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DAMODARAM SANJIVAYYA NATIONAL LAW


UNIVERSITY
VISAKHAPATNAM, A.P., INDIA

STATE LIABILITY UNDER INDIAN CONSTITUTION

CONSTITUTION LAW-II

SUBMITTED TO:

MR. BHARAT KUMAR

SUBMITTED BY:

YAMAN KHANDELWAL
2014144

SEMESTER IV
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Acknowledgement

I have endeavored to attempt this project. However, it would not have been feasible without the valuable
support and guidance of MR. BHARAT KUMAR. I would like to extend my sincere thanks to him.
I am also highly indebted to Damodaram Sanjivayya National Law University Library Staff, for their
patient co-operation as well as for providing necessary information & also for their support in completing
this project.
My thanks and appreciations also go to my classmates who gave their valuable insight and help in
developing this project.
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S.NO. CONTENTS PAGE

NO.

1. INTRODUCTION 6-8

2. CONSTITUTIONAL PROVISIONS 9

3. PRE CONSTITUTIONAL JUDICIAL DECISIONS 9-10

4. POST CONSTITUTIONAL JUDICIAL RULINGS 10-14

5. SOVERIGN AND NON SOVERIGN FUNCTIONS 14-15

6. SUGGESTIONS 16

7. CASE ANALYSIS 17-35

8. CONCLLUSION 36-37

BIBLIOGRAPHY 38

TABLE OF CONTENTS
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OBJECTIVE AND AIM OF THE PROJECT-


The Objective and Aim of the project is The Researcher will get knowledge about the project i.e
State Liability and the aspects related to it. In what cases the state will be liable and what are the
sovereign acts and immunities of the Government.

SIGNIFICANCE & BENEFIT OF THE STUDY-


The Researcher will get the knowledge about the topic. The Researcher will also get to know
about the states liability toward an act and where they can be sued or where they can sue others.

SCOPE OF THE STUDY-


The Research Topic covers The Indian Constitution (Article 300) The Research topic has a vide
aspect and it deals with the sovereign act. It also revolves around the tortuous, contractual etc
liability of the state.

RESEARCH METHODOLOGY-
The researcher will do a detailed study about the case review and will read it in each and every
aspect. The method for doing the research will be doctrinal as the topic is theoretical and book,
articles and other literary sources will be used.

HYPOTHISIS-

State liability is the legal liability of a state. The term usually refers to the liability of a sovereign
state to another international actor (usually another state) under international law. It may also
refer to the liability of an organ of state or public authority in that state's own domestic legal
system, typically under special principles within the law of tort.

300. Suits and proceedings


(1) The Governor of India may sue or be sued by the name of the Union 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
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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 proceedings chapter iv right to property
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INTRODUCTION

State as a master is liable to compensate the citizens whose rights are infringed by the unlawful
and excessive acts on its part. Hence the State is vicariously liable for the wrongs committed by
its servants. Any welfare State, functioning in accordance with rule of law, must accept the
liability. This is the primary duty of a democratic republic, working for the welfare of all the
citizens. The law relating to extent of liability and immunity of State in torts has witnessed
several phases of development. In India, tort litigation has so far been less diversified and
quantitatively less than in United Kingdom, United States, France, Australia and Canada. As a
welfare State having a written Constitution with equality clause and right to life and personal
liberty clause, its legal system has yet to find an adequate answer to the question of the State
liability in tort for the wrongful acts of its servants or agents. In the absence of comprehensive
legislation or fixed principles to decide the liability and immunity of the State for the tortuous
acts of its servants or agents, once again the past cases were being examined, tests and
distinctions were searched for, old statutes were examined to put together a mirror of the past in
which they tried desperately to catch the reflection of the law of today. 1

Justice has been regarded as one of the greatest concerns of mankind on this planet. Edmund
Burke said, that justice is itself the great standing policy of civil society. Scholars of political
science and legal theory tell us, that the administration of justice is one of the primary objects for
which society was formed. Our Constitution, in its very preamble, speaks of justice as one of the
great values which its makers have cherished.

It is for these reasons, that this Commission, entrusted with the task of reviewing the working of
the Constitution, has taken up, on a priority basis, a study of the law relating to liability of the
State in tort. Aristotle said that the law is a pledge, that the citizens of a State will do justice to
one another. Our Constitution goes much beyond that. 2 It takes a pledge, that justice shall inform
all institutions of the national life.

It follows, that the law that contains the principles that will govern the liability of the State, for
torts committed by its agencies, should be just in its substance, reasonably certain in its form and
fairly predictable in its working. This Commission, as a result of its studies, found that the law
on the subject-matter of this Report fails to satisfy these criteria. It traces its source to an archaic
provision, which is almost two centuries old. It is found to be suffering from conflicting views,
owing to the loose and imprecise criteria that have come to be adopted. It deserves a close
second look in the present century, in the larger interests of society.

1 Constitutional law of India, J.N.Pandey

2 H.M. Seervai, Constitutional Law of India (Vol 2, 4th edn., 2013)


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VICARIOUS LIABILITY:

Vicarious liability is a form of strict, secondary liability that arises under the common law
doctrine of agency respondent superior the responsibility of the superior for the acts of their
subordinate, or, in a broader sense, the responsibility of any third party that had the "right, ability
or duty to control" the activities of a violator. The liability is placed, not on the tort feasor, but
rather on someone who is supposed to have control over the tort feasor.3

The most common form of vicarious liability that we come across is the liability arising out of a
Master Servant relationship. This is sometimes referred to as the doctrine of "RESPONDEAT
SUPERIOR" (in which the MASTER - the archaic term for an employer - must respond for the
torts of its SERVANTS - the archaic term for employees)1. The principle says that a master is
jointly and severely liable for any tort committed by his servant while acting in the course of his
employment. As Lord Brougham said: The reason that I am liable is this, that by employing him
I set a whole thing in motion; and what he does, being done for my benefit and under my
direction, I am responsible for the consequences of doing it. This implies that the liability for the
injured partys loss is properly shifted to the person or entity whose enterprise was benefited by
the relationship, and created the occasion for the wrongdoers act or omission.

When a servant commits a tort in the course of his employment, the master is very often guilty of
what German lawyers call Culpa in eligendo or Culpa in inspiciendo In order that the
doctrine of vicarious liability may apply, the conditions that need to be fulfilled are that firstly,
the relationship of master and servant must exist between the defendant and the person
committing the wrong complained of. Secondly, the servant must in committing the wrong have
been acting in the course of his employment.

3 http://www.legalservicesindia.com/article/article/vicarious-liability-of-state-in-sovereign-functions-580-
1.html
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STATE LIABILITY:

Under the English Common Law the maxim was "The King can do no wrong" and therefore, the
King was not liable for the wrongs of its servants. But, in England the position of old Common
law maxim has been changed by the Crown Proceedings Act, 1947. Earlier, the King could not
be sued in tort either for wrong actually authorised by it or committed by its servants, in the
course of their employment. With the increasing functions of State, the Crown Proceedings Act
had been passed, now the Crown is liable for a tort committed by its servants just like a private
individual. Similarly, in America, the Federal Torts Claims Act, 1946 provides the principles,
which substantially decides the question of liability of State.

In ancient India, under the Hindu jurisprudence, it was an undisputed principle that no one is
exempted from the operation of law. This liability to equal punishment extended even to the
king, relative of the king, a judge or an ordinary citizen. 4 The rule of law was considered
supreme and binding on everyone alike. The important functions of the king were concerned
with protection of people, punishment of crimes and maintenance of dharma or social order.

In the medieval Indian history the personal liability of officers for their wrongs was more vogues
with evidences showing equality between the ruler and the ruled subject. Only when the king
considered it proper to undertake the burden of public officer, it was then the state treasury used
to pay the compensation. Dharma was considered the administrative law binding the king as well
as the subjects. Both in Hindu law and Muslim law, the rulers themselves administered justice as
far as possible and the rest was done by the exceptionally learned and honest judges. The most
significant recent trend has been an assertion on the part of the court that it has a power to grant
compensation. The principle of personal liability of public servants for wrongs done to citizens is
already a part of Indian law based on English case laws.

In England, the Crowns immunity before 1947 arose from the maxim King can do no wrong,
which implies that no wrong could be imputed to the Crown nor could it authorize a wrong.
Under the Common law, the Public officers were immune from liability due to their official
status. But at the end of the nineteenth century, the principle of vicarious liability was fully
developed. The position had been changed in England by the Crown Proceedings Act, 1947
which made the Crown liable for torts, like a private person of full age and capacity. Even
though the legislation provides exemption from liability, the existence of prerogative powers and
limits of statutory power are subject to judicial review.

4 Vicarious liability of the state in tort in India. By: Debanshu Mukherjee Anjali Anchayil
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CONSTITUTIONAL PROVISIONS

Article 300 of the Constitution

The law in India with respect to the liability of the State for the tortious acts of its servants has
become entangled with the nature and character of the role of the East India Company prior to
1858. It is therefore necessary to trace the course of development of the law on this subject, as
contained in article 300 of the Constitution.

Clause (1) of Article 300 of the Constitution provides first, that 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; secondly, that the Government of India or the Government of a State
may 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 be
sued, if this Constitution had not been enacted, and thirdly, that the second mentioned rule
shall be subject to any provisions which may be made by an Act of Parliament or of the
Legislature of such State, enacted by virtue of powers conferred by the Constitution.

Even though more than 50 years have elapsed since the commencement of the Constitution, no
law has so far been made by Parliament as contemplated by article 300, notwithstanding the fact
that the legal position emerging from the article has given rise to a good amount of confusion.
Even the judgments of the Supreme Court have not been uniform and have not helped to remove
the confusion on the subject, as would be evident from what is stated hereinafter.

PRE-CONSTITUTION JUDGMENTS

The first key judgment, which considered state liability for tortious acts of public servants, was P
&O Steam Navigation Co. v Secretary of State. This case involved a claim for damages for
injury caused to the appellants horse due to the negligence of workers in a government
dockyard. The issue was whether the Secretary of State would be liable for the negligence of the
workers. Peacock C.J. held that the Secretary of State would be liable for negligence. Peacock
C.J. reasoned that state liability for tortious acts of public servants would arise in those cases
where the tortious act would have made an ordinary employer liable. Peacock C.J. recognized a
crucial distinction between sovereign and non-sovereign functions - thus, if a tort was committed
by a public servant in the exercise of sovereign functions, no state liability would arise. 5 This
distinction was made on the basis that the East India Company could be held liable for torts
committed by its employees during the course of its commercial and trading activities and not for
the acts it performed as a delegate of the Crown. This distinction between sovereign and non-

5 H.M. Seervai, Constitutional Law of India (Vol 2, 4th edn., 2013) pg. 2132.
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sovereign functions was followed in Nobin Chunder Dey v Secretary of State. In this case, a
claim for damages was brought in connection with the issuance of a government licence. The
claim was ultimately rejected by the court as it related to the exercise of a sovereign function.
Subsequently, this distinction was relied on to repel state liability for tortious acts of public
servants where injury was caused in connection with the maintenance of military roads, wrongful
conviction, wrongful confinement, maintenance of public hospitals, etc.

In contrast to the above trend, a few High Courts adopted a much narrower view of the ambit of
sovereign functions. The most significant example of this trend is the decision in Secretary of
State v Hari Bhanji. In this case, Turner C.J. rejected the plain distinction between sovereign and
non-sovereign functions, and held that immunity from liability for tortious acts of public servants
would only be available in respect of acts done in the exercise of sovereign power and without
the sanction of a statute (acts of State). For acts done pursuant to a statute, or in exercise of
powers conferred on a public servant by a statute, no immunity would be available, even though
such acts might be done in exercise of sovereign powers.

The English law with regard to immunity of the Government for tortuous acts of its servants is
partly accepted in India. The High Court observed: as a general rule this is true, for it is an
attribute of sovereignty and universal law that a state cannot be used in its own courts without its
consent. Thus a distinction is sought to be made between sovereign functions and non-
sovereign functions of the state. The State is not liable in tort.

POST CONSTITUTIONAL JUDGMENTS

A broad approach

So far as the Supreme Court is concerned, State of Rajasthan vs. Vidyawati, AIR 1962 SC 933 is
the first post-Constitution judgment on the subject under consideration.

That was a case where the driver of a Government jeep, which was being used by the Collector
of Udaipur, knocked down a person walking on the footpath by the side of a public road. The
injured person died three days later, in the hospital. The legal representatives of the deceased
sued the State of Rajasthan and the driver for compensation / damages for the tortious act
committed by the driver. It was found by the court, as a fact, that the driver was rash and
negligent in driving the jeep and that the accident was the result of such driving on his part. The
suit was decreed by the trial court, and also by the High Court. 6 The appeal against the High
Court judgment was dismissed by the Supreme Court.

6 http://www.legalindia.com/tortious-liability-of-administration-in-modern-times
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Supreme Court view

The position of law, obtaining both prior and subsequent to 1858, the position obtaining under
article 300 of the Constitution and the facts and circumstances leading to the formation of the
State of Rajasthan, were all reviewed by the Supreme Court in State of Rajasthan Vs. Vidyawati,
which held as under:

The State of Rajasthan has not shown that the Rajasthan Union, its predecessor, was not liable
by any rule of positive enactment or by Common Law. It is clear from what has been said above,
that the Dominion of India, or any constituent Province of the Dominion, would have been liable
in view of the provisions aforesaid of the Government of India Act, 1858. We have not been
shown any provision of law, statutory or otherwise, which would exonerate the Rajasthan Union
form vicarious liability for the acts of its servants, analogous to the Common Law of England. It
was impossible, by reason of the maxim The King can do no wrong, to sue the Crown for the
tortious act of its servant. But it was realized in the United Kingdom, that that rule had become
outmoded in the context of modern developments in statecraft, and Parliament intervened by
enacting the Crown Proceedings Act, 1947, which came into force on January 1, 1948. Hence the
very citadel of the absolute rule of immunity of the sovereign has now been blown up. Section 2
(1) of the Act provides that the Crown shall be subject to all those liabilities, in tort, to which it
would be subject, if it were a private person of full age and capacity, in respect of torts
committed by its servants or agents, subject to the other provisions of this Act. 7 As already
pointed out, the law applicable to India in respect of torts committed by a servant of the
Government was very much in advance of the Common law, before the enactment of the Crown
Proceedings Act, 1947, which has revolutionized the law in the United Kingdom, also. It has not
been claimed before us, that the common law of the United Kingdom, before it was altered by
the said Act with effect from 1948, applied to the Rajasthan Union in 1949, or even earlier. It
must, therefore, be held that the State of Rajasthan has failed to discharge the burden of
establishing the case raised in Issue No. 9, set out above.8

Viewing the case from the point of view of first principles, there should be no difficulty in
holding that the State should be as much liable for tort in respect of tortious acts committed by its
servant within the scope of his employment and functioning as such, as any other employer. The
immunity of the Crown in the United Kingdom was based on the old feudalistic notions of
justice, namely, that the King was incapable of doing a wrong, and, therefore, of authorizing or
instigating one, and that he could not be sued in his own courts. In India, ever since the time of
the East India Company, the sovereign has been held liable to be sued in tort or in contract, and
the Common law immunity never operated in India. Now that we have, by our Constitution,

7 http://lawmin.nic.in/ncrwc/finalreport/v2b1-13.htm

8 http://www.legalindia.com/tortious-liability-of-administration-in-modern-times
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established a Republican form of Government, and one of the objectives is to establish a


Socialistic 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 tortious acts of its servant. This Court has deliberately departed from
the Common Law rule that a civil servant cannot maintain a suit against the Crown.

In the case of State of Bihar Vs. Abdul Majid,9 this Court has recognized the right of a
Government servant to sue the Government for recovery of arrears of salary. When the rule of
immunity in favor of the Crown, based on Common Law in the United Kingdom, has
disappeared from the land of its birth, there is no legal warrant for holding that it has any validity
in this country, particularly after the Constitution. As the cause in this case arose after the coming
into effect of the Constitution, in our opinion, it would be only recognising the old established
rule, going back to more than 100 years at least, if we uphold the vicarious liability of the State.
Article 300 of the Constitution itself has saved the right of Parliament or the Legislature of a
State to enact such law as it may think fit and proper in this behalf. But, so long as the
Legislature has not expressed its intention to the contrary, it must be held that the law is what it
has been, ever since the days of the East India Company.

Kasturi Lal case

However, a different note was struck by the Supreme Court itself in Kasturi Lal Vs. State of UP,
AIR 1965 SC 1039. In that case, the plaintiff had been arrested by the police officers on a
suspicion of possessing stolen property. On a search of his person, a large quantity of gold was
found and was seized under the provisions of the Code of Criminal Procedure. Ultimately, he
was released, but the gold was not returned, as the Head Constable in charge of the malkhana
(wherein the said gold was stored) had absconded with the gold. The plaintiff thereupon brought
a suit against the State of UP for the return of the gold (or in the alternative) for damages for the
loss caused to him. It was found by the courts below, that the concerned police officers had failed
to take the requisite care of the gold seized from the plaintiff, as provided by the UP Police
Regulations. The trial court decreed the suit, but the decree was reversed on appeal by the High
Court. When the matter was taken to the Supreme Court, the court found, on an appreciation of
the relevant evidence, that the police officers were negligent in dealing with the plaintiffs
property and also, that they had also not complied with the provisions of the UP Police
Regulations in that behalf. In spite of the said holding, the Supreme Court rejected the plaintiffs
claim, on the ground that the act of negligence was committed by the police officers while
dealing with the property of Ralia Ram, which they had seized in exercise of their statutory
powers. The power to arrest a person, to search him and to seize property found with him, are
powers conferred on the specified officers by statute and in the last analysis, they are powers
which can be properly categorized as sovereign powers; and so, there is no difficulty in holding
9 (1954) SCR 786: (AIR 1954 SC 245)
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that the act which gave rise to the present claim for damages has been committed by the
employee of the respondent during the course of its employment; but the employment in question
being of the category which can claim the special characteristic of sovereign power, the claim
cannot be sustained.

Suggestion in Kasturi Lals case

Having thus rejected the claim, the Supreme Court made the following pertinent observations in
Kasturi Lal Vs. State of UP 10:

Before we part with this appeal, however, we ought to add that it is time that the Legislatures in
India seriously consider whether they should not pass legislative enactments to regulate and
control their claim from immunity in cases like this, on the same lines as has been done in
England by the Crown Proceedings Act, 1947. It will be recalled that this doctrine of immunity is
based on the common law principle that the King commits no wrong and that he cannot be guilty
of personal negligence or misconduct, and, as such, cannot be responsible for the negligence or
misconduct of his servants. Another aspect of this doctrine was that it was an attribute of
sovereignty that a State cannot be sued in its own courts without its consent. This legal position
has been substantially altered by the Crown Proceedings Act, 1947 (10 and 11 Geo. 6 c. 44). As
Halsbury points out, Claims against the Crown which might, before 1st January, 1948, have
been enforced, subject to the grant of the royal fiat, by petition of right may be enforced, as of
right and without a fiat, by legal proceedings taken against the Crown. That is the effect of S. 1
of the said Act. Section 2 provides for the liability of the Crown in tort in six classes of cases
covered by its clauses (1) to (6). Clause (3), for instance, provides that where any functions are
conferred or imposed upon an officer of the Crown as such either by any rule of the common law
or by statute, and that officer commits a tort while performing or purporting to perform those
functions, the liabilities of the Crown in respect of the tort shall be such as they would have been,
if those functions had been conferred or imposed solely by virtue of instructions lawfully given
by the Crown. Section 11 provides for saving in respect of acts done under prerogative and
statutory powers. It is unnecessary to refer to the other provisions of this Act. Our only point in
mentioning this Act is to indicate that the doctrine of immunity which has been borrowed in
India in dealing with the question of the immunity of the State, in regard to claims made against
it for tortious acts committed by its servants, was really based on the common law principle
which prevailed in England; and that principle has now been substantially modified by the
Crown Proceedings Act. In dealing with the present appeal, we have ourselves been disturbed by
the thought that a citizen whose property was seized by process of law, has to be told, when he
seeks a remedy in a court of law on the ground that his property has not been returned to him,

10 AIR 1995 SC 1039. AIR 1995 SC 1039.


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that he can make no claim against the State. That, we think, is not a very satisfactory position in
law. The remedy to cure this position, however, lies in the hands of the Legislature.

Basis of the judgment in Kasturi Lal

Reverting to the basis of the judgment in Kasturi Lal (supra), we find that the basis was two-
fold:-
(a) The act was done in the purported exercise of a statutory power.
(b) The act was done in the exercise of a sovereign function.

Sham Sunder and other cases

The question of tort liability of the State has arisen in other cases also including Shyam
Sunders case. But we do not think it necessary to encumber this Chapter with a discussion
thereof. The two judgments of the Supreme Court which have been dealt with above namely,
Vidyawati and Kasturi Lal, should suffice, to illustrate the competing approaches.

Nagendra Rao case

In 1994, an important judgment, directly relating to the subject under consideration, was
pronounced by the Supreme Court. We propose to deal with it in the next Chapter, as it raises a
number of theoretical and practical issues, which deserve a Chapter unto themselves.

SOVERING AND NON-SOVERIGN FUNCTIONS

The Courts have usually put forth the defense of sovereign immunity, whenever compensation
claims are passed. After independence, Courts have actively laid down new principles, by
deciding many acts, such as negligent driving, malicious prosecution, conversion of
property, banking business, running of railways, postal service, maintenance of
hospitals, acts carried on by public works department, construction of reservoir, medical
relief work, famine relief work and fire service as non-sovereign acts, extending tortuous
liability of State. The attitude of Supreme Court, to reduce the States immunity is a plus point to
protect individuals from public wrong.11 However, the watertight compartmentalization of the
States functions into sovereign and non sovereign, is highly reminiscent of the laissez-faire era.
In the absence of guiding principles by legislation, Courts were confronted with the test of
sovereign - non-sovereign distinction. Absence of uniformity in its application and the
controversial opinions among Courts encourage only lack of confidence in the minds of the

11 Constitutional law of India, M.P. Jain


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citizens. Courts have often prompted out that it is the matter of the legislation to decide, not the
Courts.

The Supreme Court and High Courts took liberal approach in various cases in such a manner that
the distinction lost much of its practical importance. The cases like Rudul Shah, Nilabatti, Saheli,
Bhimsingh, Nagendra Rao, Peoples Union for Democratic Rights, Common Cause,
Sathyavathy, and Chella Rama Krishna Reddy show, how the judiciary discarded the principle of
sovereign immunity rule and extended the liability of State.

For the proper exercise of governmental functions, State requires immunity from liability. But it
should not be absolute. There must be guiding principles by legislation or by uniform judicial
precedents. Without any uniform judicial precedents or any rational basis to support the Courts to
decide what sovereign function is and what is not, denial of liability by deciding the wrong act as
sovereign act leads to injustice. For instance, performance of statutory duty, maintenance of
public path, maintenance of military road, commandeering goods during war, training for
defense, arrest and detention, performance of military duty, maintenance of national highways,
keeping stolen goods with police malkana, malicious prosecution, maintenance of law and order,
administration of justice etc; were considered as sovereign functions and for such function, the
State need not take responsibility.12 It is concluded that these norms laid down by Courts are
unsatisfactory norms.

While awarding compensation, the Courts are neglecting the feudal and pre Constitutional
principle of Sovereign Immunity. This judicious and equitable move of the Supreme Court and
High Court dilutes Article 300 and innovates Constitutional tort under Article 21 of the Indian
Constitution. This welcome trend fixes more responsibility on modern welfare State and creates
accountability towards the victims, whose fundamental rights are affected by the negligence or
excessive acts of the servants of the State.

12 ijtr.nic.in/articles/art68.pdf
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SUGESSATIONS AND RECOMENDATIONS-

After carefully analyzing the State liability in tort under Article 300, the researcher has
concluded that the application of Article 300 of the Indian Constitution is vague and unclear in
respect of laying down principles regarding extent of liability and immunity of State, for the
wrongful acts of its servants or agents. Another lacuna found out by the researcher in application
of Article 300 is in respect of demarcating the Act of State and Sovereign functions. Thus, in
order to curb the anomaly, the researcher has come up with certain suggestions, which are as
follows,

A Comprehensive Legislation is urgently needed. However, the Parliament has brought a Bill
namely, The Government (Liability in Tort) Bill, 1967 to implement the recommendation of the
First Law Commission. The researcher has elaborately examined the above said Bill and found
that it is not suitable to the present socio economic conditions of the State. After considering the
present modern society in the globalised world and the role played by the judiciary in expanding
the fundamental rights of the citizens under Article 21, 13 the researcher has conceptualized that
the proposed Bill should be in such a way that the State must be made liable for its tortuous
actions and reasonable exceptions should be given for the acts of State to protect the sovereign
functions and to reduce the vicious interpretation of the judiciary in expanding the liability of
the State, by compromising the sovereignty of the State.

13 www.lawctopus.com/academike/vicarious-liability-state
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CASE ANALYSIS

CASE-1
KASTURI LAL V. STATE OF U.P14

FACTS OF THE CASE


In this case the Police seized some suspected stolen gold from Plaintiff. Later, it was
misappropriated by Head Constable of the Police Station who reportedly fled to Pakistan with
the Gold.

ISSUE
Will the state be held liable for the activity of the police constable?

REASONING
The Supreme Court, the court found, on an appreciation of the relevant evidence, that the police
officers were negligent in dealing with the plaintiffs property and also, that they had not
complied with the provisions of the UP Police Regulations. However, the Supreme Court
rejected the plaintiffs claim, on the ground that the act of negligence was committed by the
police officers while dealing with the property of Ralia Ram, which they had seized in exercise
of their statutory powers. The power to arrest a person, to search him and to seize property found
with him, are powers conferred on the specified officers by statute and they are powers which
can be properly categorized as sovereign powers.

CONCLUSION
Hence the basis of the judgment in Kasturi Lal was two-fold The act was done in the purported
exercise of a statutory power. Secondly, the act was done in the exercise of a sovereign function.
Thus, the court not only reversed what appeared to be the legal position after Vidyawati case but
also reinforced an additional qualification to the State liability by referring to the statutory
powers; in a way holding that State is not liable for any torts committed by its servants in the
exercise of statutory powers. Though Kasturi Lal has not been overruled or reconsidered by a
constitutional bench of the Supreme Court, great dissatisfaction has been expressed about it in

14 1965 AIR 1039


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several writings and judicial decisions. Consequently, the court has found escape routes, either
by restricting its ratio or by innovating new remedies.

CASE-2
RUDAL SHAH V. STATE OF BIHAR15

FACTS OF THE CASE


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.

ISSUE
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?

REASONING
In this case it was laid down a most important principle of compensation against government for
the wrong action of its official the important judgement was handed down by the Supreme Court
against the Bihar Government for the wrongful and illegal detention of Rudal Shah in
Muzaffarpur jail for as many as 14 years after he was acquitted by the Sessions Court in June
1968. The Court ordered compensation of Rs 30,000 for the injustice and injury done to Rudal
Shah and his helpless family.

CONCLUSION
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

15 1983 AIR 1086


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liberty can give rise to a civil liability. The decision focused extreme concern to protect and
presence the fundamental right of a citizen than sovereign and non-sovereign dichotomy.
21 | P a g e

CASE-3
CHALLA RAMKONDA REDDY VS. STATE OF AP16

FACTS OF THE CASE


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.

ISSUE
Will the plea for sovereign immunity be available?

REASONING
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.

CONCLUSION
The plea of sovereign immunity was not available, where there was a violation of the
fundamental rights of the citizens. During the hearing of the plaintiffs appeal, the State relied
upon the decision of the Supreme Court in Kasturi Lal. The High Court, however, held, applying
the principle of a decision of the Privy Council in Maharaj Vs. AG for Trinidad and Tobago,
(1978) 2 All ER 670, 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. The view taken by the High Court of Andhra Pradesh in Challa
Ramkonda Reddy Vs. State of AP, AIR 1989 AP 235 (supra), has been approved by the Supreme
Court in AIR 2000 SC 2083.

16 AIR 1989 AP 235


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CASE-4
NILABATI BEHRA V. STATE OF ORISSA17

FACTS OF THE CASE


The son of the petitioner was taken in police custody from his home and was later found dead
with bodily injurious on a railway track the next day. The deceased was aged 22 years and his
monthly income was between Rs. 1,200 and 1,500 in 1987.

ISSUE
Will the state be liable for compensating the plaintiff for the death of her son in police custody?

REASONING
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 contravention of human rights and fundamental
freedoms. The Supreme Court, while directing the State of Orissa to pay a sum of Rs. 1,50,000
as compensation to the Petitioner and Rs. 10,000 as costs to the Supreme Court Legal Aid
Committee.

CONCLUSION
Award of compensation in a proceeding under Article 32 by this court or by the High Court
under Article 226 of the Constitution is a remedy available in public law, based on strict liability
for contravention of fundamental rights to which the principle of sovereign immunity does not
apply, even though it may be available as a defence in private law in an action based on tort.

17 1993 AIR 1960


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CASE-5
PENINSULAR AND ORIENTAL NAVIGATION COMPANY V.
SECRETARY OF STATE FOR INDIA18

FACTS OF THE CASE


A piece of iron funnel carried by some workmen for conducting repairs of Government steamer
hit the plaintiff horse-driven carriage and got injured. The Plaintiffs sued for damage. The
plaintiff filed a suit against the Secretary of State for India- in council for the negligence of the
servants employed by the Government of India.

ISSUES
Will the state be liable for the acts of the servants?

REASONING
The Small Causes Court judge decided that the dockyard servants were negligent, though he
expressed some doubt as to whether the plaintiff's coachman had not advanced in the manner that
was more than absolutely necessary. He stated the case to the Supreme Court. The Supreme
Court delivered a very learned judgement through the Chief Justice. The Supreme Court at
Calcutta, speaking through Peackok, CJ held that "the Government will be liable for the actions
done by its servants while doing non-sovereign functions but it won't be liable for injuries caused
while pursuing sovereign functions.

18 (1861) 5 Bom. H.C.R.


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CASE-6
STATE OF RAJASTHAN V. MST. VIDYAWATI19

FACTS OF THE CASE


In this case, a Government Jeep knocked down a pedestrian who died in consequence of
accident.

ISSUES
Will the state of Rajasthan be liable for compensation?

REASONING
Rejecting the appeal by the State of Rajasthan on the ground of Sovereign Immunity, the Court
ruled that the State is liable for the tort or wrongs committed by its officials. In this case
distinction between sovereign and non-sovereign functions were disregarded, but the court
observed that the State would not be responsible for the 'Act of State' under Article 300 of the
Constitution. Petitioner Vidyawati was awarded a compensation of Rs. 15000/-. The Supreme
Court, in this case, added that in modern times, the State has welfare and socialistic functions
and the defence of State immunity based on the old feudalistic notions of justice cannot be
sustained.

19 1962 AIR 933


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CASE-7
SECERATARY OF STATE V. HARI BHANJI20

FACTS OF THE CASE


The respondents having purchased a quantity of salt at Bombay and paid excise on it at the rate
of Rupees 1-13-0 per maund, the rate leviable under the law there in force, despatched it by sea
to certain ports in this Presidency. While the salt was in transit, Act XVIII of 1878 was passed
and came into force. By that Act the import duty on salt was raised to Rupees 2-8-0 per maund;
but in virtue of a notification issued by the Governor-General in Council under the authority of
the Indian Tariff Act, 1875, importers were allowed a deduction of the excise already paid, and
consequently they were chargeable only with the difference between the excise and the import
duty. On the landing of the salt in this Presidency, the Collector required the respondents to pay
the difference, 13 annas per maund, between the excise already paid and the import duty leviable
under the Act of 1877, and the respondents, having complied with the Collector's requirements in
order to obtain possession of the salt, instituted this suit to recover the sums they had been
compelled to pay.

ISSUE
Will the state immunity be confined to the acts of the state?

REASONING
In this case, the Madras High Court held that State immunity was confined to acts of State. 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. Acts thus done in the exercise of
sovereign powers but which do not profess to be justified by Municipal law are what we
understand to be the acts of state of which Municipal Courts are not authorized to take
cognizance.

CONCLUSION
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

20 (1882) ILR 5 Mad 273


26 | P a g e

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.
27 | P a g e

CASE-8
STATE OF HARYANA V. SANTRA21

FACTS OF THE CASE


The respondent in the above case was a poor lady who went under a sterilization operation at the
General Hospital, Gurgaon, as she already had seven children and wanted to take advantage of
the family planning scheme launched by the State Government of Haryana. Smt. Santra was
informed that she would not conceive in future. Smt. Santra approached the Chief Medical
Officer, Gurgaon, for her sterilization in 1988. But she gave birth to a female child. This led her
to file a suit claiming Rs. 2 lakhs as damages for medical negligence due to failed sterilization
which was decreed for a sum of Rs. 54,000/- with interest at the rate of 12 per cent per annum
from the date of institution of the suit till the payment of the decretal amount. Two appeals were
filed against this decree in the court of District Judge, Gurgaon, which were disposed of by Addl.
District Judge, Gurgaon, by a common judgment dated 10.5.1999. Both the appeals - one filed by
the State of Haryana and the other by Smt. Santra were dismissed. The second appeal filed by the
State of Haryana was summarily dismissed by the Punjab & Haryana High Court on 3.8.1999.

ISSUE
There are two major issues involved in the case. One is that there was negligence on the part of
the doctor who operated on her as the operation was a failure. Moreover as the operation took
place in a Government Hospital, the state should be vicariously liable for the negligent act of its
servant in the course of employment. This law also deals with the Hindu Adoptions and
Maintenance act, 1956, Ss.20 and 23.the principle involved for the above claim is the vicarious
liability of the state for the negligence of its doctors.

REASONING
The explanation given by the appellants for absence of state liability was rejected by the trial
court which the suit for a sum of Rs. 54,000 with pendate lite and future interest at 12% per
annum. The decision was confirmed by the Appellant Court and State High Court. The trial court
as also the lower appellate court both recorded concurrent findings of fact that the sterilization
operation performed upon Smt. Santra was not 'complete' as in that operation only the right
Fallopian Tube was operated upon while the left Tube was left untouched. The courts were of the
opinion that this exhibited negligence on the part of the Medical Officer who performed the
operation. Smt. Santra, in spite of the unsuccessful operation, was informed that sterilization
operation was successful and that she would not conceive any child in future. The plea of

21 CR-3466-2005 [2006]
28 | P a g e

estoppel raised by the defendants was also rejected. The amount of Rs. 54,000/- which has been
decreed by the courts below represents the amount of expenses which Smt. Santra would have to
incur at the rate of Rs. 2,000/- per annum in bringing up the child up to the age of puberty.
Having regard to the above facts the court said that Smt. Santra was entitled to full compensation
from the State Government and appeal was dismissed but without any order as to cost.

CONCLUSION
The ratio of this case was on the principles of state liability for negligence. Here it was clearly
established that the doctor while performing the operation was acting as a government servant
and acting in the course of employment of the government. Hence when there was negligence, it
amounted to acting in bad faith, and so the defence of sovereign immunity could not be used by
the state. Moreover it was also held that such negligence which could have been perceived by a
professional who had a duty to do so should take into consideration these matters and cannot
escape liability by claiming defence of consent by the petitioner.

POST JUDGEMENT DEVELOPMENTS:


In case of any medical negligence, if the doctor acting in the course of employment of the
Government Hospital, the Government is liable for the negligent act as it come under the
preview of State Liability. In the case of State of Punjab v. Shiv Ram & ors., cause of action for
claiming compensation in cases of failed sterilization operation arises on account of negligence
of surgeon and not on account of child birth. In the case of The Joint Director of Health Services
v. Sahai, death of patient occurred due to negligence in carrying out operation. The post-
operation treatment done by defendant No. 2 was not proper. Defendant No. 1 unauthorized
delegated function to defendant No. 2 who removed stitches of patient without taking
precautions and thus due to negligence of defendants No. 1 and 2 patient died. Following the
same principle of infringement of Right to Life, State was held vicariously liable for damages on
account of negligence of its doctors or other employees. Again in the case of Dr. M.K.Gaurikutty
v. M.K. Raghavan, proper care was not taken by defendants due to which damage to brain not
avoided. Patient was admitted to hospital for purpose of treatment but patient was not particular
about doctor. Due to negligence of doctor or staff any mishap happens hospital authorities
responsible. Government could not produce any record to show that there was no negligence,
hence State was held vicariously liable.
29 | P a g e

CASE-9
NOBIN CHUNDER DEY VS THE SECRETARY OF STATE FOR INDIA22

FACTS OF THE CASE


At the public auction, which was held by the Government officer on the 4th of March 1874, of
licenses to sell certain excisable liquors and drugs, I became the highest bidder for the right to
sell such liquors and drugs at five different shops at Calcutta; I paid the deposit upon my
purchase, and did all that was necessary to entitle me to the licenses. I demanded these licenses
from the Government officials, and I failed to obtain them. Furthermore, I paid the duties upon
certain excisable articles of the same character which I kept in my godowns; but,
notwithstanding this payment, I could not obtain from the Government officers the necessary
papers to enable me to obtain these articles. The consequence was, that I was obliged to close my
shops. I sustained heavy damages upon the resale of goods, as well as in other ways, entirely
through the wrongful acts and default of the Excise officials; and I am therefore entitled in the
first place to be compensated for all the damage which I have thus sustained, or, failing that, I am
at least entitled to have the deposit which I paid on the purchase of the licenses returned to me.

ISSUE
Is this a claim which, even assuming the plaintiff to be right upon the merits, he can legally
enforce by suit against the Government of India?

REASONING
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. The doctrine of immunity, for acts done in the exercise of sovereign functions,
was applied by the Calcutta High Court.

CONCLUSION
the Calcutta High Court gave full effect to the remarks in rejecting the plaintiff's plea for damage
against wrongful refusal to him of a licence to sell certain excisable liquours and drugs resulting
in the closure of his business on the ground that grant or refusal of a licence was a sovereign
function lying beyond the reach of the tortious liability of the State. Since then, the distinction

22 (1876) ILR 1 Cal 12


30 | P a g e

between the sovereign and non-sovereign functions of the State has been the basis of a number of
judicial pronouncements.

CASE-10
N. NAGENDRA RAO CO. V. STATE OF ANDHRA PRADESH
23

FACTS OF THE CASE


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 favor 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 appellants
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.

ISSUE
Whether the employees of the state were negligent in disposing the goods.
Whether the seizure of the goods in exercise of statutory powers under the said Act immunises
the State, completely, from any loss or damage suffered by the owner.

REASONING
The Supreme Court upheld the view in Vidyawati case and distinguished Kasturilal. The court
held that barring functions such as administration of justice, maintenance of law and order and
repression of crime etc. which are among the primary and inalienable functions of a

23 1994 AIR 2663


31 | P a g e

constitutional Government, the State cannot claim any immunity. The act of seizure of goods for
the public interests is under the welfare state functions and not under the primary functions.

CONCLUSION
With respect to the principle of vicarious liability, it was held that if the officers can be sued
personally for negligence and misfeasance in discharge of public, there is no rationale for the
proposition that even if the officer is liable the State cannot be sued. Now, since the doctrine has
become outdated and sovereignty rests with the people, the state cannot claim any immunity.
Thus, the State of Andhra Pradesh was directed to pay the appellants the amount as decided by
the trial court with costs. The court held the State of Andhra Pradesh liable for the loss caused to
the appellant by the negligent exercise of powers by the State officials under the Essential
Commodities Act, 1655. The court observed that no civilized system could permit an executive
to play with the people of a country and claim to be sovereign. To place the State above the law
is unjust and unfair to the citizen. In the modern sense the distinction between sovereign and
non-sovereign functions does not exist. The ratio of Kasturi Lal is available to those rare and
limited cases where the statutory authority acts as a delegate of such functions for which it
cannot be sued in a court of law.
32 | P a g e

CASE-11
BHIM SINGH V. STATE OF JAMMU AND KASHMIR24

FACTS OF THE CASE


The petitioner who was an MLA was illegally arrested and detained in police custody and
deliberately prevented from attending the session of the Legislative Assembly.

ISSUE
Is the state liable for the violation of right under article 21 of the constitution?

REASONING
The decisions of the Supreme Court in the cases of personal liberty clearly show that the doctrine
of state immunity is not available the constitutional rights of Shri Bhim Singh were violated with
impunity. Since he is now not in detention, there is no need to make any order to set him at
liberty, but suitably and adequately compensated, he must be. The Supreme Court awarded a sum
of Rs. 50,000 to the petitioner as compensation for violation of his fundamental right of personal
liberty under Art. 21 of the Constitution.

COCLUSION
The constitutional rights of Shri Bhim Singh were violated with impunity. Since he is now not in
detention, there is no need to make any order to set him at liberty, but suitably and adequately
compensated, he must be. That we have the right to award monetary compensation by way of
exemplary costs 01 otherwise is now established by the decisions of this court in Rudul Sah v.
State of Bihar and Anr. 1983 (3) SCR 508 and Sebestian M. Hongray v. Union of India 1984 AIR
SC 1026. When a person comes to us with the complaint that he has been arrested and
imprisoned with mischievous or malicious intent and that his constitutional and legal rights were
invaded, the mischief or malice and the invasion may not be washed away or wished away by his
being set free. In appropriate cases we have the jurisdiction to compensate the victim by
awarding suitable monetary compensation. We consider this an appropriate case. We direct the
first respondent, the State of Jammu and Kashmir to pay to Shri Bhim Singh a sum of Rs.
50,000/- within two months from today.

24 AIR 1986 SC 494


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CASE-12
STATE OF ORISSA V. PADMALOCH25

FACTS OF THE CASE


The plaintiff filed a suit for damages against the State of Orissa for injuries caused to him by the
Military Police. The fact was that in apprehension of danger of attack on the office of the S. D.
O. and its properties by an unlawful mob which resorted to violence, there was police cordoning
in the O. M. P. under the control of supervisory officers and magistrates without any orders from
the magistrate or higher authorities the police personnel assaulted members of the mob as a result
of which the plaintiff received injuries.

ISSUE
Whether the state be held liable for the actin of police?

REASONING
The Court held that the injuries caused to the plaintiff by the police personnel with a view to
disperse the unlawful crowd were in exercise of the sovereign function of the State. As the
posting of Police for the protection of its officers and properties was in exercise of the delegated
sovereign function, the fact that the police committed excess in discharge of their function
without authority could not take away the illegal act from the purview of delegated sovereign
function. The State was held to be not liable for the police.

CONCLUSION
It can be concluded from the case that if any government personnel doing any act but without the
proper authority from the higher authority than the act will not be considered to be a state act and
therefore the state will not be liable for such acts of the public servant.

25 AIR 1975 Ori 41.


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CASE-13
SATYAWATI V. UNION OF INDIA26

FACTS OF THE CASE


An Air Force vehicle was carrying hockey team to Indian Air Force Station to play a match
against a team of Indian Air Force. After the match was over, the driver was going to park the
vehicle when he caused the fatal accident by his negligence.

ISSUE
Whether the union of India be held liable to pay damages for the plaintiff?

REASONING
The Court held that the carrying of hockey team to play a match could by no process of
extension be termed as exercise of sovereign power and the Union of India was therefore liable
for damages caused to the plaintiff.

CONCLUSION
It was argued that it was one of the functions of the Union of India to keep the army in proper
shape and the tune and that hockey team was carried by the vehicle for the physical exercise of
the Air Force personnel and therefore the Government was not liable. And the court rejected the
argument of the government and so the government was held liable for paying the damages to
the plaintiff.

26 CASE NO.: Appeal (civil) 1897 of 2003


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CASE-14
UNION OF INDIA V. SUGRABAI27

FACTS OF THE CASE


Mr. Abdul Majid was knocked down by a military truck which was engaged in carrying a
machine to the School of Artillery. The machine was sent for repairs to military workshop and
after repairs it was being transported to the School of Artillery. It was a machine for locating
enemy guns which was meant for giving training to military officers.

ISSUE
Whether the act necessary for discharge of a sovereign function involves an exercise of
sovereign power?

REASONING
The Court rejected this argument that every act which is necessary for the discharge of a
sovereign function involves an exercise of sovereign power. Many of these acts do not require to
be done by the State through its servants, for example supply of food to army which may be
transported in trucks belonging to private persons. The Court said that though the transportation
of the machine from the workshop to the military school was necessary for the training of army
personnel but it was not necessary to transport it though a military truck driven by defence
personnel. The machine could have been carried through a private carrier without any material
detriment for the discharge of, by the State of its sovereign function of maintaining army
personnel.

CONCLUSION
Sovereign powers are vested in the State in order that it may discharge its sovereign functions.
For the discharge of that function one of the sovereign powers vested in the State is to maintain
an army. Training of army personnel can be regarded as a part of the exercise of that sovereign
power. The State would clearly not be liable for a tort committed by an army officer in the
exercise of that sovereign power. But it cannot be said that every act which is necessary for the
discharge of a sovereign function and which is undertaken by the State involves an exercise of
sovereign power. Many of these acts do not require to be carried out by the State through its
servants. In deciding whether a particular act was done by a Government servant in discharge of
a sovereign power delegated to him, the proper test is whether it was necessary for the State for
the proper discharge of its sovereign function to have the act done through its own employee
rather than through a private agency. But in this case the court also observed that in certain cases

27 AIR 1969 Bom 13, (1968)


36 | P a g e

transporting of machine by a military truck can be regarded as a sovereign function, e. g.,


carrying machine for the immediate use of army engaged in active military duty.

CASE-15
STATE OF BIHAR VS. ABDUL MAJID28

FACTS OF THE CASE


The cause in this case arose after the coming into effect of the Constitution, in our opinion, it
would be only recognising the old established rule, going back to more than 100 years at least, if
we uphold the vicarious liability of the State.

ISSUES
Whether the state will be held liable as per article 300?

REASONING
It may be noted that like other contracts, a Government Contract is also governed by the Indian
Contract Act, yet it is distinct a thing apart. In addition to the requirements of the Indian Contract
Act such as offer, acceptance and consideration, a Government Contract has to comply with the
provisions of Article 299. Thus subject to the formalities prescribed by Article 299 the
contractual liability of the Central or State Government is same as that of any individual under
the ordinary law of contract.

CONCLUSION
This Court has recognized the right of a Government servant to sue the Government for recovery
of arrears of salary. When the rule of immunity in favor of the Crown, based on Common Law in
the United Kingdom, has disappeared from the land of its birth, there is no legal warrant for
holding that it has any validity in this country, particularly after the Constitution. As the cause in
this case arose after the coming into effect of the Constitution, in our opinion, it would be only
recognising the old established rule, going back to more than 100 years at least, if we uphold the
vicarious liability of the State. Article 300 of the Constitution itself has saved the right of
Parliament or the Legislature of a State to enact such law as it may think fit and proper in this
behalf. But, so long as the Legislature has not expressed its intention to the contrary, it must be
held that the law is what it has been, ever since the days of the East India Company.

28 (1954) SCR 786: (AIR 1954 SC 245)


37 | P a g e

CONCLUSION-

Modern welfare State is loaded with multifarious functions. These functions are carried out by
the servants or agents of the State as per its express or implied instructions. The events of day to
day activities of the servants of the State often subject people to loss or sufferings. It is natural to
expect that the wrongdoer has to compensate the victim for the loss sustained by him. When the
aggrieved person approaches the Court to enforce his rights, the errant servant may not be able to
compensate due to his poor economic position. In this circumstance, the

The liability of the Union of India and of the States to be sued is regulated by Article 300 of the
Indian Constitution, which does not give rise to any cause of action or their respective liabilities.
All advanced societies today take the stand that the main object of welfare State is to work for
the benefit of the people generally. The rule of law merely protected the individual from arbitrary
actions of the State. The irrational rules laid down in Peninsular case, developed an irrelevant
concept of Sovereign Act, putting the State in a protected position from liability, leading to
anarchism.

For the proper exercise of governmental functions, State requires immunity from liability. But it
should not be absolute. There must be guiding principles by legislation or by uniform judicial
precedents. Without any uniform judicial precedents or any rational basis to support the Courts to
decide what sovereign function is and what is not, denial of liability by deciding the wrong act as
sovereign act leads to injustice. For instance, performance of statutory duty, maintenance of
public path, maintenance of military road, commandeering goods during war, training for
defense, arrest and detention, performance of military duty, maintenance of national highways,
keeping stolen goods with police malkana, malicious prosecution, maintenance of law and order,
administration of justice etc; were considered as sovereign functions and for such function, the
State need not take responsibility. It is concluded that these norms laid down by Courts are
unsatisfactory norms.

Moreover some of the legislations, by its various provisions of law exempt the State from suits
and proceedings. Even though it is conflicting with the modern concept of sovereignty, these
provisions protect the State from action taken in good faith for the convenience of smooth
functioning of the State machinery.
Act of State is a weapon in the hands of Sovereign State to claim immunity from liability. In
India, Act of State is of historical growth. This is necessary to keep the status of sovereign
States. But it must be governed with established principles formulated by international lawyers.
The efficient analysis of this doctrine is in a controversial state, and is an inapt doctrine for
modern States. The reason is that there is no borderline to derive, what are to be called Act of
State and those which are not. 29
29 manupatra.com/roundup/335/.../Contractual%20Liability%20of.pdf
38 | P a g e

The attitude of Courts towards applying the test of distinction between sovereign and non-
sovereign function, based on logical fallacy is unsatisfactory. Division of functions of a welfare
State with the intention to deny justice to citizens infringes the fundamental concept of the legal
system itself. So, it is desirable and equitable to abolish the test of dichotomy and to improve the
attitude of giving compensation similar to the British, American and French model.

The law commission on its first Report argued a legislation to abolish the distinction by giving
some suggestions. A Bill (introduced in 1965, then in 1967, lapsed in 1969) has not yet been
considered by the Parliament. It is clear that the rule of law requires that the government should
be subjected to the law rather than the law to be subjected to government. To protect the equality
clause guaranteed by the Constitution, it is necessary to govern tortuous liability law by judiciary
with guiding principles laid down by legislation. Individuals can be satisfied only if there is an
independent public law of tort, which governs the tortuous liability of State. It need not be on the
basis of Crown Proceedings Act or Federal Tort Claims Act which leaves large loopholes to
exempt the government from liability. A new judicial trend has been manifested by the Supreme
Court in the area of State liability called Constitutional Tort. To achieve the objectives of the
Indian Constitution, the Courts have interpreted Article 21 in new dimensions and bring out
compensatory jurisprudence which made a tremendous change in the area of modern Indian
legal system, particularly in State liability in tort. Now the Court can award compensation to one
who may have unduly suffered due to Sexual Harassment, Custodial Violence, Encounter Death,
Handcuffing, Illegal Detention, Medical Negligence, and Police atrocities at the hands of the
employees of the State through a writ petition under Article 32 and 226 of the Indian
Constitution rather than taking recourse to an ordinary civil suit.

The role of judiciary in providing guidelines in D.K Basu to prevent torture is a tremendous step.
Also the guidelines given by the judiciary in Visaka case to safeguard women from sexual
harassment in working places is another hallmark to the extension of liability of State. It is
submitted that the same vigor should be shown in overruling Kasturilal decision also which is
still alive as bad precedent. Medical negligence on the parts of the servants of the State also lead
for 300 compensation to victims under public law. It is the duty of the doctors preserve life,
whether the concerned person is a criminal or an innocent person. 30 From all the above cases,
we can infer that Courts now do not approach the matter purely from the point of view adopted
in the traditional tort litigation based on sovereign and non-sovereign functions. Compensation
awarded under Constitutional tort by making the State vicariously liable for the negligent acts of
its servants.

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