Title – Liability of the Government

Case - N. Nagendra Rao & Co vs State Of A.P –on 6 September 1994 AIR 2663

Sovereign functions of the state are those for which the government is not held liable in a
court of law. These tasks are primarily concerned with the defense of the country, the
maintenance of the country's military forces, and the maintenance of territorial peace. These
activities can only be carried out by the state for the sake of external sovereignty, which is
why they are not subject to the jurisdiction of ordinary civil courts and are largely inalienable.
However, other sovereign duties of the state are not fundamentally inalienable, such as taxes,
police functions such as maintaining peace and order, legislative functions, law and policy
administration, and pardoning.
 
 
FACTS OF THE CASE
 
In this case, the appellant N. Nagendra & Co. carried on a business in fertilizer and food
grains under a license issued by the appropriate authorities. Its premises were visited by the
Police Inspector, Vigilance Cell, and huge stocks of fertilizers, food grains, and even non-
essential goods were seized. On the report submitted by the Inspector, the District Revenue
Officer in the exercise of powers under Section 6-A of the Essential Commodities Act, 1955
Act directed the fertilizer to be placed in the custody of Assistant Agricultural Officer for
distribution to needy and the food grains and non-essential goods in the custody of Tehsildar
for disposing of it immediately and depositing the sale proceeds in the Treasury. The AAO
did not take any steps to dispose of the fertilizer. A request was made for diverting the
fertilizer 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 appellant’s
license was canceled. 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.
 
 
ISSUES RAISED

 Whether commodities have taken in the exercise of sovereign power provides

immunity to the government against loss or injury to the owner.
 Is the seizure of a portion of the items sufficient to absolve the State of any claim for
loss or injury suffered by the owner of the commodities that were ordered to be
returned?

 
LAWS INVOLVED
 
 The activity of seizing goods by the government does not come under the purview of
sovereign acts.
 The government is liable for tortious acts of its servants.
 The tortious acts of the government servants cannot be categorized under sovereign
acts.
 The doctrine of the Sovereign act is required to be enacted clearly.

 
 
ARGUMENTS
 
Plaintiff:
 The complainant claims that the government's seizure of his property is not a
sovereign act of the government.
 The commodities were deteriorating, and it was the government's responsibility to
take care of them, but they failed to do so.
 Because the Government was responsible for the harm he sustained, he is entitled to
compensation from the government.

Defendant:
 The government maintained that seizing goods falls under the jurisdiction of the
government's sovereign act.
 As a result, the government bears no responsibility for them.
 
 
CONCLUSION
 
The Court held that:
 The State would be accountable for the tortious conduct done by its agent. 
 When the state seized certain goods under the Essential Commodities Act for public
welfare, the onus fell on the state to ensure that the said goods are carefully preserved
as is necessary. 
 There was no distinction made between sovereign and non-sovereign activities. 
 According to the Court, the State will not be held accountable for its actions under
Article 300 of the Constitution.

SEE ALSO
 Rudal Shah v. State of Bihar (1983) 4 SCC 141
 Bhim Singh v. State of Jammu and Kashmir 1985 (2) SCALE 1117
 Saheli, A Women’s Resources v. Commissioner of Police 1990 AIR 513
 Common Cause, A Registered Society v. Union of India 1996(4) SCC 33