A Division Bench of Acting Chief Justice Devinder Gupta and Justice K S Gupta fixed the matter for hearing on May 13 and asked the government to place before it the results of the probe done by these agencies.

The court was hearing a public interest litigation (PIL) filed by Movement for National Awareness (MNA) which alleged that "various illegalities and irregularities" were committed by the state government in running the lottery and accused it of allowing "diversion of gains to anti-national elements".

The petitioner had alleged that Centre had "turned a blind eye" to these "irregularities" despite being "aware" of the situation.

Accusing the Nagaland government of deliberately leaving serious gaps andlacunae in running the lottery, MNA said "a sole distributor of the state government in Delhi was illegally allowed to retain the prize money on unsold tickets, which as a rule would have reverted back to the state."

The government had ordered a CBI probe into the alleged "bungling" after the matter was highlighted in media.

The petitioner alleged that the state government was allowing its distributor in Delhi to "corner" a major share (approximately Rs 12,000) on daily draws, while the state was only getting a fixed revenue of Rs 4,000 per draw, which was "negligible".

"The rules relating to conducting the draws were violated as no supervisors were turning up during the draw of lots, though it was a mandatory requirement," the petitioner said, adding "the names of supervising judges are in fact never supplied with the list of unsold tickets, which also is necessary under the state lotteries rule."

This "fraud" had been depriving income tax authorities of their due revenue on the lottery trade asunder tax laws, income tax has to be deducted at 40 per cent rate at the source, the MNA claimed.