Law of Torts
TORT 015 Capacity of Artificial Persons the State and Protected Classes
Capacity of Artificial and Public Persons: Corporations, Firms, Trade Unions, the State, Foreign Sovereigns, Diplomats, Judges and Public Authorities
Some defendants cannot act except through human beings, and some are protected by statute. A corporation acts only through its servants, so its liability is in substance vicarious, and the plea that the act was ultra vires does not save it where the servant was acting in the course of his employment. A firm is liable for a partner's wrongful act under Section 26 of the Partnership Act, and every partner is liable jointly and severally. Trade unions have a statutory immunity in trade disputes. The State was once protected by sovereign immunity, and that protection has been cut back almost to nothing, both by narrowing the sovereign functions doctrine and by holding it no defence at all to a violation of a fundamental right.
The artificial persons, the retreat of sovereign immunity, and the statutory protections
1. Corporations and Companies
- A corporation may sue for torts affecting its property, its business and its reputation. It may sue in defamation where the words reflect on its trading reputation, though not for injury to feelings, having none.
- It is liable vicariously for the torts of its servants committed in the course of their employment, on the ordinary principles of master and servant.
- It is liable for torts requiring intention or malice, the necessary state of mind being attributed to it through the minds of those who direct it. That is the reasoning of the identification doctrine.
- Ultra vires is no defence where the servant was acting within the scope of his employment. In Campbell v. Paddington Corporation [1911] 1 KB 869 the corporation was held liable in nuisance for erecting a stand in the highway, notwithstanding that it had no power to do so.
- It cannot commit torts that are personal in nature, such as those requiring bodily action of the defendant himself, though it will answer for its servants who commit them.
- Directors are personally liable for torts they themselves commit or direct, and the separate personality of the company does not shield them.
2. Partnership Firms
Indian Partnership Act, 1932, in substance 25. Liability of a partner for acts of the firm. Every partner is liable jointly with all the other partners and also severally for all acts of the firm done while he is a partner. 26. Liability of the firm for wrongful acts of a partner. Where, by the wrongful act or omission of a partner acting in the ordinary course of the business of the firm, or with the authority of his partners, loss or injury is caused to any third party, or any penalty is incurred, the firm is liable therefor to the same extent as the partner. 27. Liability of the firm for misapplication by partners. Where a partner acting within his apparent authority receives money or property from a third party and misapplies it, or where a firm in the course of its business receives money or property and it is misapplied by any of the partners while it is in the custody of the firm, the firm is liable to make good the loss. |
- The two conditions in Section 26 are that the act was done in the ordinary course of the business, or with the authority of the partners.
- Liability is joint and several under Section 25, so the plaintiff may sue the firm, any one partner, or all of them, and may execute against the separate property of a partner.
- The firm is not liable for a partner's purely personal tort, committed outside the business and without authority.
- A firm may be sued in the firm name under Order XXX of the Code of Civil Procedure, 1908.
3. Trade Unions
Section 18, Trade Unions Act, 1926 18(1). No suit or other legal proceeding shall be maintainable in any Civil Court against any registered Trade Union or any office bearer or member thereof in respect of any act done in contemplation or furtherance of a trade dispute to which a member of the Trade Union is a party on the ground only that such act induces some other person to break a contract of employment, or that it is in interference with the trade, business or employment of some other person or with the right of some other person to dispose of his capital or of his labour as he wills. 18(2). A registered Trade Union shall not be liable in any suit or other legal proceeding in any Civil Court in respect of any tortious act done in contemplation or furtherance of a trade dispute by an agent of the Trade Union if it is proved that such person acted without the knowledge of, or contrary to express instructions given by, the executive of the Trade Union. |
- The immunity is confined to trade disputes. Outside that context the ordinary law of torts applies to a union exactly as to anybody else.
- It protects only a registered trade union, and its office bearers and members.
- It does not protect violence, intimidation or damage to property, which are not acts of the kind the section describes.
- Section 18(1) answers the economic torts of inducing a breach of contract and interference with trade; Section 18(2) limits the union's liability for the acts of an agent who acted without authority.
4. The State: Article 300 and the Retreat of Sovereign Immunity
Article 300(1), Constitution of India 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. |
1. The article looks backward. It fixes the present liability by reference to what the position was before the Constitution, which sends the enquiry back to the case law under the earlier constitutional instruments.
2. P. and O. Steam Navigation Co. v. Secretary of State for India (1861) 5 Bom HCR App 1 drew the original distinction. A government servant's negligence injured the plaintiff's horses. Peacock CJ held the Secretary of State liable, drawing a line between acts done in the exercise of sovereign powers and acts done in the conduct of undertakings which might be carried on by private individuals.
3. State of Rajasthan v. Vidhyawati, AIR 1962 SC 933 applied it against the State. A government jeep, driven negligently by a driver taking it back from repairs, killed a pedestrian. The State was held liable, the act not being one done in the exercise of sovereign power.
4. Kasturi Lal Ralia Ram Jain v. State of Uttar Pradesh, AIR 1965 SC 1039 went the other way, and is the high water mark of the immunity.
5. N. Nagendra Rao and Co. v. State of Andhra Pradesh, (1994) 6 SCC 205 cut it back drastically.
6. Nilabati Behera v. State of Orissa, (1993) 2 SCC 746 removed it altogether from claims for the violation of a fundamental right.
7. State of Andhra Pradesh v. Challa Ramkrishna Reddy, (2000) 5 SCC 712 confirmed that where the right to life under Article 21 is in issue, sovereign immunity cannot be pleaded.
📖 Kasturi Lal Ralia Ram Jain v. State of Uttar Pradesh, AIR 1965 SC 1039 Facts A partner of the plaintiff firm was arrested by the police on suspicion of possessing stolen property, and gold and silver were seized from him. The gold was kept in the police malkhana instead of the treasury, contrary to the regulations, and a head constable absconded with it to Pakistan. The firm sued the State. Held The State was not liable, although the negligence of the police was established. Ratio The powers of arrest, search and seizure are statutory powers properly characterised as sovereign powers. An act done by a servant in the exercise of a delegated sovereign power cannot found a claim in damages against the State under Article 300(1), however negligent it was. The decision has been much criticised and has since been confined to a narrow class of case. |
📖 N. Nagendra Rao and Co. v. State of Andhra Pradesh, (1994) 6 SCC 205 Facts Stocks of fertiliser and foodgrains were seized from the appellant under the Essential Commodities Act, 1955. Part was released, but the remainder deteriorated through the negligent storage of the officials. The appellant claimed compensation. Held The State was liable. The defence of sovereign immunity was rejected. Ratio In the modern sense the distinction between sovereign and non sovereign power does not exist; it all depends on the nature of the power and the manner of its exercise. Sovereignty and acts of State are two different concepts. The ratio of Kasturi Lal is available only in those rare and limited cases where the statutory authority acts as a delegate of an inalienable function of the State, such as the administration of justice, the maintenance of law and order and the repression of crime. Regulating essential commodities is not such a function, and the State is vicariously liable for the negligence of its officers in discharging statutory duties. |
5. The Protected Classes
Who | The provision | The protection |
Foreign States and rulers | Section 86, Code of Civil Procedure, 1908 | No suit except with the consent of the Central Government, certified in writing by a Secretary. The protection extends to ambassadors and envoys under Section 86(4) |
Diplomatic agents | Diplomatic Relations (Vienna Convention) Act, 1972 | The Convention has the force of law in India; a diplomatic agent has immunity from civil jurisdiction, subject to the Convention's exceptions, and the immunity may be waived by the sending State |
Judicial officers | Judicial Officers Protection Act, 1850 | No suit for any act done in the discharge of his judicial duty within his jurisdiction, or believing in good faith that he had jurisdiction |
Judges of the superior courts | The common law rule, preserved | Absolute protection for judicial acts, whether or not within jurisdiction |
Public authorities generally | No special immunity | Liable on ordinary principles, subject to the notice required by Section 80 of the Code of Civil Procedure, 1908 before suing the Government or a public officer |
The President and Governors | Article 361 of the Constitution | Not answerable to any court for the exercise of the powers and duties of office, with the qualifications that article contains |
6. Why the Immunities Are Narrow
⚠ The object is the function, not the person Every one of these protections exists for a functional reason and not to confer a privilege. A judge is protected so that he may decide without fear of being sued by the losing party, which is why the protection turns on whether he was acting in the discharge of his judicial duty and in good faith. A foreign State is protected because the municipal courts of one country do not sit in judgment on the acts of another, which is why the consent of the Central Government can lift it. A trade union is protected so that collective bargaining is possible at all, which is why the immunity stops at the edge of a trade dispute. And the State was protected on a theory of sovereignty that the Supreme Court in N. Nagendra Rao said no longer exists in the modern sense. The direction of travel in every one of these is the same: the immunity is read down to the function it was created to serve. |
7. The Position Stated Shortly
1. A corporation may sue for torts affecting its property, business and reputation, and is liable vicariously for its servants' torts.
2. Ultra vires is no defence where the servant was acting in the course of employment: Campbell v. Paddington Corporation.
3. A firm is liable under Section 26 of the Indian Partnership Act, 1932 for a partner's wrongful act in the ordinary course of business or with the authority of the partners.
4. Every partner is liable jointly and severally under Section 25, so the plaintiff may sue the firm, any partner, or all of them.
5. Section 18 of the Trade Unions Act, 1926 gives a registered trade union immunity for acts done in contemplation or furtherance of a trade dispute, and outside that the ordinary law applies.
6. Article 300(1) fixes the State's liability by reference to the pre Constitution position, which sends the enquiry to the sovereign and non sovereign distinction drawn in P. and O. Steam Navigation.
7. Vidhyawati held the State liable for a negligently driven government jeep; Kasturi Lal held it not liable for gold lost from a police malkhana, the seizure being a sovereign power.
8. N. Nagendra Rao held that the distinction does not exist in the modern sense, and confined Kasturi Lal to rare cases of inalienable function.
9. Nilabati Behera held that sovereign immunity is no defence at all to a claim for the violation of a fundamental right.
10. Foreign States are protected by Section 86 of the Code of Civil Procedure, 1908, diplomats by the Act of 1972, and judicial officers by the Judicial Officers Protection Act, 1850.