Kasturilal Ralia Ram Jain vs The State Of Uttar Pradesh

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 105 of 1963

Decision Date: 29 September 1964

Coram: P.B. Gajendragadkar, K.N. Wanchoo, M. Hidayatullah, Raghubar Dayal, J.R. Mudholkar

Kasturilal Ralia Ram Jain filed a petition against The State of Uttar Pradesh. The petition was decided on the 29th of September, 1964, by the Supreme Court of India. The judgment was authored by Justice P. B. Gajendragadkar, who was the Chief Justice. The bench that heard the matter comprised Justice P. B. Gajendragadkar, Justice K. N. Wanchoo, Justice M. Hidayatullah, Justice Raghubar Dayal and Justice J. R. Mudholkar.

The parties are recorded as petitioner Kasturilal Ralia Ram Jain and respondent The State of Uttar Pradesh. The citation for the decision appears as 1965 AIR 1039 and 1965 SCR (1) 375. The judgment has been referred to in later reports, namely D 1967 SC 1885, 1971 SC 2255, 1974 SC 890, 1975 SC 1331 and 1990 SC 1480. The legal provision that forms the basis of the claim is Article 300(1) of the Constitution of India, which deals with State liability for tortious acts committed by its servants.

The headnote of the case explains that certain police officers of the State seized gold belonging to the appellant while exercising their statutory powers. The officers were subsequently negligent in maintaining the safe custody of the seized gold, and the gold was never returned to the appellant. On that basis the appellant instituted a suit against the State seeking compensation for the value of the gold. The trial court initially decreed in favour of the appellant, but the High Court set aside that decree on appeal. The appeal then proceeded to the Supreme Court, which delivered the following holding: the powers of arrest, search and seizure that were exercised by the police officers are statutory powers that can be characterised as sovereign powers. Because the negligent act was committed by the officers in the course of performing a sovereign function, the claim against the State could not be sustained. The Court relied on the decision in P. & O. Steam Navigation Co. v. The Secretary of State for India (1868‑69) 5 Bom. H.C.R. App. A. 1, and distinguished the decision in The State of Rajasthan v. Must Vidhyawati and another, [1962] Supp. 2 SCR 989. The Court also noted that legislative enactments have been passed to regulate and control the liability of the State for the negligent acts of its servants.

The judgment was recorded under civil appellate jurisdiction as Civil Appeal No. 105 of 1963. The appeal challenged the judgment and decree dated 18 March 1960 rendered by the Allahabad High Court in First Appeal No. 67 of 1950. Counsel for the appellant were M. S. K. Sastri and M. S. Narasimhan, who appeared on behalf of P. Keshava Pillai. Counsel for the respondent were A. V. Viswanatha Sastri and O. P. Rana, who appeared for the State. The judgment of the Court was delivered by Chief Justice Gajendragadkar. The principal question of law that the Court was asked to consider was whether the State of Uttar Pradesh could be held liable to compensate the appellant, a firm identified as M/s. Kasturilal Ralia Ram Jain, for the loss caused by the negligence of police officers employed by the State. The factual background of the case, as set out by the Court, indicated that the appellant was a partnership firm engaged in the trade of bullion and other goods at Amritsar and that the partnership had been duly registered under the Indian Partnership Act.

Ralia Ram was a partner in the firm that dealt in bullion and other commodities in the city of Amritsar. On 20 September 1947 he arrived at Meerut by the Frontier Mail, reaching the station close to midnight for the purpose of conducting business. His intention in traveling to Meerut was to sell gold, silver and other goods in the local market. While he was proceeding through Chaupla Bazar with that purpose, three police constables seized him and placed him under custody. The constables searched his possessions and escorted him to the Kotwali Police Station for further detention pending investigation. He was confined in the police lock‑up, and his gold weighing 103 tolas 6 mashas and 1 ratti, together with silver weighing 2 maunds and 6½ seers, was seized and kept in police custody. On 21 September 1947 he obtained bail and was released, and after a short interval the seized silver was returned to him. Nonetheless, he repeatedly demanded the return of the gold, and because the police failed to restore it, he instituted the present suit against the State. In his pleading he sought a decree directing that either the gold be returned or, alternatively, its monetary value be paid to him. He quantified the alternative claim as Rs 11,075‑10‑0 as the price of the gold together with Rs 355 as interest in damages and future interest.

The State contested the claim on several grounds, asserting that it bore no liability to return the gold or to pay its monetary equivalent. It alleged that the seized gold had been placed under the charge of Head Constable Mohammad Amir, who kept it in the police Malkhana. According to the State, Constable Amir misappropriated the gold and thereby escaped to Pakistan on 17 October 1947. The State further claimed that Amir also misappropriated other cash and articles that had been deposited in the Malkhana before his departure. It stated that a criminal case under section 409 of the Indian Penal Code and section 29 of the Police Act had been instituted against Amir. However, the State observed that despite diligent efforts by the police department, Amir could not be apprehended and consequently no effective action could be taken. Alternatively, the State contended that the incident did not constitute negligence on the part of the police officers. Even assuming negligence existed, the State argued that the Government could not be held liable for the loss caused by such negligence. From these contentions, two principal questions emerged for determination: first, whether the police officers were negligent in safeguarding the seized gold, and second, whether the State was liable to compensate the appellant for the loss.

The Court recorded that the appellant sought compensation for the loss caused by the negligence of public servants employed by the respondent. The trial Court had ruled in favour of the appellant on both the question of negligence and the claim for compensation, and because the seized gold could not be ordered to be returned, the trial Court issued a monetary decree for Rs 11,430‑10‑0. The respondent challenged that decree by filing an appeal before the Allahabad High Court, contending that the trial Court had erred in both of its findings that favoured the appellant. The High Court upheld the appeal, holding that no negligence had been proved against the police officers concerned. Moreover, the High Court observed that even if negligence were assumed and it resulted in the loss of gold, such negligence would not give rise to a monetary claim against the respondent. The appellant then obtained a certificate of the High Court’s decision and filed the present appeal before this Court. Counsel for the appellant argued that the High Court was mistaken both in its factual finding and in its legal conclusion. The Court noted that the issue of negligence required examination of the evidence placed before it. The material facts leading to the seizure of the gold were not contested; the remaining issue was whether the loss of gold could be properly attributed to negligence of the police officers who were responsible for the police station where the gold and silver were kept in custody. The Court turned to the testimony of the first witness, Ganga Prasad, who had been a Class II Officer in the Meerut Kotwali at the relevant time. Ganga Prasad testified that Mohammad Amir, who was in charge of the Malkhana, had fled to Pakistan without handing over the keys and without obtaining permission to leave his post. A subsequent inspection of the Malkhana revealed that a substantial amount of property kept therein was missing. On 26 October 1947, Ganga Prasad returned the silver articles to the appellant, but the gold could not be located in the Malkhana and therefore could not be restituted. He further explained that an investigation had been launched against Mohammad Amir for misappropriation, but Amir’s escape to Pakistan rendered the investigation ineffective. According to his testimony, the appellant’s silver and gold had not been seized in his presence, although he admitted that the appellant’s goods remained in the Kotwali’s Malkhana. No further list of the goods had been forwarded to any officials, and the witness could not explain why the gold and silver were not kept in the Treasury.

The testimony indicated that no list of the seized goods had been forwarded to any officials. The witness further explained that, as a matter of practice, valuables were normally stored in a wooden box and that the key to this box was kept by the officer‑in‑charge of the Malkhana. According to the witness, the gold and silver articles seized from the appellant were not placed in that box while the witness was present, and the witness was unable to explain why those gold and silver items were not deposited in the Treasury. The next witness, identified as Mohd Umar, held the position of Sub‑Inspector II in the Kotwali during September 1947. He affirmed that the gold and silver articles were seized from Ralia Ram and testified that, in his presence, those items were not kept in the Malkhana. He stated that both the arrested individual and the seized articles were placed under the charge of the Head Constable, who had received instructions from Mohd Umar to keep the goods in the Malkhana. The witness admitted that no inventory list of the seized items had been prepared and that he could not confirm whether appropriate precautions had been taken to safeguard the goods while they were in the Malkhana. The third witness, Agha Badarul Hasan, served as the station officer of the police station concerned in September 1947. He affirmed that it was a routine requirement for a Sub‑Inspector to inspect the Malkhana each morning under his orders. He acknowledged that Ralia Ram had been confined in the lock‑up and that his articles were retained in the Malkhana, but he added that, in his presence, those articles were neither weighed nor placed in the Malkhana. He claimed to have inspected the contents of the Malkhana, yet he conceded that he did not record this inspection in the diary. He asserted that when he examined the Malkhana, gold and silver were found there. He kept the valuables in the Malkhana without receiving any further instructions from higher officers and was not present when the items were placed in the box. The witness asserted that police officers do not forward valuables to the Treasury unless they receive explicit orders to do so. These statements comprised the entirety of the material evidence concerning the alleged negligence of the police officers. In evaluating the significance of this evidence, it was necessary to refer to the relevant statutory provisions governing the custody of property seized during police investigations. Section 54(I)(iv) of the Code of Criminal Procedure authorises any police officer, without a magistrate’s order or a warrant, to arrest a person in whose possession anything is found that may reasonably be suspected to be stolen property and whose conduct may reasonably be suspected of involving that property. It was under this provision that Ralia Ram was arrested at midnight, the police having suspected that the gold and silver articles he carried might constitute stolen property, thereby rendering his arrest lawful.

In this case, the arrest of Ralia Ram was held to be justified under section 54 (I)(iv) of the Code of Criminal Procedure. Section 550 of the same Code conferred upon police officers the authority to seize property that was suspected of having been stolen. Accordingly, the gold and silver articles that were in the possession of Ralia Ram were seized by the police in the exercise of the powers granted by section 550. After the arrest, the police conducted a search of Ralia Ram before any articles were taken from him, and that search was found to be authorised by the provisions of section 51 of the Code. Having therefore arrested Ralia Ram, searched his person and seized the gold and silver articles in accordance with the respective statutory provisions, the officers were required to consider how those seized goods should be kept in safe custody. Section 523 of the Code laid down the procedure to be followed for that purpose. It provides, inter alia, that any seizure of property made under section 51 must be reported immediately to a Magistrate. The Magistrate is then empowered to issue an order that he considers appropriate, whether that order concerns the disposal of the seized property, the delivery of the property to the person who is entitled to possess it, or, if the entitled person cannot be identified, an order regarding the custody and production of the property. These statutory provisions together formed the relevant legal framework governing property seized from a person who had been arrested on suspicion of carrying stolen articles.

The discussion then turned to the Uttar Pradesh Police Regulations, specifically Chapter XIV, which deals with the custody and disposal of seized property. Regulation 165 sets out a detailed procedure for handling movable property that the police take into their possession. While it is not necessary to recite every detail of that regulation, it is sufficient to note that the regulation requires the police to exercise meticulous care when property is seized. This includes preparing an accurate list of the seized items, describing each item, weighing the items, and taking all reasonable steps to ensure that the items are kept safe. Clause (5) of Regulation 165 further stipulates that when the seized property consists of gold, silver, jewellery or other valuables, the items must be placed in a sealed packet after being weighed, and the weight must be recorded both in the general diary and on the accompanying list. The regulation also mandates that each police station maintain a set of weights and scales for this purpose. Regulation 166 was identified as particularly relevant. It states: “Unless the Magistrate otherwise directs, property of every description, except cash exceeding Rs. 100 and property of equal value and_property pertaining to cases of importance, which will be kept by the Prosecuting Inspector in a separate box under lock and key in the treasury, will remain in the custody of the malkhana moharrir under the general control and responsibility of the Prosecuting Inspector until it has been finally disposed of.” Although the wording of this regulation is somewhat complex and confusing, its essential purpose is to prescribe that, unless the Magistrate gives a contrary direction, all seized property – except the specified categories of cash and high‑value items – should remain in the custody of the malkhana moharrir under the oversight of the Prosecuting Inspector until final disposal.

In substance, Regulation 166 states that every seized item, regardless of its description, must remain in the custody of the malkhana moharrir while it is under the general control and responsibility of the Prosecuting Inspector, and it must stay there until it is finally disposed of. This rule operates unless the Magistrate issues a contrary instruction. Put another way, the default position is that seized property stays in the malkhana, but the Magistrate may order a different arrangement. However, the regulation expressly exempts certain categories of property from this default. Cash amounts exceeding Rs 100, property of equal monetary value, and items that relate to cases of special importance are not subject to the default rule; instead, such property must be placed by the Prosecuting Inspector in a separate locked box inside the treasury. If the Magistrate subsequently directs that even property which does not fall within these exempt categories should be stored in the treasury, that direction must be obeyed, and the property in question may not remain under the custody of the malkhana moharrir.

The implication of this provision is that the gold and silver seized from Ralia Ram were required to be kept in a separate locked box in the treasury. The record shows that this requirement was not fulfilled in the present case. Consequently, the Court must interpret the oral testimony already referred to in the light of the provisions of Regulation 166. The High Court, while addressing Regulations 165(5) and 166, incorrectly concluded that the police officers had no duty to place Ralia Ram’s seized property in the treasury. That mistaken view appears to have arisen because the language of Regulation 166 is somewhat obscure, and the High Court misread its effect.

Considering the correct interpretation, the oral evidence must be examined again. On that basis, there is no way to avoid the conclusion that the police officers acted negligently after seizing Ralia Ram’s property. The seized items were not stored in the safe custody of the treasury as the regulation mandates, and the manner in which they were handled at the malkhana displays a level of gross negligence on the part of the officers. The evidence indicates that no detailed list of the seized articles was prepared, and there is no record showing that the items were weighed as required. The respondent admits that the goods may have been misappropriated by Head Constable Mohd Amir, but this admission does not excuse the failure to preserve the property properly at the police station, nor does it negate the finding of gross negligence.

Accordingly, the Court is satisfied that the trial court correctly held that the loss suffered by the appellant, arising from the fact that the gold seized from Ralia Ram has not been returned, is attributable to the negligence of the police officers employed by the respondent. This finding gives rise to the legal question that follows.

The Court referred to the rule of law that had been outlined at the beginning of its judgment. Counsel for the appellant, Mr M S K Sastri, maintained that once the appellant succeeded in proving the negligence of the police officers, there should be no obstacle to granting a decree in favour of the appellant against the respondent. He argued that issuing such a decree would simply extend the principle that this Court had recognised in the earlier decision of State of Rajasthan v Mst Vidhyawati and Anr. (1). In the Vidhyawati case, the husband of respondent No 1 and the father of the minor respondent No 2 were struck down by a Government jeep that had been driven rashly and negligently by an employee of the State of Rajasthan. At the relevant time, that jeep was being transferred from a repair shop to the Collector’s residence for the Collector’s use. The respondents subsequently filed a claim for damages against the State of Rajasthan, and this Court allowed the claim. While affirming the High Court’s judgment, this Court observed that the State’s liability for damages arising from a tortious act committed by one of its servants within the scope of his employment was the same as the liability of any other employer. To support that conclusion, the Court noted that the Crown’s immunity in the United Kingdom, on which the State of Rajasthan had relied in resisting the claim, was based on ancient feudal notions of justice that held the King incapable of wrongdoing, unable to authorise or instigate a wrong, and therefore not subject to suit in his own courts. The Court declared that such notions were incompatible with the republican form of government in India, especially because, in pursuit of welfare and socialist objectives, Indian States have undertaken various industrial and other activities and have had to employ a large workforce. Consequently, the Court held that there was no principled or public‑interest justification for exempting the State from vicarious liability for the tortious acts of its servants. On the basis of these observations, Mr Sastri relied heavily and contended that both the observations and the decision in Vidhyawati could be readily extended and applied to the facts of the present case. The Court acknowledged that some observations in the Vidhyawati judgment indeed supported Mr Sastri’s argument and gave it an apparently attractive prima facie appearance. However, the Court indicated that, as it would presently explain, the facts underlying the Vidhyawati case belong to a distinct category of claims, separate from the category applicable to the present facts. This distinction required the Court to examine the true legal position concerning a claim for damages against the respondent for loss caused to the appellant, and to determine whether the principle of State liability established in Vidhyawati could be appropriately extended to the present situation.

In this case, the Court examined whether a citizen could claim damages for the tortious acts of the servants of the respondent State. The Court observed that the issue must be decided by applying Article 300 (1) of the Constitution. That provision states: “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 Court noted that the article is divided into three segments. The first segment addresses the formal name and capacity in which a suit may be instituted against or by the Union of India or a State. The second segment explains that a State may sue or be sued in matters concerning its affairs in the same situations in which a corresponding Province could have sued or been sued before the Constitution came into force. In other words, when the legality of a suit against a State is questioned, the inquiry is whether the same suit could have been brought against the analogous Province under the pre‑Constitution law. The third segment of the article empowers Parliament or, as the case may be, the State Legislature to enact appropriate statutes governing the matters covered by Article 300 (1). Since no such statute has been enacted by the respondent State, the Court held that the liability of the State to be sued for damages must be determined by a subsidiary question: whether a suit of the same nature would have been permissible against the corresponding Province. To answer that subsidiary question, the Court turned to the provisions of the earlier Constitution Acts of India, namely section 65 of the Government of India Act 1858, section 32 of the Government of India Act 1915 and section 176 of the Government of India Act 1935. The Court considered it unnecessary to trace the lineage of the rule beyond section 65 of the 1858 Act because the decisive cases rely on the effect of that particular section. For ease of reference, the Court reproduced section 65, which reads: “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.”

The Court examined the language of section 65 of the Government of India Act 1858, which provided that the Secretary of State in Council could be sued and could sue both in India and in England in the name of the Secretary of State in Council as a body corporate, and that all persons and bodies politic could have and take the same legal and equitable suits, remedies and proceedings against the Secretary of State in Council of India as they could have against the Company. The provision further stated that the property and effects vested in Her Majesty for the purposes of the Government of India, or acquired for those purposes, would be subject to the same judgments and executions as they would have been while vested in the Company, and that such property would be liable for debts and liabilities lawfully contracted and incurred by the Company.

The Court then referred to the earliest decision that had been treated as a leading authority on this point, namely the 1861 judgment of the Supreme Court at Calcutta in Peninsular and Oriental Steam Navigation Company v. The Secretary of State for India (1). The judgment of Chief Justice Peacock in that case had been consistently followed by subsequent Indian judicial decisions, with only one recorded dissent. Although the decision had not been reported promptly in the Calcutta reports, it later appeared in the Bombay Law Reports for the year 1868‑69.

In the factual scenario of that case, a servant of the plaintiff company was travelling on a Calcutta highway in a carriage drawn by two horses owned by the plaintiff. An accident occurred on the highway because government servants employed at the Government dockyard in Kidderpore were carrying an iron funnel in the centre of the road, and the manner in which they carried it injured one of the plaintiff’s horses. The injury to the horse, caused by the alleged negligence of the government servants, formed the basis of the plaintiff’s claim for damages against the Secretary of State for India.

The claim was first heard by the Small Causes Court Judge in Calcutta, who held that the government servants were at fault for placing the iron funnel in the middle of the road and therefore liable for the injury caused by their negligence. However, the Judge expressed uncertainty about the legal question of whether the Secretary of State could be held liable for the tortious act of his servants. Consequently, he referred the question of legal liability of the Secretary of State to the Supreme Court of Calcutta. The Supreme Court, upon consideration, held that the Secretary of State in Council of India would be liable for the damages occasioned by the negligence of the government servants, subject to the principles articulated in section 65 of the 1858 Act.

In this case, the Court examined whether the Secretary of State in Council of India could be held liable for damages caused by the negligence of government servants, assuming the negligence would make an ordinary employer liable. The Supreme Court addressed the issue by referring to section 65 of the Act of 1858. Chief Justice Peacock explained that the principal purpose of that section was to transfer possession and governance of the British territories in India to Her Majesty, which had previously been held in trust by the East India Company. However, the Chief Justice noted that the Legislature did not intend to change the nature or extent of liabilities that the revenue of India could be charged with. The Chief Justice then reviewed the other relevant provisions of the Act and asked whether the East India Company would have been liable in the present suit if the statute of 21st and 22nd Vict., chapter 106, had not been enacted. In response, the Chief Justice observed that the history of the East India Company was sufficiently well known that detailed exposition was unnecessary, and it was enough to state that after the enactment of the 3rd and 4th William IV, chapter 85, the Company exercised governmental powers as well as continued to operate as a merchant. He further observed that when deciding whether the Company would be liable, the general principles applicable to sovereigns and states, including the maxim that the King can do no wrong, should not be applied. He agreed with the earlier judgment of Chief Justice Grey in Bank of Bengal v. East India Company, which held that possession of powers normally described as sovereign did not transform the Company into a sovereign, and therefore the Company could not claim sovereign immunity. Building on that reasoning, the Chief Justice stated that when the Company was permitted to undertake government‑related activities such as operating bullock trains or transporting goods and passengers for hire, it was logical to subject it to the same liabilities as private individuals. Consequently, he expressed the view that for accidents of the kind before the Court, if the injury resulted from the negligence of government servants, the East India Company would have been liable both before and after the passage of the 3rd and 4th William IV, chapter 85. He further concluded that the same liability attaches to the Secretary of State in Council, who can be sued to obtain satisfaction from the revenues of India.

The learned Chief Justice stated emphatically that the liability in question was recognised not only by the literal wording but also by the spirit of the statutes, namely the third and fourth William IV, chapter 85, section 9, and the twenty‑first and twenty‑second Victoria, chapter 106, section 65, and he added that it would be contrary to common sense and justice to hold otherwise. The Court noted that counsel had urged that the Secretary of State in Council should be treated as the State itself or as a public officer employed by the State, and that his liability ought to be decided on that basis. The Court rejected this submission on two grounds: first, the statutory language did not support such an interpretation; second, the East India Company was not a sovereign entity and therefore could not claim the complete immunity enjoyed by a sovereign. Consequently, the learned Chief Justice concluded that the case did not fall under the general principle governing the liabilities of public servants employed by the Sovereign. Instead, the Company was a corporation to which sovereign powers had been delegated; it conducted commercial activities for its own profit and also performed certain governmental functions. The Court emphasized that without any delegation of sovereign authority, the Company could have carried out those activities just as private individuals might. On this basis, the Chief Justice articulated a clear principle that has been consistently applied in later judgments: there is a distinct and important difference between acts performed in the exercise of powers normally described as sovereign, and acts carried out in the conduct of enterprises that private persons could undertake without any sovereign delegation. From this fundamental distinction he derived a further proposition, observing that where an act or contract is executed in the exercise of powers normally termed sovereign—powers that lawfully may be exercised only by a sovereign or a private individual specifically delegated such powers—no legal action for damages may arise. Conversely, where an act or contract is performed in the exercise of powers that are not sovereign, an action for damages is permissible. The Court cited the decision of the Supreme Court of Calcutta in the Peninsular and Oriental Steam Navigation Co. case as illustrative of this principle. Thus, the judgment recognised a material separation between tortious acts committed by State servants when those acts are tied to the exercise of delegated sovereign powers, and tortious acts by public servants that are not connected to any such delegation, the latter category supporting a claim for damages.

In this case the Court explained that when a public servant commits a tortious act, the first question to be asked is whether the servant was acting in the discharge of statutory functions that are derived from the delegation of the sovereign powers of the State to that servant. If the answer is affirmative, the Court held that an action for damages for the loss caused by such a tortious act will not be available. Conversely, if the tortious act was committed while the servant was performing duties that were not assigned on the basis of any delegated sovereign power, the Court said that an action for damages would lie. The Court further observed that the act of a public servant performed during the course of his employment can, in this second category, be regarded in the same way as the act of a servant who might have been employed by a private individual for the same purpose. The Court noted that this distinction, although clear and precise in law, is sometimes forgotten when discussing the State’s liability for tortious acts of its servants. The Court referred to the classic statement of Chief Justice Peacock made in 1861, which has been recognised as an authoritative articulation of the principle. The Court added that the Indian judiciary has uniformly followed this distinction and cited a number of representative decisions to illustrate the point.

In the decision of the Privy Council in The Secretary of State for India in Council v. Moment the Court examined the effect of section 41(b) of Act IV of 1898 (Burma), a provision comparable to section 65 of the Government of India Act 1858. While holding that a suit for damages for wrongful interference with the plaintiff’s land would lie against the East India Company, the Privy Council expressly approved the principles set out by Chief Justice Peacock in the Peninsular & Oriental Steam Navigation Co. case. The Court later referred to the Bombay High Court decision in Shivabhajan Durgaprasad v. Secretary of State for India. In that case a suit had been filed against the Secretary of State in Council to recover damages for the negligence of a chief constable in relation to seized goods. The defence argued that no action lay because the constable had acted not under an executive order but under a statutory power vested in him by the Legislature. The High Court upheld the defence, stating that when a duty is imposed by law and not by the will of the employing party, the employer is not liable for the wrong committed by the agent.

In examining the principle of liability arising from employment, the Chief Justice, Jenkins, referred to the earlier authority in Peninsular and Oriental Steam Navigation Co. (2). He acknowledged that he entertained some doubt about the correctness of that decision, but observed that the view had remained unchallenged for a long period and therefore felt compelled to accept it as a binding authority for the Court. The only dissent at that point was a brief, tentative objection raised by Chief Justice Jenkins himself; nevertheless, he ultimately submitted to the authority of the cited decision. The relevant citations for this discussion are (1) (1912‑13) 40 I. A. 48, (2) 5 B. H.C. R. Appendix A p.1, and (3) (1904) I. L. R. 28 Rom. 314. The Court then considered the case of Secretary of State for India in Council v. A. Cockcraft & Anr. (1), in which the plaintiff sought damages for injuries sustained in a carriage accident allegedly caused by the negligent stacking of gravel on a military road described in the plaint as being maintained by the Public Works Department of the Government. The Madras High Court held that the plaintiff had no cause of action against the Secretary of State for India in Council for acts performed by the East India Company in the exercise of its sovereign powers. This conclusion was based on the finding that the provision and maintenance of roads, particularly a military road, constitute a function of the Government carried out in the exercise of sovereign authority and are not undertakings that could be performed by private persons. Subsequently, the Court turned to Secretary of State for India in Council v. Shreegobinda Chaudhuri (2), where the Calcutta High Court ruled that a suit for damages could not lie against the Secretary of State for India in Council for misfeasance, negligence or omissions of managers appointed by the Court of Wards, because the acts giving rise to the claim were performed by Government officers in the exercise of powers that could be lawfully exercised only by sovereign authority. In that connection, Rankin C. J. articulated the principle that no tort action lies against the Secretary of State for India in Council upon the “respondent superior.” Nevertheless, the learned Chief Justice recognized that a suit may lie against the Secretary of State for India in Council for torts committed by the Government in connection with a private undertaking or an undertaking not exercised as sovereign power. The Allahabad High Court adopted the same view in Mohammad Murad Ibrahim Khan & Anr. v. Government of United Provinces (3). Finally, in Uma Parshad v. The Secretary of State (4), certain property stolen from the plaintiff was recovered by the police and subsequently kept in the Malkhana under the orders of a Magistrate during the trial of the thieves; the receiver, H. A., the man in charge of the Malkhana, later absconded with the property, giving rise to further legal proceedings.

In the case under consideration, the officer who was in charge of the Malkhana absconded with the property that had been recovered by the police. The plaintiff therefore instituted a suit seeking either the return of the property or, alternatively, its monetary value. The Lahore High Court examined the liability arising under the Criminal Procedure Code and held that the defence that the act was an act of the State could not be sustained. Nevertheless, the Court, citing authorities such as (1) (1914) I.L.R. 39 Mad. 351, (3) I.L.R. [1957] 1 All. 94, (2) (1932) I.L.R. 59 Cal. 1289 and (4) (1936) I.L.R. 18 Lah. 380, concluded that the Secretary of State could be held liable only in situations where a private employer would be liable. The Court then asked whether, in the circumstances that gave rise to the present claim for damages, a private employer could have been liable. It answered this question in the negative, reasoning that no liability attached to the Secretary of State for the criminal act of the man in charge of the Malkhana, because that act was a felonious act unauthorised by his employer. The Court noted that some of the High Court’s reasons might be open to doubt, but it affirmed that, in substance, the decision was justified because the act giving rise to the claim was performed by a public servant who was authorised by statute to exercise his powers. The performance of that function was therefore an exercise of the State’s sovereign power, and the criminal act could not validly support a claim for damages against the State. The Court observed that the principle first set out by Peacock C.J. in 1861 has been consistently followed in subsequent judicial decisions concerning the State’s liability for negligent or tortious acts of its public servants. Turning to the decision of this Court in the Vidhyanati case(1), it recalled that the negligent act that gave rise to a claim for damages against the State of Rajasthan involved an employee driving a jeep from a repair shop to the Collector’s residence for the Collector’s use. The issue that arose was whether that negligent act, occurring during the journey, gave rise to a valid claim for damages against the State of Rajasthan. The Court pointed out that this particular aspect had not been clearly or emphatically addressed when the point of law was discussed in that case.

In reviewing the principal facts that supported the claim for damages, the Court noted that the government employee who was driving the jeep from the workshop to the collector’s residence for the collector’s use was performing a task that could not be described as relating to, or ultimately based on, the delegation of sovereign or governmental powers of the State. The Court emphasized that, in cases of this nature, it is essential to remember that when the State seeks immunity from liability for injuries caused by the negligent acts of its servants, the nature of the employee’s duties must be carefully examined to determine whether those duties fall within the scope of sovereign powers. Before the State’s claim of immunity can be upheld, the Court must be satisfied that the impugned act was carried out in the course of an undertaking or employment that is referable to the exercise of sovereign power, or to the exercise of delegated sovereign power; and, as held in the Vidhyawati case(1), this Court concluded that the negligent act of driving the jeep from the workshop to the collector’s bungalow for the collector’s use could not be assigned such a status. The Court further explained that employing a driver to operate a vehicle for a civil servant’s personal use is an activity that bears no connection at all with the sovereign power of the State. This reasoning forms the foundation of the decision in that case, and the same foundation is absent in the present matter. The Court observed that the distinction is especially important at present, because the governments of the states and the Union of India, in pursuit of welfare objectives, regularly engage in commercial and other undertakings that are unrelated to the traditional notion of governmental activities involving the exercise of sovereign power. It is therefore necessary to limit the scope of the State’s immunity to those affairs that truly involve sovereign power, so that when government employees act in relation to other activities that can be described as non‑governmental or non‑sovereign, citizens who have a valid cause of action for damages are not barred from seeking redress against the State. This principle was precisely the basis on which this Court limited state immunity in the Vidhyawati case(1). In the case before this Court, the negligent act was committed by police officers while they were handling the property of Ralia Ram that they had seized while exercising their statutory powers. The powers to arrest a person, to search him, and to seize property found with him are powers conferred on the designated officers by statute and, in the final analysis, they constitute sovereign functions. (1) [19621 Supp. 2 S.CR. 989. L2Sup./64-12

These powers could properly be described as sovereign powers, and therefore the Court found no difficulty in concluding that the act which gave rise to the present claim for damages had been committed by an employee acting in the course of his employment. Because the employment involved the exercise of a category of authority that possessed the special characteristic of sovereign power, the Court held that the claim could not be sustained. Accordingly, the Court referred back to the decision of Chief Justice Peacock in 1861 and affirmed that the present claim was not maintainable. Before disposing of the appeal, the Court indicated that it was time for the legislatures of India to seriously consider enacting statutes that would regulate and control claims of immunity in situations such as the present one, on the same lines as the Crown Proceedings Act, 1947 enacted in England. The Court recalled that the doctrine of immunity originated from the common‑law principle that the King commits no wrong, that the sovereign could not be personally negligent or guilty of misconduct, and consequently could not be held liable for the negligence or misconduct of his servants. Another aspect of the doctrine was that, as an attribute of sovereignty, a State could not be sued in its own courts without its consent. The Court observed that this legal position had been substantially altered by the Crown Proceedings Act, 1947 (10 & 11 Geo. VI c. 44). As noted in Halsbury’s, claims against the Crown that before 1 January 1948 could have been enforced only by a petition of right, subject to the royal grant, could thereafter be enforced as of right and without a special fiat by legal proceedings against the Crown. This effect was created by section 1 of the Act. Section 2 of the Act provided for Crown liability in tort in six classes of cases set out in clauses (I) to (VI). For example, clause (3) stipulated that where any function was conferred or imposed upon a Crown officer by common‑law rule or statute, and that officer committed a tort while performing or attempting to perform that function, the liability of the Crown for the tort would be the same as if the function had been imposed solely by lawful instructions from the Crown. Section 11 saved the Crown from liability for acts done under prerogative and statutory powers. The Court deemed it unnecessary to discuss the remaining provisions of the Act. The sole purpose of referring to the Act was to demonstrate that the doctrine of immunity adopted in India with respect to claims against the State for tortious acts of its servants was originally based on the common‑law principle that prevailed in England, a principle that has since been significantly modified by the Crown Proceedings Act.

The Court observed that the Crown Proceedings Act had now substantially modified the principle previously discussed. While examining the present appeal, the Court expressed personal disturbance at the idea that a citizen – as illustrated in the reference to Halsbury’s Laws of England, 3rd ed., Vol. II, p. 8 – whose property had been seized lawfully, could be told, when seeking a judicial remedy on the basis that the seized property had not been returned, that he could make no claim against the State. The Court found that such a result was not a satisfactory position in law. Accordingly, the Court indicated that the appropriate remedy to correct this unsatisfactory state lay in the hands of the Legislature, which alone possessed the authority to amend the legal framework. After considering the arguments and the applicable law, the Court concluded that the appeal could not succeed. Nevertheless, given the particular circumstances of the case, the Court directed that each party should bear its own costs for the entirety of the proceedings. Consequently, the appeal was dismissed.