Sovereign and Non-Sovereign Functions

Held. The liability of the State for damages for a tortious act committed by its servant within the scope of his employment and functioning as such is the same as that of any other employer. The relevant provision is Article 300(1), not Articles 294 and 295, which concern the devolution of rights, assets and liabilities.

Why it matters. Driving a car from a workshop to a residence is an act any private employer's driver might perform. The State was liable, and for two years it looked as though the sovereign function defence would be confined to genuinely governmental acts.

Stage 2: immunity at its widest

Facts. Kasturilal Ralia Ram Jain v. State of Uttar Pradesh, AIR 1965 SC 1039. The appellant was a firm dealing in bullion at Amritsar. Its partner was taken into custody by police officers of the State of Uttar Pradesh on suspicion of possessing stolen property, and gold was seized from him in the exercise of statutory powers. The police were negligent in dealing with the safe custody of the gold, which was misappropriated by a head constable who fled to Pakistan, and it was never returned. The firm sued the State for its value. The trial court decreed the suit; the High Court dismissed it.

Held. The appeal was dismissed. The powers to arrest a person, to search him and to seize property found with him are powers conferred on specified officers by statute, and are powers which can properly be characterised as sovereign powers. Therefore, although the negligent act was committed by employees of the State in the course of their employment, the claim against the State could not be sustained, because the employment was of the category which could claim the special characteristic of sovereign power. The earlier steam navigation case was approved and Vidhyawati was distinguished. The Court suggested that legislation be passed to regulate and control the liability of the State for the negligent acts of its servants.

Why it matters. It is the high water mark of immunity, and its reasoning is the reason the doctrine was attacked. Note precisely what it did: it treated the fact that the power was conferred by statute on specified officers as making it sovereign. On that reasoning almost every administrative power is sovereign, since almost all of them are statutory, and the exception would swallow the rule.

Note the date. The case was decided on 29 September 1964 and reported at AIR 1965 SC 1039, so a student who writes "Kasturi Lal (1965)" is quoting the report year and not the decision year.

Stage 3: immunity confined

Facts. N. Nagendra Rao and Co. v. State of Andhra Pradesh, AIR 1994 SC 2663. Stocks of fertiliser and food grains belonging to the appellant firm were seized under control orders issued under the Essential Commodities Act 1955. The goods remained in the custody of the officers, deteriorated, and were not disposed of even after the Sessions Judge directed their return. The firm sued for the value of the damaged stock. The trial court decreed the claim, holding that the relationship was one of bailor and bailee, that deterioration in custody was not the exercise of a sovereign function, and that once goods were seized it was the State's responsibility to keep them in proper condition. The High Court reversed, applying Kasturilal.

Held. The State cannot claim immunity for the negligence of its officers in the discharge of statutory duties merely by invoking sovereignty. Sovereign immunity survives only for the primary and inalienable functions of the State, such as the defence of the country, the raising and maintenance of the armed forces, the making of peace or war, foreign affairs and the power to acquire and retain territory, which are indicative of external sovereignty, are political in nature, and are not amenable to the jurisdiction of an ordinary civil court. But there the immunity ends. No civilised system can permit an executive to play with the people of its country and claim that it is entitled to act in any manner because it is sovereign, and no legal or political system today can place the State above the law, since it is unjust and unfair for a citizen to be deprived of his property illegally by the negligent act of officers of the State without any remedy. Any watertight compartmentalisation of the functions of the State as sovereign and non-sovereign, or governmental and non-governmental, is not sound and is contrary to modern jurisprudential thinking.

Why it matters. It is the modern law and it does three things. It restricts immunity to a short list of primary and inalienable functions. It rejects the reasoning that a statutory power is for that reason sovereign, which was Kasturilal's reasoning. And it questions the distinction itself.

The position today, stated in four propositions

1. The general rule is liability. The State is liable for the torts of its servants committed in the course of employment, like any other employer.
2. Immunity is exceptional and narrow, confined to the primary and inalienable functions: defence, the armed forces, war and peace, foreign affairs, and the acquisition and retention of territory.
3. A statutory power is not sovereign merely because it is statutory. That was Kasturilal's error, and Nagendra Rao corrects it.
4. The distinction is bypassed altogether where a fundamental right is violated, because compensation is then awarded in public law under Articles 32 and 226 and immunity is no answer: [Tortious Liability of the State].

Proposition 4 is what makes the topic manageable in practice. The situations in which the sovereign function defence used to be decisive, police excess, custodial injury, unlawful detention, are exactly the situations in which the constitutional remedy is now available, so the defence is not reached.

The criticisms of the distinction

An answer should be able to say why the doctrine is disliked.

1. It is an anachronism. It derives from the dual capacity of a trading company abolished in 1858, and the modern State does not have two capacities in that sense.
2. The test is unworkable. Asking whether a private person could perform the function gives no clear answer for regulation, licensing, inspection or public health.
3. It produces arbitrary results. A person injured by a government bus recovers; a person whose goods are lost by a police officer did not. The wrong is the same to the victim.
4. England abolished it. The Crown Proceedings Act 1947 made the Crown liable substantially as a private person, and India, which inherited the rule from England, has kept it.
5. The invitation in Article 300(1) has never been accepted. The Article expressly contemplates an Act of Parliament, and the Supreme Court asked for one in Kasturilal itself.

A worked example

Ganesh Rane suffers loss in each of the following ways. Advise on liability.

1. A State Transport bus, negligently driven, damages his shop front. Non-sovereign. Running a bus service is a commercial activity a private person could perform. The State or the corporation is liable on ordinary principles: State of Rajasthan v. Mst. Vidhyawati, AIR 1962 SC 933.
2. Excise officers seize his stock under a statutory power, store it carelessly, and it perishes. This is Nagendra Rao precisely. Seizure under a control order is a statutory power, but it is not a primary and inalienable function of the State, so the immunity does not extend to it and the State is liable for the negligence in custody.
3. An army truck on a training exercise for the defence of the frontier collides with his car. Here the immunity is most likely to be available, because the maintenance of the armed forces is among the primary and inalienable functions named in Nagendra Rao. The result may still turn on how closely the act is connected with that function.
4. He is detained by the police for eleven days without any order and is beaten in custody. Do not analyse this as a tort at all. It is a violation of Article 21, and the remedy is compensation in public law under Articles 32 or 226, to which the sovereign function defence is no answer.
5. A municipal hospital's negligence in treatment causes him permanent injury. Running a hospital is not a primary and inalienable function. Liability follows on ordinary principles.

Distinctions worth having straight

What it does NOT mean

It does not mean the State is immune whenever it acts under a statute. That was the reasoning of the 1964 decision and it is no longer the law.

It does not mean Kasturilal has been overruled in terms. It has been confined, and the sources this book is written from do not record its formal overruling. What can be said is that its reasoning was expressly departed from in Nagendra Rao, and that its practical scope is now very small.

It does not mean the distinction has been abolished. Nagendra Rao criticises it and confines it; it does not remove it.

It does not mean a claimant must always argue about it. Where a fundamental right is violated, the constitutional remedy avoids the question entirely.

Quick revision

1. Origin: the East India Company's dual capacity, trading and sovereign, carried into Article 300(1) through the Government of India Acts.
2. Old test: could a private person have performed the act?
3. State of Rajasthan v. Mst. Vidhyawati, AIR 1962 SC 933: a jeep driven from the workshop to the Collector's residence; liability the same as any other employer; Article 300(1) is the operative provision.
4. Kasturilal Ralia Ram Jain v. State of Uttar Pradesh, AIR 1965 SC 1039, decided 29 September 1964: gold seized under statutory police powers and lost through negligence; no liability, because arrest, search and seizure are powers conferred by statute on specified officers and are sovereign powers. The Court suggested legislation.
5. N. Nagendra Rao and Co. v. State of Andhra Pradesh, AIR 1994 SC 2663: fertiliser seized under the Essential Commodities Act 1955 and allowed to deteriorate; immunity survives only for the primary and inalienable functions, defence, armed forces, war and peace, foreign affairs and territory; but there the immunity ends; and watertight compartmentalisation into sovereign and non-sovereign is not sound.
6. Where a fundamental right is violated, compensation is awarded in public law and immunity is no answer.
7. Criticisms: an anachronism, an unworkable test, arbitrary results, abolished in England by the Crown Proceedings Act 1947, and Parliament's failure to legislate although Article 300(1) invites it.

Test yourself

1. Explain the distinction between sovereign and non-sovereign functions and its effect on State liability. Functions which by their nature can be performed only by a sovereign attract immunity from liability in tort; functions which a private individual could equally perform do not. The distinction descends from the dual capacity of the East India Company, which was liable for its trading acts but not for its sovereign ones, and it was carried into Indian law by the Government of India Acts and preserved by Article 300(1). The old test asked whether a private person could have done the act. Its effect was that the State escaped liability for a large class of wrongs, which was criticised as arbitrary, since the injury to the victim is the same whichever capacity the officer was acting in.

2. Trace the development of the law through the three leading cases. In State of Rajasthan v. Mst. Vidhyawati, AIR 1962 SC 933, a government jeep being driven from the repair shop to the Collector's residence killed a pedestrian, and the Supreme Court held the State liable as any other employer would be, Article 300(1) being the operative provision. In Kasturilal Ralia Ram Jain v. State of Uttar Pradesh, AIR 1965 SC 1039, gold seized from a bullion dealer under statutory police powers was lost through the negligence of the police, and the Court held there was no liability, because the powers of arrest, search and seizure are conferred by statute on specified officers and are properly characterised as sovereign powers; it suggested that Parliament legislate. In N. Nagendra Rao and Co. v. State of Andhra Pradesh, AIR 1994 SC 2663, stocks seized under the Essential Commodities Act 1955 deteriorated in official custody, and the Court held that immunity survives only for the primary and inalienable functions of the State, that beyond those the immunity ends, and that watertight compartmentalisation into sovereign and non-sovereign functions is not sound.

3. What are the primary and inalienable functions of the State? Those identified in N. Nagendra Rao and Co. v. State of Andhra Pradesh, AIR 1994 SC 2663: the defence of the country, the raising and maintenance of the armed forces, the making of peace or war, foreign affairs, and the power to acquire and retain territory. They are described as indicative of external sovereignty and political in nature, and as not amenable to the jurisdiction of an ordinary civil court. Everything outside that short list attracts ordinary liability.

4. Criticise the sovereign and non-sovereign distinction. It is an anachronism, deriving from the dual capacity of a trading company that ceased to exist in 1858 and having no counterpart in the functions of a modern welfare State. The test is unworkable, because asking whether a private person could perform a function gives no answer for regulation, licensing, inspection or public health. It produces arbitrary results, since a person injured by a government bus recovers while a person whose goods are lost by a police officer did not, though the wrong to each is the same. England, from which the rule was received, abolished Crown immunity by the Crown Proceedings Act 1947, and India has not followed. And Article 300(1) expressly contemplates an Act of Parliament fixing the liability of the State, which the Supreme Court requested in Kasturilal itself and which has never been enacted.

5. Police officers seize a trader's goods under a statutory power and the goods are ruined through their negligence. Advise. The State is liable. This is the situation in N. Nagendra Rao and Co. v. State of Andhra Pradesh, AIR 1994 SC 2663, where stocks seized under the Essential Commodities Act 1955 deteriorated in official custody. The State cannot claim immunity for the negligence of its officers in discharging statutory duties merely by invoking sovereignty; immunity is confined to the primary and inalienable functions such as defence, the armed forces, war and peace, foreign affairs and territory, and seizure and custody of goods is not among them. The earlier decision in Kasturilal Ralia Ram Jain v. State of Uttar Pradesh, AIR 1965 SC 1039, which treated statutory powers of seizure as sovereign, is not to be followed on that reasoning. If the seizure also violated a fundamental right, compensation may in addition be sought in public law under Articles 32 or 226, where the sovereign function defence is no answer at all.