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“Liability of State in context of Sovereign and Non-Sovereign Functions": A DISCUSSION

Submitted by:

NIPUN DAVE

Division -A, Class-BBA LLB

Roll No- 30, PRN- 15010224030

OF

Symbiosis Law School, NOIDA

Symbiosis International University, PUNE

In

OCTOBER 2015

Under the guidance of

Dr. C.J. RAWANDLE

&

Prof. NITYA THAKUR

C E R T I F I C A T E

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The project entitled “LIABILITY OF STATE IN CONTEXT OF SOVEREIGN AND NON-SOVEREIGN FUNCTION:A DISCUSSION” submitted to the Symbiosis Law School, NOIDA for Law of Torts, MV Accident and Consumer Protection Laws I as part of Internal assessment is based on my original work carried out under the guidance of Prof. Nitya Thakur from July 16 to October 29.

The research work has not been submitted elsewhere for award of any degree. The material borrowed from other sources and incorporated in the thesis has been duly acknowledged.

I understand that I myself could be held responsible and accountable for plagiarism, if any, detected later on.

Signature of the candidate :

Date:

Acknowledgement:

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In the making of this project. it was all with the kind support and help of many individuals and organizations. I would like to extend my sincere thanks to all of them.

I am highly indebted to Symbiosis Law School, NOIDA for their guidance and constant supervision as well as for providing necessary information regarding the project & also for their support in completing the project.

I would like to express my gratitude towards my parents & faculty of Symbiosis Law School, NOIDA for their kind co-operation and encouragement which help me in completion of this project.

I would like to express my special gratitude and thanks to the Nitya mam for giving me valuable advice and suggestions on my project. It was with her help that I have successfully completed my project

My thanks and appreciations also go to my colleague in developing the project and people who have willingly helped me out with their abilities.

Thank you,

Nipun dave

TABLE OF CONTENTS:

HEADINGS: Page no:

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Table of Cases 5

Introduction 6 Constitutional provisions 7 Restrictive liability in pre-constitutional era 8

Expanded liability in post- constitutional era 10

Sovereign and non-sovereign functions: Summary 13

Conclusion 16 Bibliography 17

TABLE OF CASES:

Kasturi lal v. state of U.P. AIR 1965 SC 1039 Hari bhanji v. sec of state - Madras H.C. (1882)5 ILR MAD 273 State of rajasthan v. Vidyawati AIR 1915 MAD 993 (SL)

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State of A.P. v. Challa Ramkrishna Reddy (2000 SC) Saheli v. commissioner of police, delhi 1990 AIR 513, 1989 SCR 488 Rudal shah v. State of Bihar 1983 AIR 1086, 1983 SCR (3) 508 Amulya patnaik v. State of Orrisa AIR 1967 Ori 116, (1968) ILLJ 64 Ori. P&O Steam Navigation Co v. Sec of State 5 BOM HCR APP I Nobin Chunder Dey v Secretary of State 1876) ILR 1 Cal. 12 Thangarajan v. Union of India AIR 1975 Mad 32 Sec of State v. Sheoramjee AIR 1952 NAG 213 Sec of State v. Moment (1912) 40 I.A. 48 State of Bihar v. Sanabati AIR 1954 PAT 873 Udai Chand v. Province of Bengal 5 KAL WN 537 Union of India v. Ramkamal AIR 1953 ASSAM 116 Union of India v. Harban singh AIR 1959 PUNJ 39 Gurchan v. State of Madras AIR 1942 MAD 539 Ettic C v. Sec of State AIR 1939 MAD(663) Mata Prasad v. Sec of State AIR 1931 OUDH 29 Sec of State v. Cockraft AIR 1915 MAD(993) N. Nagendra Rao. v. State of A.P. 1994 AIR 2663 1994 SCC (6) State of Gujrat v. Haji menon 1967 AIR 1885, 1967 SCR (35) Chairman of Railway Board v. Chandrima Das (2000) SCC 356 State of Maharashtra v. Kanchanmala Shrike 996 SCC (2) 634 JT Sanjay Gupta v. State of U.P. Sanjay Gupta v. State of U.P. Municipal corp. of Delhi v. Uphaar Tragedy victims (2011) 14 SCC 481 Bhim singh v state of Jammu and Kashmir AIR 1986 SC 494 Gurucharan v State of Madras, AIR 1942 Mad 539 Shyam Sundar v. State of Rajasthan AIR 1974 SC 890

Statues Referred : Law commission report - 1956 (Liability of state) Article 300(1) of Indian Constitution. Section 65(2) of the Government of India Act, 1858; Section 32 of the Government of India Act, 1915; Section 176 of the Government of India Act, 1935.

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INTRODUCTION :

The concept of the State has undergone a vast transformation from a form of political organisation to that of an entity that closely interacts with its citizens in a number of areas. The functions of the State are no longer limited to maintenance of law and order, administration of justice and defence of the country, but also extend to commercial and economic activities, provision of various public services etc. In its interactions with citizens, the State can affect the lives of people, sometimes causing harm to their lives and property through the wrongdoing of its servants. Some incidents that occurred in the past year can be used to illustrate this point. In November 2014, a state-run mass sterilisation camp in Chattisgarh resulted in the deaths of about 14 women. In June 2014, the alleged negligence of the officials of the Larji Hydroelectric project in Himachal Pradesh in releasing the water stored in its reservoir into the Beas river without any warning caused the death of 24 students. In another incident, due to the alleged negligence of the officials of a state-owned gas transmission and marketing company, a fire broke out at its gas pipeline in Andhra Pradesh that claimed 22 lives. Accidents caused due to unmanned railway crossings, open bore wells etc. may also be attributable to negligence of State actors to a certain extent. While it can be argued that negligent actions of the victims (or even third-party interventions) may have contributed to such accidents, these incidents do raise questions about the culpability of State actors. Given this importance of tort law, and given the vast role that the State performs in modern times, one would reasonably expect that the legal principles relating to an important area of tort law, namely, liability of the State in tort, would be easily ascertainable. However, at present, this ideal is not at all achieved, in reality. It is only fair, in a society based on the principles of equality and justice, that the state be held responsible for the damage caused to citizens due to the wrongdoings of its employees or agents in the carrying out of its services and operations. Often, the remedy for such wrongs can be found through the imposition of civil liability in tort law,

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which would recompense the citizen for the intrusion into his/ her private rights.

CONSTITUTIONAL PROVISION:

The legal regime governing state liability for tortious acts of its employees is based on Article 300 of the Constitution of India. A. 300(1) allows for actions to be brought by and against the Government of India or the Government of a State in the name of the Union of India or the State respectively. 1 This provision expressly permits the imposition of civil liability on the Government of India and the Government of every state. Additionally, A. 300(1) delineates the scope of such liability by imposing liability on the Government of India and the Government of every state to the same extent as the liability of the Dominion of India and the corresponding provinces or the corresponding Indian states. A. 300(1) also makes the scope of liability thus defined subject to any legislation made by the Parliament of India or the legislature of any state. The result of this constitutional position is that the scope of liability of the Government of India and the Government of every state is defined by reference to the scope of liability of the Dominion of India and the corresponding Indian princely states or provinces respectively, as it stood prior to the enactment of the Constitution. Therefore, in order to determine the scope of such liability, reference must be made to the Government of India Act, 1935 to assess the scope of liability of the Dominion of India and the corresponding provinces. S 176(1) of the Government of India Act, 1935, which is the relevant provision, ultimately refers to S (65) of the Government of India Act, 1858.2 S (65) of the Government of India Act, 1858, while dealing with the

1 A.300(1) : “The Government of India may sue or be sued by the name of the Union of India and the Government of a State may sue or be sued by the name of the State and may, subject to any provisions which may be made by Act of Parliament or of the Legislature of such State enacted by virtue of powers conferred by this Constitution, sue to be used 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 3 S 176(1), Government of India Act, 1935 refers to the legal position contained in s 32, Government of India Act, 1935 thus: The Federation may sue or be sued by the name of the Federation of India and a Provincial Government may sue or be sued by the name of the Province, and, without prejudice to the subsequent provisions of this Chapter, may, subject to any provisions which may be made by an Act of the Federal or a Provincial Legislature enacted by virtue of powers conferred on that Legislature by this Act, sue or be sued in relation to their respective affairs in the like cases as the Secretary of State in Council might have sued or been sued if this Act had not been passed.”

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scope of liability of the Secretary of State for India, merely stipulates that the scope of liability of the Secretary of State for India would be the same as that of the East India Company.3 Ultimately, as the above provisions do not provide any substantive guidance as to the scope of liability, reference must be made to certain relevant judgments, which have specifically considered the scope of state liability in relation to the tortious acts of public servants. Only through these judgments, case laws and precedents we will be able to distinguish sovereign and non-sovereign functions of the state.

Pre-constitutional era :

The first key judgment, which considered state liability for tortious acts of public servants, was P & O Steam Navigation Co. v Secretary of State.4 This case involved a claim for damages for injury caused to the appellant’s 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. recognised 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. This distinction was made on the basis that the East India Company 5 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.

S 32, Government of India Act, 1915 refers to the position contained in s 65, Government of India, 1858. 3 S 65, Government of India Act 1858: “The Secretary of State in Council shall and may sue and be sued as well in India as in England by the name of the Secretary of State in Council as a body corporate; and all persons and bodies politic shall and may have and take the same suits, remedies and proceedings, legal and equitable, against the Secretary of State in Council of India, as they could have done against the said Company; and the property and effects hereby vested in Her Majesty for the purposes of to Government of India, or acquired for the said purposes, shall be subject and liable to the same judgments and executions as they would, while vested in the said Company, have been liable, to in respect of debts and liabilities lawfully contracted and incurred by the said Company.”4 5 Bom HCR App. 1. 5 The Secretary of State’s liability was coterminous with the liability of the East India Company under s 65, Government of India Act, 1858.

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This distinction between sovereign and non-sovereign functions was followed in Nobin Chunder Dey v Secretary of State.6 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 7 , wrongful conviction 8 , wrongful confinement 9 , maintenance of public hospitals 10 , etc. In contrast to the above trend, a few High Courts11 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 12. 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’) 13 . 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 14 .

Post-Constitutional era :

The decision of the Supreme Court in State of Rajasthan v Vidhyawati15 was one of the earliest decisions on the issue of state liability for the tortious acts of public servants after the Constitution came into force. In

6 (1876) ILR 1 Cal. 127 Secretary of State v Cockraft, AIR 1915 Mad 9938 Mata v Secretary of State, AIR 1931 Oudh 29.9 Gurucharan v State of Madras, AIR 1942 Mad 53910 Etti C v Secretary of State, AIR 1939 Mad 66311 Ross v Secretary of State, AIR 1915 Mad 434; Kishanchand v Secretary of State, (1881) ILR 2 All 829; State of Bombay v Khushaldas Advani, AIR 1950 SC 222.12 (1882) ILR 5 Mad. 27313 The Court understands ‘acts of State’ as “Acts done by the Government in the exercise of the sovereign powers of making peace and war and of concluding treaties, obviously do not fall within the province of Municipal law…” (para 16)14 This decision seems to be one of the earliest indications of the distinction between executive acts and acts done under a statute, a distinction which seemed to have been glossed over in the later judgment in Kasturilal Ralia Ram Jain v State of Uttar Pradesh, AIR 1965 SC 1039.15 AIR 1962 SC 933

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this case, a government servant negligently drove a government vehicle and injured a pedestrian, who later succumbed to his injuries. The Supreme Court followed the decision of Peacock C.J. in P & O Steam Navigation Co. to hold that the Government of Rajasthan would be liable for the tortious acts of its servants like any other private employer. The Supreme Court also observed that "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." The decision in Vidhyawati was analysed by the Supreme Court in a subsequent decision in Kasturilal Ralia Ram Jain v State of Uttar Pradesh.16 In this case, a quantity of gold seized from the plaintiff by the police and kept in police custody was misappropriated by a police constable. The plaintiff raised a claim against the Government of Uttar Pradesh and argued that the loss was caused due to the negligence of police officers. The Supreme Court rejected the claim raised by the plaintiff and affirmed a more expansive view of sovereign immunity. The Supreme Court did not follow the decision in Vidhyawati as it distinguished this decision on the basis of the facts involved. It noted that the tortious act in Vidhyawati (driving a government vehicle from the workshop to the Collector’s residence) could not be considered as an exercise of sovereign functions, unlike the tortious act in Kasturilal (seizure of property by police)17.Therefore, the decision in Vidhyawati necessarily had to be different from the decision in Kasturilal. It also noted that the decision in Vidhyawati ought to have been premised on this specific aspect, even though this did not happen in fact. Ultimately, the Supreme Court held that state liability for tortious acts of public servants would not arise if the tortious act in question was committed by the public servant while employed “in discharge of statutory functions which are referable to, and ultimately based on, the delegation of the sovereign powers of the State.” 18 This broad formulation of the definition of sovereign functions resulted in a substantial expansion

16 AIR 1965 SC 1039.17 The Supreme Court specifically held that the state was not vicariously liable as - (a) the power to arrest and search a person and seize his property were statutory powers conferred on the police officers; and (b) such powers could be characterised as sovereign powers (para 31)18 Kasturilal, n 17, para 23

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in the scope of sovereign immunity. The decision of the Supreme Court in Kasturilal has been a subject of much academic scrutiny. The reasoning of the Court erodes this distinction and enlarges the scope of sovereign immunity beyond reasonable limits. 19 It is pertinent to note that the Supreme Court itself, in its decision in Kasturilal, recognised the possibility that this legal position in relation to state liability for tortious acts of public servants might give rise to unjust situations where a citizen might suffer serious loss and not possess any legal remedy against the state20. However, in the opinion of the Supreme Court, the means of resolution of this problem was through suitable legislative intervention and not judicial interpretation.21 Subsequently, the definition of sovereign functions enunciated in Kasturilal was applied in a number of circumstances by reference to whether the act in question could be pursued by private individuals or not. If the act in question could be pursued by private individuals, then such act would not be a sovereign function and state liability would arise.However, notwithstanding such extensive judicial guidance, distinguishing between sovereign and non-sovereign functions has remained rather difficult. In fact, a cursory look at two decisions from the High Courts on analogous facts illustrates this difficulty. In one decision, 22 it was held that an army driver carrying carbon dioxide to a naval ship was performing a sovereign function. In the other decision,23 it was held that sovereign immunity would not be available in case of a tortious act committed while carrying arms from a railway station to a military camp by truck.The difficulties faced in distinguishing sovereign and non-sovereign functions have been further compounded by a number of decisions that have attempted to bypass the distinction altogether. These decisions have sought to impose liability for tortious acts of public servants on the basis of other justifications. In State of Bombay (Now Gujarat) v Memon Mahomed Haji Hasam,24 certain vehicles and goods seized by customs authorities were

19 See H.M. Seervai, Constitutional Law of India (Vol 2, 4th edn., 2013) pg. 2132.20 Kasturilal, n 17, para 32.21 Ibid.22 Thangarajan v Union of India, AIR 1975 Mad 3223 Usha Aggarwal v Union of India, AIR 1982 P & H 279.24 AIR 1967 SC 1885.

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disposed of owing to the negligence of the police. The Supreme Court, after comparing the position of the Government of Gujarat to that of a bailee, held that the Government of Gujarat was liable for tortious acts of public servants such as the police. It further held that the decisions in Vidhyawati and Kasturilal were not relevant to the issue of state liability in such circumstances. Similarly, in Basava Dyamogouda Patil v State of Mysore,25 on facts largely similar to the facts in Kasturilal, the State of Mysore was held liable for property which was lost while in the custody of the police.

Sovereign and non-sovereign functions: Summary

Established Doctrine: Nagendra rao case - This distinction between sovereign and non-sovereign functions was considered at some length in N. Nagendra Rao Vs. State of AP. The court in this judgment held that “In the modern sense, the distinction between sovereign or non-sovereign power thus does not exist. It all depends on the nature of the power and manner of its exercise. Legislative supremacy under the Constitution arises out of constitutional provisions. The legislature is free to legislate on topics and subjects carved out for it. Similarly, the executive is free to implement and administer the law. A law made by a legislature may be bad or may be ultra vires, but, since it is an exercise of legislative power, a person affected by it may challenge its validity but he cannot approach a court of law for negligence in making the law. Nor can the Government, in exercise of its executive action, be sued for its decision on political or policy matters. It is in (the) public interest that for acts performed by the State, either in its legislative or executive capacity, it should not be answerable in torts. That would be

25 AIR 1977 SC 1749

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illogical and impracticable. It would be in conflict with even modern notions of sovereignty26”.

TEST: "One of the tests to determine if the legislative or executive function is sovereign in nature is, whether the State is answerable for such actions in courts of law. For instance, acts such as defence of the country, raising (the) armed forces and maintaining it, making peace or war, foreign affairs, power to acquire and retain territory, are functions which are indicative of external sovereignty and are political in nature. Therefore, they are not amenable to jurisdiction of ordinary civil court. No suit under Civil Procedure Code would lie in respect of it. The State is immune from being sued, as the jurisdiction of the courts in such matters is impliedly barred"27 The obscurity in application of the distinction can be seen through various cases as discussed earlier i.e,

Sovereign functions:

1. Commandeering goods during war,(Kesoram Vs. Secretary of State, (1928) ILR 54 Cal. 969)

2. Making or repairing a military road,(Secretary of State Vs. Cockraft, ILR 39 Mad. 351)

3. Administration of justice,(Mata Prasad Vs. Secretary of State, ILR 5 Luck. 157)

4. Improper arrest, negligence or trespass by police officers,(Kedar Vs. Secretary of State, ILR 9 Rang. 375)

5. Removal of an agent, by the labour supplying association under an ordinance, ILR 37 Mad. 55;

Non- sovereign functions:

1. Bus services run by the state, commercial activity, ,(Amulya Patnaik v. Orrisa AIR 1967 Ori 116)

2. Banking Business run by the state, sub-treasury conducted on (State v. Hindustan lever AIR 1972 All 486)

3. Activities of the public work department of the state (State v. Ram Pratap AIR 1972 MP 219)

4.Constructing a reservoir for facilitating supply of drinking water to residents of town (State Of Mysore vs Ramchandra Gunda)

5. Use of military truck performing a non- military task :

5.1 Function of towing away of crane of 26N. Nagendra Rao. v. State of A.P. 1994 AIR 2663 1994 SCC (6) para 2427 consultation paper on liability of the state (2001).

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6. Negligence of officers of the court of wards, in the administration of estate in their charge.(Secretary of State Vs. Sreegovinda, (1932) 36 Cal. WN 606)

7. Removal of a child by the authorities of a hospital, maintained out of the revenues of the state, (Etti Vs. Secretary of State, AIR 1939 Mad. 663)

8. Negligence of the chief Constable, in seizing hay under a statutory power – ILR 28 Bom. 314.

9. Carrying of fuel from factory to naval ship in a military truck (Thangarajan v. Union of India AIR 1975 Mad 32)

defence department.(Union of india v Sadashiv)

5.2 Driving a missile carrier (Pushpinder Kaur v. Corporal sharma)

5.3 Act of transportation , even of jawans (Union of India v. Savita Sharma AIR 1979)

5.4 Transportation of Records, ranging machines and other equipments in a military truck( India v. Sugrabai AIR 1969)

6. Famine relief work (Shyam sunder v. State of Rajasthan AIR 1974 SC 890)

7. Railways run by the state, commercial activity (Chairman railway board v. Chandrima Das)

8. Govt. Hospitals run by the state (Abhutaro Haribhav Khodara v. State of Maharastra (1996) 2 SCC 634)

The list is inclusive and not exhaustive.

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CONCLUSION:

Despite several attempts made to eliminate the confusion over deciding tortious liability of state , no concrete step has been taken in furtherance to it. Art 300 (1) provides a very weak foundation and there is a urgent need for legislation on the current subject of law. Even LCI report suggested and agreed on the doctrine established in HARI BHANJI case but still no bill was passed and a similar recommendations were made in this area by the consultation paper on liability of state in 2001. The present scenario accepts widely what was established in case of NAGENDRA RAO case as discussed earlier. The trend observed narrowing down the scope of immunity which state could get as its functions as a welfare state increased not only to administration and establishing peace, harmony and justice but also regulating and controlling commercial, social economic, political and even material. The demarcating line between sovereign and non-sovereign power for which no rational basis survives has largely disappeared.

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BIBLIOGRAPHY: 1. Casebook on torts ,12 Eds.,Richard Kidner

2. Ramswamy lyer's ,THE LAW OF TORTS,10 Eds.

3. Law Of Torts ,R.M. Gandhi,4 Eds. 2011 pt. 37,38,39.

4. Vicarious liability in tort , Giller ; A Comparitive Perspective.

5. HALSBURY'S LAW OF INDIA (ADMINISTRATIVE LAW ). LEXIS NEXIS BUTTERWORTHS, pt. 005.317-005.322.

6. THE LAW OF TORTS,(2009) ,26 Eds , JUSTICE G P SINGH ,pt. 86,87.

7. A journal on Sovereign Immunity, Source, (1977): The International and Comparative Law Quarterly, Vol. 26, No. 3 , pp. 684-685

8. Against Sovereign Immunity, Author(s): Erwin Chemerinsky, Source: Stanford Law Review, Vol. 53, No. 5, Symposium: Shifting the Balance of Power? The Supreme Court, Federalism, and State Sovereign Immunity (May, 2001), pp. 1201-1224

9. Clerk and Lindsell on Torts, (2010) (Michael Jones & Anthony Dugdale eds, 20th edn.,) Ch. 1 paras 1-14, 1-15.

10. H.M. Seervai, Constitutional Law of India (Vol 2, 4th edn., 2013) pg. 2132.

11. Vicarious liability of the state in tort in india (2015,June) ,A CASE FOR REFORM , Debanshu Mukherjee ,Anjali Anchayil.

12. National Commission to Review the working of the Constitution (2001) , A Consultation Paper on Liability of The State in Tort, 6 (Vigyan Bhavan, Delhi)

13. Law commission report , "Liability of state" (1956),First report

14. Justice U.C. Srivastava (1996), "TORTIOUS LIABILITY OF STATE UNDER THE CONSTITUTION", Chairman, J.T.R.I., Lucknow.

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15. George W. Rev. (1953) Pugh,Historical Approach to the Doctrine of Sovereign Immunity, 13 La.

16. Jamshed Ansari. (2014) Tortious Liability Of State: A New Judicial Trend In India. Researcher;6(5):43-51

17. Lakshminath, A,Sridhar, M,(2010), Ramaswamy Iyers’ Law of Torts, 10th Edition, LexisNexis Butterworths, Nagpur.

18. Ranchhoddas, R, Thakore, D.K,(2015), Ratanlal and Dhirajlal, The Law Of Torts, 26th Edition, LexisNexis, New Delhi.

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