Tortious Liability of a State

State is not a living entity but a legal entity which cannot function without human agency. It is
therefore, that the state has to act through its servants. The concepts of Tortious liability of the
state refers to situation when the state can be held vicariously liable for the wrongs committed by
its servants. There are numbers of constitutional provisions relating to the tortious liability of the
state. Under article 294 (b), the liability of the union government or a state may arise out of any
contract or otherwise.
The word otherwise indicates that such liability may arise in respect of tortious acts as well the
extent of the said liability is defined in article 300 (l) which declares that the government of India
or of a state may sue or may be sued in relation to their respective affairs in the like cases as the
Dominion of India and corresponding provinces or Indian states might have sued or been sued.
The leading case arising under sec. 65 of the government of India 1858 is case: P & 0 steam
Navigation co. v. Secretary of state (1861) {1} In this case the servant of the plaintiff company
was traveling in a horse-driven carriage belonging to the company. While the carriage was
passing near the government dockyard certain workmen employed by the government
negligently dropped an iron bar on the road. The noise so created scared the horse of the carriage
and injuries were sustained by the horse and the servant of the company. The plaintiff company
filed a suit for the damage caused by the negligence of the government servants. Peacock CJ. (Of
the supreme court of Calcutta) held that the action against the defendant was maintainable and
the court classified the acts of secretary of state into two categories:

a. Sovereign
b. Non-sovereign.

The secretary was liable for the acts but enjoyed immunity from former acts.

Case Kasturil Ial v. State of UP (1965). A certain quantity of gold and silver was seized by
police from Raila Ram on the suspicion that it was stolen property. It was kept in government
Malkhana which was in custody of a Head Constable. The property was misappropriated by the
head constable who fled to Pakistan. Raila Ram was prosecuted but acquitted of charge. A suit
for damaged was filed by Raila Ram against the state for the loss caused to him by the
negligence of police authorities following the principle laid down in steam navigation co. case,
the supreme court ruled that the state was not liable as police officers were exercising sovereign
functions.
State of Rajasthan v. Vidyawati (1962). A jeep was owned and maintained by the state of
Rajasthan for official use of collector of a district. Once the driver of the jeep was taking it back
from the workshop after repairs by (his) rash and negligent act of driver of the jeep a pedestrian
was knocked down and fatally injured. He died. His widow sued the state for damages. The state
claim immunity on the ground that in similar circumstances the east India Company would not
have been liable, as the jeep was maintained in the exercise of sovereign functions and not as a
 part of commercial activity of the state was vicariously liable for the rash and negligent act of the
driver and held that the doctrine of sovereign immunity founded on English law had no validity
in India.

Under the Constitution of India two Articles viz Article 294 and Article 300 contain
explicit and implicit provisions regarding tortious liability of State and suit against it.
Both the Articles come under Chapter III of "Part XII of the Constitution of India
which is headed as Property Contracts. Rights, Liabilities Obligations and Suits."
Article 294 (b) of the Constitution of India provides that the liability of Union
Government or State Government may arise out of any contract or otherwise. The
word "otherwise" would include various liabilities including tortious liability also. This
Article thus constitutes and transfers the liabilities of Government of India and
Government of each governing province in the Union of India and corresponding
States. Article 300 of the Constitution of India provides that State can sue or be sued as
juristic personality. It reads as under: "The Government of India may sue or be sued by
the name of the Union of India and the Government of a State may sue or be sued by
the name of the State and may, subject to any provisions which may be made by Act of
Parliament or of the Legislature of such State enacted by virtue of powers conferred by
this Constitution, sue or be sued in relation to their respective affairs in the like cases
as the Dominion of India and the corresponding Provinces or the corresponding Indian
States might have sued or been sued if this Constitution had not been enacted."

The Supreme Court of India after coming into force of the Constitution of India in the
first notable case regarding State's tortious liability viz. State of Rajasthan v. Mrs.
Vidyavati, AIR 1962. It was thus made clear that ambit of Article 300 included tortious
liability of State and its scope is not limited to suit or right to one in respect of
contractual liability only. In the said case a vehicle owned by the State of Rajasthan
met with an accident causing death of one person due to negligence of the driver. The
State was held liable as the said accident could not be associated with the sovereign
powers. The Court held that the act of public servant committed by him during the
course of his employment was in discharge of duties assigned to him not by virtue of
delegation of any sovereign powers.

In Kasturi Lal case a police officer misappropriated the gold deposited in police
Malkhana after seizing it from the plaintiff on suspicion. Later he absconded. It was
found that the police officers were negligent as they failed to observe the provisions of
the U.P. Police Regulations in taking care of the gold seized. The Supreme Court held
that since the negligence of the police officers was in the exercise of statutory powers,
which could be characterised as sovereign powers, the State was not vicariously liable
for the same. The Court relied on Sir Peacock&; observations in P & O case to hold
that if an activity could not be performed by a private individual, such activity could be
termed as sovereign activity and the State is not vicariously liable for any tort arising
from the exercise of such activity.

Dilution of the principle of sovereign immunity.In N, Nagendra Rao & Co. v.

State of A.P. the Supreme Court has held that when due to the negligent act of the
officers of State a citizen suffers any damage the State will be liable to pay
compensation and the principle of sovereign immunity of State will not absolve him
from this liability. The Court held that in the context of modern concept of sovereignty
the doctrine of sovereign immunity stands diluted and the distinction between
sovereign and non- sovereign functions no longer exists. The Court noted the
dissatisfactory condition of the law in this regard and suggested for enacting
appropriate legislation to remove the uncertainty in this area.

The facts of the case were that the appellant was carrying on business in
fertiliser. and foodgrains under licences issued by appropriate authorities. Its premises
were visited by the Police Inspector Vigilance Cell and huge stocks of fertiliser,
foodgrains and even non-essential goods were seized. On the report submitted by the
Inspector, the District, Revenue Officer (DRO) in exercise of powers under Section 6-A
of the Essential Commodities Act, directed the fertiliser to be placed in the custody of
Assistant Agricultural Officer (AAO) for distribution to needy ryots and the foodgrains
and non- essential goods in the custody of Tehsildar for disposing it of immediately and
depositing the sale proceeds in the Treasury. The AAO did not take any steps to dispose
of the fertiliser. On 29-6-1976, the proceeding under Section 6-A of the Act were
decided in- favour of the appellant and confiscation order was quashed as there was no
proof that the appellant was guilty of blackmarketing or adulteration. The only violation
of Control Order found was improper maintenance of accounts. Accordingly the
Collector directed the release of the stock. Despite Collector's Order the AAO did not
release the stock. However, in March, 1977 he informed the appellant to take delivery
of the stock. But when he went to take the delivery of the stock he found that the stock
had been spoilt- both in quality and quantity. He then demanded the value of the stock
released by way of compensation. His demand was rejected. He then filed the suit for
recovery of the amount which was contested by the State that it was immune from
liability on the ground of doctrine of sovereign immunity. The trial court did not accept
the defence and held that AAO acted negligently in not disposing of the stock in time
and decreed the suit. The State appealed to the High Court. The High Court set aside
the decree relying on the ratio of Kasturi Lal. The appellant filed an appeal in the
Supreme Court against the judgment of the High Court.

Rejecting the contention of the State, the Supreme Court held that the State was
liable vicariously for the negligence committed by its officers in discharge of public
duty conferred on them under a statute. As regards the immunity of State on the ground
of sovereign function, the Court held that the traditional concept of sovereignty has
undergone a considerable change in the modern times and the line of distinction
between sovereign and non-sovereign powers no longer survives. No civilised system
can permit an executive as it is sovereign. The concept of public interest has changed
with structural change in the society. No legal system can place the State above law as
it is unjust and unfair for a citizen to be deprived of his property illegally by negligent
act of officers of the State without remedy. The need of the State to have extraordinary
powers cannot be doubted. But it cannot be claimed that the claim of the common man
be thrown out merely because the act was done by its officer even though it was against
law and negligence. Need of the State, duty of its officials and right of the citizens are
required to be reconciled so that the rule of law in a welfare State is not shaken.