Vicarious Liability of State — Sovereign and Non-Sovereign Functions

The law on the State’s vicarious liability for the torts of its servants in India is built on a single, slowly-eroding distinction — sovereign functions, for which the State is immune, and non-sovereign functions, for which it answers like any other employer. The distinction is the lineal descendant of an 1861 decision of the Supreme Court of Calcutta in Peninsular & Oriental Steam Navigation Co. v. Secretary of State for India; it is preserved by Article 300 of the Constitution; it was reaffirmed by the Supreme Court in 1965 in Kasturilal v. State of U.P.; and it has been progressively bypassed since the 1980s by a constitutional-tort jurisprudence that grants compensation under Article 32 and 226 for violations of the right to life under Article 21. The result is that Kasturilal still nominally holds the field, while Rudul Sah, Bhim Singh, Saheli, Nilabati Behera, Nagendra Rao and Chandrima Das have made it functionally redundant in any case implicating fundamental rights.

The chapter takes the law in its proper order — the position in England, the constitutional structure in India, the leading cases on sovereign and non-sovereign functions, the treatment of police and military servants, the Kasturilal lineage, and the constitutional-tort overlay. Capacity issues that intersect this chapter are addressed in capacity in tort; the master-servant doctrine that supplies the underlying mechanism is the subject of vicarious liability proper; and the underlying conceptual frame — legal damage and legal remedy — is laid down in the essentials of tort chapter and the introduction to the law of torts.

The position in England

At common law, the Crown could not be sued in tort — either for wrongs actually authorised by it or for wrongs committed by its servants in the course of their employment. The maxim “the King can do no wrong” was applied with rigour. The individual wrongdoer was personally liable, but the Crown stood outside the suit. The position became increasingly indefensible as the Crown became one of the largest employers in the country, and various ad hoc devices grew up — the Crown defending suits brought against its servants and satisfying judgments as a matter of grace; the use of nominal defendants supplied by the Treasury Solicitor (Royster v. Cavey).

The position was finally placed on a statutory footing by the Crown Proceedings Act, 1947. Section 2(1) of that Act provides that the Crown shall be subject to all those liabilities in tort to which a private person of full age and capacity would be subject — in respect of torts committed by its servants or agents, breaches of the master’s common-law duties to those servants, and breaches of the duties attaching to the ownership, occupation, possession or control of property. The proviso preserves the requirement that the underlying act would have been actionable against the servant or agent personally. The Crown is now liable just like a private employer.

The Indian constitutional structure

India has no comparable statute. Article 300(1) of the Constitution provides that the Government of India and the Government of a State may sue and be sued, but in the like cases as the Dominion of India and the corresponding Provinces or Indian States might have sued or been sued before the commencement of the Constitution. Article 300 freezes the position; it does not itself fix the substantive test. The earlier position is reached through Section 176 of the Government of India Act, 1935 and ultimately through Section 65 of the Government of India Act, 1858, which placed the Secretary of State in Council in the position of the East India Company. The substantive law is therefore the law as it stood for the East India Company prior to 1858 — which means the law as the case-law has developed it.

P. & O. Steam Navigation Co. — the foundational distinction

Peninsular & Oriental Steam Navigation Co. v. Secretary of State for India, (1861) 5 Bom HCR App. 1 is the foundational authority. The plaintiff’s servant was travelling in a horse-drawn carriage past the Kidderpore Dockyard, a Government property, in Calcutta. The Government’s servants negligently dropped a heavy piece of iron, the clang of which frightened the horse; the horse rushed forward, was injured by the iron, and the plaintiff sued. Peacock C.J. drew the distinction that has dominated the field ever since:

“There is a great and clear distinction between acts done in exercise of what are usually termed sovereign powers, and acts done in the conduct of undertakings which might be carried on by private individuals without having such powers delegated to them. ... But where the act is done, or a contract is entered into, in the exercise of powers usually called sovereign powers, by which we mean powers which cannot be lawfully exercised except by a sovereign or private individual delegated by a sovereign to exercise them, no action will lie.” Maintenance of the dockyard was held to be a non-sovereign function — a private individual could equally have run a dockyard — and the State was liable.

The early authorities went both ways. Nobin Chander Dey v. Secretary of State for India, (1875) ILR 1 Cal. 11 took the sovereign-function side: a contract for issue of a ganja licence, even assuming there had been one, was an exercise of sovereign power and the action did not lie. The contrary view, supported by Secretary of State v. Hari Bhanji, (1882) ILR 5 Mad. 273, treated the State as liable for everything except an Act of State; and the Law Commission of India in its First Report (1956) approved the Hari Bhanji line. P.V. Rao v. Khushaldas, AIR 1949 Bom. 277 and the Supreme Court’s observations in Province of Bombay v. Khushaldas, AIR 1950 SC 222 also pulled in the broader direction.

Vidyawati — the welfare-State turn

The first emphatic post-Constitution affirmation of State liability was State of Rajasthan v. Vidyawati, AIR 1962 SC 933. The plaintiff’s husband was knocked down and killed by a Government jeep being driven from the workshop to the Collector’s bungalow for the Collector’s use. The State pleaded sovereign immunity. The Supreme Court rejected the plea. Dave J., for the High Court below, had captured the spirit: “the State is no longer a mere police State and this country has made vast progress since the above decision (Peninsular case) was made. Ours is now a Welfare State and it is in the process of becoming a full-fledged Socialistic State.” In affirming the High Court, the Supreme Court observed that “in so far as the State activities have such wide ramifications involving not only the use of sovereign powers but also its powers as employers in so many public sectors, it is too much to claim that the State should be immune from the consequences of tortious acts of its employees committed in the course of their employment as such.”

If the law had stopped at Vidyawati, this chapter would be much shorter. It did not. The line of authority that follows reads as a long retreat — reminiscent of the doctrinal qualifications elsewhere in the law of torts, for instance the way the rule in Rylands v. Fletcher is hedged about with five exceptions. The State’s position has been refined in much the same way.

Kasturilal — the retreat

Kasturilal Ralia Ram Jain v. State of U.P., AIR 1965 SC 1039 is the case that re-established the sovereign-function defence in its present form. Ralia Ram, a partner in a firm of jewellers in Amritsar, came to Meerut by Frontier Mail with 103 tolas of gold and over two maunds of silver to sell in the market. While walking through the bazaar in the small hours, he was taken into custody by three police constables on suspicion of carrying stolen property. He was lodged in the police station, the property was seized under the Code of Criminal Procedure and kept in the police Malkhana, and he was released on bail the next day. The silver was returned to him; the gold was not. The Head Constable in charge of the Malkhana, one Mohammad Amir, misappropriated the gold and fled to Pakistan. The plaintiff sued the State of U.P.

The Supreme Court held that the State was not liable. Two reasons: first, the police were acting in discharge of statutory powers conferred by the Cr.P.C.; secondly, those powers were sovereign powers — “powers which can be properly characterised as sovereign powers”, in the words of Gajendragadkar C.J. The negligence in the safekeeping of the gold was therefore committed in the course of an employment of the sovereign-function kind, and the State could claim immunity. The Court itself expressed dissatisfaction with the result and pointed to the legislative remedy available in England under the Crown Proceedings Act — but it would not, on its own, alter the law.

How the sovereign-function test has been applied

The cases mark out a roughly stable list. Sovereign functions have been recognised in: maintenance of the army (Secretary of State v. Cockraft, (1915) 39 Mad. 351 — military road); transport of meals to military personnel on duty (Union of India v. Harbans Singh, AIR 1959 P&H 39); checking of army personnel on duty (Baxi Amrik Singh v. Union of India, (1973) 75 PLR 1, FB); arrest, search and seizure of property under the Cr.P.C. (Kasturilal); and police firing to disperse riotous crowds in maintenance of law and order (State of M.P. v. Chironji Lal, AIR 1981 MP 65 — damaged loudspeaker; State of Orissa v. Padmalochan, AIR 1975 Ori. 41 — assault by police personnel cordoning the SDO’s office).

Non-sovereign functions, by contrast, include: driving the Collector’s jeep (Vidyawati); famine-relief work (Shyam Sunder v. State of Rajasthan, AIR 1974 SC 890); running a Government hospital (A.H. Khodwa v. State of Maharashtra, AIR 1996 SC 2864 — mop left in patient’s abdomen during sterilisation); transporting sports teams (Satya Wati Devi v. Union of India, AIR 1967 Del. 98); driving a military vehicle on station duties not directly connected with combat (Union of India v. Sugrabai, AIR 1969 Bom. 13; Union of India v. Savita Sharma, AIR 1979 J&K 6); driving a water tanker for the Border Security Force (Union of India v. Abdul Rehman, AIR 1981 J&K 22); maintaining a sub-treasury (State of U.P. v. Hindustan Lever Ltd., AIR 1972 All. 486); and detaining persons for transport other than to a magistrate (State of Punjab v. Lal Chand Sabharwal, AIR 1975 P&H 178). The pattern is consistent: where the function could equally be performed by a private individual or company, the State pays. The same logic as the distinction between tort, crime and contract applies here — the State’s function is being classified by the public-private nature of the activity, not by the identity of the actor.

Negligence of military servants

The maintenance of the army is plainly a sovereign function, but it does not follow that every tort committed by army personnel is immunised. The cases require a sub-distinction between acts done in the exercise of sovereign powers and acts which could equally be performed by a private individual. Baxi Amrik Singh v. Union of India is the Punjab & Haryana High Court’s Full Bench statement of the test: where the tortfeasor was on duty checking army personnel — a function intimately connected with army discipline that could be performed only by a member of the armed force on such duty — the act was sovereign. Contrast Union of India v. Sugrabai (transporting machinery to a military training school), Satya Wati Devi (carrying hockey and basketball teams), Iqbal Kaur v. Chief of Army Staff, AIR 1978 All. 417 (taking a truck for training new motor-transport recruits), Pushpa v. State of Jammu & Kashmir, AIR 1977 J&K 105 (transporting crushed barley for the defence department), Union of India v. Smt. Jasso, AIR 1962 P&H 315 (carrying coal for heating military rooms in Simla) — all non-sovereign, all attracting State liability. The pattern reaffirms the test: anything that the army does which a private contractor could equally do is non-sovereign.

The key further doctrine appears in Roop Lal v. Union of India, AIR 1972 J&K 22 — military jawans who carried away firewood belonging to the plaintiff for camp fire and fuel were held to have committed conversion within the course of their employment, since they were on 24-hour duty and the wood was used for unit purposes; the State was liable.

Acts of police officials — a closer look

Police acts furnish a particularly fertile ground because almost every police action can be located somewhere along the sovereign / non-sovereign axis. Pagadala Narasimham v. Commissioner, Nellore Municipality, AIR 1969 AP 11 held that traffic-clearing of a wrongly parked bus was in discharge of sovereign functions. State of M.P. v. Chironji Lal held that quelling a student riot was sovereign. State of Punjab v. Lal Chand Sabharwal held that transporting detenus for purposes other than production before a magistrate was non-sovereign. Kalpana Mandal v. State of Orissa, AIR 2007 Ori. 94 held the State liable for irresponsible aimless firing at a bus carrying the deceased — once the act ceases to be even loosely connected to a sovereign function, immunity is lost. The line is not always crisp, but it is reliably this: maintenance of law and order is sovereign; transportation, business and welfare functions, even when performed in police uniform, are not. The relevant defences for the individual constable — lawful authority, private defence and the like — remain available on their own footing, but they do not on their own immunise the State.

Kasturilal bypassed — the loss-of-property cases

One of the first sets of cases to weaken Kasturilal in fact even where it was respected in form is the loss-of-property line. Where property is in police custody, the State is treated as a bailee and is bound either to return the property or to pay compensation. State of Gujarat v. Memon Mahomed, AIR 1967 SC 1885 makes the point: the customs authorities had seized two trucks, a station wagon and goods on the false representation that they were unclaimed; the Revenue Tribunal set aside the order; the State was bound to return the goods or pay their value. Smt. Basava v. State of Mysore, AIR 1977 SC 1749 follows the same logic: ornaments in police custody, missing from the trunk in which they were kept, must be paid for unless the State proves loss in spite of due care.

The constitutional-tort line — Rudul Sah and after

The decisive shift comes from the Article 32 / 226 jurisprudence on compensation for violations of the right to life and personal liberty under Article 21. The leading authorities form a continuous lineage:

• Rudul Sah v. State of Bihar, AIR 1983 SC 1086 — petitioner acquitted on 3 June 1968 but kept in jail until 16 October 1982; Rs. 30,000 awarded as interim compensation under Article 32, with the right to a regular suit preserved.
• Sebastian M. Hongray v. Union of India, AIR 1984 SC 1026 — two persons taken into army custody at Manipur not produced on a habeas corpus writ; presumed to have met unnatural death in custody; exemplary costs of Rs. 1 lakh each awarded to the wives.
• Bhim Singh v. State of J. & K., AIR 1986 SC 494 — wrongful detention of a sitting MLA preventing him from attending the assembly; Rs. 50,000 compensation.
• Saheli v. Commissioner of Police, Delhi, AIR 1990 SC 513 — death of a 9-year-old boy by police beating; damages awarded to the mother.
• Smt. Kumari v. State of Tamil Nadu, AIR 1992 SC 2069 — child fell into an open sewerage tank in the city; Rs. 50,000 compensation directed against the State, with a right of recovery against the local authority.
• Nilabati Behera v. State of Orissa, AIR 1993 SC 1960 — death in police custody; Rs. 1.5 lakh compensation; the doctrine of sovereign immunity expressly held inapplicable to a violation of Article 21.
• Chairman, Railway Board v. Chandrima Das, AIR 2000 SC 988 — gang rape of a Bangladeshi woman by railway employees in Yatri Niwas at Howrah Railway Station; the Court held that “life” under Article 21 extends to non-citizens, and the Central Government was liable to pay damages.

The Andhra Pradesh High Court in C. Ramkonda Reddy v. State of A.P., AIR 1989 AP 235 captured the principle: even if the State is acting in exercise of sovereign power, it is liable if Article 21 is violated, because Article 300(1) does not constitute an exception to Article 21. The Gujarat High Court in State of Gujarat v. Govindbhai, AIR 1991 Guj. 27 took the same line. The constitutional-tort overlay therefore does not strictly overrule Kasturilal — it goes around it.

N. Nagendra Rao — the doctrinal bypass

N. Nagendra Rao & Co. v. State of A.P., AIR 1994 SC 2663 is the most important Supreme Court statement of the modern position. The Court reviewed Vidyawati, Kasturilal, the recommendations of the Law Commission and the comparative material from the Crown Proceedings Act and the U.S. Federal Tort Claims Act, and held that the doctrine of sovereign immunity has “no relevance in the present-day context when the concept of sovereignty itself has undergone a major change”. The Court did not in terms overrule Kasturilal — but its reasoning is incompatible with Kasturilal’s holding, and lower courts have read it as effectively reducing Kasturilal to the cases of arrest, search and seizure under specific statutory powers. After Nagendra Rao, the default rule is one of liability; sovereign immunity is the narrow exception. The shift mirrors the doctrinal evolution of mental elements in tort — once dominant, now reframed by modern policy considerations; and the broader move can be tracked alongside the development of general defences in tort, where common-law doctrines have similarly been refined to fit modern circumstances.

Failure to discharge a positive duty

Modern decisions also recognise State liability where there is a failure to discharge a positive duty of protection. Shyamal Karan Saha v. State of West Bengal, AIR 1973 Cal. 295: a young boy crushed in a stampede outside Eden Gardens at a Test match, where the police failed to control the crowd or provide basic facilities — both the Cricket Association and the State were liable. P. Gangadharan Pillai v. State of Kerala, AIR 1990 Ker. 142: the police, having warning of likely riots, failed to protect the petitioner’s hotel from mob attack — held to be a violation of the right to carry on business under Article 19(1)(g) and the State was directed to pay compensation. Inder Singh v. State of Punjab, (1995) 3 SCC 702: persons taken into police custody whose whereabouts could not later be traced — Rs. 1.5 lakh per family, with a direction to the State to recover from the guilty officials.

The present position — uncertain but tilting

The present position is best stated this way. Kasturilal still nominally holds the field for cases of arrest, search and seizure under specific statutory powers, where no fundamental right is implicated. Outside that narrow corridor, the rule today is one of State liability, supported by Vidyawati, Nagendra Rao and the constitutional-tort lineage. Where Article 21 is engaged — which it is in any meaningful case of detention, custodial death, custodial torture, or excessive use of force — sovereign immunity simply does not apply. Where Article 19(1)(g) is engaged through failure to discharge a duty of protection, the same result follows. The Law Commission’s First Report recommendation for a Government Liability in Tort Bill, made in 1956, has still not become law; but the courts have, through the constitutional-tort device, given substantial effect to the underlying principle.

The chapter therefore reads as a study in the slow, judge-led displacement of an outdated common-law doctrine by a constitutional-rights remedy — the same architectural move you find in the law of torts in other places where common-law immunities have given way to public-law obligations. The connecting principles — legal damage and legal remedy — are unchanged; what has changed is the scope of the persons and institutions whom the law permits the plaintiff to hold to account.

Frequently asked questions

Has Kasturilal been overruled?

Not formally. The Supreme Court has not in terms overruled Kasturilal. But its reasoning has been heavily eroded — by Vidyawati from before, by N. Nagendra Rao & Co. v. State of A.P. (1994) which holds that sovereign immunity has no relevance in the present day, and by the constitutional-tort line from Rudul Sah onward which simply by-passes the sovereign-function defence whenever Article 21 or another fundamental right is engaged. Kasturilal still nominally holds the field for the narrow case of damage to property held in police custody under specific statutory powers; outside that corridor, the modern rule is one of liability.

What does Article 300 of the Constitution itself decide about State liability?

Article 300 by its own terms decides nothing about the substantive test of liability. It identifies the Union and the States as juristic persons who may sue and be sued, and it preserves the position as it stood under the Government of India Acts and ultimately under Section 65 of the Government of India Act, 1858, which placed the Secretary of State in Council in the position of the East India Company. The substantive test — the sovereign / non-sovereign distinction — therefore lives in the case-law that has interpreted those provisions, beginning with the P. & O. Steam Navigation case in 1861.

What test do the courts apply to distinguish sovereign and non-sovereign functions?

The test laid down in P. & O. Steam Navigation Co. and reaffirmed in Kasturilal is whether the function is one which could be performed by a private individual without the delegation of any sovereign power. If it could (running a hospital, a dockyard, a sub-treasury, a famine-relief vehicle, a sports team transport), the function is non-sovereign and the State is liable. If it could not (defence operations, maintenance of law and order, statutory powers of arrest, search and seizure under the criminal procedure code), the function is sovereign. The line is not always crisp; the modern tendency is to read the sovereign category narrowly.

Does sovereign immunity apply where Article 21 is violated?

No. The line of authority from Rudul Sah v. State of Bihar (1983) through Bhim Singh, Saheli, Sebastian M. Hongray, Nilabati Behera and Chandrima Das holds that Article 300(1) does not constitute an exception to Article 21. Where the right to life and personal liberty is violated by the wrongful act of a State servant, the Supreme Court and the High Courts may grant compensation in their writ jurisdiction under Article 32 and 226, irrespective of whether the function in question would otherwise be classed as sovereign. The right under Article 21 is available even to non-citizens (Chandrima Das).

Is the State liable for the loss of property held in police custody?

Yes, on a bailment-based reasoning that side-steps the sovereign-function test. State of Gujarat v. Memon Mahomed and Smt. Basava v. State of Mysore hold that where property is in the custody of police officials, the State is in the position of a bailee and is bound either to return the property or to pay its value, unless the State proves that the loss occurred in spite of the bailee’s due care. The principle thus operates as an in-fact bypass of Kasturilal, even though the formal rule of sovereign immunity over Cr.P.C. seizures remains.

Why does the Crown Proceedings Act, 1947 matter for the Indian discussion?

Because the doctrine of sovereign immunity that India inherited was a common-law doctrine, expressed in the maxim that the King can do no wrong. England abolished that doctrine prospectively by Section 2(1) of the Crown Proceedings Act, 1947 — the Crown is now subject to the same liabilities in tort as a private person. India does not have an equivalent statute. The Law Commission of India in its First Report (1956) recommended such legislation, and the Government (Liability in Tort) Bill, 1967 was introduced and reported by a Joint Committee in 1969, but it has not become law. The constitutional-tort lineage has been the judicial substitute.