Game of Chance On Website Without Reward Not Gambling: Bombay HC In Plea Filed By Play Games 24x7

A division bench of the Bombay High Court comprising Justice GS Patel and SG Dige has recently observed that the mere fact that there is a game of chance on the website does not in itself make the activity gambling unless there is an accompanying reward or promise of a reward.

The bench was hearing a petition filed by Play Games 24x7 which owns mycircle11 and rummy circle. The company had filed the plea before the high court seeking directions to be issued to the RBI for considering the compounding application of the company for certain ‘procedural’ or ‘technical’ contraventions of Foreign Exchange Management (Non-debt Instrument) Rules 2019 and the Foreign Exchange Management (Mode of Payment and reporting of non-debt instruments) Regulations 2019. The said contraventions were from the period 2006-2012.

The petitioner had filed a compounding application within 45 days as directed by the RBI. However, the RBI returned the application and asked the company to approach its Foreign Exchange Department. After the company approached the Foreign Exchange Department, the department asked the petitioner to approach the then department of Industrial Policy and Promotion, which has now become DPIIT, ostensibly to seek a clarification for eligibility to receive FDI in the first place.

The company made 3 representations before the DPIIT but recieved no response . The company then filed another application of compounding before the RBI which was returned pointing out that a clarification from the DPIIT with respect to the permissibility of the Petitioner’s business application had not yet been submitted.

Advocate Prasad Chenoy for the RBI submitted before the court that if the activity is permissible, then an application for compounding will be processed in accordance with the law but if the activity is illegal, prohibited or otherwise illicit, it cannot gain legitimacy because of compounding.

Senior Advocate Ram Apte for DPIIT submitted that he had visited the website of the petitioner at rummycircle.com and found that there was an offering called Ultimate Teen Patti and another called Call it Right.

Senior Advocate Janak Dwarkadas argued that Ultimate Teen Patti was not introduced until February 2015 and Call It Right was launched in July 2013; both were beyond the reporting period for which compounding was sought. He relied on the Apex Court’s judgment that if there is a game purely of chance and there is no element of reward, gain or a prize to be won, then it is not gambling. He further submitted that it is not illegal for two people to simply toss a coin unless one stands to gain some reward by that chance activity.

The court said that DPIIT sought no clarification or explanation as to the nature of these games or offerings. The bench said DPIIT proceeded only on the basis of the name, i.e., the label attached to the name-‘Teen Patti’ meaning gambling.

The division bench while directing the RBI to consider the compounding application of the company within 4 weeks said that,

“The mere fact that there is a game of chance on the website does not in itself make the activity gambling unless there is an accompanying reward or promise of a reward.”

The bench however made it clear that the company would not engage in gambling as long as it prohibited by the law.

“We must clarify that whether it is for a past period or for an ongoing or future period, it is undoubtedly necessary that the Petitioner must remain clear of any illicit or prohibited gambling activity, whatever the platform. If this is illegal in India, it does not become legitimate merely because it is online or because foreign investors have put money into it. We have the statement made across the Bar and which we will of course have to accept as an undertaking to the Court that at no point will the Petitioner’s activities involve gambling, so long as it is prohibited by our law,” court said.

Case Title: Play Games 24x7 Pvt Ltd vs RBI & Anr

Statue: Foreign Exchange Management (Non-debt Instrument) Rules 2019 and the Foreign Exchange Management (Mode of Payment and reporting of non-debt instruments) Regulations 2019.