Besides
circulating it to these recipients, I sent a copy of the monograph to the
Ministry of Home Affairs (MHA), which dealt with the subject in the
Government of India.
Following the action taken by the Delhi Police, several lottery vendors
wound up their operations and closed shop. In some states such as Bihar,
Haryana and Madhya Pradesh, the state governments banned lotteries.
Lottery operators across India came together and decided to approach the
Supreme Court regarding the action being taken by the state and the Central
governments as well as the police cases against them. The best lawyers of
the country represented them. During the proceedings, after hearing the
arguments of both sides, the court asked the government counsel if any
systematic study had been conducted by the government into the frauds
committed by lottery operators. In the absence of any other report, MHA
submitted the monograph prepared by us. Copies were supplied to the
advocates of the lottery operators as well. After protracted hearings, the
court adjourned for final orders to a date a fortnight later, when it would
decide the fate of lottery operators in India.
We waited with bated breath for the hearing, eager to know what the
court had to say about our findings on this mammoth fraud, which had
illegally lined the pockets of a few unscrupulous lottery vendors, devastated
the lives of thousands of innocent lottery ticket buyers and defrauded the
government of billions of rupees by tax evasion and tax fraud. We were a
humble team of a few police officers armed only with a monograph on our
meticulous investigations and represented by a senior government counsel.
The lottery vendors were a wealthy force, had the media on their side due to
the enormous advertising revenue made through such operators, the best
lawyers of the land, and the support of a few unscrupulous politicians and
lottery department officials. I hoped the Supreme Court would deem our
findings meritorious and substantial and stop lottery vendors from looting
millions of innocent people of their hard-earned money in the future.
The date of the hearing finally arrived. The bench, in the opening lines of
their order, quoted from A Matter of Chance. The court took note of the
cases we had investigated and appreciated the pioneering work we had
done, much like a sustained campaign. In a far-reaching order, the court put
a blanket ban on all private lotteries and declared only those that were run
wholly by the government to be legal.
As the officer who had studied and investigated the lottery frauds in the
country for months, the order was gratifying. What was even more
humbling was the fact that the court had relied heavily on the monograph I
had prepared with the help of my ACP, S.M. Bhaskar.
Millions of innocent people, who would have otherwise been the victims
of such frauds in subsequent years, had been saved. That was reward
enough for us; that was the recognition to be cherished forever.
Jamalpur, Bihar, was a happy man, content with what he had in life—a
secure job, a caring wife and two lovely children. He had no bad habits
except, perhaps, one: he spent a lot of money on buying lottery tickets,
hoping someday Lady Luck would smile on him and make him rich
overnight.
Sure enough, the fateful day dawned on 6 December 1991. Ticket
number SA-763447, which he had bought for the bumper draw of the All
India Deaf and Dumb Society Lotteries, run under the aegis of the Andhra
Pradesh (AP) government, was declared the winner of the first prize of Rs
51 lakh. Now, Rs 51 lakh at that time—or for that matter even now—was a
lot of money. Pritam’s jubilation knew no bounds and he celebrated by
distributing sweets amongst his friends and neighbours, who were more
envious than happy for him. Both his wife and he began to plan how they
would invest the money to secure their children’s future, after setting aside
some money for themselves. They would perhaps take that elusive trip to
Goa, a place they had heard so much about and dreamt of visiting some day.
Little did they realize that one should never count one’s chickens before
they hatch.
An excited Pritam went to meet the manager of the local branch of the
State Bank of India, who processed his claim—as was the procedure
prescribed to claim winnings in the said lottery—and sent the winning
ticket along with other necessary documents to the society’s office in New
Delhi. Interestingly, the society responded by sending two different
acknowledgements of receipt: one to the bank and the other to Pritam. The
communication he received said that the society had received all necessary
documents except the winning ticket, whereas the bank was informed that
all documents had been duly received.
A disturbed Pritam Kumar entered into a protracted correspondence with
the society stating that his bank had sent them the winning ticket, but his
protests were to no avail. After running from pillar to post, he was advised
to approach the Crime Branch of the Delhi Police where Assistant
Commissioner of Police (ACP) S.M. Bhaskar heard his complaint and
immediately sensed foul play. He deputed Sub-inspector (SI) O.P. Sagar to
look into the matter.
A case of cheating, criminal conspiracy and theft was registered on the
basis of Pritam’s complaint and an investigation was launched. The SI
interrogated the employees concerned of the All India Deaf and Dumb
Society in Delhi, who denied having received the winning ticket. It came to
light that they had outsourced the running of the lottery to M/s Popular
Ventures & Capitals Private Limited, who in turn had appointed M/s Bharat
Lottery as their sole selling agent.
SI Sagar, the investigating officer (IO), was surprised when Praveen
Kumar Jolly of Bharat Lottery said that the winning ticket had never been
printed. Thus, the fraud perpetrated by Jolly was evident. The IO reported
his findings to ACP Bhaskar, who instructed him to get to the bottom of the
case by visiting Hyderabad and contacting the lottery department officials
of the AP government since the Deaf and Dumb Society claimed to have
the department’s approval.
When the SI inquired of the officials whether they had authorized the
society to conduct the lottery, he was in for another shock. The society had
been given permission to run a lottery only for its own members and not for
the general public. Thus, the lottery that was being run by the society was
unlawful.
As the probe went deeper, layer after layer of fraudulent activities began
to emerge. The society had never approached the AP government for
permission to hold a bumper draw. It conducted the bumper draw without
the government’s approval and had also printed on the tickets that it was a
government-approved draw of lots. No government official was present
when the draw was carried out. Therefore, the society had given the public
the false impression that it was organizing a lottery that had the approval of
the AP government, when in reality it was running a private, unauthorized
and fraudulent lottery.
There was yet another act of chicanery involved. The scheme ostensibly
envisaged a total of twenty-four lakh tickets, and this information was
printed on the back of the tickets. In reality, the organizers printed only
2,40,000 tickets. However, when the draw for the winning tickets was done,
the numbers of all twenty-four lakh tickets were included whereas only
2,40,000 tickets had been sold. This meant that chances of the balance
21,60,000 unsold/unprinted tickets remained with the organizers, which was
90 per cent! Further, if any one of the printed tickets were to win a prize, it
would only be of Rs 50 each, as had been decided beforehand by the
organizers.
Thus, assuming that all printed tickets were sold, they would yield Rs
1,20,00,000, whereas only Rs 12,000 was to be paid by way of prizes. In
this manner, a single draw yielded a profit of Rs 1,19,80,000 to the
organizers, which was shared amongst the selling agents, the organizing
company and the society. The figures were mind-boggling, and with
hundreds of lotteries under operation with multiple daily draws in quite a
few of them, the Crime Branch was sitting on the tip of an enormous
iceberg. There was a lottery scam running across the country, cheating
millions of people of their hard-earned money, and the Crime Branch had to
do everything it could to stem the rot.
*
I had completed an eventful three-year stint as the deputy commissioner of
police (DCP), south district, in August 1992 and was desperate for a change
of assignment. District jobs can get stressful and tedious after a while, and I
was a tad weary and longing for a change, having carried the yoke for over
three years. I requested the then commissioner of police (CP), M.B.
Kaushal, to transfer me out, and he very kindly posted me as DCP, Crime
Branch of the Delhi Police, an assignment after my heart. To my good
fortune, the multi-crore lottery scam came my way within just over a month
of my joining, and it turned out to be one of the most satisfying
investigations of my career.
As the word spread about the Pritam Kumar Razak lottery fraud case,
many more complainants who had been cheated similarly began to
approach the Crime Branch. During the investigation of each case, newer
and more bizarre ways employed by the lottery operators to cheat people
began to emerge. One such case was that of Jasminder Singh, a resident of
Bhagat Singh Market in New Delhi, who had won a prize in a daily draw of
the Jeevan Rekha lottery, ostensibly run under the aegis of the Government
of Manipur.
When Jasminder approached the lottery owners with his winning ticket,
he was informed that there had been a mistake in the printing of the results
in the newspapers. It was claimed that the results of Jeevan Rekha and
Vijay Rekha had been erroneously interchanged, and it was an innocent
printing error. Usually, when a purchaser of lottery tickets reads in the
papers that his ticket number has not figured in the list of prizes, he destroys
the tickets. Now, with this interchanging of the results many genuine
prizewinners would have thrown their tickets away. Jasminder Singh,
however, went to the police station in Karol Bagh to register a complaint
that he had been cheated of Rs 1 lakh. The local police directed him to
approach the Crime Branch as we had already investigated a case of lottery
fraud.
When the case came to us, we learnt that M/s Guru Nanak Agency, Karol
Bagh, run by one S.K. Sethi, was the sole selling agent for Manipur State
Lotteries. They paid Rs 18,000 as fixed royalty on each of the daily draws
of Jeevan Rekha, Bhagya Rekha, Vijay Rekha and Bhagya Rekha Super—
four lotteries run by them for the Manipur government. Thus, the organizers
paid a fixed royalty of Rs 2,10,00,000 per annum to the Manipur
government.
S.K. Sethi defrauded unsuspecting lottery ticket buyers by interchanging
the results of Jeevan Rekha and Vijay Rekha lotteries in the newspapers.
Generally, members of the public go by the results published in the
newspapers. By interchanging the results of the two lotteries, Sethi made a
wrongful gain of Rs 2.5 crore in one single draw.
Readers can extrapolate the amount of money Sethi would have made by
adopting this modus operandi when the draw of lots took place every day.
Not even in one case did Sethi issue a corrigendum. After registering a case
based on the complaint made by Jasminder Singh and conducting a detailed
investigation, we arrested S.K. Sethi on 11 November 1992 and chargesheeted
him for cheating and criminal breach of trust.
Yet another complainant, Jagdish Lal of Faridabad, bought Hast Rekha
lottery ticket number 3851501, which was declared the first prize winner in
the draw of lots in June 1993. The prize amount was Rs 1 lakh. Much like
Pritam Kumar Razak of Jamalpur, he sent his claim through a nationalized
bank, but the organizing agent did not pay him a single penny on the ground
that the ticket in question was never printed. When Jagdish Lal persisted
with his questioning of the organizing agent, he was threatened with
criminal action for forgery.
S.K. Sethi was once again the organizing agent. We recovered Jagdish
Lal’s prizewinning ticket from Sethi’s office. Additional charges were
pressed against Sethi, who had already been arrested by the Crime Branch
in the earlier case.
Complaints of lottery frauds committed by resorting to a wide variety of
modus operandi continued to pour in. Ved Prakash Saxena of Bareilly
complained that he was denied payment of the first prize of the Bharat
Raffle Deluxe Lottery on his winning ticket number 321138, which
amounted to Rs 2 lakh. M/s Guru Nanak Lotteries of Karol Bagh had
organized the draw in May 1993. Here again, the organizing agent
questioned the genuineness of the ticket Saxena produced and shooed away
the claimant by threatening him with criminal action for forgery. When the
matter reached the Crime Branch, the office of Guru Nanak Lotteries was
searched and the winning ticket recovered. V.S. Sethi, a brother of S.K.
Sethi, was arrested in this case.
Another lottery agency, M/s APS Agencies, was investigated on the basis
of a complaint received at the police station on Deshbandhu Gupta Road,
New Delhi. In this case, the company was not only cheating ticket buyers of
their rightful prize money but was also forging its accounts, showing false
transactions in its books and evading taxes amounting to crores of rupees.
The said agency was the sole organizer of Matka Sone Ka (MSK) and
Matka Motiyon Ka (MMK)—two daily lotteries authorized by the Punjab
government. The company was also authorized to supply paper for the
printing of tickets while M/s Druck Grafen India Private Limited was
contracted for printing the tickets.
The book of accounts revealed that M/s Druck Grafen procured the paper
from APS Agencies and printed tickets at the rate of Rs 1500 per lakh.
Nearly Rs 23 lakh was paid as expenditure on paper to APS Agencies and
Rs 30 lakh was shown as printing charges. Further scrutiny of records
revealed that one M/s Krishna Paper Mart supplied the paper to APS
Agencies. However, investigations revealed that M/s Krishna Paper Mart
was a non-existent firm and its registered office was the residence of a
private citizen. The sales tax office also confirmed that no such firm had
been allotted the sales tax number that the books of Druck Grafen reflected
as belonging to their ‘paper supplier’. Further, mandatory government
papers meant for transportation of stationery from Delhi to Patiala did not
carry any central sales tax or local sales tax numbers. It was clear that the
bogus firm had not supplied any stationery, and all the bills in the books of
Druck Grafen concerning M/s Krishna Paper Mart were fraudulent.
APS Agencies’ books revealed that Rs 23 lakh had been paid to M/s
Krishna Paper Mart for the supply of paper and Rs 30 lakh to Druck Grafen
for the printing of lottery tickets. Since Krishna Paper Mart was a fictitious
entity, the paper could not have been procured from them. Investigations
also revealed how this money had been swindled by dubious bank dealings
carried out by APS Agencies and Druck Grafen. Needless to say, no taxes
had been paid to the exchequer for these dealings.
To top it all, APS Agencies denied its lottery winners access to prize
money by one trick or the other. The winning buyer had to claim his or her
money within forty-five days of the announcement of the prize and had to
make the claim through the office of the Punjab State Lotteries. The office,
after ascertaining the genuineness of the tickets, was supposed to send the
claim to APS Agencies, which would make the money available to the
lottery office that would then disburse the money to the winner. The lottery
department of the Punjab government furnished a list of 246 draws of
Matka Sone Ka and 102 draws of Matka Motiyon Ka. It was astonishing to
find that only thirty-one claims for prize money out of 246 draws of MSK
and fifteen claims out of 102 draws of MMK were made. A total of only Rs
5 lakh stood disbursed out of the Rs 6.91 crore that was kept reserved for
prizes. The balance amount of Rs 6.86 crore had been swindled. It was also
clear that officials of the Punjab lottery department had not supervised the
conduct of lotteries closely, and were, perhaps, part of the scam.
It was no surprise, therefore, that officials of the lottery departments of
various states, including Punjab, were camping in Delhi during our
investigation, trying their best to twist our arms. Since our superiors
supported us and we stood our ground, we had little difficulty in
withstanding the pressure tactics. Interestingly, many media houses came
forward in support of the lottery operators as their advertising revenues
were being negatively affected by our investigation.
The above-mentioned facts relate to only a handful of cases investigated
by the Crime Branch. It would not be incorrect to say that similar frauds
existed in all 137 lotteries being run in Delhi, out of which quite a few had
daily draws. We estimated that countrywide, around Rs 55,000 crore of
people’s money had been swindled in the lottery scam. We arrived at this
figure by working backwards after obtaining the aggregate of royalties that
the state governments had received from lottery operators. No government
agency, no civil society organization, or, for that matter, no section of the
media had taken notice of this scam of humongous proportions. The reasons
were simple and straightforward. The lottery departments of various state
governments, whose responsibility it was to regulate such lotteries, were
themselves party to the scam and had a vested interest in perpetuating the
malpractices. The victims were poor, powerless and faceless citizens of the
country, who could be turned away or silenced easily by any agency they
approached with their grievances. The lottery operators, government
officials and unscrupulous politicians made tons of money at the cost of the
poorest of the poor. It is no surprise that when their unbridled run at making
easy money came to an abrupt end—as will be described later—most of the
lottery operators shut shop and invested their ill-gotten money in real estate
and other capital-intensive enterprises.
*
When someone buys a lottery ticket, they do so under the impression that a
reasonably fair chance to win a prize exists. However, investigations into
the above cases revealed that the odds were heavily against the ticket
buyers as the sellers of this chance manipulated the conduct of lotteries in
such a way that they cornered the odds and the bulk of the proceeds of the
lottery went into their own pockets. The buyers received prizes only on the
rarest of rare occasions. To understand the malpractices in this trade, I
decided to probe the matter in great depth with my team and studied every
modus operandi adopted by lottery operators and catalogued them. But
before I go into the outcome of this investigation, let us understand the legal
aspect of the situation.
In its legal and popular sense, ‘lottery’ means distribution of prizes by
lots or chance. It is the purchase of this chance that is the essence of a
lottery. The distinction between lottery and gambling is subtle as both are
games of chance. But gambling is a game played by and in the presence of
all participants while in the case of a lottery, the presence of participants is
both unnecessary and superfluous. In gambling, there may be a display of
some skill, as in rolling a dice or the like. In a lottery, the participants
merely buy chance, the happening of which is beyond their control. The
mischief of gambling affects only the actual players whereas in a lottery it
is widespread. The US Supreme Court observed:
Experience has shown that the common forms of gambling are comparatively innocuous when
placed in contrast with the widespread pestilence of lotteries. The former are confined to a few
persons and places, but the latter infests the whole community. It enters every class, it preys
upon the hard earnings of the poor, and plunders the ignorant and the simple.*
The law reprobates gambling as well as the lottery because both promote
the circulation of money that is the fruit of labour by chance, a practice that
is both unjust and unequal. Furthermore, gambling and lottery encourage
the squandering of hard-earned money, which leads to incalculable misery.
They are, moreover, in opposition to honest labour and thrift, upon which
the happiness of society depends. An English court called ‘keepers of
lotteries as a class of rogues and vagabonds’, and they are, in fact, so.
Lotteries are mostly intended to inveigle people into purchasing worthless
things or parting with their money with no return, to the advantage of the
lottery keeper. As such, a lottery is a fraudulent public practice because it
leads people to pay for a game in which there is no subtlety—namely, that
the lottery keeper keeps the biggest prize.
The subject of lottery figures in the Union list of the Constitution of India
in Entry No. 40 of the Seventh Schedule. However, curiously, the Centre
had not legislated on the subject, thereby leaving the ground clear for a
free-for-all situation. This was the beginning of all the troubles in the Indian
context. If the Central government had spelt out the dos and don’ts for the
lottery trade and had enabled law enforcement agencies to come down
heavily on violations, the large-scale loot of people would have stopped. In
the absence of any legislation, some state governments, such as Andhra
Pradesh and Karnataka, enacted their own laws. For instance, Section 3 of
the Andhra Pradesh Lotteries Act of 1968 declares that all lotteries are
unlawful. However, under Section 24, the Act gives some exemptions to a
lottery whose net proceeds are to be used for charitable or educational
purposes. Under the garb of this provision, several lotteries run by
unscrupulous individuals got authorizations from the AP government and
ran private lotteries. Some such lotteries that came to adverse notice were:
1. All India Deaf and Dumb Society
2. Visakhapatnam District Cricket Association
3. Urban and Rural Development Scheme
4. Share Medical Care
Section 294 A of the Indian Penal Code provides that running of any lottery
that is not a state lottery or a lottery authorized by the state government is
an offence. However, Section 294 A is non-cognizable and bailable, which
means that the police cannot take action without a court’s permission and
the accused, if arrested, has to be released on bail immediately.
By several judicial pronouncements and orders of the government, both
state and Central, only a lottery that is initiated and managed by the state
government is permissible. The rest come under the category of private
lotteries, which are banned.
However, the trick of the trade was to somehow get an authorization from
the lottery department of a state government for running a lottery, for which
a small amount of royalty was paid to state authorities. Regrettably, the
lottery departments, having given such authorization, ceded control to the
private lottery operators. Nobody knew when and where the draws were
held; nobody knew who attended the draws and whether any representative
of the government was present. Thus, the lottery operators could do what
they wanted.
The second and most reprehensible act of chicanery was to print far
fewer tickets than were declared in the scheme. For instance, if the scheme
envisaged twenty lakh tickets, only two lakh tickets were printed. Further,
not all two lakh tickets printed were sold. However, when the draws took
place, not only were all twenty lakh ticket numbers approved by the lottery
department concerned included, but also included were the unsold ticket
numbers, reducing the chance of a valid ticket buyer winning a prize by
more than 90 per cent. All chances accruing out of unprinted and unsold
tickets stayed with the lottery operator. Thus, over 90 per cent of the time,
the prizewinning tickets were those that were with the operator himself.
If even against these adverse odds a valid ticket buyer won a prize, the
lottery operator would turn away such a ticket holder, claiming that the
ticket was never printed and the claimant was producing a forged ticket.
The poor man was threatened with legal action for forgery. At the beginning
of this story we saw how lottery organizers shooed away Pritam Kumar
Razak of Jamalpur and Jasminder Singh of New Delhi, denying them their
legitimate prize money and holding on to every penny of the cash paid by
ticket buyers from across the country.
Emboldened by the lack of oversight by government officials, the lottery
operators adopted a more depraved method: they printed and sold only
forged tickets. When the draws were conducted, the numbers used were of
another series, which had been approved by the government lottery
department. So the numbers of the tickets sold were not used in the draw at
all. That meant the buyers had zero chance of winning and all the proceeds
of the ticket sales went directly into the pockets of the operators.
An even more diabolical way of cheating lottery ticket buyers was to
interchange the results of two lotteries, thereby denying prizes to legitimate
prizewinners. This method of cheating came to light, as narrated earlier in
this chapter, when the results of Jeevan Rekha and Vijay Rekha were
deliberately interchanged. Here again, the organizers conveniently pocketed
all sale proceeds.
By adopting these tactics, the lottery operators denied disbursement of
prizes, especially prizes of higher denominations, to any genuine ticket
holder.
*
On 31 May 1993, four lottery operators from Delhi were returning from
Kohima in a private taxi when the insurgent group, People’s Liberation
Army (PLA) of Manipur, gunned them down. The PLA had warned the
Manipur government of direct action against lottery operators if the
government failed to ban them. The PLA felt, and perhaps rightly so, that
innocent Manipuri people had been cheated by non-Manipuri private lottery
organizers for several years. Their contention was that while lakhs of people
from Manipur had bought lottery tickets, not a single Manipuri had ever
received a prize because of fraud in the conduct of lotteries. The PLA had
urged the Manipur government to stop lottery trade in their state. However,
when after several warnings the state government did not take any action,
they resorted to this killing.
Criminal incidents related to the lottery trade occurred in different parts
of the country from time to time. In some cases, lottery operators resorted to
killing fellow operators out of professional rivalry and in turf wars. In
others, lottery ticket buyers, having lost their hard-earned money,
committed suicide.
Since a lot of data emerged during our investigations, I decided to collate
them in the form of a monograph that bore the same title as the present
chapter. Besides a detailed note on the various modus operandi adopted by
the lottery operators, it had copies of all relevant government orders, a list
of lottery operators, the number of draws held by them, the prizes
disbursed, etc. The monograph was in high demand by various state police
forces, lottery department officials and police stations in Delhi. Besides
circulating it to these recipients, I sent a copy of the monograph to the
Ministry of Home Affairs (MHA), which dealt with the subject in the
Government of India.
Following the action taken by the Delhi Police, several lottery vendors
wound up their operations and closed shop. In some states such as Bihar,
Haryana and Madhya Pradesh, the state governments banned lotteries.
Lottery operators across India came together and decided to approach the
Supreme Court regarding the action being taken by the state and the Central
governments as well as the police cases against them. The best lawyers of
the country represented them. During the proceedings, after hearing the
arguments of both sides, the court asked the government counsel if any
systematic study had been conducted by the government into the frauds
committed by lottery operators. In the absence of any other report, MHA
submitted the monograph prepared by us. Copies were supplied to the
advocates of the lottery operators as well. After protracted hearings, the
court adjourned for final orders to a date a fortnight later, when it would
decide the fate of lottery operators in India.
We waited with bated breath for the hearing, eager to know what the
court had to say about our findings on this mammoth fraud, which had
illegally lined the pockets of a few unscrupulous lottery vendors, devastated
the lives of thousands of innocent lottery ticket buyers and defrauded the
government of billions of rupees by tax evasion and tax fraud. We were a
humble team of a few police officers armed only with a monograph on our
meticulous investigations and represented by a senior government counsel.
The lottery vendors were a wealthy force, had the media on their side due to
the enormous advertising revenue made through such operators, the best
lawyers of the land, and the support of a few unscrupulous politicians and
lottery department officials. I hoped the Supreme Court would deem our
findings meritorious and substantial and stop lottery vendors from looting
millions of innocent people of their hard-earned money in the future.
The date of the hearing finally arrived. The bench, in the opening lines of
their order, quoted from A Matter of Chance. The court took note of the
cases we had investigated and appreciated the pioneering work we had
done, much like a sustained campaign. In a far-reaching order, the court put
a blanket ban on all private lotteries and declared only those that were run
wholly by the government to be legal.
As the officer who had studied and investigated the lottery frauds in the
country for months, the order was gratifying. What was even more
humbling was the fact that the court had relied heavily on the monograph I
had prepared with the help of my ACP, S.M. Bhaskar.
Millions of innocent people, who would have otherwise been the victims
of such frauds in subsequent years, had been saved. That was reward
enough for us; that was the recognition to be cherished forever.
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