Law of Torts
Sovereign and Non Sovereign Functions: The Distinction on Which the State's Immunity Rests
The whole of the State's immunity in tort turns on a distinction drawn in 1861 by Peacock C.J. in the P. and O. Steam Navigation case, between acts done in the exercise of sovereign powers and acts done in the conduct of undertakings which a private person might also carry on. For the first the State was not liable; for the second it answered like anybody else. The test survives in India because Parliament never legislated under Article 300, but it survives in a very reduced form: after N. Nagendra Rao the immunity covers only the primary and inalienable functions, and where a fundamental right is violated it does not operate at all.
1. The Comparison
Sovereign functions | Non sovereign functions | |
What they are | The primary and inalienable functions of a constitutional government, which only a sovereign can perform | Activities which a private person or corporation might equally carry on |
The test | Could this be done by anyone other than the State, acting as the State | Is this the kind of thing a private undertaking does |
Examples | Defence, the armed forces, war and peace, foreign affairs, the administration of justice, the maintenance of law and order, the repression of crime, legislation, the levy of tax | Hospitals, railways, road transport, education, public works, utilities, commercial undertakings, the custody of goods in trade |
Immunity | Survives, in a much reduced form | None at all |
If a fundamental right is violated | No immunity, even for a sovereign function | No immunity |
The liability | Ordinarily none in tort, but a constitutional remedy lies | Full liability on ordinary principles |
Modern trend | Steadily narrowed | Steadily widened |
2. The Original Distinction
📖 Peninsular and Oriental Steam Navigation Co. v. Secretary of State for India, (1861) 5 Bom HCR App 1 Facts A servant of the plaintiff company was driving a carriage drawn by two horses in Calcutta. Workmen employed at the Government dockyard at Kidderpore were carrying a heavy piece of iron funnel casing along the road. They dropped it, the noise startled the horses, and one of them was injured. The company sued the Secretary of State for India in Council. Held The Secretary of State was liable. Ratio Peacock C.J. drew the distinction which has governed the subject ever since. The East India Company had a twofold character: it exercised powers of sovereignty delegated to it, and it also carried on trade. Where an act is done in the exercise of sovereign powers, that is, powers which cannot be lawfully exercised except by a sovereign or by a person to whom such powers have been delegated, no action lies. But where the act is done in the conduct of an undertaking which might be carried on by a private person without sovereign powers, the State is liable as a private employer would be. Maintaining a dockyard was such an undertaking. |
3. The Development
The case | What it decided |
State of Rajasthan v. Vidhyawati, AIR 1962 SC 933 | A Government jeep driven rashly from the workshop after repairs killed a pedestrian. The State was held liable. Driving a jeep to a workshop is no part of the sovereign functions, and in a welfare State carrying on many activities there is no justification for a wide immunity |
Kasturilal v. State of Uttar Pradesh, AIR 1965 SC 1039 | Gold seized by the police and misappropriated from the malkhana. The State was not liable, the seizure being an exercise of a statutory power exercisable only by a sovereign authority. The Court criticised the result and invited legislation |
N. Nagendra Rao and Co. v. State of Andhra Pradesh, (1994) 6 SCC 205 | Seized foodgrains and fertiliser negligently allowed to deteriorate. The State was liable. Immunity survives only for functions that are primary and inalienable, and no civilised system can permit an executive to play with the people of its country and claim to be sovereign |
Common Cause v. Union of India, (1999) 6 SCC 667 | On review, the Court recalled an exemplary award against a Minister for arbitrary allotments. Arbitrariness alone, however plain, is not the tort of misfeasance in public office, and exemplary damages must rest on a clear and rational basis |
State of Andhra Pradesh v. Challa Ramkrishna Reddy, (2000) 5 SCC 712 | An undertrial killed in an inadequately guarded jail. Where a fundamental right is infringed, the defence of sovereign immunity is not available at all |
Chairman, Railway Board v. Chandrima Das, (2000) 2 SCC 465 | Running the railways is a commercial activity and not a sovereign function. Article 21 protects persons and not only citizens, and Rs 10 lakh was awarded in the writ jurisdiction to a foreign national |
4. What Remains Within the Immunity
- Defence of the country, the armed forces and the making of war and peace.
- The conduct of foreign affairs, and acts of state in relation to foreign powers.
- The administration of justice, which is separately protected by judicial immunity.
- The maintenance of law and order and the repression of crime, though this head is now heavily qualified, since a custodial injury engages Article 21 and the constitutional remedy is unaffected by any immunity.
- Legislation and the levy of tax.
- Even within these heads the immunity is not absolute. It protects against a claim in tort; it does not protect against a claim founded on the breach of a fundamental right, and in practice almost every serious case arising out of policing or custody is now brought on that footing: TORT 135.
5. What Has Been Held Outside It
- Hospitals and medical services, running a hospital being no part of the inalienable functions of the State: TORT 107.
- Railways, road transport and other commercial undertakings.
- Public works, roads, drains, bridges and culverts, which are in any event usually the responsibility of a municipal corporation, which has no sovereign immunity at all, being a statutory body and not the State: TORT 106.
- Education, and the running of schools and institutions.
- Electricity, water and other utilities, which now attract absolute liability rather than any immunity: TORT 115.
- The custody of goods seized in the course of trade regulation, after Nagendra Rao.
- The operation of a motor vehicle, where a claim under the Motor Vehicles Act, 1988 raises no question of immunity at all, the liability being statutory and the insurer answering.
6. Why the Test Is Unsatisfactory
- It rests on an analogy that no longer holds. The distinction was drawn to separate the East India Company's two capacities, as a trading corporation and as a delegated sovereign, and there is no modern institution with that double character.
- The formula is circular in practice. Asking whether an act could be done only by a sovereign invites the answer that any act done under a statutory power could be, since the power came from the legislature, which is how Kasturilal reached its result.
- It produces arbitrary distinctions. A person injured by a Government jeep recovers and a person whose property is stolen from a police station does not, though the State was equally careless in both.
- It protects the wrong cases. The functions within the immunity, policing, custody, the armed forces, are precisely those in which the State's power over the individual is greatest and the individual's ability to protect himself is least.
- And the remedy has been judicial rather than legislative, so the law now consists of a surviving immunity that the courts have narrowed as far as Article 300 permits, alongside a constitutional jurisdiction built to go round it: TORT 137.
⚠ Whether the distinction still decides anything It is tempting to conclude that after Nagendra Rao and Challa Ramkrishna Reddy the sovereign function test is dead, and for most practical purposes that is right: the category has been narrowed to a handful of functions, and within even those a claim founded on a fundamental right passes straight through. But the test has not been abolished, because only Parliament can abolish it and Parliament has not acted, and that matters in a residual class of case that is larger than it first appears. It is the claimant whose loss is purely economic or proprietary, arising out of policing, prosecution, regulation or the administration of justice, where no fundamental right is engaged and the writ route is therefore closed. A business ruined by an unlawful raid, goods spoiled in official custody, a licence wrongly cancelled, a prosecution launched without cause: in each the claimant must sue, and in each the State may still plead the immunity, and whether it succeeds depends on how the function is characterised. So the right way to state the position is not that the distinction is obsolete but that it has been displaced from the cases everybody discusses, custody and violence and death, into the quieter ones nobody writes about, where it continues to decide outcomes on a test the Supreme Court has itself described as having no relevance in the present day. |
7. The Position Stated Shortly
1. The distinction between sovereign and non sovereign functions was drawn by Peacock C.J. in the P. and O. Steam Navigation case in 1861.
2. An act done in the exercise of powers that can be lawfully exercised only by a sovereign attracts immunity; an act done in an undertaking a private person might carry on does not.
3. It survives in India because Article 300 preserved the pre existing position and Parliament has never legislated under it.
4. State of Rajasthan v. Vidhyawati held the State liable for a Government jeep driven rashly, that being no part of the sovereign functions.
5. Kasturilal denied relief for gold misappropriated from a police malkhana, the seizure being an exercise of a sovereign power.
6. N. Nagendra Rao confined the immunity to functions that are primary and inalienable, and held that no executive may play with the people and claim to be sovereign.
7. Challa Ramkrishna Reddy holds that where a fundamental right is infringed the immunity is not available at all.
8. Chandrima Das holds that running the railways is a commercial activity, and that Article 21 protects persons and not only citizens.
9. Defence, foreign affairs, the administration of justice, law and order, legislation and taxation are what remain within the category.
10. The immunity now bites chiefly in claims for economic or proprietary loss where no fundamental right is engaged and the writ route is closed.