N. Nagendra Rao & Co. v. State of Andhra Pradesh

Facts

Stocks of fertiliser and foodgrains belonging to the appellant firm were seized by officials under the Essential Commodities Act. Due to the negligence of the State's officers, the seized goods were not properly preserved and deteriorated/were not returned in proper condition, causing loss to the firm, which sought compensation from the State.

Issues

• Whether the State was vicariously liable for the negligence of its officers in dealing with goods seized under statutory powers.
• Whether the doctrine of sovereign immunity continued to shield the State in such cases.

Arguments

The appellant argued the State was bound to take reasonable care of seized goods and was liable for loss caused by its officers' negligence. The State relied on sovereign immunity and the exercise of statutory powers under the Essential Commodities Act.

Held

The Supreme Court reviewed Vidyawati, Kasturi Lal, the Law Commission's First Report and foreign statutes (the Crown Proceedings Act 1947 and the Federal Tort Claims Act 1946) and held that the doctrine of sovereign immunity has no relevance in the modern day except in narrow areas of truly sovereign function. The functions of seizure and custody under a regulatory statute were not such inalienable sovereign functions, and the State was held liable for the negligence of its officers.

Ratio decidendi

Sovereign immunity is confined to a narrow class of inalienable sovereign functions; for ordinary statutory, regulatory and welfare activities the State is vicariously liable for the negligence of its servants like any other employer.

Significance

A landmark that narrowed sovereign immunity almost to vanishing point and effectively confined Kasturi Lal to its facts, reflecting the modern welfare-State approach to State tort liability.

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