2. Liability for Torts

In the beginning, the East India Company was only a trading body. Gradually, it acquired territories in India and became a sovereign authority. The Company was suable for its functions as a trader but not as a sovereign. This immunity of the Company in respect of its sovereign functions was based on the English Common Law maxim that the 'King can do no wrong’, which means that the King was not liable for wrongs of his servants. This traditional immunity of the State (i.e., Crown) in Britain from any legal liability for any action has been done away by the Crown Proceedings Act (1947). However, the position in India still remains the same.

Therefore, the government (Union or states) in India can be sued for torts (civil wrongs) committed by its officials only in the exercise of its non-sovereign functions but not in the sovereign functions like administering justice, constructing a military road, commandeering goods during war, etc. This distinction between the sovereign and nonsovereign functions of the Government in India and the immunity of the government in respect of its sovereign functions was established in the famous P and O Steam Navigation Company case3 (1861). This was reaffirmed by the Supreme Court in the post-independence era in the Kasturilal case4 (1965). However, after this case, the Supreme Court started giving a restrictive interpretation to sovereign functions of the‌

government and awarded compensation to victims in a large number of cases.

In Nagendra Rao Case4a (1994), the Supreme Court criticised the doctrine of sovereign immunity of the State and adopted a liberal approach with respect to the tortuous liability of the State. It ruled that when a citizen suffers any damage due to the negligent act of the servants of the State, the State would be liable to pay compensation for it and the State cannot avoid this liability on the ground of sovereign immunity. It held that in the modern sense, the distinction between sovereign and non-sovereign functions does not exist. It laid down the proposition that barring a few functions, the State cannot claim any immunity. Its observations, in this case, are as follows:

1. 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 as it is sovereign. The concept of public interest has changed with structural change in the society. No legal or political system today can place the State above law as it is unjust and unfair for a citizen to be deprived of his property illegally by negligent act of officers of the State without any remedy.

2. The modern social thinking of progressive societies and the judicial approach is to do away with archaic State protection and place the State or the Government at par with any other juristic legal entity. Any water-tight compartmen-talisation of the functions of the State as "sovereign” and "non-sovereign” or "governmental” and "non-governmental” is not sound. It is contrary to modern jurisprudential thinking.

3. The need of the State, duty of its officials and right of the citizens are required to be reconciled so that the rule of law in a welfare State is not shaken. In a welfare State, the functions of the State are not only the defence of the country or administration of justice or maintaining law and order but it extends to regulating and controlling the activities of the people in almost every sphere-educational, commercial, social, economic, political and even marital.

4. The demarcating line between sovereign and non-sovereign powers for which no rational basis survives has largely

disappeared. Therefore, barring functions such as administration of justice, maintenance of law and order and repression of crime etc., which are among the primary and inalienable functions of a constitutional Government, the State cannot claim any immunity.

In the above case, the Supreme Court did not overrule its judgement in the Kasturilal case (1965). However, it said that it is applicable to rare and limited cases.

In Common Cause Case4b (1999), the Supreme Court again examined the whole doctrine and rejected the sovereign immunity rule. The Court held that the rule of State liability as laid down in

P. & O. Steam Navigation Company case is very outmoded. It said that in modern times when the State activities have been considerably increased it is very difficult to draw a line between its sovereign and non-sovereign functions. The increased activities of the State have made a deep impression on all facets of citizens’ life, and therefore, the liability of the State must be made co- extensive with the modern concept of a welfare State. The State must be liable for all tortuous acts of its employees, whether done in exercise of sovereign or non-sovereign powers4c. Finally, the court observed that the efficacy of Kasturilal case as a binding precedent has been eroded.

In the Prisoner’s Murder case4d (2000), the Supreme Court ruled that in the process of judicial advancement Kasturilal case has paled into insignificance and is no longer of any binding value.