Peninsular and Oriental Steam Navigation Company v. Secretary of State for India

Facts

The plaintiff's servant was driving a horse-carriage past the government-owned Kidderpore Dockyard in Calcutta. Due to negligence of government servants carrying a heavy piece of iron for repair of a steamer, the iron fell, frightened the horse and injured it. The plaintiff sued the Secretary of State for India for the damage caused by the negligence.

Issues

• Whether the Secretary of State (representing the East India Company/government) could be held vicariously liable for the negligence of its servants.
• Whether the maintenance of a dockyard was a sovereign or non-sovereign function.

Arguments

Plaintiff argued the damage was caused by negligence of government servants in the course of employment, attracting vicarious liability. The State contended that as the sovereign it was immune from tort liability.

Held

The Court drew a distinction between sovereign and non-sovereign functions of the East India Company, which had a dual character as trader and ruler. It held that for acts done in exercise of sovereign powers (those exercisable only by a sovereign or its delegate) no action lies, but for non-sovereign functions which a private individual could perform, the State is liable like an ordinary employer. Maintenance of the dockyard was held to be a non-sovereign function, so the government was held liable.

Ratio decidendi

The State is vicariously liable for torts committed by its servants in the discharge of non-sovereign functions, but enjoys immunity for acts done in the exercise of sovereign powers.

Significance

The foundational Indian decision on State tortious liability, establishing the sovereign/non-sovereign distinction that governed the field for over a century and was carried forward through the Government of India Acts into Article 300 of the Constitution. Followed in Kasturi Lal but progressively eroded by Vidyawati and later cases.

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