This is the 3rd post in Law of Torts, Unit 2 — Liability and Defences (the previous post covered vicarious liability in general). This post covers the special complications that arise when the "employer" whose vicarious liability is in question is the State itself, and the defence of sovereign immunity that has historically limited it.
The Problem This Topic Solves
The State, through its millions of servants, performs an enormous range of activities — from running hospitals, transport corporations and factories to maintaining armed forces, collecting revenue and administering criminal justice. If ordinary vicarious liability principles applied without qualification, the State would be liable, exactly like any private employer, for every tort committed by any government servant acting in the course of duty. Historically, however, English common law had developed the maxim "the King can do no wrong," treating the Crown as legally incapable of committing a wrong and therefore immune from being sued in tort. India inherited a version of this position, and courts have had to work out, case by case, how far a modern constitutional democracy — committed to the rule of law and to compensating citizens for wrongs done to them — should allow the State to shelter behind this inherited immunity.
The Evolution of State Liability — Four Milestones
Historical Background
Even before Independence, Indian courts had begun distinguishing between two categories of governmental activity for the purpose of tort liability. In P. and O. Steam Navigation Co. v. Secretary of State for India (1861), the Calcutta Supreme Court held that where the East India Company (and later the Secretary of State) undertook an activity that a private individual could equally undertake — there, the negligent driving of a company servant's carriage — liability followed the ordinary rules of tort, exactly as it would for a private employer. But where the act was one that only a sovereign government could perform — the exercise of political or governmental power such as making war, maintaining the armed forces, or administering criminal justice — no action in tort would lie, since these were regarded as acts of state, immune from the ordinary courts. This sovereign/non-sovereign functions distinction, framed well over a century ago, remains the starting point for the whole topic even today.
Constitutional Basis — Article 300
Article 300 of the Constitution of India provides that the Government of India and the Government of each State may sue and be sued in the same manner as the Dominion of India and the corresponding Provinces or Indian States could have sued or been sued immediately before the Constitution came into force — subject to any law made by Parliament or a State Legislature. Article 300 does not itself create or define the scope of the State's tortious liability; it simply carries forward the pre-constitutional legal position (traced back to the East India Company era) until Parliament chooses to legislate a different, comprehensive scheme. Because Parliament has never enacted such comprehensive legislation, courts have continued to apply and refine the inherited sovereign/non-sovereign functions test through case law rather than through a modern statute.
Sovereign Functions v. Non-Sovereign Functions
Sovereign functions are those which only the State, in its capacity as a sovereign authority, can perform — legislation, the administration of justice, the maintenance of the armed forces and police, foreign affairs, and the exercise of statutory powers of a coercive nature that no private individual could lawfully exercise. For torts committed by its servants while performing genuinely sovereign functions, the State has historically enjoyed immunity from suit. Non-sovereign (sometimes called commercial or proprietary) functions, by contrast, are activities that any private person or company could equally well undertake — running a transport service, a factory, a hospital, or maintaining official vehicles for ordinary administrative use. For torts committed in the course of such non-sovereign activity, the State is liable exactly like any other employer, under the ordinary principles of vicarious liability covered in this unit's previous post.
State of Rajasthan v. Vidyawati (1962) — AIR 1962 SC 933, decided by the Supreme Court of India.
Facts: A government jeep, being driven back from a workshop after repairs by a driver employed by the State, was driven so negligently that it knocked down and killed a pedestrian.
Holding: The Supreme Court held the State of Rajasthan vicariously liable, holding that maintaining a vehicle for the use of a government official and driving it back from repairs was not an exercise of sovereign power at all — it was an activity any private employer running a fleet of vehicles could equally undertake — so the State stood in exactly the same position as a private employer for the tort of its driver.
Kasturi Lal Ralia Ram Jain v. State of Uttar Pradesh (1965) — AIR 1965 SC 1039, decided by the Supreme Court of India.
Facts: Police officers, acting under statutory powers of search and seizure, arrested the plaintiff on suspicion and seized a large quantity of gold found on him. The gold was kept in police custody, but a head constable in charge of the malkhana (property store) misappropriated and fled with it. The plaintiff, later found not guilty of any offence, sued the State for the value of the gold that had never been returned to him.
Holding: The Supreme Court held the State of Uttar Pradesh not liable, reasoning that the power of arrest and seizure of property was a statutory power conferred on police officers as an exercise of the sovereign power of the State — a function that could only be performed by the State's own police machinery, not by any private person — and that this sovereign character attached to the act of taking and keeping custody of the seized property as well, even though a servant of the State had been negligent or dishonest in discharging that custody.
Criticism of Kasturi Lal and the Later Trend
Kasturi Lal has been widely and consistently criticised — including by the Supreme Court itself in later decisions — for allowing a government's sovereign character to shield it from liability even where the actual harm arose from a straightforward instance of negligence or dishonesty by an identifiable government servant, leaving an innocent citizen without any remedy at all. In N. Nagendra Rao and Co. v. State of Andhra Pradesh (1994), the Supreme Court confined Kasturi Lal to its own specific facts and moved decisively toward holding the State liable for the negligence of its officers even while exercising statutory or regulatory powers, observing that in a modern welfare state exercising vast powers over citizens' property and liberty, sovereign immunity could not be stretched to cover ordinary negligence unconnected with any genuine exercise of sovereign discretion.
Alongside this gradual erosion of Kasturi Lal through ordinary tort law, the Supreme Court also developed a separate, constitutional route to compensation — a public-law remedy under Articles 32 and 226 for violation of the fundamental right to life and personal liberty under Article 21, entirely independent of whether the underlying act would also qualify as a sovereign function for private-law tort purposes. This constitutional-tort jurisprudence, and its leading illustrations, are examined in depth in the unit on remedies later in this course.
Foreign Sovereign Immunity and Act of State
Two related but distinct ideas are sometimes confused with the sovereign/non-sovereign functions test discussed above. Foreign sovereign immunity is the principle of international and municipal law that a foreign State, its head, or its diplomatic representatives generally cannot be sued in the domestic courts of another country without that foreign State's consent — a rule concerned with jurisdiction over another sovereign nation, not with whether the defendant's own government is liable in tort to its own citizens. An act of state, in the narrower technical sense used in tort law, refers to an act done by a sovereign government in its dealings with another state or with the subjects of another state (typically persons who owe no allegiance to it) — such as an act of annexation or an act done in the course of war or diplomatic relations — which, being a matter of high policy between nations, is treated as non-justiciable in the ordinary municipal courts altogether, regardless of the sovereign/non-sovereign functions test that applies when the same government deals with its own citizens.
| Point of Comparison | Sovereign Function | Non-Sovereign Function |
|---|---|---|
| Nature | Can be performed only by the State, in its capacity as sovereign authority | Could equally be performed by a private person or company |
| Examples | Legislation, administration of justice, defence, police search/seizure powers | Running transport services, hospitals, factories; maintaining official vehicles |
| Liability for servant's tort | Historically immune (Kasturi Lal, 1965) | Liable exactly like a private employer (Vidyawati, 1962) |
| Modern trend | Immunity increasingly confined and criticised (N. Nagendra Rao, 1994) | Unaffected — liability remains the settled rule |
Beyond This Post
Where the harm complained of also amounts to a violation of a fundamental right — most commonly an unlawful arrest or detention violating Article 21 — courts have granted monetary compensation directly under their writ jurisdiction, as a public-law remedy distinct from an ordinary tort suit. That constitutional-compensation jurisprudence, including its leading cases, is examined fully in the later unit of this course dealing with remedies for tortious wrongs.
- Article 300 continues, rather than creates, the pre-constitutional position on suits by and against the Government, pending comprehensive legislation that has never been enacted.
- Sovereign functions (legislation, justice, defence, statutory police powers) historically carried immunity; non-sovereign/commercial functions carry ordinary vicarious liability.
- State of Rajasthan v. Vidyawati (1962): maintaining/driving a government vehicle is a non-sovereign function — State liable.
- Kasturi Lal Ralia Ram Jain v. State of Uttar Pradesh (1965): seizure and custody of property under statutory police power is a sovereign function — State held not liable, despite a servant's dishonesty.
- N. Nagendra Rao and Co. v. State of Andhra Pradesh (1994) confined Kasturi Lal to its own facts, moving the law toward holding the State liable for ordinary negligence even in exercising statutory powers.
- The sovereign/non-sovereign distinction traces back to P. and O. Steam Navigation Co. v. Secretary of State for India (1861), decided over a century before Vidyawati and Kasturi Lal.
- Foreign sovereign immunity (a foreign state's immunity from suit in domestic courts) is a distinct doctrine from a citizen's tort claim against their own government.
- An "act of state," in tort law's technical sense, concerns a government's dealings with another state or its subjects, and is treated as wholly non-justiciable, unlike the sovereign/non-sovereign test applicable between a government and its own citizens.
- Constitutional compensation under Articles 32/226 for violation of Article 21 offers a route to redress independent of whether the underlying government function would be classified as sovereign for ordinary tort purposes.
A Practical Example
Suppose a government-owned road transport corporation bus, driven negligently by a corporation employee on an ordinary passenger route, knocks down a pedestrian. Applying Vidyawati's reasoning, running a public bus service is not a sovereign function — any private company could operate a bus service — so the corporation (and, through it, the State) is vicariously liable exactly as a private bus operator would be. Contrast this with a case where customs officials, acting under statutory search powers, seize goods suspected of being smuggled, and a departmental clerk later loses or misappropriates the seized goods while they remain in official custody. Following Kasturi Lal's reasoning, the act of seizure and custody under statutory power would traditionally be treated as sovereign, potentially barring an ordinary tort suit — though after N. Nagendra Rao, a court today would scrutinise more closely whether the loss reflects genuine, ordinary negligence in safekeeping rather than any true exercise of sovereign discretion, and would be considerably more willing than in 1965 to hold the State liable regardless of the sovereign label attached to the underlying power.
Quick Revision Points
- Article 300 continues the pre-constitutional position on suits by/against government, pending legislation that has never come.
- Sovereign functions: only the State can perform them (legislation, justice, defence, statutory coercive powers) — historically immune.
- Non-sovereign functions: any private person could equally perform them (transport, hospitals, official vehicles) — ordinary vicarious liability applies.
- P. and O. Steam Navigation Co. v. Secretary of State for India (1861): earliest Indian articulation of the sovereign/non-sovereign distinction.
- Vidyawati (1962): government vehicle use — non-sovereign — State liable.
- Kasturi Lal (1965): statutory seizure/custody of property — sovereign — State not liable, widely criticised.
- N. Nagendra Rao and Co. (1994): confined Kasturi Lal, expanded State liability for negligence in exercising statutory powers.
- Foreign sovereign immunity and "act of state" are distinct doctrines, concerned with other nations/their subjects, not a citizen's ordinary tort claim against their own government.
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