Tortious Liability of a State

PROJECT OF

ADMINISTRATIVE LAW

ON

TORTIOUS LIABILITY OF A STATE

Submitted In Partial Fulfillment of Academic Requirement of Curriculum of

Administrative law

SUBMITTED TO:

MR GIRISH R.

FACULTY: ADMINISTRATIVE LAW

GUJARAT NATIONAL LAW UNIVERSITY

GANDHINAGAR

SUBMITTED BY:

REG. NO: 09B106


TABLE OF CONTENTS

PAGE

ACKNOWLEDGMENTS 3

LIST OF ABBREVIATIONS 4

LIST OF CASES 6

BIBLIOGRAPHY 9

INTRODUCTION 10

CHAPTERS

Chapter – I – Introduction to a State 13

Chapter – II – Principle of Vicarious Liability 17

Chapter – III – Tortious Liability 19

Chapter – III(A) – Act of a State 30

CONCLUSION 31

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ACKNOWLEDGMENTS

I would like to thank Mr. Girish R., faculty, Administrative Law, Gujarat National

Law University, for giving me the opportunity to present a research paper on Tortious

Liability of a State, thereby helping me broaden my horizons on the topic and helping me to

refine my research – skills. I am highly indebted to the librarians and the Xerox Room staff

for providing me with relevant material and reference books which helped me with my

project.

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LIST OF ABBREVIATIONS

1. S - Section

2. & - And

3. Eg. - Example

4. Ed. - Edition

5. All - Allahabad

6. ER - England Reporter

7. Vol. - Volume

8. Para. - Paragraph

9. Co. - Company

10. Ltd. - Limited

11. Ch. - Chapter

12. LR - Law Reporter

13. App. - Application

14. SCC - Supreme Court Cases

15. BLR - British Law Reporter

16. AIR - All India Reporter

17. MP - Madhya Pradesh

18. Cal - Calcutta

19. SCR - Supreme Court Review

20. SC - Supreme Court

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21. Mad - Madras

22. Bom - Bombay

23. ILR - Indian Law Review

24. AP - Andhra Pradesh

25. PC - Punjab and Chandigarh

26. P&H - Punjab and Haryana

27. P - Paragraph

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LIST OF CASES

1. Kartick v. W.B.S.I.C.

2. Ramana v. I.A.A.I

3. State of Punjab v. Raja Ram

4. Gulam v. State of U.P.

5. Som Prakash v. Union of India

6. Pradeep Kumar Biswas v. Indian Institute of Chemical Biology

7. Rajasthan State Electricity Board v. Mohan Lal

8. Ujjam Bai v. State of U.P.

9. Ramamurthi v. Chief Commr.

10. State of Gujarat v. Shantilal

11. Rashid Ahmed v. Municipal Board

12. Ajit Singh v. State of Punjab

13. Bhagat Ram v. State of Punjab

14. R. I. Handicraft Manufacturing Association v. Kottayam Municipality

15. Natwarlal Khodidas Parmar v. Dist. Panchayat , Jamnagar

16. State Trading Corporation v. C.T.O

17. Housing Board v. H.H.B.E.U

18. Masthan Sahib v. Chief Commr

19. Sonu Prakash Rakhi v. Union of India

20. Trilok Singh v. Kailash Bharti

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21. Tamlin v. Hannaford

22. U.S. v. Muniz

23. Peninsular & Oriental Steam Navigation Company v. Secretary of State

24. Secretary of State v. Hari Bhanji

25. Forrester v. Secretary of State for India

26. Maharaja Bose v. Governor – General in Council

27. State of Rajasthan v. Vidhyawati

28. Annamalai v. Abithakujambal

29. Chairman, Railway Board v. Chandrima Das

30. Satyawati v. Union of India

31. M. Vijaya v. Chairman and Managing Director, Singrani Collieries Co. Ltd.

32. State of Punjab v. Modern Cultivators

33. Union of India v. P. S. Mahal

34. Sebastin M. Hongray v. Union of India

35. Rudul Shah v. State of Bihar

36. Bhim Singh v. State of Jammu & Kashmir

37. SAHELI a Woman’s Resources Centre v. Commr. of Police, Delhi

38. Inder Puri General Stores v. Union of IndiaNilabati Behera v. State of Orissa

39. Tobin v. The Queen

40. Nieraha v. Baker

41. Stanbury v. Exeter Corporation

42. Ross v. Secretary of State

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43. Venkatesh v. The City Municipal Council

44. National Small Scale Industries Corpn. v. Bishambhar Nath

45. Kerala State Electricity Board v. Suresh Kumar

46. Union of India v. Mohd. Nazim

47. Traifus & Co. Ltd. v. Post Office

48. C.I.T. v. P.M. Rathod & Co.

49. Union of India v. Amar Singh

50. Nabob of Carnatic v. East India Company

51. East India Company v. Sayed Ally

52. Eshugbayi Eleko v. Govt. of Nigeria

53. P. V. Rao v. Khushaldas

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BIBLIOGRAPHY

Statutes Referred:

1. The Constitution of India

Books Referred:

1. Justice Y. V. Chandrachud, Justice S. S. Subramani, Justice B. P. Banerjee,

Constitution of India – Durga Das Basu, Eighth Edition, Wadhwa Nagpur

Publications

2. Justice G. P. Singh, The Law of Torts – Ratanlal and Dhirajlal, Sixth Edition,

Wadhwa Nagpur Publications

3. M. P. Jain, Principles of Administrative Law – M. P. Jain and S. N. Jain, Sixth

Edition, Wadhwa Nagpur Publications

4. Mark Elliott, Administrative Law (Text and Materials) – Beatson, Matthews and

Elliot, First Indian Edition, Oxford University Press

Web-sites referred:

1. www.manupatra.com

2. www.jstor.org

3. www.westlaw.com

4. www.lexisnexis.com

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http://www.lexisnexis.com/

http://www.westlaw.com/

http://www.jstor.org/

http://www.manupatra.com/


INTRODUCTION

This project mainly deals with the liability of a State or a Government, where the

action is done either by the officials of the Government or by the State as a whole, and where

the question of the liability of the State and protection of the rights of the citizens arises. The

basic question of this project is primarily to decide, the cases where the State or the

Government can be said to be sovereign institutions- to decide if they are liable or not for

their actions. To find answer to this question, it becomes necessary to understand the concept

of “State” as provided in the Constitution under Art. 12.

For better presentation and understanding of the topic, the present project has been

divided into three Chapters.

Chapter – I of this project concentrates of the scope of the term “State” which

includes the Government, the Parliament of India, any form of Legislature and all local and

other authorities that are under the control of the Government of India. In liberal ordinary

sense a State is any form of institution, authority or a body of people that has the powers to

makes and legislates uniform laws to provide Fundamental Rights to the citizens as provided

under Part – III of the Constitution. Hence, any action can lie against such a State even under

non – constitutional grounds or when its actions have been performed in violation of the Part

– III of the Constitution. And authorities that are under the control of the Government of

India need not necessarily be a Government Department or a Legislature. Institutions like

schools, colleges, hospitals etc. also come within the ambit of the word “State” as defined

under Art. 12. Other local authorities and local self – governments also come within the

meaning of the word “State”. Authorities located outside India can also come under the

jurisdiction provided by Art. 12, if these authorities are essentially under the control of the

Government of India. Judicial, Quasi – Judicial, Administrative and Legislative authorities

falling under the control of the Government of India, are necessarily what constitute a

“State”.

As would be clarified in Chapter – I, a State is any institution or authority that comes

within the control of the Government of India. There will be many cases where the

Government will be required to compensate its own employees in case the functions of the

Government have been breached, causing violation of Art. 21 – Right to Personal Life and

Liberty or any other Fundamental Right as provided in Part – III. To understand the concept

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of the liability of a State, it becomes necessary to understand the principle of vicarious

liability provided under the Tort law. The principle of vicarious liability states that in case if

there is a master – servant, principal – agent or a partnership relationship between the

employer and the employee, the employee will have to be compensated by the State or the

employer, if and only if his Fundamental Rights have been violated during the course of his

employment. The State and all the other institutions and authorities falling within its ambit

can be held to be liable to pay damages to the employee if any damages have been occurred

to violate his Fundamental Rights when he is in the course of his employment. If the

employee is not working for such institutions, and breach of this rights occur, the State

cannot be made liable to compensate for the damages caused to him.

The Constitution of India under Art. 300 provides for the instances when the State or

a Government institution can be sued. But if the person has been damaged when the

Government has been acting as a sovereign, the State cannot be made liable to pay damages

to compensate to the victim. Sovereignty of the Government means individual acts of the

Government, not hindering the rights of the citizens or causing breach of any of the

Fundamental Rights.

Chapter – III of the project deals with situations where tortious liability of a State

arises. Tort means a civil wrong that has been committed that have led to damages being

caused to the victim. Tortious liability of a Government means a situation where the

Government is to be held liable for a civil wrong committed by any official working for the

Government or the State as a whole, against an individual, that has resulted in violation of his

Fundamental Rights. As explained earlier, liability of a Government only arises in situations

where the Government has not been acting as a sovereign. A situation of vicarious liability

has been created where, as per the definition, one person is held liable for the acts committed

by the others. In a situation where vicarious liability is said to have arisen for the State, the

Government or an official working for the Government has caused breach of the

Fundamental Rights of an individual. Thus determination of the liability of a State and to

decide whether it is a sovereign or otherwise, is one of the main question that has been dealt

with under Chapter – III.

Chapter – III also deals with the situation of the law before and after the Constitution

was enacted and relates to instances where and in what cases the Government is made liable

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for acts committed by people working for it. Comparison between the English Law and the

Indian Law has been made with regard to the position of tortious liability of the State.

Chapter – III (A) essentially deals with the act of a State where the acts have been

committed by one sovereign against another sovereign or any other alien body or territory.

There is a immunity from courts’ interference in respect of an act done by the State against an

alien outside its territory, since the courts cannot try the acts committed by the sovereign

under the general municipal law. If the fault of the State or the Government has been brought

under the jurisdiction of a general court of the country, it cannot fall under the ambit of the

meaning of the words “act of a State” as they cannot try cases between two sovereigns under

the general municipal law. The case of Nabob of Carnatic v. East India Company1 was a

landmark judgment simplifying the meaning of this principle and clearing the doubts between

acts done by a sovereign against another sovereign and acts done by a sovereign against its

subjects.

1 30 ER 391 and 521, (1793).

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CHAPTER – I

INTRODUCTION TO A “STATE”

Art. 12 of the Constitution of India defines a “State” as,

“In this Part, unless the context otherwise requires, “the State” includes the Government and

Parliament of India and the Government and the Legislature of each of the States and all

local or other authorities within the territory of India or under the control of the Government

of India.2”

Scope:

This definition in Art. 12 is only for the purpose of application of the provisions

contained in Part – III. Hence, even though a body of persons may not constitute ‘State’

within the instant definition, a writ under Art. 226 may lie against it on non – constitutional

grounds or on ground of contravention of some provision of the Constitution outside Part –

III, e.g., where such a body has a public duty to perform or where its acts are supported by

the State or public officials.3

A State need not necessarily be a body governed by a Government, which has

uniform and codified laws. Institutions like Schools, Corporate institutions and the

Government itself also form a part of the definition of a State as provided in Art. 12. The

Supreme Court4 has held that the word “includes” indicates that the definition of “State” is

not confined to a Government Department and the Legislature, but extends to any action –

administrative (whether statutory or non – statutory), judicial or quasi – judicial; which can

be brought within the fold of ‘State action’ and violates a fundamental right.5

The words “State” and “Authority” used in Art. 12, remain among “the great

generalities of the Constitution” the content of which has been and continues to be applied by

2 Y. V. Chandrachud, J., S. S. Subramani, J. and B. P. Banerjee, J., Durga Das Basu – Commentary on the Constitution of India (Part – 1), 8th Edition 2007, Wadhwa Nagpur Publications.

3 Kartick v. W.B.S.I.C., AIR 1967 Cal 231 (234).

4 Ramana v. I.A.A.I, AIR 1979 SC 1628 (paras. 14-16); State of Punjab v. Raja Ram, AIR 1981 SC 1694 (para. 5); Gulam v. State of U.P., AIR 1981 SC 2198 (para. 23); Som Prakash v. Union of India, AIR 1981 SC 212 (paras. 34, 37).

5 Ibid.

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Courts from time to time.6 Thus, it includes all constitutional or statutory authorities on

whom powers are conferred by law7, including even autonomous bodies8 whether they are

under the control of the Government or may be regarded as agents or delegates of the

Government or not.9

Local authorities are under the exclusive control of the States, by virtue of entry 5 of

List II of the 7th Schedule. That entry contains a list of some local authorities. A ‘local

authority’ is defined in section 3(31) of the General Clauses Act X of 189710 as follows –

“ ‘local authority’ shall mean a municipal committee, district board, body of port

commissioner or other authority legally entitled to, or entrusted by the Government with, the

control or management of a municipal or local fund”.

This expression will therefore include a Municipal Committee11, a Panchayat12 and a

Port Trust13. Municipality is a “State” for the purpose of this Article14 and local or other

authorities may be a ‘State’ too within the meaning of Art. 12. but that does not mean that the

authorities are State Government or Central Government as there is distinction between

“State” and “Government”.15

‘Other authorities’ refer to authorities other than those of local and self Government,

who have power to make rules, regulations etc., having the force of a law. In view of the

Supreme Court’s decision in Rajasthan State Electricity Board v. Mohan Lal16 there is no 6 Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111 (Supra).

7 Rajasthan State Electricity Board v. Mohan Lal, (1967) 1 SCR 377 (385); Casebook, p. 36, (para. 4-5).

8 Ibid.

9 Ujjam Bai v. State of U.P., (1963) 1 SCR 778 (969), per AYYANGAR, J.; Ramamurthi v. Chief Commr., (1964) 1 SCR 656 (666).

10 State of Gujarat v. Shantilal, AIR 1969 SC 634 (643); Rashid Ahmed v. Municipal Board, (1950) SCR 566 (571) : AIR 1950 SC 163.

11 Ibid.

12 Ajit Singh v. State of Punjab, AIR 1967 SC 856 (866); Bhagat Ram v. State of Punjab, AIR 1967 SC 927.

13 State of Gujarat v. Shantilal, AIR 1969 SC 634 (643); Rashid Ahmed v. Municipal Board, (1950) SCR 566 (571) : AIR 1950 SC 163.

14 R. I. Handicraft Manufacturing Association v. Kottayam Municipality, AIR 2000 Ker. 30.

15 Natwarlal Khodidas Parmar v. Dist. Panchayat , Jamnagar, AIR 1990 Guj 142.

16 (1967) 1 SCR 377 (385).

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common genus in Art. 12 and that, accordingly, this expression ‘other authorities’ cannot be

construed ejusdem generis with the authorities specifically mentioned, it is now clear that in

order to be ‘State’ an authority need not necessarily exercise governmental functions or

constitute an instrumentality of the Government.17 The real test is whether it is endowed with

constitutional or statutory powers. If the test is satisfied, even a statutory corporation, having

a legal entity separate from the State, and carrying on non – governmental functions would be

‘State’ under Art. 12, e.g., a University18, the State Trading Corporation19 and that the ‘other

authorities’ included in Art. 12 have no common genus.20

Quasi – governmental agency is a sponsored enterprise or corporation (sometimes

called government controlled corporation). Authority is the “person or persons in whom

government or command is vested”.21

An authority which is located outside India may still come under the definition of

‘State’ under Art. 12 if it is under the control of the Government of India. These words

extend to the application of the fundamental rights to areas outside the territory of India,

which may be under the control of the Government of India for the time being, e.g.,

mandatory and trust territories which might be placed by international organisations under the

control of the Government of India. This article explains that India would not discriminate, so

far as the fundamental rights of individuals are concerned, between its own nationals and the

people of other countries, which might come under the administration of India under some

international arrangement.22

The Supreme Court23 has, however, given to the above words a meaning different

from that given in the Constituent Assembly. According to the Supreme Court, the words

17 Ramamurthi v. Chief Commr., (1964) 1 SCR 656 (666).

18 Ibid. State Trading Corporation v. C.T.O., (1964) 3 SCR 99 (123, 155, 189).

19 State Trading Corporation v. C.T.O., (1964) 3 SCR 99 (123, 155, 189).

20 Housing Board v. H.H.B.E.U., AIR 1996 SC 434 (para. 52).

21 Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111 – para. 74.

22 Dr. Ambedkar, Constituent Assembly Debates, Vol. VI, p. 607.

23 Ramamurthy v. Chief Commr., AIR 1963 SC 1464 (1467-8); Masthan Sahib v. Chief Commr., AIR 1963 SC 533 (537). See also Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111 (supra); Sonu Prakash Rakhi v. Union of India, (1981) 1 SCC 449 : AIR 1981 SC 212.

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‘under the control of Government of India’ control the word ‘authorities’ and not the word

‘territory’, so the expression would be read thus:

”all local or other authorities within the territory of India or all local or other

authorities under the control of the Government of India”.

The result of interpretations is that in respect of authority situated outside India, an

additional test has to be satisfied before it can be brought within Art. 12, namely, whether it

is ‘under the control of Government of India’. Thus, according to this interpretation, Art. 12

will apply to two categories of ‘authorities’:

(a) Authorities situate within the territory of India; these need not be under the control of

India in order to be deemed ‘State’ under Art. 12.

(b) Authorities situate outside the territory of India (e.g., territories administered by India

under the Foreign Jurisdiction Act, 1947); these will come within the purview of Art.

12 only if they are under the control of India.

The further discussion on the scope of the word state can go long. As a matter of fact an

entire project can be made on this point, but it will give it a constitutional perspective while

ours is an administrative analysis. So owing to that point the discussions are limited.

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CHAPTER – II

PRINCIPLE OF VICARIOUS LIABILITY

Vicarious liability is a concept of Tort Law meaning the liability to be borne by one

person for the acts committed by another person. The principle of vicarious liability arises

only in certain cases and where a relationship has been established between the two persons.

These relationships are mainly categorized in three parts: (a) Principle and Agent, (b)

Partners, and (c) Master and Servant. The liability of the principal arises when his agent

commits a tort in the course of performance of his duty as an agent and hence they are

considered to be joint tortfeasors since their liability is joint and several. When the wrongful

act is done by one partner in the ordinary course of the business of the firm, all the other

partners are vicariously liable for the same. Their liability is also joint and several and the

plaintiff can choose to sue either one of the partners or the entire firm for the tort committed

by the guilty partner. The same rule applies in the case of master – servant relationship where

the master is vicariously liable for the wrongful act done by his servant in the course of

employment.

The principle of vicarious liability underlines one very important concept. It states

that in the case of a principal – agent, partners, or a master – servant relationship, the

principal, all of the partners, and the master, respectively, can only be sued if the agent, the

guilty partner, and the servant commit the wrongful act during the course of their

employment. In the case of Trilok Singh v. Kailash Bharti24, while the owner of the motor

cycle was outside the country, his younger brother took the motor cycle without his

knowledge or permission and caused the accident. It was held that the younger brother could

not be deemed to be the agent of the owner of the motor cycle and the latter could not be

vicariously liable for the accident.

In the case where a state is to be held liable for the acts committed by its employees

and officials, Art. 300 of the Constitution should be reffered. Art. 300 of the Constitution of

India is as under:

Art. 300 (1) The Government of India may sue and be sued by the name of Union of

India and the Government of a State may sue or be sued by the name of the State and may,

24 1986 ACJ 757 (P & H).

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subject to any provision which may be made by Act of Parliament or of the Legislature of

such State enacted by virtue of power 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 of 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.

No action lies against the Government for injury done to an individual in the course of

exercise of sovereign functions of the Government. If the Government has been acting out of

its own accord, and during such a course of fulfilment of the duty, it causes injury to any

individual, then the individual cannot be compensated for the damages done to him because,

such an act was done as a sovereign function and injury to the individual was not caused to

him during the course of his employment. Art. 300 provides for situations under which the

Government of India can be sued after the commencement of the Constitution. It provides for

the trial of those cases that are pending in the Courts before and after Indian independence

and admission and disposal of those cases under the name of Union of India.

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CHAPTER – III

TORTIOUS LIABILITY

1. GOVERNMENTAL TORTIOUS LIABILITY:

a. Position in Foreign Countries:

(i) Britain: Before 1947, the Crown enjoyed immunity from tortious liability

under the common law because it was believed that the neither any wrong could be

imputed to the King and nor could he authorize any wrong, and as such, the King

could not be held responsible for the negligence or misconduct of his servants.

Moreover, as per one of the aspect of the doctrine of immunity, it was regarded as an

attribute of sovereignty that the state could not be sued in its own courts without its

consent. To mitigate the injustice arising out of the immunity rule, the government

would pay compensation in proper cases by settling the matter with the injured party.

However, as it was decided in the case of Tamlin v. Hannaford25, statutory

corporations were held liable for torts. Hence, the position was accordingly changed

by the Parliament enacting the Crown Proceedings Act, 1947, which makes the

Crown in principle liable for torts to the same extent as a private person of full age

and capacity subject to such exception, inter alia, as defence of the realm, armed

forces and postal services. The Crown thus becomes vicariously liable o a very large

extent for the torts committed by its servants.

(ii) U.S.A: In the United States of America, the Federal Tort Claims Act, 1946,

defines the tortious liability of the central government. In the case of common law

duties, the U.S. Government is liable to the same extent as a private individual under

like circumstances. Intentional torts such as assault, battery, false imprisonment etc.

are excluded. The Act exempts the government from liability for torts committed by

officials in the discharge of their discretionary functions conferred on them by

statutes, even if the discretion is abused or there is negligence, so long as it is

exercised with due care. The tortious liability of the U.S. Government is more

restricted than that of the British Government. The Supreme Court of America, in the

25 (1951) 1 KB 18.

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case of U.S. v. Muniz26, where the question arose that whether the United States was

liable for the acts and omissions of its employees resulting in death of, or personal

injuries to, a federal prisoner, accepted the allegations. The Court emphasized that the

Federal Tort Claims Act was designed not only to avoid injustice to those having

meritorious claims barred till then by sovereign immunity but it also waived the

sovereign immunity for claims arising out of the negligent treatment in government

hospitals.

b. Position in India:

(i) Pre – Constitution: The extent of liability of the government for torts of its

employees is defined by Art. 300(1) of the Constitution which declares inter alia that

the Government of India, or 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 “been sued” if the

Constitution had not been enacted. This is subject to any law made by the Parliament

or the State Legislature. S. 176 of the Government of India Act, 1935, stated that the

Dominion of India and the Provincial Government may sue or be sued in relation to

their respective affairs in the like cases as the Secretary of State for India in Council

might have sued or been sued if the Government of India Act of 1935 had not been

enacted. Thus, the liability of the Government was made co – extensive with that of

the Secretary of State for India under S. 32 of the Government of India Act, 1915,

which in turn made it co – extensive with that of the East India Company prior to the

Government of India Act, 1958. S. 65 of this Act thus preserved against the

government the same suits and proceedings which were then available against the

East India Company. The Secretary of State for India in Council could be sued in all

those cases in which the East India Company could be sued before 185827. By the

Charter Act of 1833, the East India Company came under the hold of the Government

26 (1963) 10 L ed 2d 805.

27 By 3 & 4 Will IV, C. 85, the East India Co. was made a trustee for the Crown in respect of all the property which it possessed in India. The Act of 1858 transferred the Indian Territories to the Crown. As the Queen could not be sued in her own courts under the common law prevailing at the time, the Act provided that the Secretary of State as a body corporate would have the same rights of suit as the Company had and would be subject to the same liability of being sued as previously attached to the East India Company.

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of India in trust for the British Crown. In 1858, the Crown assumed sovereignty in

India to take over the administration of India from the hands of the Company. Thus,

from 1765 to 1858, the Company had a dual character: it was a trader and also

exercised some sovereign powers. As the Company was an autonomous corporation,

having an existence of its own, and bearing no relationship of servant or agent to the

British Crown, the immunity enjoyed by the Crown was never extended to it.

In a leading case arising under S. 65 of the Government of India Act, 1858 –

Peninsular & Oriental Steam Navigation Company v. Secretary of State28 – was

decided in 1861 by the Calcutta Supreme Court, where the P. & O. made a claim for

damages against the Secretary of State for injury to its horse caused on the highway

because of the negligence of some workmen employed in the Government Kidderpore

Dockyard. To determine the liability of the government, the court posed the question

whether the East India Company would have been made liable in such a situation.

After the Charter Act of 1833, the Company was acting in a dual capacity in India as a

merchant, as well as one exercising sovereign powers as a trustee of the Crown in

respect of the territorial possessions acquired by it. The court pointed out that the fact

that the Company exercised sovereign powers as a delegate of the Crown did not

make it a sovereign. Therefore, the Crown immunity could not extend to it. As to the

scope of actual liability of the Company, the court stated that where an act was done

in exercise of ‘sovereign powers’, no action would lie against it. The court further

stated that if the Company were carrying on activities which would be carried on by

private persons, the Company would be liable for torts of its servants committed

during the course of such activities. Hence, no action would lie in the former case.

The sovereign powers were defined as “powers which cannot be lawfully exercised

except by a sovereign or private individual delegated by a sovereign to exercise

them”. On the basis of this reasoning, the court held in the instant case that the

Company would have been liable for negligence of its servants in repairing a river

steamer or doing any action in connection with such repairs. Thus, the Secretary of

State was held liable.

The P. & O. case thus laid down two propositions:

28 5 Bom HCR App. 1.

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(a) Apart from any special statutory provision, suits could have been

brought against the East India Company and, consequently, against the

Secretary of State as successor to the Company, in respect of acts done in the

conduct of an undertaking which might be carried on by private individuals

without sovereign powers.

(b) The Secretary of State was not liable for anything done in the exercise of

sovereign powers.

Most of the cases cited in P. & O. as examples of sovereign functions

are really cases pertaining to act of state. However, the distinction between the

‘sovereign’ and ‘non – sovereign’ functions is amorphous and unfocussed except

when the court equals sovereign functions with acts of state in the present case.

The P. & O. case was considered by the Madras High Court in the case of

Secretary of State v. Hari Bhanji29. The facts of the case, briefly stated, were that

during the course of transit of salt from Bombay to Madras ports, the rate of duty on

salt as enhanced and the merchant was called upon to pay the difference at the port of

destination. He paid under protest and instituted a suit for recovery. The court ruled

that the immunity of the East India Company extended only to “acts of state”, strictly

so – called and that the distinction based on sovereign and non – sovereign functions

of the East India Company was not well founded. 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 which municipal courts are not authorised to

take cognizance.30

As regards P. & O., it was said that it was an authority for the proposition that

the government was responsible for injuries in the course of transactions of a

commercial or private character, but that it did not exclude liability in other respects.

In Hari Bhanji, a broader view of government liability, and a narrower view of the P.

& O. ruling was adopted. The view propounded that the government was liable for all

acts other than an ‘act of state’ and that the distinction based on ‘sovereign’ and ‘non

– sovereign’ functions was not well founded. The view was taken that the acts of the

29 (1882) ILR 5 Mad 273.

30 (1882) ILR 5 Mad 273, 279, emphasis supplied.

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government fell either outside, or within, the municipal law and that it was only the

former of which the courts could not take cognizance.

While the line of reasoning adopted by the court in Hari Bhanji found some

support in a few later cases, in effect, the P. & O. view drawing distinction between

sovereign and non – sovereign functions came to be perpetuated in the case of

Forrester v. Secretary of State for India.31 Had the view propounded in Hari Bhanji

found judicial acceptance in India, the position as regards the tortious liability of the

government would have developed on entirely different lines. But the view that found

general judicial acceptance, and thus became the ruling norm, was that the

government was not liable for any tortious liability arising out of the exercise of a

‘sovereign’ function.

(ii) Post – Constitution: Even in Republican India after the new Constitution

came into force in 1950, the pre – Constitution judicial trend continued and the courts

kept on enforcing the P. & O. ruling. The courts continued to distinguish between

sovereign and non – sovereign functions of the government for purposes of

governmental liability.

In the case of Maharaja Bose v. Governor – General in Council32, the

Government was held liable for tortious action of a railway servant committed by him

within the course of his employment as running of railways was held to be not in

exercise of sovereign powers. Railways were held to be a “commercial undertaking,

an undertaking which a private individual can equally well undertake, an undertaking

not in exercise of sovereign powers.”

2. DEVELOPMENTS IN THE LAW :

a. Transportation:

A large number of cases have occurred pertaining to claims of damages

against the State by individuals for injuries caused to them due to negligence of the

drivers of the State transport. As stated by the Supreme Court in the case of State of

31 IA, Suppl. Vol. 55.

32 AIR 1952 Cal 242.

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Rajasthan v. Vidhyawati33, the State was held liable for the accident caused by the

driver of a jeep owned and maintained by the State for the official use of the collector.

Similar are the judgments of various High Courts and the Supreme Court in

various cases concerning the state liability, in light of the Vidhyawati34 case. In the

case of Annamalai v. Abithakujambal35, a person was killed in an accident with a jeep

driven by a government employee during the scope and course of his employment.

Hence, the court held that the government was to be held liable to pay damages to the

widow of the deceased on the principle of vicarious liability for its servant’s tortious

act, as driving a jeep is a non – sovereign function, since any person can drive a jeep.

b. Railways:

In the case of Chairman, Railway Board v. Chandrima Das36, a Bangladeshi

woman was gang raped by several railway employees in yatri niwas attached to a

railway station. The court ruled that running of railways has been characterised as a

commercial activity. Establishing yatri niwas at various railway stations to provide

lodging and boarding facilities to passengers on payment of charges is regarded as a

part of the commercial activity of the Government of India and such an activity

cannot be equated with the exercise of sovereign power.

c. Military Vehicles:

In several cases, the government has been held liable to pay compensation for

injuries caused by negligent driving of military vehicles engaged in doing various odd

jobs. The test applied is not that a military vehicle was involved in an accident, but the

purpose on which the vehicle was employed and whether that purpose could be

characterized as ‘sovereign’. If not, the government would become vicariously liable

for the torts of its servants.

33 AIR 1962 SC 933 : 1962 Supp (2) SCR 989.

34 State of Rajasthan v. Vidhyawati, AIR 1962 SC 933 : 1962 Supp (2) SCR 989.

35 AIR 1979 Mad 276.

36 AIR 2000 SC 988 : 2000 CrLJ 1473 : JT 2000 (1) SC 426.

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Similarly, in the case of Satyawati v. Union of India37, no ‘sovereign’ function

was held to be discharged when a military vehicle carrying hockey and basket ball

teams to an Indian Air Force station to play matches against the Indian Air Force, met

with an accident due to the negligence of the driver, and a person was killed and

hence the state was not entitled to claim immunity for the tortious act of its employee.

d. Government Hospitals:

In the case of M. Vijaya v. Chairman and Managing Director, Singrani

Collieries Co. Ltd.38, the appellant was awarded compensation by the court for

negligent transfusion of HIV infected blood in a government hospital.

e. Torts against Property:

The government was held liable under the general principles of law of torts in

the case of State of Punjab v. Modern Cultivators39, where the plaintiff brought a suit

for compensation against the State Government for the damage caused to his land and

crops due to inundation as a result of breach in canal maintained by the government

under the Northern India Canal and Drainage Act, since the breach had been caused

by the negligence of the government employees.

f. Torts against Person:

Art. 21 of the Constitution of India plays a very important role in this part,

since it means right to live with human dignity and this includes a guarantee against.

In the case of Chairman, Railway Board v. Chandrima Das40, where a

Bangladeshi woman was gang raped by railway employees in the yatri niwas attached

to a railway station, the Supreme Court ruled that rape is an offence which is violative

of the Fundamental Right of a person under Art. 21. It violates the most cherished

rights of the victim, viz., the right to live with human dignity contained in Art. 21.

37 AIR 1967 Del 98. Union of India v. P. S. Mahal, AIR 1976 J&K 80.

38 AIR 2001 AP 502.

39 AIR 1965 SC 17 : 1964 (8) SCR 273.

40 AIR 2000 SC 988 : 2000 CrLJ 1473 : (2000) 2 SCC 465.

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The Court also ruled that the protection of Art. 21 extends not only to the citizens of

India but even to foreigners who come to India merely as tourists or in any other

capacity, and hence the Court awarded compensation to the concerned person.

The cases of Rudul Shah v. State of Bihar,41 Sebastin M. Hongray v. Union of

India,42 Bhim Singh v. State of Jammu & Kashmir43 and SAHELI a Woman’s

Resources Centre v. Commr. of Police, Delhi,44 also lead to the inference that the

defence of sovereign immunity is not available when the State or its officers acting in

the course of their employment infringe a person’s fundamental right of life and

personal liberty as guaranteed by Art. 21 of the Constitution.

g. Failure to maintain Law and Order:

In the case of Inder Puri General Stores v. Union of India45, loss of property

was caused to the petitioners in a communal riot in Jammu. The Government made an

ex gratia payment of Rs. 25,000 as compensation to the petitioners whereas the

government appointed expert committee had assessed the loss at a much higher

figure. Directing the Government to pay adequate compensation to the petitioners for

the loss suffered by them, the High Court pointed out that the maintenance of law and

order is the duty of a responsible government; it cannot abdicate this function and put

the life and liberty of the citizens in jeopardy.

h. Police Lawlessness:

A significant pronouncement in this line of cases is Nilabati Behera v. State of

Orissa46, where the Supreme Court had awarded a compensation of Rs. 1,50,000 to

the widow of a person who had died in police custody as a result of injuries inflicted

on him because of the police. The Court explained the basis on which the liability of

the State arises in such cases like custodial death, police atrocities etc.) for payment

41 AIR 1983 SC 1086 : 1983 CrLJ 1644 : (1983) 4 SCC 141 : (1983) 3 SCR 508.

42 (1984) 3 SCC 82 : AIR 1984 SC 1026.

43 (1985) 4 SCC 677 : AIR 1986 SC 494 : 1986 All LJ 653 :1986 CrLJ 192.

44 AIR 1990 SC 513 : AIR 1984 SC 1026 : (1990) 1 SCC 422.

45 AIR 1992 J&K 11.

46 AIR 1993 SC 1960 : (1993) 2 SCC 746 : 1993 CrLJ 2899.

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of compensation and the distinction between this liability and the liability in private

law for payment of compensation in an action of tort. The award of compensation in a

proceeding under Art. 32 or Art. 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.

3. STATUTORY FUNCTIONS OF OFFICIALS:

Formerly, the principle was followed that the state would not be vicariously

liable for acts of its servants performed by them in pursuance of a power conferred on

them by a statute. This was on the basis that the rule embodied in the maxim

“respondent superior” is subject to the well recognized exception that a master is not

liable for the acts of his servant performed in the discharge of a function conferred on

him by law.

As it was held in the case of Tobin v. The Queen47, where a function is

conferred by law directly on the employee, the employer cannot be said to have legal

control over him in the discharge of that function and, accordingly, the employer

cannot be held liable for the wrongs committed by the employee during the course of

discharging that function. In such a case, the general law of agency has no

application. However, the official himself may be personally liable for the torts he

commits.

Similarly, in the case of Ross v. Secretary of State48, the Secretary of State was

held not liable for the wrongful acts of the district magistrate done by him in the

exercise of statutory authority.

4. NEGLIGENCE OF MUNICIPAL BODIES:

Municipal bodies are statutory bodies discharging many functions of public

interest. In a number of cases, the courts have held such bodies liable to pay

compensation for the tortious acts of their servants.

47 143 ER 1148. Also, Nieraha v. Baker, 1901 AC 561; Stanbury v. Exeter Corporation, (1905) 2 KB 839.

48 AIR 1915 Mad 434.

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In the case of Venkatesh v. The City Municipal Council49, where the

municipality had demolished some buildings belonging to the plaintiff for the purpose

of broadening a road without taking any action to acquire the buildings under the

Land Acquisition Act, the court had awarded damages to the plaintiff to compensate

him for the injury sustained by him for the tortious act of the municipality.

a. Government Companies:

The government sets up a number of statutory corporations or bodies

incorporated under the Companies Act. Most of these bodies are engaged in carrying

commercial enterprises. Actions for damages against such bodies for tortious acts of

their servants are not covered by Art. 300 of the Constitution and therefore the

principles of the general law of torts are applicable to them to the same extent as to

any corporate body. Thus, in National Small Scale Industries Corpn. v. Bishambhar

Nath50, the corporation was held liable for the damage caused to the building of the

respondent [of which the corporation was a tenant] due to the negligence of the

employees of the corporation.

5. NEGLIGENCE OF ELECTRIC UNDERTAKINGS:

The courts have also awarded compensation for injuries or death caused to

persons because of negligence of the statutory electricity boards to properly maintain

electric installations. In the case of Kerala State Electricity Board v. Suresh Kumar51,

where Rule 77(3) of the Indian Electricity Rules, 1956, which imposes a duty on the

electricity board to hold 11 KV overhead lines at a height of 15 feet above the ground,

was violated, and instead the line in the instant case sagged to a height of 9 feet above

the ground and a boy came in contact with the line and sustained serious burns and

injuries which affected his physical and mental capacities. The court ordered the

board to pay a sum of Rs. 1,02,000/- along with interest from the date of filing the suit

by way of compensation to the plaintiff for the injuries suffered by him.

6. NEGLIGENCE OF POST OFFICES:

49 AIR 1975 Knt 62.

50 AIR 1979 All 35.

51 AIR 1986 Ker 72.

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The liability of the post office was first questioned in Union of India v. Mohd.

Nazim52. The Supreme Court has ruled that post office which has been established by

a statute53 is not a common carrier. It is not an agent of the sender of the postal article

for reaching to the addressee. It is really a branch of the public service providing

postal services subject to the provisions of the Post Office Act and the rules made

thereunder.54

52 AIR 1980 SC 431 : (1980) 1 SCC 284.

53 The Post Office Act, 1898.

54 Traifus & Co. Ltd. v. Post Office, (1975) 2 QB 352; Cf. C.I.T. v. P.M. Rathod & Co., AIR 1959 SC 1394 : 1960 (1) SCR 401; Union of India v. Amar Singh, AIR 1960 SC 233 : 1960 (2) SCR 75.

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CHAPTER – III (A)

ACT OF A STATE

The government is not regarded as liable for an “act of state”. An act of state, under

the English law, is an act of executive as a matter of policy performed in the course of is

relations with another state during its relations with the subject of that state, unless they are

temporarily within the allegiance of the Crown. An act of state is an act of a sovereign against

another sovereign or an alien outside its territory. It is a sovereign act which is not grounded

in law. As an act of state derives its authority not from municipal law but from ultra – legal or

supra – legal means, municipal courts have no power to examine the propriety or legality of

an act of state. There is immunity from courts’ interference in respect of an act done by the

state against an alien outside its territory.55 This principle has also been applied in India in a

number of cases in the pre – Constitution era with respect to the princely states existing at the

time.

In Nabob of Carnatic v. East India Company56, a suit brought by the Nabab against

the Company for an account under a political treaty between the Company and the Nabab

was dismissed as it was a matter between two sovereigns, the Company was having acted

throughout in its political capacity. In East India Company v. Sayed Ally57, it was held that the

resumption by the Madras Government of a jagir granted by the former Nabab of Carnatic

before the date of cession to the East India Company was an act of sovereign power and so

exempt from the jurisdiction of the courts.

There can be no act of state between a state and its subjects, and such an act is not

immune from judicial scrutiny. If the government justifies its act under a municipal law, that

act cannot be an act of state. Its legality and validity must be tested by the municipal law and

in municipal courts.58

55 Eshugbayi Eleko v. Govt. of Nigeria, (1931) AC 692.

56 30 ER 391 and 521, (1793).

57 7 MIA 555 (1827).

58 P. V. Rao v. Khushaldas, AIR 1949 Bom 277, 278.

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CONCLUSION

The Preamble of the Constitution of India declares India to be a ‘sovereign, socialist,

secular, democratic republic’. The word ‘sovereign’ emphasises that India is no more

dependent on any outside authority. It is a sovereign, both internally and externally. So far as

the Constitution of India is concerned, the king has no place and the country and the

government owe no allegiance to him. This is not the position in England. Till the 1947, the

Crown enjoyed immunity over the fact that they cannot be tried and charged for any wrong

done by them or the government to the citizens during their course of employment or

otherwise. The position was however changed in 1947, where the new law declared all

statutory corporations and the government to be held liable in cases where the employees

have been damaged or hurt during their course of employment, and compensate them for the

same.

The definition of a ‘state’ provided in Art. 12 of the Constitution of India includes the

Government and the Parliament of India, the Government and Legislature of each state, all

local and other authorities within the territory of India, and all local and other authorities

outside India, that is under the control of the Government of India. It thus includes all

legislative and executive organs of the state Union and the states. Thus, all corporations,

municipal bodies, schools, universities, railways, post-offices, etc. fall within the ambit of the

meaning of the word ‘state’ as defined in Art. 12.

To prove the liability of these institutions, it is necessary to prove them to be

vicariously liable. The principle of vicarious liability means that the liability is to be borne by

one person for the acts committed by another, during the course of his or her employment. It

is necessary to understand the fact that the act committed by such an institution has caused

damages to the person during the course of his or her employment. If the aggrieved person

has been acting out of his own accord and performing a sovereign function, the institution

cannot be held liable to pay damages and compensation to the person thus hurt. The principle

of vicarious liability arises only in those situations where there is a relationship of master-

servant, principal-agent or of partners between the employer and the employee. Art. 300 of

the constitution provides for situations wherein the Government can be sued and under what

circumstances it can be sued.

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It is therefore concluded that when a state is exercising sovereign functions of its own,

it cannot be sued. In case if damages have been caused to the employee during the course of

his employment, the government is required to pay compensation to the employee for the

damages caused. All private institutions do not fall under the concept of the definition of a

state. Hence, if a private corporation is tried and charged for committing an offence against

an employee and where an employee is damaged, the government cannot be compelled to pay

compensation to the employee, since the private institution is a sovereign and it is performing

sovereign functions that do not fall within the control of the Government of India. In case

where the act has been committed by the state, the government is still liable to pay

compensation to the employees. Thus, in case where a tort has been committed by a

government that is not in exercise of its sovereign functions, it will be held liable to pay all

costs to the aggrieved party.

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Tortious Liability of a State

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