DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE

Case analysis : tortuous liability of state

SUBJECT

Constitution law-II

NAME OF THE FACULTY

A Nageswara rao

Name of the Candidate

Roll No. & Semester

Jaswanth siram

2016043 & SEMESTER - 4

1
Synopsis
Introduction
The State liability for the acts of omission and commission committed by its servants, not
being a static concept, has been governed by written or unwritten laws. Liability of State for
the tortious acts of its servants known as tortious liability. of State makes it liable for the acts
of omission and commission, voluntary or involuntary and brings it before Court of Law in a
claim for non liquidated damages for such acts. This liability is also a branch of Law of Torts.
Law of Torts like various other laws has travelled to this country through the British in India
and now stands varied due to being regulated by certain local laws and Constitutional
provisions.
The English maxim 'the King can do no wrong' regarding the absolute immunity of
Crown was never accepted in this country even in the past from ancient times. The Crown
could not be sued in tort for acts of its servants in the course of their employment. But it was
not accepted in this country even during the rule of the East India Company. The East India
Company which came to India initially for carrying on trade gradually became ruler of a
great part of this country and made yet another part under its subjugation. It was not a
sovereign body but was delegate of the Crown. Its powers and extent of political authority
were gradually regulated by certain legislations passed by the British Parliament. The British
Crown took over the reigns of this country directly in 1858 after armed uprising in India
against the English rule termed by the British Rulers as Sepoy Mutiny of 1857 was quelled.
The vicarious liability of the Government in the absence any statutory rules or contours
depended on the extent and exercise of the power by the Government or the head of the
Government. In pre-independence period, the extent of tortious liability of the State and its
immunity was subject matter of dispute before existing Courts. "The liability of the State was
dependent on the nature of the act and the category of power in which it was placed viz
sovereign or non-sovereign power of the State. Sovereign powers of the State were never
defined and in the absence of any clear cut distinction between sovereign and non-sovereign
powers of the State Courts of law were faced some times with difficulties in resolving the
disputes. The plank for defence by State in cases pertaining to State liability used to be that
the acts of omission or commission complained of were within the realm of sovereign powers
of the State and as such State was not liable. The first judicial interpretation of State liability
during the East India Company was made in John Stuart's case, 1775. It was held for the first
time that the Governor Genera~ in Council had no immunity from Court's jurisdiction in
cases involving dismissal of Government servants.

2
Chapterisation

Introduction ………………………………………………………………………………..

Historical approach to state liability ……………………………………………………….

The Constitutional Provision of Article 300 ………………………………………………

Distinction between sovereign functions and non sovereign functions …………………..

How far the state liability can be extended ………………………………………………..

Case laws …………………………………………………………………………………..

Conclusion …………………………………………………………………………………

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Historical Approach to State Liability

In medieval Europe, the primary duty of the king was to ensure protection of people
and their property and maintain a peaceful ambiance having equitable laws. In the discharge
of this duty, the king was not immune to pay compensation to public in general. The
instances of king paying compensation for stolen property to aggrieved party when the
officials cannot recover the said stolen property make the scenario quite evident. But in
English legal system the similar liability of king was completely absent as they regarded the
notion that “the king can do no harm” but due to the fact that immunity enjoyed by British
crown did not particularly extend to the East India company neither of the acts dealing with
State liability provided any immunity to the Company or Secretary of the state of India.

State liability during British period was accorded with a different definition by different Acts.
Initially, it found a place in the Government of India Act 1858 which said that the secretary
of state can sue and be sued for liabilities and disregarded to extend the immunity which the
Crown enjoyed. Further, the concept evolved, and most refined and precise form was traced
in Section 176(1) of Government of India Act 1935 which also forms the basis for Article
300 which provides state liability in the present scenario.1

Introduction

The English maxim 'the King can do no wrong' regarding the absolute immunity of Crow
was never accepted in this country even in the past from ancient times. The Crown could not
be sued in tort for acts of its servants in the course of their employment. But it was not
accepted in this country even during the rule of the East India Company. The East India
Company which came to India initially for carrying on trade gradually became ruler of a
great part of this country and made yet another part under its subjugation. It was not a
sovereign body but was delegate of the Crown.
In Moodaly v. The East India Company 1775 (1 Bro-CC 469) the Privy Council expressed
the opinion that Common law doctrine of sovereign immunity was not applicable to India.
After assumption of sovereign powers by the British Crown in 1858. The first enactment
regarding the administration of Country was enacted in 1858 known as Government of India

1
https://blog.ipleaders.in/constitutional-liability-state-tort-law-india/

4
Act 1858. Later on it was replaced by the Government of India Act 1915 and 1935. Sec. 58 of
the Act of 1858, the provisions of which remained on Statute Book in subsequent
Government of India Acts, for the first time spelt out tortiuous liability of State in Statutory
terms. It provided that Secretary of State may sue or be sued which read as follows "The
Secretary of State in Council may sue and be sued as well in India as in England in the name
of the Secretary of State in Council as a body corporate and all persons and bodies politic
shall and may have and take the same suits remedies and proceedings legal and equitable
against the Secretary of State in Council of India as they could have done against the said
company, and the property and effects hereby vested in Her Majesty for the purposes of the
Government of India acquired for the said purpose shall be subject and liable to the same
judgments and executions as those vested in the said Company would have been liable to in
respect of debts and liabilities lawfully contracted and incurred by the said Company".
Sec. 68 of the said Act protected members of the Council from personal liability. Now
Article 361 of the Constitution of India exempts the President and the Governors who are
heads of State from personal liability. The leading case under Sec. 58 of the Government of
India Act 1858 was Oriental Steam Navigation v. Secretary to the State of India (Bombay
High Court Reports Vol. V, 1868-69) Appendix I. The Calcutta High Court in the said case
held that there was a great and clear distinction between acts done by the public servants in
the delegated exercise of sovereign powers and acts done by them in the conduct of other
activities. The Court held that East India Company were not sovereign, drew distinction
between sovereign acts in respect of which State was not liable and the other category i.e. non
sovereign in respect of which the Secretary of the State was made liable. In the said case due
to negligence of a servant of Government working in Dockyard an accident happened and
horse of a carriage hired by an individual was injured. Calcutta High Court had in a
subsequent decision adhered to the same view but the Bombay and Madras High Courts did
not agree with the same. The Madras High Court in Secretary of State v. Hari Bhanjj2 held
that immunity of East India Company extended only to "Acts of the State". The defence of an
act of State is not available against a citizen. Acts of State are directed against another
sovereign State or its sovereign personally or its subjects and being based on policy
consideration and not on law administered by municipal Courts they are not justiciable.
Under the Constitution of India two Articles viz Article 294 and Article 300 contain
explicit and implicit provisions regarding tortious liability of State and suit against it. Both

2
(1882) ILR Madras 273
5
the Articles come under Chapter III of "Part XII of the Constitution of India which is headed
as Property Contracts. Rights, Liabilities Obligations and Suits." Article 294 (b) of the
Constitution of India provides that the liability of Union Government or State Government
may arise out of any contract or otherwise. The word "otherwise" would include various
liabilities including tortious liability also. This Article thus constitutes and transfers the
liabilities of Government of India and Government of each governing province in the Union
of India and corresponding States.
Article 300 of the Constitution of India provides that State can sue or be sued as juristic
personality. It reads as under:
"The Government of India may sue or be sued by the name of the Union of India and the
Government of a State may sue or be sued by the name of the State and may, subject to any
provisions which may be made by Act of Parliament or of the Legislature of such State
enacted by virtue of powers conferred by this Constitution, sue or be sued in relation to their
respective affairs in the like cases as the Dominion of India and the corresponding Provinces
or the corresponding Indian States might have sued or been sued if this Constitution had not
been enacted."
The first part of the Article 300 deals with the nomenclature of the parties to a suit or
proceeding, that is Union of India and State Government but the second part defines the
extent of liability by the use of words 'in the like cases.
The Supreme Court of India after coming into force of the Constitution of India in the
first notable case regarding State's tortious liability viz. State of Rajasthan v. Mrs. Vidyavati 3,
removed the doubt that the scope of Article 300 was limited and held that the scope of Article
300 is not limited and the expression 'in the like cases' refers back for the determination of
such cases to the legal position before the enactment of the Constitution and Article 300 has
saved the right of Parliament or legislature of a State to enact such law as it may think fit and
proper in this behalf and so long as legislature has not expressed its intention to the contrary,
law must be held to be the same which has been continuing from the day of the East India
Company. The Court further held that there can be no difficulty in holding that the State
should be as much liable for tort in respect of a tortious act committed by its servant within
the scope of his employment and wholly dissociated from the exercise of sovereign powers as
any other employer. Sovereign functions were specified as defence act of State and other like
operatives. It was thus made clear that ambit of Article 300 included tortious liability of State

3
AIR 1962 SC 937.

6
and its scope is not limited to suit or right to one in respect of contractual liability only. In the
said case a vehicle owned by the State of Rajasthan met with an accident causing death of
one person due to negligence of the driver. The State was held liable as the said accident
could not be associated with the sovereign powers. The Court held that the act of public
servant committed by him during the course of his employment was in discharge of duties
assigned to him not by virtue of delegation of any sovereign powers. In subsequent decision
of Kasturi Lal Ralia Ram v. State of Uttar Pradesh4 the case of Vidyavati was distinguished
on facts confining it to tortious liability not arising from the exercise of sovereign powers.

The Court in Kasturi Lal's case upheld the defence of sovereign immunity and held
that area of employment referable to sovereign powers must be strictly determined. In the
said case the seized gold was kept in the Malkhana and the person from whom it was seized
applied for its return later on but the case was not done and it appeared that it was no longer
in Malkhana and the same was misappropriated by the person incharge of the same. It was
held that this happened because of the negligence on the part of the police officers who acted
in violation of provision of U.P. Police Regulations and the powers which were exercised by
them could be properly characterised as sovereign powers. Kasturi Lal's case was
distinguished by the Supreme Court in subsequent decisions and without overruling it the
Court diluted the emphasis laid in the said case on sovereign immunity of the State and the
Court took these Regulations to have special characteristics of sovereign functions of State.
These cases and other cases came up for consideration before the Supreme Court.

In the case of Nagendra Rao v. State of Andhra Pradesh5, AIR 1994 SC 2663
which arose under Essential Commodities Act. The Court observed that in welfare state
functions of State are not only defence or administration of Justice or maintaining law and
order which are sovereign functions of State, but its functions intend to regulate and control
activities of people in almost every sphere: educational, commercial, social, economic,
political or even marital, and the demarcating line between sovereign and non sovereign
powers for which no rational basis survives has largely disappeared. The water tight
compartmentation of sovereign and non-sovereign functions was held not to be sound and
against modern jurisprudential thinking. The Court observed that distinction between
sovereign and non sovereign powers depends upon the nature of power and its exercise. One

4
, AIR 1965 SC 1039.
5
AIR 1994 SC 2663.

7
of the tests to determine if the legislative or executive function is sovereign in nature is
whether the State is answerable for such actions in Courts of law. For instance, such as
defence, security, raising armed forces and maintaining it, making peace or war, foreign
affairs, power to clear territory are functions which are indicative of external sovereignty and
therefore they are not amenable to the civil courts.

Kasturi Lal's case was distinguished in this case too and it was pointed out that the
property in respect of which suit for damages was filed was seized by the police officers
while exercising the powers of arrest under Section 54(1) (4) of the Cr. P.C. and the act
complained of was committed during the course of employment being of the category which
can claim special characteristics of sovereign powers and it was for this reason that the
principle of sovereign immunity was extended by the Court, which was not available in a
large number of other activities.
In the recent decision of Achut Rao Hari Bhau Kodwa and another v. State of
Maharashtra and others6 the Government doctor and the State were held liable because of the
negligence of the said doctor in the hospital resulting in death of the patients, it was held that
running of hospitals not being exclusive function of the Government, maintaining a hospital
by Govt. would not be an exercise of sovereign power so as to enable to claim immunity from
liability for the tortious acts of its hospital employees. Compensation was awarded to the
family of the deceased reversing the decision of the High Court and affirming the decision of
the Trial Court. Sovereignty in India now vests in the people who have given a written
constitution to India with certain aims and objects enshrined in the Preamble to the
Constitution. It is obvious that the claim of immunity now survives in defence, administration
of justice, maintenance of law and order, repression of crime etc. which are primary and
inalienable functions of Government regulated by a constitution.
The Supreme Court in Dr. M. Ismail Farooqui v. Union of India7, held that the
acquisition of temple and mosque may it be because it is covered in maintenance of law and
order is also covered in the sovereign functions of State. In the matter of payment of
compensation for damage caused to a person by the wrongful act of another person, say
Government servant, there is some deviation from the traditional concept in this behalf even
if no specific damage is alleged. The liability of the State has gone beyond the traditional
principles in view of changing laws and the Constitutional mandates in this country too.

6
(1996) 2 SCC 634.
7
AIR 1995 SC 605

8
Negligence and carelessness of the employees are words of great importance and the State
would be liable to pay compensation to aggrieved persons because of the negligent and
careless act done by its employees during the course of employment. Even if an employee
was doing an unauthorised act but not in a prohibited way, the employer is liable for such acts
because such employee was acting within the scope of his employment and in acting did
something negligent or wrongful. A master would be liable even for acts which he has not
authorised if the same can be connected with the acts so authorised. Article 21 of the
Constitution of India forbids State to deprive a person of his life and liberty except in
accordance with a procedure established by law. To expand the word 'life', it includes every
aspect of life which makes life meaningful, complete and living, and even culture, tradition,
heritage and personal liberty which have a very expanded meaning impose negative deed on
the State and in view of Constitutional provisions including Directives Principles of State
Policy it has been interpreted to be imposing positive obligation upon the State which is to
ensure better enjoyment of life and dignity of individual. The Fundamental Rights which
have been guaranteed and are enforceable by the Supreme Court. Under Article 32 and High
Court, under Article 226 have not only made the defence of sovereign immunity completely
inapplicable but have overthrown it altogether as it cannot go with constitutionally
guaranteed rights. In view of complete ouster of sovereign immunity in regard to fundamental
rights particularly Article 21, right to award money compensation for violation of the law is
justified. The Union and State governments would be liable for tortious acts committed by
their employees in the course of employment for violation of Article 21. The Supreme Court
awarded monetary compensation in a large number of cases. In the case of Nibati Behera v.
State of Orissa8, the Court spelt out the principles on the liability of the State in case for
payment of compensation and the distinction between this liability and the liability in law for
the payment of compensation for the tort so committed. If no other practicable mode of
redress is available the Court would award monetary compensation for breach of fundamental
rights by State or its employees based on the principle of strict liability.9

The Constitutional Provision of Article 300

Article 300 of the Indian Constitution reads as follows:
Suits and Proceedings –

8
AIR 1993 SC 1960.
9
http://ijtr.nic.in/articles/art68.pdf

9
 (1) The Government of India may sue or be sued by the name of the Union of India and the
Government of a State may sue or be sued by the name of the State and may, subject to any
provisions which may be made by Act of Parliament or of the Legislature of such State
enacted by virtue of powers conferred by this Constitution, sue or be sued in relation to their
respective affairs in the like cases as the Dominion of India and the corresponding Provinces
or the corresponding Indian States might have sued or been sued if this Constitution had not
been enacted.
(2) If at the commencement of this Constitution
(a) any legal proceedings are pending to which the Dominion of India is a party, the Union of
India shall be deemed to be substituted for the Dominion in those proceedings; and
(b) any legal proceedings are pending to which a Province or an Indian State is a party, the
corresponding State shall be deemed to be substituted for the Province or the Indian State in
those proceeding .10

How far can the liability extend?

 Is it available to foreign Nationals Also?

The most celebrated judgment in regards to civil liability in consequence of the violation of
the fundamental right which inter alia discussed the contours of this liability was
ofChairman, Railway board v. Chandrima das11 In this case, a Bangladeshi woman on her
way to the holy shrine in Ajmer was raped by railway officials in Kolkata. Later, a petition
under Article 226 was filed by Chandrima Das a practicing advocate of Calcutta high court
against railway board to seek compensation for Hanufa Khatun. It was contended that Hanufa
Khatun being a foreign national is not entitled to compensation as no constitutional right were
violated.

The court after considering various issues put forward by Petitioner and respondent granted a
compensation of Rs. 10 lakhs. Firstly, on the grounds of Domestic jurisprudence based on
constitutional provisions and the grounds of Human rights Jurisprudence based on Universal
Declaration of Human Rights, 1948. Supreme Courts also contended that rape qualifies to be
a gross violation of fundamental right to life and personal liberty which is available to a
person in general. Hence, Court awarded a compensation claiming that the foreign tourist and

10
http://shodhganga.inflibnet.ac.in/bitstream/10603/37607/9/09_chapter%203.pdf
11
AIR 2000 SC 988.

10
visitors owe a behavior of high dignity which an obligation is resting on each citizen of the
country.

The court rightly observed that allowing a complete immunity in nature of sovereign
functions may result in misuse of the said powers.

Law is not static but dynamic, In the modern world having a complex society the encounters
between the people and state have become frequent in number and relevant in nature. Hence
these encounters often result in legal mishaps demanding redressal. Also, most of these cases
fall under the ambit of tort law because of the fact that to seek redressal through civil court
tort law is the one branch which appears most feasible owing to fact of its vastness. So, it’s
evident that tort law being still in its evolving stage owes a great importance and state
liability being its part can be a genuine tool for redressal against the violations committed by
the state officials.

DISTINCTION BETWEEN SOVEREIGN AND NON SOVERIEGN FUNCTIONS:

Sovereign functions are those actions of the state for which it is not answerable in any court
of law. For instance, acts such as defence of the country, raising and maintaining armed
forces, making peace or war, foreign affairs, acquiring and retaining territory, are functions
which are indicative of external sovereignty and are political in nature. Therefore, they are
not amenable to jurisdiction of ordinary civil court. The State is immune from being sued, as
the jurisdiction of the courts in such matters is impliedly barred.

The distinction between sovereign and non-sovereign functions was considered at some
length in N. Nagendra Rao v. State of AP. All the earlier Indian decisions on the subject were
referred to. The court enunciated the following legal principles, in its judgment:

In the modern sense, the distinction between sovereign or non-sovereign power thus does not
exist. It all depends on the nature of the power and manner of its exercise. Legislative
supremacy under the Constitution arises out of constitutional provisions. The legislature is
free to legislate on topics and subjects carved out for it. Similarly, the executive is free to
implement and administer the law. A law made by a legislature may be bad or may be ultra
vires, but, since it is an exercise of legislative power, a person affected by it may challenge its
validity but he cannot approach a court of law for negligence in making the law. Nor can the
Government, in exercise of its executive action, be sued for its decision on political or policy

11
matters. It is in public interest that for acts performed by the State, either in its legislative or
executive capacity, it should not be answerable in torts. That would be illogical and
impractical. It would be in conflict with even modern notions of sovereignty.12

CASE LAWS

1. Peninsular & Oriental Steam Navigation Company v Secretary13 :

A consideration of the pre-Constitution cases of the Government’s liability in tort begins with
the judgment of the Supreme Court of Calcutta in the case. P. & O. Steam Navigation Co. v.
Secretary of State.

The principle of this case holds that if any act was done in the exercise of sovereign
functions, the East India Company or the State would not be liable. It drew quite a clear
distinction between the sovereign and non-sovereign functions of the state.

As the facts of the case go, a servant of the plaintiff-company was proceeding on a highway
in Calcutta, driving a carriage which was drawn by a pair of horses belonging to the plaintiff.
He met with an accident, caused by negligence of the servants of the Government. For the
loss caused by the accident, the plaintiff claimed damages against the Secretary of State for
India.

The Supreme Court observed that the doctrine that the ‘King can done wrong’, was
applicable to the East India Company. The company would have been liable in such cases
and the Secretary of State was thereafter also liable. This arose out of the section 65,
Government of India Act, 1858, which equated the liability of the Secretary of State for India
with that of the East India Company. Distinguishing between sovereign and non-sovereign

12
http://www.legalservicesindia.com/article/580/Vicarious-Liability-of-State-in-Sovereign-Functions.html
13
(1861) 5 Bom HCR App I p.

12
functions it was held that if a tort were committed by a public servant in the discharge of
sovereign functions, no action would lie against the Government – e.g. if the tort was
committed while carrying on hostilities or seizing enemy property as prize.

This doctrine of immunity, for acts done in the exercise of sovereign functions, was applied
by the Calcutta High Court in Nobin Chander Dey v. Secretary of State. The plaintiff in this
case contended that the Government had made a contract with him for the issue of a licence
for the sale of ganja and had committed breach of the contract. The High Court held that upon
the evidence, no breach of contract had been proved. Secondly even if there was a contract,
the act had been done in exercise of sovereign power and was thus not actionable.

2. CASE NAME: Secretary of State v. Hari Bhanji14 :

In this case, the Madras High Court held that State immunity was confined to acts of State. In
the P & O Case, the ruling did not go beyond acts of State, while giving illustrations of
situations where the immunity was available.

It was defined that Acts of State, are acts done in the exercise of sovereign power, where the
act complained of is professedly done under the sanction of municipal law, and in exercise of
powers conferred by law. The mere fact that it is done by the sovereign powers and is not an
act which could possibly be done by a private individual does not oust the jurisdiction of the
civil court.

The Madras judgment in Hari Bhanji holds that the Government may not be liable for acts
connected with public safety, even though they are not acts of State. This view was re-
iterated in Ross v. Secretary of State. The Allahabad High Court took a similar view in
Kishanchand v. Secretary of State.

However, in Secretary of Secretary of State v. Cockraft, making or repairing a military road

was held to be a sovereign function and the Government was held not liable, for the
negligence of its servants in the stacking of gravel on a road resulting in a carriage accident
that injured the plaintiff.

3. Challa Ramkonda Reddy Vs. State of AP15:

14
ILR 5 MAD 273.

13
In the judgment of the High Court of Andhra Pradesh in Challa Ramkonda Reddy Vs. State
of AP, it was held that the plea of sovereign immunity was not available, where there was a
violation of the fundamental rights of the citizens. It was a case where a person arrested by
the police was lodged in a cell in the jail. He expressed his apprehension to the authority in
charge of the jail, that his enemies were likely to attack and kill him in the jail. This
apprehension was not given any consideration by the authorities. During the particular night,
there were only two persons guarding the jail, instead of the usual six. The enemies of the
arrested person entered the jail during the night and shot him dead. The legal representatives
of the deceased filed a suit for damages. The trial court found that the authorities were
negligent in guarding the jail and that the death of the deceased was attributable to such
negligence. However, the suit was dismissed on the ground that the arrest and detention of
the deceased in jail was in exercise of sovereign functions of the State. During the hearing of
the plaintiff’s appeal, the State relied upon the decision of the Supreme Court in Kasturi Lal.
The High Court, however, held that where the fundamental rights of the citizens are violated,
the plea of sovereign immunity, which is assumed to be continued by article 300 of the
Constitution, cannot be put forward. This view has been approved by the Supreme Court in
AIR 2000 SC 2083. [State of A.P. v. Chella Ramakrishna Reddy].

4. CASE NAME: Nilabati Behra V. State of Orissa16 :

Another landmark judgement was Nilabati Behra V. State of Orissa awarding compensation
to the petitioner for the death of her son in police custody. The court held that a claim in
public law for compensation for violation of human rights and fundamental freedoms, the
protection remedy for enforcement and protection of such right, is distinct from and in
addition to the remedy in private law damages for tort. The court expressly held that principle
of sovereign immunity does not apply to the public law remedies under Article 32 and Article
226 for the enforcement of fundamental rights. The Kasturi Lal case ratio is confined to
private law remedies only.

The distinction between public and private law and the remedies under the two has been
emphasised in Common Cause, A Registered Society V. Union of India and Chairman,
Railway Board V. Chandrima Das cases. It was held "where public functionaries are involved
and the matter relates to the violation of fundamental rights or the enforcement of public

15
A.I.R 1989 A.P. 235
16
AIR 1993 SC 1960

14
duties, the remedy would still be available under the public law notwithstanding that a suit
could be filed for damages under private law.

5. CASE NAME: N. Nagendra Rao & Co. v. State of Andhra Pradesh

In this case, the appellant N. Nagendra & Co. carried on a business in fertiliser and
foodgrains under licence issued by the appropriate authorities. Its premises were visited by
the Police Inspector, Vigilance Cell and huge stocks of fertilisers, foodgrains and even non-
essential goods were seized. On the report submitted by the Inspector, the District Revenue
Officer in exercise of powers under Section 6-A of the Essential Commodities Act, 1955 Act
directed the fertiliser to be placed in the custody of Assistant Agricultural Officer for
distribution to needy and the foodgrains and non- essential goods in the custody of Tehsildar
for disposing it off immediately and depositing the sale proceeds in the Treasury. The AAO
did not take any steps to dispose of the fertiliser. The appellant made application that since no
steps were being taken the fertiliser shall deteriorate and shall be rendered useless causing
huge loss to him. Request was made for diverting the fertiliser either to the places mentioned
by the appellant as the demand was more there or to release it in his favour for disposal and
deposit of the sale price. But neither any order was passed by the DRO nor any action was
taken by the AAO. In the meanwhile, the appellant’s licence was cancelled. After repeated
requests, the collector ordered that the goods be returned to the appellants. However, the
AAO did not comply with the orders. After repeated consultations with various minsters,
when the appellants finally obtained the stock, it was spoiled both in quality and quantity.

In N.Nagendra Rao’s case as well when the state seized certain goods under the Essential
Commodities Act for public welfare, the onus fell on the state to ensure that the said goods
are carefully preserved as is necessary. Thus, the state was held liable to pay the
compensation for the loss incurred.

15
 6. VIDHYAWATI CASE

This is a landmark judgement in the determination of liability of state and lays down a
distinction between the sovereign and non- sovereign functions.

The respondent’s husband was knocked down by a Government jeep car rashly and
negligently driven by an employee of the State of Rajasthan, and subsequently died in
hospital. The trial court decreed against the driver but dismissed the case against the state.
The High Court on appeal, disagreeing with the trial court, decreed the suit as against the
State as well. It was held by the High Court that the liability of the State for damages in
respect of a tortious act committed by its servant within the scope of his employment and
functioning was the same as that of any other employer. It did not agree with the trial court’s
reasoning of classifying the act as a part of the discharge of the sovereign functions by the
state. The state of Rajasthan appealed in the Supreme Court against the same.

The Supreme Court first analysed the liability of the state with respect to the Government of
India Act,1935, and others and held that the liability of the state post-independence is the
same as that of the East India Company as held in the case of Peninsular and Oriental Steam
Navigation Co. v. The Secretary of State for India. The issue that arose for consideration was
the extent of the vicarious liability of Government for the tortious acts of its employees,
acting in the course of their employment. The next question that was to be answered was
whether the act of driving the car back from the repair shop was an exercise of sovereign
powers of the state.

The Supreme Court upheld the view of the High Court. It held that the state must be equally
liable as other companies for the acts of its employees. The concept of sovereign immunity
and the rule of ‘king can do no wrong’ are no longer applicable. The Crown Proceedings Act
removes such unlimited immunity in the Common Law countries. Also our Constitution
envisages a Republican form of Government, and one of the objectives is to establish a
Socialist State with its varied industrial and other activities, employing a large army of
servants, there is no justification, in principle, or in public interest, that the State should not
be held liable vicariously for the tortious act of its servant.

The case of N. Nagendra must be read in light of this case. In this case, the liability was
imposed on the state and the concept of sovereign immunity was not adopted. The act of
driving a government vehicle during the course of employment cannot make the state
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immune when it substantially interferes with the right to life of the citizens. The state today
undertakes a plethora of activities under the umbrella of a welfare state such as
transportation, trading, construction and others. It would be unfair to immunise the state for
any mistake committed by itself or its employees during the course of these activities.

However, the view in the case of Vidhyawati was not upheld by the Supreme Court in
Kasturilal Ram case. The court laid down its ration on the basis of sovereign function of the
state through police and distinguished Vidhyawati case.

7. KASTURILAL’S CASE17

In this present case, the police authorities had seized certain goods of the appellants in the
exercise of its statutory powers. The police seized the goods under suspicion and detained
Kasturilal at Meerut. Later, when the police confirmed that the goods belonged to Kasturilal
and that he had the title to the goods, he was let free. However, in the meanwhile, a constable
of the police has stolen the goods. The police were, thus, negligent in the safe custody of the
goods. As a result of such negligence, the appellant suffered a loss of the gold articles and
thus sued the state to recover the loss. The trial court decreed against the state but was
overruled by the High Court. The appellants approached the Supreme Court.

It was argued in this case that once the negligence of the state is established, no further
deliberation is needed. It was argued that the principle laid down in Vidyawati case must be
applied as both cases included loss suffered due to the negligence of state employees.
Nonetheless, the judges distinguished the case of Vidyawati. The course of public
employment of the Vidyawati case was not that of a sovereign function. The power to arrest a
person, to search him, to seize property found with him, are powers conferred on specified
officers by statute, and are powers which could be properly characterised as sovereign
powers. So, even though, the employees of the state were negligent during the course of their
employment, the state cannot be held liable because the employment in question was of the
category which falls under the characteristic of sovereign power.

Thus, the Supreme Court ruled in this case held that the state cannot be held liable to
compensate the appellant as the act of the state falls under the sovereign function of the state.

17
1965 AIR 1039.

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This view can nevertheless be accepted. Sovereign immunity as a defence can never be
available where the state was involved in commercial or public activity and it interferes with
the life and liberty of a citizen. The state must be legally and morally bound to compensate
the victims for the wrongs committed. No doubt the state must have protection so as to
conduct its activities for the public interest without being sued every now and then by the
people. However, this cannot be applied to every case where the state fails to take necessary
care to protect the interests of the public. The state cannot have the absolute power to act
according to its whims and caprice.

Also the changing structure of the society, a democratic political system and an unbiased
Constitution, cannot permit an executive to have absolute powers. The rule of law does not
permit the state to be above law. The state vis-à-vis an individual must be treated equally.
Today when the functions of the state extend to regulating and controlling the activities of the
people in almost every sphere, educational, commercial, social, economic, political and even
marital, the line demarcating between sovereign and non-sovereign functions is largely
disappearing.

8. Peoples' Union For Democratic rights vs Police Commissioner, Delhi 18

It is an unfortunate case where the police collected poor people and took them to the Police
Station for doing some work. They were asked to work without labour charges. On demand
they were beaten and it appears that one of them Ram Swaroop succumbed to the injuries and
the body has also been disposed of. Petition No. 2 Patasi, as alleged, was also stripped of her
clothes and was thrashed in the Police Station. The other Eight persons namely (1) Dandwa
(2) Ram Prasad (3) Jaipal (4) Mahavir (5) Kannu (6) Munsjia (7) Hukka and (8) Pratap were
also beaten up rather then they should have been paid for the work they did at the Police
Station.

3. We are happy and we record our appreciation that Mr. A.S. Khan, Deputy Commissioner
of Police in his Affidavit has frankly accepted the atrocity committed by the police officers
and it also appears some action has been taken and Station House Officer has been arrested.
The matter is being investigated for criminal prosecution. It is unfortunate that the police to
whom the citizen can approach for protection and help acted in such a manner.

18
(1989) 4 SCC 730.

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4. Under the above circumstances we direct that the family of Ram Swaroop who is dead will
be paid Rs. 50,000/- as compensation, which will be invested in some scheme under the Life
Insurance Corporation, so that the destitute family may get some amount monthly and the
money may also be kept secured. It is also directed that petitioner No. 2 Patasi who was
stripped of he clothes at the Police Station, shall be paid Rs. 500/- as compensation and the 8
other persons namely-(1) Dandwa (2) Ram Prasad (3) Jaipal (4) Mahavir (5) Kannu (6)
Munsjia (7) Hukka and (8) Pratap, who were taken in the Police Station without being paid
for their work will be paid Rs. 25/- each. It is directed that after investigation and inquiry
officers who are found guilty, the amount paid as compensation or part thereof may be
recovered from these persons out of their salaries after giving them opportunity to show
cause.

5. This Order will not prevent any lawful action for compensation. But in case some
compensation is ordered by a competent court, this will be given credit to

9. Rudal Shah V. State of Bihar19

The petitioner Rudal Shah was detained illegally in prison for more than fourteen
years. He filed Habeas Corpus before the court for his immediate release and inter alia prayed
for his rehabilitation cost, medical charges and compensation for illegal detention. After his
release, the question before the court was "whether in exercise of jurisdiction under Article
32, the court can pass an order for payment of money? Whether such order is in the nature of
compensation consequential upon the deprivation of fundamental right? The court answered
this query in the affirmative, this affirmation was a real acceleration and giant leap in the
compensatory-cum-constitutional tort jurisprudence in our legal history.

The decision of Rudal Shah was important in two respects. Firstly, it held that violation of
a constitutional right can give rise to a civil liability enforceable in a civil court and;
Secondly, it formulates the bases for a theory of liability under which a violation of the right
to personal liberty can give rise to a civil liability. The decision focussed extreme concern to
protect and presence the fundamental right of a citizen than sovereign and non-sovereign
dichotomy.

10. Case name:Saheli Vs Commissioner Of Police

19
AIR 1963 SC 1086.

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“On November 14, 1987, Kamlesh Kumari was attacked by Shambu Dayal, his brother
Prakash Chand accompanied by Lal Singh in civilian clothes and Sham Lal, Sub-Inspector in
uniform accompanied by two others. They beat Kamlesh Kumari, tore her clothes and
molested her. Her nine year old son clung to his mother to protect her when Lal Singh took
him away and forcibly threw him on the floor. Lal Singh also asked Shambu Dayal to beat
Naresh. Kamlesh Kumari was dragged away to the police station and a criminal case was
imposed upon her of trespass. She was sent to Tihar Jail and her lawyer got her released on
November 16, 1987. Kamlesh Kumari on her release came back and found that her child,
Naresh was in a very bad condition. The children took shelter at a neighbour’s house and the
neighbours had got local doctors to look after Naresh. On the advice of the doctors, Naresh
was admitted to Ram Manohar Lohia Hospital on November 18, 1987. However, no medical
legal case was registered. Kamlesh Kumari’s lawyer tried to get a medical legal case
registered. At last medical legal case was registered on November 23, 1987 by the ACP, Patel
Nagar at 11.30 p.m. In the FIR No. 143/87 the said ACP had written that she had said that no
policeman had beaten her son although she had specifically named Lal Singh and others. On
November 26, 1987, Naresh died in hospital
Judgement:
The Court directed a payment of Rs 75,000 to the mother of the deceased child and permitted
the Delhi Administration to take appropriate steps for the recovery of the amount paid as
compensation or part thereof from the officers responsible for this dastardly act.

CONCLUSION
The rule of liability of the State for torts of its servants as laid down in the Peninsular
and Oriental Steam Navigation case is very outmoded. In the modern age, when the activities
of the State have widely increased, it is very difficult to draw a distinction between sovereign
and non sovereign functions of the State. The increased activities of the State have made a
deep impact on all facets of an individual life and therefore, the liability of the State should
accordingly be made co-extensive with its modern role, a welfare State and not be confined to
the era of individualism. The judgment in Nagendra Rao case is very significant one in the
field of law on tortious liability of State in a Welfare State. This judgment shows that there is
no need of the distinction between sovereign and non-sovereign functions while fixing
liability of the State. To find out the liability of State in tortious acts of its servant‟s one of
the test is whether the State is answerable for such actions in Courts of law. State may be
exempted from liability only for the functions which are indicative of external sovereignty

20
and are political in nature, such as defense, foreign affairs etc. It is clear that the State is
subjected to law, like individuals are subjected to. Immunity of the State ends with political
acts. In order to expand the ambit of liability, the demarcating line between „sovereign‟ and
„non-sovereign‟ powers has largely disappeared. In Nagendra Rao case, the Court
demarcated the functions of the State in to primary and inalienable functions. The need of
certain and precise principles of law of universal application in nature is lacking in India. The
National Commission to review the working of the Constitution is strongly of the view that
there is one area of law where the need for a clear settlement of law in a statutory form, is
urgent and undeniable.98 Jurists may hold different views as to the relative merits of codified
and un-codified law. But this is definitely an area where a statutory formulation is urgently
needed.

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