1. The only question which arises on this appeal is, whether the State is liable for the tortious acts of its servants. The facts, admitted or established, are these. Respondent No. 1 was carrying on business in cloth at Bhagalpur in the name and style of Ajoy Bharat Stores. Respondent No. 6 was his salesman. On the 4th October, 1951, 222 pairs of Saris and dhotis were seized from this shop for contravention of clause (9) of the Bihar Cotton Coth and Yarn (Control) Order, 1948 promulgated under the Essential Supplies (Temporary Powers) Act, 1946 as also for contravention of conditions 2 and 3 of his Licence issued under the said Order. The two respondents were convicted by a Magistrate, Shri D.N Thakur, under S. 7 of the said Act for the aforesaid contraventions; and in pursuance of the powers conferred by the Act, the learned Magistrate passed orders dated the 23rd March, 1952 forfeiting to Government the dhotis and Saris that had been seized. An appeal preferred to the Sessions Judge by the respondents was dismissed, on the 14th July, 1954. Imam, C.J of this Court set aside the conviction and sentence on the ground that the relevant provisions of the said Order, 1948 had been declared to be unconstitutional by a Bench of this Court.

2. While the case was pending before the Magistrate, respondent No. 1 filed a petition on the 22nd March, 1952 for the release of 206 pairs of Saris and dhotis on the ground that the allegation of charging of high prices was in respect of the remaining sixteen pairs only. But, on the 25th March, 1952, the learned Magistrate directed that as the cloths were not required for the purpose of the case, all the 222 pairs of Saris and dhoties should be sold away before a respectable officer after observing the necessary formalities and the sale proceeds should be deposited in the treasury. On the 5th November, 1954 the two respondents filed a petition before the same Magistrate for release of all the pairs of Saris and dhoties in view of the order of this Court setting aside the conviction and sentence. The Magistrate passed an order directing the release of the cloths to the respondents; but it was reported subsequently that the bags of cloths, which were abnormally damaged and cut by rats and white ants, had already been sold by the Malkhana Magistrate, Mr. Ibrahim, and the sale price that is Rs. 350/- only had been deposited in the treasury.

3. Then, respondent No. 1 instituted the suit, out of which this appeal arises, for a decree against the State of Bihar for Rs. 3,083/10/3, being the price of the Saris and duties which had been seized. It was alleged that, in fact, the cloths were not sold, but they were shown to have been sold on paper only.

4. The State of Bihar disputed the claim of the plaintiff respondent and asserted that the seizure was made bona fide in the course of normal administration of law and justice, and in any case, the State was not liable for the unlawful or negligent acts, if any, of its servants.

5. The additional Subordinate judge of Bhagalpur, who tried the suit found that the price of the seized dhotis and Saris, was Rs. 3,083/10/3. He also found that there was no evidence to show that the cloths were actually cut by white-ants or that they were actually auction-sold, except the order of Mr. Ibrahim dated the 29th February, 1953 in which he said that inasmuch as the appeal had been dismissed and the cloth bags had been damaged by white ants and rats, the same should be sold by auction and the sale proceeds should be deposited in the treasury. He, however, held that the State was not responsible for the wrongful act of the Malkhana Officer which resulted in the alleged sale of the cloths at a grossly inadequate sum of Rs. 350/- only. The suit was, therefore dismissed.

6. In appeal the plaintiff impleaded also Mr. Ibrahim and some other Government servants as respondents, but the appeal was dismissed against them, as they had not been impleaded in the suit. The learned Additional District Judge, who heard the appeal accepted the findings of fact, but he took a contrary view in law and held that the State was liable for the acts of its servants and therefore, the suit was decreed against the State fir the amount claimed, that is Rs. 3,083/10/3 besides cost. Hence, the present appeal by the State.

7. It is now settled by a series of decisions, including the decision of the Supreme Court in State of Rajasthan v. Mst. Vidhyawati, AIR 1962 SC 933, that the liability of the State for the acts of its servants is the same which the East India Company had before the enactment of the Government of India Act, 1858. Their Lordships of the Supreme Court approved the decision of the Supreme Court of Calcutta in the case of Peninsular and Oriental Steam Navigation Co v. Secy. of State for India, 5 Bom HCR App 1 in which it had been held that it was possible to sue the Government for tort, if it was in connection with the private undertaking or undertaking not in the exercise of sovereign powers. This was also the view taken by the Judicial Committee in the case of Secretary of State v. Moment, 40 Ind App 48 (PC). Their Lordships of the Supreme Court also quoted with approval the observation of the Calcutta Court to the effect that the Secretary of State was liable for the damages “Occasioned by the negligence of servants in the service of Government if the negligence is such as would render an ordinary employer liable.” Their Lordships, ultimately, observed that viewed from first principles there could be no difficulty in holding that the State should be as much liable for tort in respect of a tortious act committed by its servant within the scope of his employment but wholly dissociated from the exercise of sovereign powers, as any other employer. It is also well settled that a distinction must be made between acts done by the Government in pursuance of ventures which a private individual might undertake equally well and acts done in exercise of Governmental powers which could not be lawfully exercised save by the sovereign authority or persons to whom the sovereign authority might delegate those powers. Acts of the former class are mercantile operations or operations of like kind in which the East India Company actually engaged itself before and even after it had acquired sovereignty. Acts of the second class fall under two categories. One category consists of the acts of State, properly so called, such as making a treaty, commandeering private property for war purposes or quelling civil disturbances by force, and the immunity of Government is absolute for acts in this category. The other category consists of those acts which are done under the sanction of some municipal law or statute and in exercise of powers thereby conferred. This class can be subdivided further into two groups: (i) those consisting in detention by the Government of land, goods or chattels belonging to the subject, and (ii) those done by officers of the Government in the discharge of their official duties. With regard to acts of group (i) an action would lie in the Courts in India, and it would seem that even in England a petition of right would lie. With regard to acts of group (ii), however, no action would lie except in cases where it can be proved that the impugned act had been expressly authorised by the Government or that the Government had profited by its performance. The reason why no right of action lies except on proof of special authorisation by the Government is that in the absence of such proof the act is considered to have been done in exercise of the power or the discretion vested in the officer by the relevant law and not in pursuant of any implied authority derived from the Government. See Uday Chand v. Province of Bengal, 51 Cal WN 537. This decision has been followed by this Court in District Board, Bhagalpur v. Province of Bihar, ILR 33 Pat 563 : (AIR 1954 Pat 529) and State v. Rani Sonabati*, ILR 33 Pat 603 : (AIR 1954 Pat 513). These principles were repeated in Sewkissen Bhattar v. Dominion of India, 61 Cal WN 389: ((S) AIR 1957 Cal 617), with this difference that the first group of acts done under the colour of Municipal Law is described as “unlawful detention of land, goods, chattels or money of the subject.”

8. Thus, there are only three exceptions to the rule that Government is not liable in tort for its own act or the acts of its servants. (1) where the act complained of is of a private nature, that is acts done in the conduct of private or commercial undertakings; (2) unlawful detention of land, goods etc. belonging to the subject under any Municipal Law; and (3) where the impugned act has been specially authorised by the State or that the State has been profited by its performance.

9. Shri De, however, submitted that the State was liable in the present case inasmuch as the Saris and dhotis of the respondents had been seized and detained by the officers of the Government-26 pairs were detained lawfully and the remaining 206 were detained unlawfully. But it will be recalled that the seizure was not made under the orders of Government, but the Officers of the State had in seizing the cloths acted under the sanction or purported sanction of the Essential Supplies (Temporary Powers) Act, and the Order made thereunder; and the State is not liable for the consequences of such an act, unless the State had authorised or ratified the act it is not the case of the plaintiff-respondent that the State had authorised or ratified the act of seizure or detention of the Saris and dhotis. On the other hand, when on the 22nd March, 1952 respondent No. 1 requested the Magistrate before whom the case was pending that 206 pairs 1 Saris and dhotis should be released on the ground that the allegation of charging high prices did not relate to these pairs, the learned Magistrate refused to do so and directed the sale of Saris and dhotis. It is obvious that when a case had been instituted in respect of the offence said to have been committed in respect of the Saris and dhotis, they could be released only under the orders of the Court it is remarkable that the plaintiffs did not make any request for the release of a single pair of Saris or dhotis before the 22nd March, 1952. Of course, it has been found by the Court below that the Saris and dhotis were probably not sold at all and misappropriated or they were unjustifiably sold for a grossly inadequate sum of Rs. 350/- only; but this fact would amount to only a negligent or dishonest act of the servants of the Government.

10. The question now is whether the Government is liable for such an act. It was held in ILR 33 Pat 563 : (AIR 1954 Pat 529) by a Bench of this Court that the Government cannot be held liable for the damage caused on account of the negligence of its officers in performing the duties entrusted to them by a statute. Their Lordships observed that in order that the rule of vicarious responsibility may apply, two conditions must co-exist:—(i) there must exist the relationship of Master and Servant between the persons sued and the person who has committed the wrong and (ii) the person committing the wrong, that is the servant, must have been at the time acting in the course of his employment such a servant must be subject to the control and directions of his employer in respect of the manner in which the work is to be done. Their Lordships discussed all the important decisions on this point, and I shall refer to only a few of these old decisions.

11. In Tobin v. The Queen, (1864) 143 ER 1148 which arose out of a petition of right to recover compensation for a wrongful act done by a servant of the crown in the supposed performance of his duties, Erle, C.J, observed:

“The liability of a master for the act of his servant attaches in the case, where the will of the master directs both the act to be done and the agent who is to do it. The act of the servant is then held to be the act of the master; and the Servant acting in the course of his employment is a general agent in that employment, and makes his principal liable for all that he does within the scope of his authority as such general agent; and further, in respect of all his acts within the scope of that authority, they are the acts of the principal notwithstanding any private arrangement to the contrary between the principal and such agent. This doctrine is frequently exemplified in cases of collision either on land or water. The master is liable for the act of the coachman employed by him to drive his horses, whether he was so employed for a single drive or in constant service, and notwithstanding that the orders were to drive slowly and on the proper side the coachman drove fast or on the wrong side. The master is held responsible, upon the ground that he has put the servant in his place to perform a service ordered by himself and over which he has absolute control at all times”.

“When the duty to be performed is imposed by law, and not by the will of the party employing the agent the employer is not liable for the wrong done by the agent in such employment. On this principle it has been declared that superior public Officers such as the Postmaster-General, the Lords Commissioners of the Treasury, the Commissioners of Customs and Excise, the auditors of the Exchequer, and the like are not responsible for the negligence or misconduct of inferior officers in their several departments though the superior officers appointed them and had the power of dismissing them.”

12. In that case, the petitioner claimed damages sustained by him from the loss of his vessel, which had been seized as being engaged in the slave trade by Captain Douglas who was the Commander of a ship of Her Majesty's Navy, and was employed for the suppression of the slave trade according to the statutes relating thereto. The vessel of this petitioner, after its seizure, was destroyed by Captain Douglas in the supposed performance of his duty. The petitioner alleged that the vessel had been wrongly seized and destroyed and it had not been engaged in the slave trade. It was held that, on the statement of the petitioner's case the petitioner may bring an action for the wrong suffered by him against Captain Douglas, but he could not maintain a petition of right against the Queen. The argument in support of the petition to hold the Queen liable for the act of Captain in her Majesty's Navy was rested upon the analogy of the liability of a principal or master for the act of his servant, and the Queen was sought to be made responsible for any wrong done by a Captain of the Navy in the course of his employment.

13. Erle, C.J pointed out that the argument failed because there was no analogy between the relation of the Captain of a Queen's ship to the Queen and the relation of servant to master or bailiff to sheriff so as to create the liability in question.

14. This decision was approved by the Privy Council in Nireaha Tamaki v. Baker, (1901) AC 361 at p. 575, on the ground that the naval officer in that case in seizing the vessel was not acting in obedience to a command of Her Majesty, but in the supposed performance of a duty imposed upon him by Act of Parliament, and in such a case the maxim ‘respondent superior’ did not apply.

15. The principles laid down in Tobin's case, (1864) 143 ER 1148 were followed in A.M Ross v. Secy. of State, ILR 39 Mad 781 : (AIR 1916 Mad 1157), which was a decision on appeal from the judgment of Wallis, J. on the Original side of the Madras High Court and reported in A.M Ross v. Secy. of State, ILR 37 Mad 55 : AIR 1915 Mad 434. That case arose out of a suit by the plaintiff representing the Assam Labour Supply Association in Ganjam, against the Secretary of State for India for damages in respect of certain orders passed by the District Magistrate of Ganjam suspending and dismissing the local agent of the Association in Ganjam and closing his depot. It was held that the District Magistrate had passed his orders under the Assam Labour and Emigration Act and, in doing so, he was not the agent of the Government and, as the act was not done on Government's behalf, the Government could not ratify the same, nor could Government be liable even if it had ratified the same.

16. In the case of ILR 33 Pat 603 : (AIR 1954 Pat 513), on which Shri De relied, Ahmad, J. referred to this decision while stating the third exception, namely, that where it is proved that the impugned act has been expressly authorised by the State or that the State has been profited by his performance the State will not be immune from an action for liability arising from them.

17. I shall refer to two more cases in this (connection. In the State of Tripura v. Province of East Bengal, 1951-2 SCR 1 : (AIR 1951 SC 23), Fazl Ali, J. of the Supreme Court referred to some cases including those of Shivabhajan v. Secy. of State, ILR 28 Bom 314 and A.M Ross, ILR 39 Mad 781 : (AIR 1916 Mad 1157) and observed:

“(2) It is settled law that the Secretary of State cannot be held liable for wrongs committed by the servants of the Crown in the performance of duties imposed by the Legislature.”

18. In ILR 28 Bom 314, the plaintiff had sued to recover a sum of money from the Secretary of State on the allegation that a large number of bundles of hay had been attached by a Chief Constable, while the hay was in the possession of the plaintiff, and, when the plaintiff served notice upon the District Superintendent of Police for the delivery of possession of his hay only a small quantity of the hay was delivered while the remainder was not made over to him. The plaintiffs case was that his hay had been attached by the Chief Constable in his capacity as a Government servant and Government, being the principal, was liable for the act of its agent. It was held that the suit was not maintainable, inasmuch as the Chief Constable had seized the goods not in obedience to any order, of the executive Government but in performance of a statutory power vested in him by the legislature. This decision was referred to with approval in both the cases of this Court referred to earlier.

19. The facts of Shivabhajan's case, ILR 28 Bom 314 are almost on all fours with the instant case, subject to this difference that none of the saris and dhotis was delivered to the plaintiff-respondent, and they were shown to have been sold for Rs. 350/- only, while in the former case a small quantity of hay was delivered to the plaintiff; In the instant case also, the goods were seized by the servants of the Government, not in obedience to any order of the Government but in the purported exercise of the statutory power vested in them by the Legislature.

20. Shree De then relied on another bench) decision of this Court in the case of Chetandas Gulabchand v. State of Bihar, AIR 1958 Pat 512. The plaintiffs in that case were dealers in textile goods and also acted as importers of cloth for the Sadar sub-division of the district of Purnea and held a licence from the Government of Bihar for that purpose. The plaintiffs accordingly ordered purchase of cloth in different parts of the country. In the year 1945, there was restriction on the carriage of goods to Purnea by railway through Karha Gola and, accordingly, the plaintiffs arranged to get their consignment of cloth through Nirmali railway station in the district of Bhagalpur. The arrangement was that delivery of the consignment would be taken at Nirmali and thereafter it would be taken to Purnea by boat and bullock carts. 18 bales of cloth were received accordingly at the Nirmali railway station and the plaintiffs' men went to take delivery of the goods on production of the railway receipts, but, under orders from the Additional District Magistrate of Saharsa, the railway receipts were seized by some local officers of the Government, who took delivery of the consignment. The plaintiffs came to learn later on that the cloth was sold and the sale proceeds were deposited in the Government Sub-Treasury, at Supaul. All attempts on the part of the plaintiffs to recovery their property failed, in spite of the recommendation of the District Magistrate of Purnea for the release of the cloth. When, however, the plaintiffs learnt that all the 18 bales had been sold away, they approached the Additional District Magistrate of Saharsa for payment of compensation at the rate of ex-Mill price plus 10 per cent, but the Additional District Magistrate of Saharsa refused to pay the compensation and the suit was instituted, basing the cause of action on the refusal of the Additional District Magistrate of Saharsa to accede to the plaintiffs claim, which took place on 15th July, 1946.

“The defendant, that is, the State of Bihar resisted the claim of the plaintiffs on a number of grounds. Their Lordships held that the act of the Additional District Magistrate, who passed the order of requisition and acquisition of plaintiffs' goods under Rule 75-A of the Defence of India Rules, did not commit any irregularity and his act was not tortious and he was not, personally liable for the compensation payable in respect of the property. Further, it was held that, even if his act was wrongful or tortious, the State would still be liable when it ratified the act of the servant by refusing to pay compensation and by profiting out of the act by retaining the amount realised by the sale. The decision of this Court in the case of Dist. Board Bhagalpur was brought to the notice of their Lordships in support of the argument that the tortious act of the servant of the State would not make the State liable even if he commits it in bona fide discharge of his duties as a Government servant; but Misra, J. observed:

“As I have held, however, this argument is also academic. In the present case, the seizure was not wrongful and, as such, not tortious and, if it were so, I would hold the State still liable because the act of the servant in the present case is one which was ratified by the State as it refused to pay compensation to the plaintiff or to state that the Additional District Magistrate, Saharsa was personally liable and, in any case, the State did profit by the act in retaining the amount in its treasury.”

21. This view was taken by his Lordship on account of the peculiar facts of that case, as will appear from his earlier observation which reads thus:

“Moreover, when the plaintiffs applied on 31st March, 1945, (Ext. 5/1) for payment of the price of the bales of cloth belonging to them and seized by Government and further renewed that prayer by petition dated 4th December, 1945, in the Court of the Additional District Magistrate, Saharsa, (Ext. 5.a), and when the prayer of the plaintiff was turned down by the Additional District Magistrate, it amounts to refusal to exercise jurisdiction to determine the amount of compensation, and in that case there is no reason why the present suit should not be maintainable in the Civil Court.”

22. But the facts of the instant case are absolutely different. The most remarkable difference is that an the case of Chetan Das Gulabchand, the officers of the Government requisitioned and acquired the goods under the Defence of India Rules which required the determination and payment of compensation of properties requisitioned or acquisitioned, while in the instant case the goods were seized and a criminal case was started for the alleged violation of certain statutory provisions and it was the Court alone which could order return or sale of the goods or the payment of the sale price to the owner of the goods. Thus, there was no question of the executive officers of the Government refusing to return the goods, nor there was any question of determination or payment of compensation in the instant case. Hence, it cannot be said that the Government ratified the action of its servants in seizing the Saris and dhotis or in selling them, nor it can be said that the Government profited by these acts of its servants, of course, the sale price was kept in the treasury, but it is not the case of the plaintiff that there was at any time refusal on the part of the Government or its servants to pay the sale price of Rs. 350/- only.

23. In view of the foregoing decisions, the facts of the instant case do not bring the claim of the plaintiffs respondent under any of the three exceptions which make the State liable for the acts of its servants, and it must be held that the State is not liable for any compensation or damage to the plaintiffs.

24. But it is admitted that a sum of Rs. 350/- is lying in the Government Treasury as the price of the cloth, and the plaintiffs have not yet withdrawn this amount. Hence, the plaintiffs shall recover this amount only from the State. In the result, the appeal succeeds in part and the suit is decreed in part, that is, the plaintiffs will get a decree for Rs. 350/- only. The parties will bear their own costs throughout.

CG/R.G.D

25. Appeal partly allowed.