Government Liability in Tort: Article 300, Sovereign Immunity, the Sovereign and Non-Sovereign Distinction and the Modern Law

Can the State be sued for a wrong committed by its servants? The answer in India is governed by Article 300, which does not state a rule of liability at all but freezes the position as it stood before the Constitution, and so sends the enquiry back through the Government of India Acts to the liability of the East India Company. From that historical accident came the distinction between sovereign and non-sovereign functions, under which the State was liable for a road accident caused by a departmental vehicle but not for the negligence of a police officer. The distinction was criticised from the moment it was applied, has been narrowed almost to vanishing point, and survives more as a matter of form than of substance. This topic traces that development from Vidyawati through Kasturi Lal to the modern position.

1. Article 300 and What It Does

Article 300(1)

The Government of India may sue or be sued by the name of the Union of India and the Government of a State may sue or be sued by the name of the State, and may, subject to any provisions which may be made by Act of Parliament or of the Legislature of such State enacted by virtue of powers conferred by this Constitution, sue or be sued in relation to their respective affairs in the like cases as the Dominion of India and the corresponding Provinces or the corresponding Indian States might have sued or been sued if this Constitution had not been enacted.

Three things follow. Article 300 confers the capacity to sue and be sued and names the parties, but it does not itself say when the State is liable. It makes the extent of liability the same as it was immediately before the Constitution, which under section 176 of the Government of India Act, 1935 and section 65 of the Government of India Act, 1858 was the same as the liability of the East India Company. And it expressly permits Parliament or a State legislature to legislate on the subject, a power that has never been exercised, so the position continues to rest on nineteenth-century case law.

The foundational decision in that line is Peninsular and Oriental Steam Navigation Co. v. Secretary of State for India, (1861) 5 Bom HCR App 1, where Peacock, C.J. held that the Company was liable for acts done in the exercise of functions that could be performed by a private individual without sovereign power, and not liable for acts done in the exercise of sovereign functions. That distinction, invented to describe a trading company that had acquired governmental powers, became the Indian law of State liability.

2. Vidyawati: The Liberal Position

📖 State of Rajasthan v. Vidhyawati, AIR 1962 SC 933

Facts: A jeep belonging to the State of Rajasthan, maintained for the official use of the Collector, was being driven back from the workshop after repairs by a driver employed by the State. It was driven rashly and negligently, knocked down a pedestrian, and he died of his injuries. His widow sued the State for damages, and the State pleaded immunity on the footing that the vehicle was maintained in the exercise of a sovereign function.

Held: The Supreme Court held the State liable. It held that the State is liable for the tortious acts of its servants in the same manner as any other employer, subject only to the exception of acts done in the exercise of sovereign powers, and that the maintenance of a vehicle for the use of a Collector is not a sovereign function: it is an activity any private employer might undertake. The Court went further and questioned the continuance of the immunity itself, observing that in a welfare State which had taken upon itself extensive commercial and industrial activities and which was governed by a Constitution establishing a republic on socialistic principles, there was no justification for continuing an immunity founded on the position of a personal sovereign, and that the rule of immunity based on the old feudal notion had no place in modern conditions.

Ratio: The State is vicariously liable for the torts of its servants like any other employer, save for acts in the exercise of sovereign functions, and the running of a vehicle for official use is not such an act. The Court cast serious doubt on the continued justification for sovereign immunity.

3. Kasturi Lal: The Retreat

📖 Kasturi Lal Ralia Ram Jain v. State of Uttar Pradesh, AIR 1965 SC 1039

Facts: A partner of a firm dealing in bullion was arrested by the police on suspicion of possessing stolen property, and a quantity of gold and silver was seized from him and kept in the police malkhana. He was released and the silver was returned, but the gold was misappropriated by the head constable in charge of the malkhana, who absconded to Pakistan. The firm sued the State for the value of the gold, alleging negligence by the police in keeping it and failure to comply with the provisions of the Police Regulations governing the custody of seized property.

Held: The Supreme Court held the State not liable, although it found the police negligent. It held that the act of the police officers in arresting the person and seizing the property was done in the exercise of statutory powers conferred on them, and the power to arrest, to search and to seize property is a power that can be properly characterised as a sovereign power; the negligence occurred in the discharge of that sovereign function, and on the rule preserved by Article 300 the State was therefore immune. The Court expressed dissatisfaction with the result, observing that the law on the subject was unsatisfactory and that it was time the legislature enacted a statute regulating the liability of the State in tort, as Parliament in England had done by the Crown Proceedings Act, 1947.

Ratio: Acts done in the exercise of statutory powers of arrest, search and seizure are sovereign functions, and the State is not liable in tort for negligence in their discharge. The Court invited legislation, which has not followed.

4. How the Two Decisions Sit Together

	Vidhyawati (1962)	Kasturi Lal (1965)
Activity	Driving a government jeep back from a workshop	Arrest, seizure and custody of property by police
Characterisation	Non-sovereign; any employer might do it	Sovereign; statutory police powers
Result	State liable	State not liable
Tone on immunity	Immunity criticised as a feudal relic with no place in a welfare State	Immunity applied with expressed dissatisfaction and a plea for legislation
Effect on the doctrine	Narrowed the immunity in practice	Confirmed it in principle for statutory and police functions

The two are not strictly inconsistent, since both accept the sovereign and non-sovereign distinction and differ only on which side the activity falls. But their direction is opposite, and the later development of the law has followed Vidhyawati rather than Kasturi Lal, by shrinking the category of sovereign functions until very little is left in it.

5. Development after Kasturi Lal

The sovereign category was narrowed. In N. Nagendra Rao and Co. v. State of Andhra Pradesh, (1994) 6 SCC 205, where seized fertiliser and foodgrains deteriorated in the custody of officials, the Court held the State liable and confined sovereign functions to those inalienable functions which only the State can perform, such as defence, foreign affairs, the administration of justice, the maintenance of law and order in its true sense, and the exercise of legislative power; the routine activities of a welfare State, including the running of departments that regulate trade and hold property, are not sovereign.
Statutory power was distinguished from sovereign power. The mere fact that an officer acts under a statute does not make the function sovereign, which is where Kasturi Lal went wrong in the view of the later cases.
The constitutional route was opened. From Rudul Sah v. State of Bihar, (1983) 4 SCC 141 onwards, compensation for the violation of fundamental rights became available under Articles 32 and 226, where sovereign immunity is no defence at all.
Custodial wrongs were removed from the immunity. In Nilabati Behera v. State of Orissa, (1993) 2 SCC 746, the Court held expressly that the defence of sovereign immunity is inapplicable to a claim in public law for the infringement of a fundamental right.
Constitutional obligations displaced it. In Common Cause, A Registered Society v. Union of India, (1999) 6 SCC 667 and other decisions, the Court held that the State cannot claim immunity for acts that violate constitutional or statutory obligations.
Special statutes created liability regimes in particular fields, including motor accidents, environmental damage on the principle of absolute liability, and consumer protection, which bypass the question altogether.

6. Vicarious Liability and the Conditions of the Claim

The wrongdoer must be a servant of the State, not an independent contractor, though the State may be directly liable for its own negligence in selection or supervision.
The act must be in the course of employment, which includes an authorised act done in an unauthorised manner but not a purely personal frolic.
Acts beyond authority may still bind the State, where the officer was purporting to act in the discharge of his duties, which is how custodial violence is treated.
Statutory protection provisions requiring notice or conferring immunity for acts done in good faith must be complied with or overcome.
Notice under section 80 of the Code of Civil Procedure is required before a suit against the Government, subject to the provision for urgent relief.
Limitation applies to a suit, though not in terms to a writ petition, where delay is a discretionary bar instead.

7. Sovereign Immunity and Constitutional Tort Compared

Basis	Claim in tort (private law)	Constitutional tort (public law)
Basis of liability	Vicarious liability of the employer for a servant's tort	The State's own responsibility for breach of a fundamental right
Forum	Civil court, by suit under Article 300	Supreme Court under Article 32 or High Court under Article 226
Sovereign immunity	Available in principle, though narrowed almost to nothing	No defence whatever
Proof	Full trial with evidence	Affidavits and records; the violation must be patent
Award	Full compensatory damages	Palliative and often exemplary; not a computation of loss
Time	Years	Immediate, in the same proceeding
Notice under section 80 CPC	Required	Not applicable

⚠ Kasturi Lal is still good law, and almost never applied

The position is easy to state wrongly in either direction. Kasturi Lal has never been overruled, and its reasoning remains formally binding on a claim in tort arising from the exercise of a genuinely sovereign function. But its practical field has almost vanished, for two reasons. The category of sovereign functions has been confined to the inalienable functions of the State, so most of what government does falls outside it. And where the wrong infringes a fundamental right, the claimant proceeds in public law, where immunity is no defence at all, and does not need to engage with Kasturi Lal in the first place. The result is a decision that stands as authority and is seldom the reason a case is decided.

8. The Position in Summary

Article 300 confers the capacity to sue and be sued and continues the pre-Constitution position, which traced back through the Government of India Acts to the liability of the East India Company; the legislative power it contemplates has never been exercised.
The sovereign and non-sovereign distinction derives from the P. and O. Steam Navigation case, under which liability attached to acts a private person could perform without sovereign power.
Vidhyawati held the State liable for a departmental vehicle and doubted the justification for immunity in a welfare State; Kasturi Lal held the State immune for the misappropriation of seized property because arrest and seizure are sovereign powers, while inviting legislation that never came.
Since then the sovereign category has been confined to inalienable functions (N. Nagendra Rao), statutory power has been distinguished from sovereign power, and constitutional tort has provided a route in which immunity is no defence.
Kasturi Lal has not been overruled but is rarely the operative reason today, since most claims either fall outside the narrowed sovereign category or are brought in public law.

9. Related Topics and Provisions

Constitutional Tort (Topic 131) and Public Law Compensation (Topic 133): the public law route.
Natural Justice in Government Contracts (Topic 85): the contractual side of State liability.
Writs Against Government Companies and Public Corporations (Topic 123): who counts as the State.
Constitutional Writs (Topic 106): the jurisdiction in which public law claims are brought.
Rule of Law (Topic 8) and Dicey's Rule of Law (Topic 9): equality before the law and the position of officials.
Constitution of India: Articles 21, 32, 226, 294, 299 and 300; Code of Civil Procedure, 1908, section 80.