The Chief Justice.

This is an appeal from an order of Stone, J., made upon a petition by the Appellant-Nidhi for leave to alteer Clause 3 of the memorandum of association of the Nidhi. Clause 3 acts out the objects for which the Nidhi is established; and a resolution was passed approving of the alteration of the objects of the Nidhi as set out in Schedule B, namely,

"To lend at interest monies received from shareholders and others to shareholder and others on the security of deposits, immovable property, goods and sureties, to receive deposits etc. when necessary and to pay interest and do other banking business, to conduct various kinds of trade should directors decide to establish branches outside, to conduct various kinds of auction chits and prize chits as will be determined by the Board from time to time and to do all acts which will be helpful to the above objects."

The alteration was approved by Stone, J., subject to the deletion of those parts of the clauses relating to the conduct of various kinds of trade and prize chits.

With regard to the latter, which, in my opinion, was the most important alteration proposed, the conditions of the prize chit are set out; and it is only necessary to refer to conditions No. 1 to 4 which are as follows :-

"

1. All persons who have attained the age of majority whether males or females irrespective of castes can become members.



2. The prize chits should be subscribed for 50 months continuously at the rate of Rs. 3 a month.



3. The chit amount should be paid by the 15th of every month. Prizes will be drawn on the 19th of each month at 4 P.M. in the presence of subscribers present.



4. The subscriber that gets the prize will be paid the prize amounts as undermentioned after getting from him a receipt for the same. Thereafter he need not pay future subscriptions.(a) Amount payable to the prize drawer inclusive of subscriptions paid between 1 to 15 months. Rs. 100.

Rs. 100

dodo16 to 30Rs. 150

dodo31 to 45Rs. 175

dodo46 to 50Rs. 200

It is not necessary to refer to any of the other conditions. Therefore, any member of the public, subject to their having attained majority, can join the chit and should a subscribers name be drawn before the termination of the chit, he gets a prize and is no longer liable to subscribe to the chit. Thus the luckiest subscriber, suppose his name or number to be drawn in the first months drawing, has only subscribed Rs. 3 and nevertheless gets a prize of Rs. 100 and deducting the Rs. 3 he has paid, he gets Rs. 97 as prize. On the other hand, taking the period 1 to 15 months, another subscribers name may be drawn in the 15th month and he also gets Rs. 100. He has paid for 15 months, at the rate of Rs. 3 a month, Rs. 45, and he gets Rs. 100 for it. Taking that section 1 to 15 months, the subscriber whose name is drawn earlier gains a very large benefit over the other subscribers whose names or numbers have not been drawn. As the chit progresses, the benefit to the subscriber whose name is drawn earlier becomes further emphasised. It is contended here that this prize chit is not a lottery. If it is a lottery, obviously our learned brother was quite right in dealting that object of the Nidhi from the proposed altered rule. In support of the appellants argument we were referred to the Full Bench Decision in Narayana Ayyangar v. Vellachami Ambalam. I myself was a member of that Full Bench. It is relied upon as supporting the argument that this prize chit is not a lottery. It does not support that contention at all. The question there consiedered was whether the chit fund in that case amounted to a contract which was void because it was a wagering contract and not because it was a lottery. In the Full Bench judgment the whole discussion is whether that contract was or was not a wagering contract. That that is so is clear from a Bench decisions of this Court in Universal Mutual Aid and Poor House Association Ltd. v. Thoppa Naidu. In that case in the judgment it is pointed out that what the Full Bench were considering was whether or not there was there a wagering contract and not whether the scheme was a lottery or not. The scheme in the Universal Mutual Aid and Poor House Association Limited was a lottery; and a lottery is there defined as a distribution of prizes by lot or chance without the use of skill and it is pointed out that a lottery is different from a wager which is a contract between two persons that on the termination of a future uncertain event one shall win from the other and the other shall pay or hand over to him a sum of money or other stake. In the course of the judgment reference was made to a definition of lottery in Websters Dictionary, viz., a distribution of prizes by lot or chance. Reference was also made to Sykes v. Beadon where Jessel, M. R., said at 190 :

"The holders of certificates are persons who subscribe money to be invested in funds which are to be divided amongst them by lot and divided unequally. That is, the persons who get the benefit of the drawings get a bond bearing interest and a bonus which gives them different advantages from the persons whose certificates are not drawn, and it depends upon chance which gets the greater or lesser advantage. It is, therefore, a subscription by a number of persons to a fund for the purpose of dividing that fund between them by chance and unequally." *

It appears to me that the conditions laid down by Jessel, M. R., are present here. The subscribers to that chit fund are investing in a fund which is to be divided amongst them by lot and clearly dividend unequally. The conditions of the fund have only got to be examined as they have already been done, to make this abundantly clear. The persons who get the benefit of the drawings get a prixe and the benefit which such persons get from drawings gives them different advantages from the persons whose names or numbers are not drawn and this benefit depends upon chance. Chance decides which of the subscribers gets the greater or lesser advantage. Clearly here what is proposed is a subscription by a number of persons to a fund for the purpose of dividing that fund between them by chance and unequally. Where these conditions exist in the opinion of Jessel, M. R., there is a lottery. I am unable to distinguish the conditions of this price chit fund from what was stated by Jessel, M. R. In my opinion, the proposed prize chit is clearly a lottery. That being so, it is quite obvious that the Court cannot sanction a proposal to run such a prize chit. Under these circumstances, this appeal must be dismissed.

We are asked, however, to extend the time for filing documents with the Registrar of Joint Stock Companies. Ordinarily, three months are allowed under section 15 of the Indian Companies Act for the purpose. However, sub-clause 3 of that section gives the Court power to extend the time. Under these circumstances, as the appellants are probably out of time now in which to file the documents, we extend the time for filing documents by three months from this date.BUTLER, J. for the I agree.

Order accordingly.