State Of Andhra Pradesh v. Devarasetty Rama Murthy

Raghuvir, J.:-

(1) D. Rama murthy is a commission agent at khammam. He transported 573 bags containing 'ravva' in a wagon box no. 67304 of raijways from khammam station. The bags were to be delivered to two firms - k. R. Pulnaekar and brothers and abnnapurna flour mill at gadagin the state of mysore. The vigilance inspector of civil supplies, as respects the bags received an anonymous telephone complaint, to contain rulgar wheat not ravva. On receipt of complaint, crime no. 39/1971 was recorded on march 15, 1971. The goods at khammam railway station were seized by civil supplies department. The bags were shifted to warehouse of the district co - operative marketing society limited. To avoid deterioration of the goods, later, the stock was sold in a public auction. Out of the sale proceeds, godown rent of rs. 1,581 - 94 ps. Was paid. The judicial first class magistrate, khammam on december 4, 1972 ordered the balance of sale proceeds be paid to commission agent.

(2) In the course of the investigation, the vigilance inspector seized bill book, exs. B - 3 to b - 6 of the commission agent, and distribution supply register of bulgar wheat maintained under the a. P. Gift goods (prevention of unlawful possession) act x. Of 1965. He examined witnesses at brabmanapalli village. When he did not find any incriminating evidence to prosecute the commission agent under act x of 1965, he considered the feasibility to prosecute under the provisions of the a. P. Food - grains dealers licensing order, 1964. Since no evidence was procured, no charge - sheet was laid either under the act x of 1965 or under the order 1964. The commission agent was finally discharged in the criminal court.

(3) The instant civil suit was laid by the commission agent, after he was discharged, for recovery of rs. 22,000/ - deducting rs. 30,964 - 46 ps. Paid by the criminal court. The suit was laid against the state government, in that the vigilance inspector was not impleaded. The suit was principally resisted by the state of a. P. To hold, the seizure of bags, no doubt, was a tortuous act, but a plea of immunity was raised for tort under the state sovereignty.

(4) The issue in the suit, inter alia, were: whether the seizure was illegal; whether the seized 573 bags were of bulgar wheat; whether the state government was responsible for the deterioration of goods - in the godown. These issues were answered against the state. A decree followed. Hence, the appeal by the state government. In the decree, however, the amounts paid by the commission agent as sales - tax and railway freight were not allowed, therefore, the commission agent lodged cross - objections in the appeal covering the said two times. -

(5) The state government did not adduce any evidence at the trial to hold the bags seized contained not 'ravva' but 'bulgar wheat1. P. Satyanarayana rao, the inspector of vigilance cell, deposed: he could not collect evidence to implicate the commission agent. The bail books, exb - 3 to b - 6 showed the stock were 'ravva'. The distribution supply register maintained under act x of 1965 by the field worker, appa rao. Did not show culpability of the commission agent. It is thus seen from the evidence, the seizure of bags was wholly unjustified either under the act x of 1965 or under the order, 1964 in the - instant appeal, no question as to 'probable cause' or 'reasonableness' of seizure is raised to justify the act of seizure made on march 15, 1971 by the vigilance inspector, therefore, that aspect is not considered.

(6) The learned government pleader, however, cited the following four cases: k. Krishna murthy v. State of andhra pradesh, (1960) 2 an. W. R. 502= air1961 a. P. 283: chodey janakiramaiah and co. V. State of andhra pradesh, (1964) 1 aruw. R. 253; hindupur co - op. Stores v. State of andhra, (1964) 1 an. W. R,333; and chetty and co. V. Collector of ,anantapur, (1965) 1 an. W. R. 183= air1965 a. P. 457 and argued, the fact of seizure, on the facts was a tortuous act and for such an act, the state is not liable to pay any damages to the commission agent, event if the seizure of goods is wholly unjustified.

(7) In the four cases cited, the ratio and dictalaid by the supreme court is followed to hold the state is not liable for damages if the acts are referable to the sovereign functions of the state. A word, however, is necessary to be stated as to the cases cited. Whilst, the principle relevant to sovereignity laid by the supreme court is correctly stated in the four cases, application of the principle in each of the cases does not form part of precedent, as it is not unknown, mistakes occur in application of the principle to facts of each case. If a principle is to be deduced from 'application' such a "deducedl principle' or 'dicta' often or at times, it is seen over - reach the original principle. These four cases, no doubt, have applied the principle laid, but the manner of 'application' of principle in the four cases, it is needless to reiterate, does not bind subsequent cases. This is equally true of cases decided by other high court and also of supreme court, where the' principles are applied.

(8) The question raised, in the instant case, relevant to the seizure made on march 15, 1971 is the following: the act of seizure is in exercise of sovereign powers of the state. It was argued that such a conclusion follows from the acts of seizure and state is immune from liabi - lity. The argument is elaborated:

"if a seizure is referable to a statute and such a seizure even if it is purported seizure, the act of seizure is a sovereign act"

. If this contention is to be accepted in this bland firm, in which, it is posed, in which case, instead of making the state immune for sovereign acts, the state will immunised in all cases of seizures or purported seizures, if the act is proved done under 'statutory power'. The logical conclusion in such a contingency or case, it is argued by the govt. Pleader, any statutory power exercised, according to this contention, should be construed as a sovereign exercise of power. This conclusion, in my view, in law, is non - sequiter.

(9) The seizure, in the instant case, is made cinder the andhra pradesh gift goods (prevention of unlawful possession) act x of 1965. The act speaks of eight organisations in the schedule of the act like unicef; care; tcm etc. In section 2 eight commodities are specified to cover the gifts including "gulgar wheat". Under section 3 of the act, sale, purchase and transport of gifted goods, without permission from the appropriate authority, is unlawful and is punishable offence under section 4 of the act. The offence is a cognizable offence under section 5 of the act. The offence is a cognizable offence under section 5. The state is empowered to amend the schedule under section 6. The rule are to be made under section 7 and under section 8, rules are to be laid before the legislature. Thus, the act contains eight sections. The issue is, whether the receipt and distribution of bulgar wheat, has any relevance to the sovereign power of the state.

(10) Sovereignty is often a political question as defined by aristotle. In legal parlance or connotation the definition given by jean bodin, the french philosopher, is accepted bodin's definition is, "the supreme power of the state over citizens and subjects unrestrained by law. " the words, "unrestrained by law" gain meaning from the character of the government whether it is monarchy, republican, origarchy, totalitarian or bictotorial. The "restraint" imposed by the states thus varies with the character of the government. In democratic sense, or democratic governments, sovereignity is deffused and the concept is worked out in individual issues through political processes. The issue whether an individual act is a sovereign act or not, is to be considered from the stand point of first principles. Sometimes, it is easier to determine the issue in holding in negative perspective i would have continued the discussion on first principles further but the counsel at the debate, did not touch the first principles.

(11) The question, in the instant case, is whetheer under the provisions of act x of 1965, the receipt and distribution of gifts or possession of gifted goods, the sale, the purchase, the movement of blilgar wheat, whether, on facts, is a sovereign act. This question was imposed in this manner on behalf of the commission agent. Whether in purchasing or in selling, transporting or in its unlawful possession, whether concept of "sovereignity" has any relevance, is not raised in the appeal by the learned govt. Pleader. It is not argued, on the facts of the case, transporting goods, has any relevance to sovereign act. What is argued is (it is necessary to repeat) , when seizure is made whether it is with reference to the provisions of act x of 19g5 or de hors the provisions of the act, seizure is made under a statute, therefore, such an act is a sovereign act. This inference is neither good logic nor such an inference, in law, follows. The state can plead immunity for sovereign act and every statutory act, cannot be equated to a sovereign act.

(12) The same question has been posed on behalf of the state again, from the stand point of punishment. A citizen can be punished as a sequel to seizure, therefore, it is argued, seizure partakes the character of a sovereign act. This again is a plea, which cannot be countenanced. It is seen, a citizen can be punished under a schedule if he is cruel to cats, dogs or when his cattle trespass, a citizen can be punished. In the event of dearth of electrical energy, a citizen can be punished for consumption of excess of energy when a ceiling is fixed by the authorities as to the consumption of energy. Can it be said, because of cattle trespass, cruelty to animals or excess consumption of energy, sovereignity of the state has any relevance to the punishment. These instances are stated to hold, theory of punishment does not, in all cases, relate back to sovereignity. Sovereignity may be relevant, in some cases but it is not good law to state a citizen since can be punished, therefore, in all such acts, sovereignity is relevant.

(13) The two contentions raised on behalf of the state in support of this appeal, therefore fail. It is seen, relevant to cross - objections, under ex. 3 - 5, railway freight was paid by the commission agent and under ex. B - 6 receipts shows, sales - tax was paid by the commission agent. The cumulative sum of the two amounts as rs. 2,114 - 37 ps. The lower court did not advert its attention to the two receipts and in the decree, did not include these two amounts. The cross - objections, therefore, are allowed with costs. The appeal of the state government, for the aforesaid reasons, is dismissed with costs.

(14) The defendant is the appellant. The plaintiff filed a suit for recovery of rs. 22,000/ - towards damages from the defendant. The essential facts culminating in the suit may be stated: the plaintiff is carrying on commission business at khammam. The plaintiff purchased 573 bags of wheat rawa on 15. 3. 1971 for rs. 39,537/ - and booked the bags through railways from khammam to gadag. The stock of 573 bags was loaded into the wagon and the inspector of v. C. C. S. Department, hyderabad, registered crime no. 39/1971 under section 3 of a. p. Gift food (unlawful possession) act, 1965 in police station khammam town on 15. 3. 1971 at 10. 30 p. M. And seized the bags of wheat rawa and duplicate railway receipts on 16. 3. 1971 from the wagon at 10. 00 a. M. The stock was unloaded from the railway wagon and sent to the godown of district co - op marketing soceity ltd. Khammam on 19. 3. 1971. The wheat rawa in question does not come under the category of bulgar wheat and the bags were not supplied by way of gift by any of the specified relief organisations mentioned in the act and the. Stock was not gift goods supplied to any state government or the central government. The plaintiff filed crlm. P. No. 1294/71 in the 'high court of andhra pradesh for quashing the proceedings in crime no. 39/71 on the file of the munsif magistrate, khammam. Considering the matter as premature at that stage, the high court passed orders on 7. 9. 1971, directing expeditious completion of the proceedings. On 13. 3. 1972, the business manager of the district co - op. Marketing society ltd. Khammam sent a letter to the munsif magistrate, khammam, with a request to arrange for the disposal of the stock as it. Was getting deteriorated. The munsif magistrate in the month of may, 1972 authorised the business manager to sell the stock in open market and deposit the proceedings into court. The public auction was held on 13. 9. 1972 and on weighment the stock was 458. 40 quintals at the time of auction and if fetched rs. 32,546. 94 due to deterioration. The district co - op. Marketing society deducted rs. 1581. 94 towards expenses for storage, commission etc. And deposited rs. 30,954. 46 in the court, the plaintiff filed a petition on 4. 12. 1972 in the court of the munsif magistrate, khammam, for refund of the amount lying in deposit reserving the right to claim compensation for the loss and damages. Thereupon, a cheque was issued to the plaintiff for the said amount and the plaintiff incurred a loss of rs. L1,543. 31 in the principal amount. The state government and its employee, the inspector vigilence cell, civil supplies, hyderabad, are responsible for the loss. The plaintiff is entitled to rs. 22,074. 90 comprising rs. 11,543. 31 being the principal amount, rs. 9,r35. 10 being the interest on rs. 42,507. 77 p. From 15. 3. 71 to 5. 2. 73 at 12% p. A. And the claim in the suit is restricted to rs. 22,000/ -. The defendant denied the allegation of purchase of wheat rawa on 15. 3. 71 from four villagers. The defendant officials had information that the plaintiff who was not having food grain dealers licence was unauthorisedly and illegally transporting bulgar wheat which is a gift! good under the a. P. Gift goods (unlawful posession) act, 1965. The first information report was received on 15. 3. 71 by the police station, khammam and the entire stock of bulgar wheat was seized from the wagon and handed over to the court fo first class magistrate, khammam, who sent the same to marketing society for safe custody. The defendant felt that the plaintiff is liable under section 3 and 4 of the gift goods act besides being liable for not having food grain dealers licence. The defendant had information that the catholic relief service u. S. India programme had supplied bulgar broken wheat to some service organisations in khammam district and the plaintiff was found in possession while transporting the same to mysore state. The defendant could not however file charge - sheet under section 3 of the a. P. Gift goods act as they were advised that necessary requirements are not fulfilled. Therefore, they were contemplating to file charge - sheet under section 4 for unlawful transport of hulgar wheat in the absence of food grain dealers licence under the essential commodities act or for both. The charge sheet could not be filed at an early date as the investigation was of a detailed nature and as the officer entrusted with the same was transferred. The contents are broken bulgar wheat and not rawa. The wheat imported into india by the above mentioned charitable organisations is exempted from to and is not intended to be sold in market. The vigilance authroities acted in good faith "and seized the wheat while exercising their powers and registered the crime under the provisions of the a. P. Gift goods act. The allegation of deterioration in quantity and quality of the wheat is denied. The district co - operative marketing soceity stocked the wheat in a permanent godown which is a safe place for storage. The district marketing society is entitled to deduct rs. 581. 94 towards expenses for storage etc and the plaintiff is not entitled to claim the loss or interest. The defendant officials deposited the total quantity seized by them and there is no negligence on their part for which the government is responsible. If there is any shortage, it is due to natural circumstances for which the defendant cannot be made liable and the officials acted in good faith and in strict compliance of law. The plaintiff's suit is no maintainable against the government for any damages caused or likely to be caused for anything done in good faith by the officials. Further, the suit against the state of a. P. Is not maintainable without impleading the officials whose acts are stated to be objectionable.

(15) On the above pleadings, the following issues are framed: -

1. Whether the stock of 573 bags seized is wheat ravva or bulgar wheat and whether its seizure is misconceived, illegal and unwarranted? 2. Whether the stock in question is covered by the prohibition under any of the provisions of a. P. Gift goods act? 3. Whether the plaintiff is entitled to claim rs. 22,074. 95 with future interest? 4. Whether there is deterioration of the said stock in quantity and quality by the time it was put to sale and whether the defendant is accountable for the loss due to such deterioration? 5. Whether the suit is maintainable against the state of andhra pradesh? 6. Whether the officials who seized are necessary parties and the suit is bad for non - joinder of those parties? 7. To what relief?

(16) The court below found that the seizure of the goods by the official purporting to be under the municipal law is illegal and as the government ratified the action, the government is liable and as such they are accountable to the loss due to the deterioration of the goods in quantity and quality.

(17) The learned government pleader contended that the seizure and detention of the goods is pursuant to the power conferred on the authorities under a. P. Gift goods act and foodgrains licencing order and as such the government is not liable for the acts done by the officials in the course of discharge of the functions under the relevant statutes and traceable to sovereign power. The question of ratification by the government does not arise and is not relevant in the context of consideration of liability of the government for the acts done by the officials purporting to be under the powers vested in them by the statute. The learned counsel for the respondent subject sustain the judgment of the court below contending that the seizure accompanied by undue detention of the goods is illegal and outside the purview of the provisions of the enactments and not relatable to deligation of the sovereign power and further in any event, having regard to the subsequent ratification of the illegal action, the government is liable under the doctrine of vicarious liability. The learned counsel, on either side, cited several decisions touching diverse shades of opinion and the two leading decisions are state of rajasthan v. Mst. Vidyawathi, (1963) 1 s. Cj. 307= (1963) 1 m. L. J. (s. C.) 70: (1963) 1 an. W. R. (s. C.) 70: air1962 s. C. 933 and kasturilal v. State of u. P. , (1965) m. L. J. (crl.) 571= (1965) 2 an. W. R. (s. C.) 15= (1965) 2 m. L. J. (s. C.) 15= (1965) 2 s. C. J. 318= a. I. R. 1965 s. C. 1039 handed down by the supreme court. In state of rajasthan v. Mst. Vidhyawati, (1963) 1 s. C. J. 307 (1963) 1 m. L. J. (s. C.) 70= (1963) 1 an. W. R. (s. C) 70= a. I. R. 1962 s. C. 933 the car of i the government was sent to workshop for necessary repairs and, after the repairs were carred out, the driver while driving the car along a path - road from the work shop to the residence of collector knocked down one jaggishlal and it resulted in his death three days later. The widow of jagdishlal and his minor daughter filed a suit for compensation of rs. 25,000/ - from the driver as well as the state of rajasthan. The suit was contested by the state of rajasthan only and it was contended that it was not liable for the tortious acts of its employee. The trial court decreed the suit aginst the driver and dismissed against the government and on appeal at the instance of the plaintiffs, the high court allowed appeal and decreed the suit against the government also. Thereupon the state of rajasthan field an appeal before the supreme court contending that the state of rajasthan was not liable as the case was maintained by the government in exercise of sovereign powers and not as part of any commercial activity of the state. After survey of section 176 (1) government of india act, 1935 and section 32 of government of india act, 1915 and act 21 and 22 victoria ch. Cvi, entitled "an act for the better government of india act, 1858 it is held as follows:

"it will thus be seen that by the chain of enactments beginning with the act of 1858 and ending with the constitution the words "shall and may have and take the same suits, remethes and proceedings" in section 65 above, by incorporation, apply to the government of a state of the same extent as they applied to the east india company. "

After review of the decision of the supreme court of calcutta in peninsular and oriental steam navigation co. V. Secy, of state for india, (1868) 5 bombay hcr. (app.) 1 and also the case of viscount contebury v. Attorney general. (1843) 1 ph. 306 the supreme court observed as follows at page 938:

"this case also neets the second branch of the argument that the state cannot be liable for the tortious acts of its servants, when such servants are engaged on an activity connected with the affairs of the state. In this connection, it has to be remembered that, under the constitution, we have established a welfare state, whose functions are not confined only to maintaining in all activities including industry, public transport, state trading, to name only a few of them. In so far as the state activities have such wide remifications involving not only the use of sovereign powers but also its powers as employers in so many public sectors, it is too much to claim that the state should be immune from the consequences of tortious acts of its employees committed in the course of their employment as such. In this respect, the present set up of the government is, analogous to the position of the east india company, which functioned not only as a government with sovereign powers, as a delegate of the british government, but also carried on trade and commerce, as also public and road transport business."

Finally the supreme court held as follows at page 940:

"in india, ever since the time of the east india company, the sovereign has been held liable to be sued in tort or in contract, and the common law immunity never operated in india. Now that we have, by our constitution, established a republican from of government, and one of the objectives is to establish a socialistic state with its varied industrial and other activities, employing a large army of servants, there is no justification, in principle or in public 'interest, that the state should not be held liable vicariously for the tortious act of its servant. This court has deliberately departed from the common law rule that a civil servant cannot maintain a suit against the crown. In the case of state of bihar v. Abdul majid, 1954 s. C. R. 786: 67 l. W. 550: air1954 s. C. 245, this court has recognised the right of a government servant to use the government for recovery of arrears of salary. When the rule of immunity in favour of the crown, based on common law in the united kingdom, has disappeared from the land of its birth, there is no legal warrant for holding that it has any validity in this country particularly after the constitution. As the case of action in this case arose after the coming into effect of the constitution, in our opinion, it would be only recognising the old established rule, going back to more than 100 years at least, if we uphold the vicarious liability of the state. Article 300 of the constitution itself has saved the right of parliament or the legislature of a state to enact such law as it may think fit and proper in this behalf."

In kasturilal v. State of u. P. , (1965) 2 s. C. J. 318= (1965) m. L. J. (crl.) 571 while one of the partners of the firm was corning to meerut to sell gold, silver and other goods, he was taken into custody by three police constables and his belongings consisting of gold and silver were seized from him and kept in police custody. Thereafter he was released on bail and the silver seized from him was returned to him. Inspite of repeated demands, the gold was not returned and subsequently the partner filed a suit against the state of u. P. That the gold seized from him should be either returned to him or in alternative its value should be directed to be paid to him. The plea was taken on behalf of the state that this was not a case of negligence of the police officers and even assuming negligence, the state cannot be made liable for the loss resulting in such negligence. The trial court found on both the issues in favour of the plaintiff and a decree was passed for rs. L 1,430 - 10 - 0 being the value of the gold seized. On appeal, the allahabad high court found that no negligence has been established and even assuming that there is negligence, that would not justify the claim for a decree against the state. The supreme court held that the loss suffered by the appellant is relatable to the negligence of the police officers employed by the respondent arid in the context of considering whether the state should be held liable vicariously for the tortious acts of its servants, took notice of the decision in state of rajasthan v. Mst. Vidhyawati, (1963) 1 s. C. J. 307 and, after reviewing the said decision and other decisions, held as follows:

"thus, it is clear that this case recognises a material distinction between acts committed by the servants employed by the state where such acts are referable to the exercise of sovereign powers delegated to public servants, and acts committed by public servants which are not referable to the delegation of any sovereign powers. If a tortious act is committed by a public servant and it gives rise to a claim for damages, the question to ask is: was the tortious act committed by the public servant in discharge of statutory functions which are referable to, and ultimately based on, the delegation of the sovereign powers of the state to such public servant, if the answer is in the affirmative, the action for damages for 'loss caused by such tortious act will not lie. On. The other hand, if the tortious not act has been committed by a public servant in discharge of duties assigned to him not by virtue of the delegation of any sovereign power, an action for damages would lie. The act of the public servant committed by him during the course of his employment is, in this category of cases, an act of servant who might have been employed by a private individual for the same purpose. This distinction which is clear and precise in law, is sometimes not borne in mind in discussion question of the state's liability arising from tortious acts committed by public servants."

Referring to the facts in the decision in state of rajasthan v, mst. Vidhyawati, (1963) 1 s. C. J. 307, it was observed that, when the employee was driving the jeep car from the workshop to the collector's residence for the collector's use, he was employed on a task or an undertaking which cannot be said to be refereable to, or ultimately based on the delegation of sovereign or governmental powers of the state. It was further observed that, before a plea of a person for damages against the government is upheld, the court should always investigate whether the impugned act was committed in the course of undertaking or employment which is referable to the exercise of sovereign power, or to the exercise of delegated sovereign power, finally, the supreme court summed up as follows:

"it is not difficult to realise the significance and importance of making such a distinction particularly at the present time when, in pursuit of their welfare ideal, the government of the states as well as the government of india naturally and legitimately enter into many commercial and other undertakings and activities which have no relation with the traditional concept of governmental activities in which the exercise of sovereign power is involved. It is necessary to limit the area of these affairs of the state in relation to the exercise of sovereign power, so that if acts are committed by government employees in relation to other activities which may be conveniently described as non - governmental or non - sovereign, citizens who have a cause of action for damages should not be precluded from making their claim against the state. That is the basis on which the ?rea of the state immunity against such claims must be limited; and this is exactly what has been done by this court in its decision in, the case of state of rajasthan, ( 1963) 1 s. C. J. 307= (1963) 1 m. L. J. (s. C.) 70= ( 1963) 1 an. W. R. (s. C.) 70= ( 1962) 2 s. C. R. (supp) 989: air1962 s. C. 933. In the present case, the act of negligence was committed by ;the police officers while dealing with the property of ralia ram which they had seized in exercise of their statutory powers. Now, the power to arrest a person, to search him, and to seize property found with him are powers conferred on the specified officers by statute and in the last analysis, they are powers which can be properly characterised a sovereign powers; and so, there is no difficulty in the holding that the act which gave rise to the present claim for damages has been committed by the employee of the respondent during the course of its employment; but the - employment in question being of the category which can claim the special characteristic of sovereign power, the claim cannot be sustained; and so, we inevitably hark back to what cheif justice peacock decided in 1866 and hold that the present claim is not sustainable"

.

(18) At this juncture, it is appropriate to refer to the oft - quoted decision peninsula and oriental steam navigation co. V. Secretary of state, (1868) 5 bom. Hcr (app) l. The provocation to use the secretary of state is injury caused to the horse of a person due to negligent conduct of workmen employed by the government in the dockyard. While focussing the distinction between the facts within the scope of governmental administration and acts outside the governmenal administration such as commercial undertaking peacock, c. J. Observed as follows: -

"when an act is done or a contract is entered into in the exercise of powers usually called sovereign powers by which we mean powers which cannot be lawfully exercised except by a sovereign or individual delegated by a sovereign to exercise them the action will lie."

the reasoning in this decision is approved by lord heldana in privy council in secretary of state for india v. Moment, (1913) 23 m. L. J. 459= i. L. R. 40 cal. 391= 40 i. A. 40. In secretary of state for indian council v. Hari bhanji, (1882) i. L. R. 5 madras 273, the salt was purchased at bombay and excise duty was paid at the rate of rs. 1. 12. 0 per maund. While the salt was in transit to madras the import duty on salt was enhanced to rs. 2. 8. 0 per maund and they were chargeable only with the difference between the exercise and the import duty. On lending of the salt at madras, the collector demanded the payment of duty and the respondant having paid the same filed suit to recover the sums they have been compelled to pay. The trial court dismissed the suit on the ground that the court has no jurisdiction to entertain the suit. The contentions centred round the issues whether sovereign can be sued in it own courts and is amenable to jurisdiction of municipal courts. As regards acts of state and in the context of dual functions of east india company of administration and commercial ventures, it is observed as follows, at page 275:

"having pointed out that, while the government was in the hands of the east india company, the company never entirely lost its private or commercial character, and alluded to the decisions on which it was held that the east india company though ' invested with powers usually called sovereign was not constituted thereby a sovereign, the learned judge preferred to the peninsula and oriental steam navigation company v. The. Secretary of state, bourke, pt. Vii, 166 and to the distinction there drawn between acts done by the company in the exercise of what are usually termed sovereign powers and acts done by the company in the exercise of what are usually termed sovereign powers and acts done by the company in the exercise of what are usually termed sovereign powers and acts done by the company in the conduct of undertakings which might be carried on by private individuals who "had no such powers delegated" to them, and he held that the east india company and the secretary of state, as succeeding to the liability to suit under which the company lay, could be sued only for acts done in the conduct of undertakings which might be carried on by private individuals without sovereign powers. "

The meaning of sovereign is referred to by hibbert in his jurisprudence as follows: "the term 'sovereign' means a political superior who is not subject to any other political superior. " holland in his jurisprudence says as follows: "the sovereignty of the ruling part has two aspects. It is 'external' as independent of all control from without; 'internal' as paramount over all action within. " article 300 of tne constitution envisages status quo as prevailing in the dominion of india hither to with regard to liability of union of india and state governments to be sued. Therefore, it is necessary to tunnel into the development of law and trace the enactments, pertaining to the same. The ease india company initially a trading corporation acquired the dimensions of governance of the country and, in view of the dual functioning of the east india company, it has become imperative to identify the governmental and trading activities in the context of determining the liability to be sued. The imperial government of india act, 1858 declared that india should be governed in the name of the crown acting through secretary of state and the powers formerly exercised by board of directors of east india company were assigned to secretary to state. Sections 65. 6g and 67 of the act formulated the rights and liabilities of the secretary of state to sue or to be sued. The analogous provisions are contained in successor enactments namely section 322 of government of india act, 1915 and section 176 of the government of india act, 1935. By and large, the common law principles in england afforded a feedback to the development of. Law of torts in india.

(19) The principles that can be distilled from the two leading decisions and also the earliest decisions are that the states does not enjoy blanket immunity from the liability pertaining to all tortious acts committed by government servants. The immunity is confined to governmental actions traceable to sovereign power and by the persons to whom the powers are delegated by sovereign authority. The doctrine of immunity is applicable to every form of government whether monarchial or republican and it is conducive to the general welfare of the state as the government in vital matters aligned with sovereignity. In the event of tortious acts committed by government servants divorced from governmental functions intertwined with sovereign touch the vicarious liability of the government can be equated to that of an individual. The litmus test is whether the act complained of could have been done by a servant employed by private - individual or relatable to sovereign power. The functions associated with business or commercial undertakings can be easily sifted as they are clearly outside the zone of governmental administration. But however the allocation of a particular act in the region of governmental functions of sovereign character or otherwise is boset with herculean task in the context of assumption of diverse functions by states in recent times. The difficulty in this process of investigation is more pronounced in a welfare state densely populated with new patterns of social functions and services. If the tortious acts are associated with sovereign power any illegality or functional exigencies in the course of performing the acts do not dilute the immunisation. The determination controlled by ratification or disapproval by the government. The activities of every person in the pay roll of the government need not be confused with functions associated with governmental administration much less linked to exercise of sovereign power. The immunity of the government cannot be stratched to the tortious act committed by employees of public sector undertakings, which are essentially commercial in nature or teachers or professors or doctors and several other categories of employees performing duties, outside the stream of sovereign fountain. Propelled by the principles enunciated time and again the fell of the facts and circumstances is the ultimate decisive factor.

(20) The learned government pleader contended that, in cases of seizure and detention of goods, the state enjoys absolute immunity and the judicial opinion is uniform in this respect. In chodey jana - kiramaiah and co. V. State of andhra, (1964) 1 an. W. R. 253 the plaintiffs who are dealers in foodgrains were suspected to have purchased paddy and rice from a procuring agent. The anti - black marketing sub - inspector seized certain quantity of paddy and rice and prosecuted the plaintiffs for an offence under section 411, i. P. C. The case was subsequently withdrawn and the grain seized was ordered to be returned. But, the plaintiff refused to take delivery on the ground that it was damaged and unfit for consumption and the sale. Proceeds were credited to court deposit. The plaintiffs filed a suit, claiming rs. 2,923. 11. 6 as the price of the paddy and the gunny bags seized from them alleging that the seizure was illegal and the state was liable for the claim. On these facts, it was held by a division bench of this court, consisting of chandra reddy and narasimham, jj. As follows: "we are now concerned with an act of seizure of goods on suspicion than an offence has been committed in respect thereof. The detection and prevention of offences are indisputably functions of a sovereign power - and any injury resulting from the exercise of such a power cannot give rise to an action for compensation or damages. Further more, the official, who effected the seizure of the goods acted under the authority of the land and the state would not be vicariously liable for any loss or injury resulting therefrom. It may be that if the act of seizure was wholly unjustified or if the officer acted under malice, the officer concerned may be held liable personally for his tortious acts; but that question does not arise here. In hindupur co - op. Stores v. State of andhra, (1964) 1 an. W. R. 333 venkatesam, j. Held that, in the event of illegal seizure of goodgrains under the essential supplies act, the suit against state for recovery of value of goods as damages is not maintainable as the state enjoys immunity, following the decision in chodey janakiramaiah and co. Case, (1964) 1 an. W. R. 253.

(21) In state v. Chhotey lal, air1967 all. 327 the claim was for a compensation of rs. 1,000/ - for 16 bags of sugar seized by a police official in the employ of the appellant state and it was never returned to the plaintiff. In the course of transporting sugar, the plaintiff was arrested and the police seized the bags on the ground that 16 of them contained khanda - sari sugar, of which the movement was banned under the u. P. Control of supplies (temporary power) ordinance. The plaintiff was prosecuted under section 7 of the essential supplies (temporary powers) act, - but was acquitted. The trial court held that the state was liable for the wrongful acts of the station officer and held that, as employer, it was vicariously liable for any tortious act of its servants. The appeal, at the instance of the state was dismissed by the lower appellate court. On further appeal, the allahabad high court adverted to the power of the police officers to seize property under section 550 of the criminal procedure code. It was held that the power to seize the goods by the station officer is referable to the exercise of his statutory powers. It was observed that the abuse of power, resulting in any injury to any person, is actionable but abuse of power does not mean absence of power and it was held that the state is not liable for action for illegal action by the official. It was further held that the right to claim for damages against the police official is not concerned with the immunity of the state. The decision in cketty and co. V. Collector of anantapur, (1965) 1 an. W. R. 183= air1965 a. P. 457 is concerned with the illegal attachment of the immoveable property by the tahsil - dar under the revenue recovery act, pertaining to the recovery of income - tax arrears. The suit was filed for damages against the state government as well as the tahsildar and it was pleaded that neither the state government nor the defendants are liable for any damages as the government officials acted in good faith and bona fide. In considering the question whether the government is liable for the negligent act of attachment effected by tahsildar, the division bench consisting of satyanarayana raju and venkatesam, jj. Held that the government, whether state or central, cannot be made liable for the torts committed by the tahsildar, in effecting the illegal attachment. In bmkshi amrik singh v. The union of india, (1974) a. C. J. 105, a military truck which was driven by a sepoy was involved in an accident with a car of which one of the occupants received a number of injuries and he was treated for about two months. Subsequently, the said occupant filed a petition claiming compensation amounting to rs. 50,000/ - against the union of india, stating that the incident took place, due to rash and negligent driving, on the part of the sepoy. It was pleaded by the union of india that there was no fault on the part of the driver and, as the driver was acting in exercise of the sovereign powers of the union government, at the time of the accident, on action should be taken against the government and therefore there was no liability of the union of india. The motor accidents claims tribunal found that the incident occurred, due to rash and negligent driving, of the driver and as the sepoy was engaged in military duty in checking military personnel on duty, he was acting in exercise of the sovereign powers of the union government and therefore the union of india is not liable for tortious acts of the driver. The full bench of the punjab and haryana high court considered the issue whether the driver can be said to be performing the duty in the exercise of the sovereign powers of the state which could absolve the union of india from any liability in respect of the tortious acts committed by him. The full bench of punjab and haryana high court held that it is not sufficient if it is proved that the vehicle is owned by the government and driven by its servant and it must be proved that, at the time the accident occurred, the person driving the vehicle was "acting in discharge of the sovereign powers of the state or such delegated authority. In considering the claim for inmunity the nature of the act, the transaction in the course of which it is committed, the nature of the employment of the person committing it and the occasion for it, have all to be considered it was ultimately held that the checking of the army personnel on duty is a function which is intimately connected with the army discipline and it could only be performed by a member of the armed forces and that too by such a member of that force who is detailed on such duty and is empowered to discharge that function. In this view, it was held that the state is immune from liability. In babulal agarwalla v. Province of orissa, air1954 orissa 225 the orissa high court made a departure from the trend and texture of the current principles and held that, in a situation where the seizure is not authorised by the state and devoid of any sanction of law and in the absence of ratification or benefit to the government from such seizure, the government is not liable for the tortious acts of their servants. In k. Krishnamurthy v. State of andhra pradesh, (1960) 2 an. W. R. 502= a. I. R. 1961 a. P. 283, the plaintiff was injured as he was hit by the edge of the road roller as the driver of the road roller driven fast and in unusual speed through a busy locality. The plaintiff field a suit claiming damages for the permanent loss of limb for recovery of rs. 10,000/ -. The plea of the government was that the driver was not guilty of negligence or rash driving and even otherwise, the action for damages lies only against the driver and the suit against the government for the tortious acts of its servants is untenable in law. The trial court came to the conclusion that, the accident is directed result of the negligence and rash driving but however held that the government is not liable for the tortious acts of its servants. On appeal, the division bench consisting of satyanarayana raju and kumarayya, jj. Confirmed and the judgment of the trial court regarding negligence and vicarious liability of the government. In the context of considering the liability of the government for the tortious act of the driver kumarayya, j. Held as follows:

"it follows that, in attaching the vicarious liability in torts to the state, it is necessary to ascertain whether the acts complained of or the acts in exercise of governmental powers which cannot be lawfully exercised save by the sovereign authority might delegate such powers, or are they such acts as are done by the government in pursuance of ventures which a private individual might undertake equally well."

It is further held as follows: -

"it is not merely the nature of the work but its relation to the duties of the government having regard to the goal of the government that has to be kept in view. There can be no doubt about the fact that the making and maintenance of national highways is the exclusive duty of the government. On the principle already stated the government is not in law within the rule of vicarious liability in relation. To the tortious act of its servants in the discharge of such duties."

In thangarajan v. Union of india, (1974) 2 m. L. J. 288= 87 l. W. 521= air1975 madras 32, thangarajan a boy aged about 10 years was walking along the road at the time of the accident and the military lorry belonging to the defence department of union of india knocked him, as a result of which he sustained serious injuries. He claimed a compensation of rs. 45,000/ - before the motor accidents claims tribunal, madras. It was contended on behalf of the union of india that there is no negligence on the part of the driver and it is not liable for the tortious acts of its servant viz. , the driver of the lorry committed in the course of the exercise of its sovereign functions. The tribunal found that there is a rash driving but however held that the union of india is not vicariously liable for the tortious action of the driver of the lorry as the act was committed in the course of exercise of sovereign functions. On appeal, at the instance of the claimant the division bench of madras high court consisting of kailasam and maharajan, jj. Considered the issue whether the driver in the course of driving the vehicle is discharging a duty assinged to him by virtue of delegation of sovereign power. It was held that the driver of the lorry for taking c. O. 2 gas from the factory to the ship and on the way the accident occurred and as such the lorry was being driven in the course of discharge of duty, referable to sovereign power.

(22) The consensus of judicial opinion is that the acts of seizure and detention of goods associated with punishment for infraction of the provisions of a statute are relatable to exercise of sovereign power. The supreme court in kasturilal's case held that the power to arresrt, search and seizure can be properly characterised as sovereign powers. The essential commodities act and the allied acts and the others there under with an object for vigilence over the supply and distribution of listed goods are designed to lubricate supply and ensure equitable distribution in furtherance of the concept of welfare state. Therefore, stringent measures of search, seizure, confiscation and punishment have been devised in the interests of general welfare of the nation. The a. P. Gift goods (prevention of unlawful possession act) , 1965 is a sister enactment to regulate possession of the goods, enumerated under the act. The action of seizure was initiated under the a. P. Gift goods act in conjunction with foodgrains licencing order. Section 4 of the gift goods act provides that a person, who is found to be in possession of gift goods, shall be punishable with imprisonment for a term of two years or with fine which may extent of rs. 1000/ -. Section 5 of the act provides that any offence punishable under this act shall be cognizable offence within the meaning of criminal procedure code and that no court inferior to that of the chief city magistrate in the cities of hyderabad and secunderbad or of a magistrate of first class elsewhere shall try any offence punishable under this act. The police official has power to seize goods on the suspicion of the commission of the offence, as provided in the second limb of section 102, crup. C. The officials acted under the reasonable belief that the provisions of a. P. Gift goods act and the foodgrains licencing dealers orders are violated. The mix up of both the provisions at the initial stage is borne out by the plea in the written statement but however the recourse to the foodgrains licencing order was abandoned, at a later stage. The seizure is prompted by both the provisions. The reasonable belief or suspicion at the time of seizure gathered momentum, resulting in setting in motion the prosecution proceedings. The gift goods act envisions that the gift goods shall be used in the manner contemplated by the act and prohibits the sale or purchase and transport of goods, without necessary permission. The action of seizure accompanied by detention and followed up by prosecution are under the powers vested under the statute and the discharge of such official duties are essential attributes of exercise of sovereign power. The unjustified and unsustainable actions of the officials professing to be under the statute or outside the purview of the provisions of the act render the concerned officers liable for action but, on that score, the government servant to vulnerability to claim for damages or otherwise in the event of illegal acts or excess does not rob the government of its immunity, in respect of acts relatable to sovereignly.

(23) The learned counsel for the respondent strongly relied upon the decision of the supreme court in shyam sunder v. State of rajasthan, (1974) 2 s. C. J. 317= (1974) lab. I. C. 598= (1974) 1 s. C. C. 690= (1974) a. C. J. 296= air1974 s. C. 890. In this case, navneetlal is an employee of state of rajasthan and was working in the office of the executive engineer public works as store keeper. In connection with the famine relief work, while he was proceeding to ranswara, he boarded the truck owned by the department and, after travelling for some distance, the engine of the truck caught fire. On seeing the fire, the driver cautioned the occupants to jump out of the truck and navneetalal and other persons in the truck jumped and, while doing so, naveetalal filed suit against the state of rajasthan for damages under the provisions of the fatal accidents act, 1885. Trial court found that the act of the driver inputting the truck on the road is negligent as the truck was not road worthy and since the driver was negligent the state was vicariously liable for his act. The high court allowed the appeal, at the instance of the state of rajasthan, on the ground that the inference of negligence on the part of the driver cannot be drawn in the circumstances. On further appeal, the supreme court held that the driver was negligent in putting the vehicle on the road and took notice of the contention raised on behalf of the state of rajasthan that the state was engaged in performing the function pertaining to its character asi sovereign as the driver was action in the course of his employment in connection with famine relief work and therefore even if the driver was negligent the state is not liable for damages mathew, j. Held as follows at page 894: -

"today, hardly any one agrees that the stated ground for exempting the sovereign from suit is either logical or practical we do not also think it necessary to consider whether there is any rational dividing line between the so - called sovereign and proprietary or commercial functions for determining the liability of the state. We are of the view that, as the law stands today, it is not possible to say that famine relief work is a sovereign function of the state as it has been traditionally understood. It is a work which can be and is being undertaken by private individuals. There is nothing peculiar about it so that it might be predicted that the state alone can legitimately undertake the work."

This case is concerned with the negligence in the course of employment in connection with famine relief and it was held that the famine relief work is done by individuals and as such far removed from sovereign functions. The learned counsel referred to the observations of mathew, j. That grounds for exempting the sovereign are not rational but however mathew having posed this issue referained from considering this aspect. In satyawati. V. Union of india, a. I. R. 1967 delhi 98. Shaim narain singh held a permanent commission on the indian air force and he was killed in an accident with a three tonner air force vehicle, which was at the time of the accident being driven by kanji lal, defendant no. 2. The trial court dismissed the suit mainly on the ground that the union of india, the first defendant, was not liable for the tortious acts of kanji lal, the 2nd defendant. The trial court however held that the negligence of the driver, the second defendant is proved. On appeal, the delhi high court concurred with the view of the trial court that the driver, the 2nd defendant, was negligent and considered the question of immunity of union of india, with regard to the tortious act committed by the driver. It was contended on behalf of the union of india to keep the army in proper shape and trim and since the hockey and basket - ball teams were carred by the truck, as a part of physical exercise by the air force men, the union of india should be held immune for the tortious act of the driver. This contention was negatived. It was held that carrying hockey and basket ball teams to play a match can by no process of extension be termed as exercise of sovereign power. In nandram heeralal v. Union of india, air1978 m. P. 209 the suit was filed for damages against the driver of the army vehicle and also the union of india for collision and for driving at high speed and in negligent manner. The plea was taken by the union of india that the driver was driving the vehicle on duty and on government work and therefore the union of india was not in any manner liable. The claims tribunal held that the vehicle was driven negligently resulting in accident and held that the union of india cannot be held liable as the vehicle was being driven while the driver was in army service and discharging his duties by driving the army vehicle carrying military personnel for exercises as the driver was discharging the sovereign function of the state. On appeal, the madhya pradesh high court held that the act of driving the vehicle in bringing back officers from the place of exercise of the college of combat was an act which cannot be lawfully exercised except by a sovereign or a person by virtue of delegation of sovereign rights. It is further held that, although the maintenance of army is a sovereign function of the union of india, from it alone it does not follow that the union is immune frorm all liability for any fortious act committed by an army personnel in the act of such driving. Further it is held that it cannot be said that the driver was discharging the functions which would not have been discharged by any private individual. In l. M. Co - op. Bank v. M/s. Prabhudas, air 1966 bombay 134, pursuant to the certificate under section 46 (2) of the income - tax act, the attachment and seizure of the goods were effected by the circle officer, acting under delegated authority. It was found that the seizure and attachment are illegal. The question that arose for decision is whether the government is liable for damages for the illegal seizure and attachment in the course of discharge of their official duties. In this context naik, j. Held that levy and collection of tax are sovereign powers but the purported collection of tax under sections 150 and 154 of the land revenue is illegal and unconstitutional and not in confirmity with article 265 of the constitution. This decision is far removed from the facts of this case. In union of india v. Sugra bai abdul mazid, air1969 bombay 13 a military truck knocked down a cyclist while it was being driven in carrying a machine meant for training for military officers. On the facts of the case, the bombay high court held that it cannot be said that the driver was acting in exercise of any delegated power of sovereign of state and therefore the state was liable to pay compensation.

(24) The above decisions are rendered in the context of the facts arising in those cases and none of them relate to seizure of goods and exercise of powers conferred under the statute. The action has to be considered whether it is relatable to sovereign function and if the action is not within the domain of exercise of soverign power the ratification of the government does not impress the said action with the character or texture of sovereign power. The crucial consideration should be whether the impugned action is within the fold of exercise of sovereign power and this determination is not dependant upon ratification of the government. The court below erred in holding that the ratification of the government tables the act with non - sovereign character.

(25) Lastly, the learned counsel for the respondent sri m. Chandrasekhararao contended that there is clevage of opinion between vidhya wati's case, (1963) 1 s. C. J. 307 and kasturilal's case, (1965) 2 s. C. J. 318 and the ratio propounded in the later case is not correct. This contention is jacked up by the commentary made by seeravai in constitutional law of india, 2nd edition vol. 2 at pages 1137 to 1139. Referring to thangarajan's case of the madras high court, the learned author says as follows: -

"judicial discipline may have made the judges refer "to the strong plea" made by gajendragadkar, c. J. But the present writer considers such a plea inappropriate. If the cruelty and injustice which the madras high court pointed out are to be removed, the remedy lies with the supreme court which can restate in the nineteen seventies what sri barnes peacock had said over a hundred years ago, that the maxim of the english law that "the kind can do no wrong had no application to the east india company, and therefore can have no application to the union of india or to the states. "

Vidhyawati's case we distinguished in the later decision of the supreme court on the ground that the action was concerned with liability not relatable to exercise of sovereign power and in both the cases several shedes of opinion have been touched upon and the contours of immunity of the state based upon and the contours of immunity of the state based upon the exercise of sovereign power have been highlighted. The prior decision is distinguished on facts and there is absolutely no divergence in rationcination. The maxim "king can do no wrong" was given a go - bye under english law by crown proceedings act, 1947 and the absolute immunity is substantially eroded. The scrutiny of the decisions referred to above reveals that the law, relating to liability of the government, in respect of tortious acts committed by the servant developed on an entirely different perspective from that of common law in england.

(26) In the result, the judgment and decree of the court below is set aside. Appeal allowed. No costs. In this view, the cross - objections are dismissed. No costs. Appeal and cross objections coming on for hearing on friday the 10th day of february, 1984, tuesday the 6th wednesday the 7th/ friday the 16th, tuesday the 20th, wednesday the 21st and thursday the 22nd days of march 1984, before the honourable mr. Justice punnayya on a difference of opinion between the learned judges raghuvir and rama rao, jj. Upon perusing the differing judgments dated 4. 10. 83 and upon hearing the arguments of government pleader for home on behalf of the appellant and mr. M. Chandra sekhara rao, advocate for the respondent and having stood over for consideration till this day, the court on reference delivered the following judgment

(27) On a difference of opinion between the two learned judges, the legal question "whether the state of andhra pradesh is immune from the suit claim made by the plaintiff?" is referred to the third judge. Thus the matter came before me.

(28) The brief facts leading to the reference need be mentioned: on 15th march, 1971 the vigilance inspector of civil supplies seized 573 bags of wheat ravva, which were booked by the plaintiff through railways from khammam to dadag and were loaded into the wagon. The stock was unloaded from the railway wagon and sent to the godown of the district co - operative marketing society limited, khammam, on 19. 3. 1971. The inspector of vigilance cell (civil supplies) department, hyderabad, registered crime no. 39 of 1971 under section 3 of the andhra pradesh gift food (unlawful possession) act, 1965 in police station, khammam. The plaintiff filed cri. M. P. No. 1294 of 1971 in the high court of andhra pradesh for quashing the proceedings in crime no. 39 of 1971 on the file of the munsif magistrate, khammam. But the high court passed orders on 7. 9. 1971, directing expeditious completion of the proceedings. On 13. 3. 1972, the business manager of the district co - operative marketing society limited, khammam, sent a letter to the munsif magistrate, khammam, with a request to arrange for the disposal of the stock, as it was getting deteriorated. The munsif magistrate authorised the business manager in the month of may, 1972 to sell the stock in open market and deposit the proceeds into court. On 13. 9. 1972, the stock was sold in public auction. On weighing, the stock was found to be 458 - 40 quintals at the time of auction and it fetched rs. 32,546 - 94 ps. Due to deterioration. The district co - operative marketing society deducted rs. 1,581 - 94 ps. Towards expenses for storage, commission etc. , and deposited rs, 30,954 - 46 ps. In the court. The plaintiff filed a petition on 4. 12. 1972 in the munsif - magistrate's court, khammam for re found of the amount lying in deposit reserving the right to claim compensation for the loss and damages. Thereupon, a cheque was issued to the plaintiff for the said amount. The plaintiff aopears to have incurred a loss of rs. 11,543 - 31 ps. In the principal amount. The plaintiff contends that the state government and its employee - inspector, vigilance cell, civil supplies, hyderabad, are responsible for the loss. The plaintiff is, therefore, entitled to recover from the defendant (state of andhra pradesh) a sum of rs. 22,074 - 90 ps. Comprising rs. 11,543 - 31 ps. Being the principal amount, rs. 9,635 - 10 ps. Being the interest on rs. 42,507. 77 ps. From 15. 3. 1971 to 5. 2. 1973 at 12% per annum and the claim in the suit was restricted to rs. 22,000/ -.

(29) The defendant denied the allegations. It contends that the transport of bulgar wheat, which is a gift food, is illegal under the a. P. Gift goods (unlawful possession) act, 1965, for short, gift goods act. After the receipt of the f. I. R. On 15. 3. 1971, the entire stock of bulgar wheat was seized from the godown and handed over to the court of the first class magistrate, khammam, who sent the same to the marketing society for safe custody. The defendant felt that the plaintiff is liable under sections 3 and 4 of the gift goods act, besides being liable for not having foodgrains dealers' licence. The wheat imported into india by the charitable organisations is exempted from tax and is not intended to be sold in market. The vigilance authorities, therefore acted in good faith in seizing the wheat, while exercising their power and registering the crime under the provisions of the a. P. Gift goods act. The allegation of deterioration in quality and quantity in the wheat is denied. The district co - operative marketing society stocked the wheat in a permanent godown, which is a safe place for storage. The district marketing society is entitled to deduct rs. 581 - 94 ps. Towards expenses for storage etc. , and the plaintiff is not entitled to claim loss cr interest. The district officials deposited the total quantity seized by them and there is no negligence on their part for which the government is responsible. If there is any shortage, it is due to natural circumstances for which the defendant cannot be made liable. As the officials acted in good faith and in strict compliance of law, the plaintiff's suit is not maintainable against the government for damages caused or likely to be caused for anything done in good faith by the officials.

(30) The learned subordinate judge found that the seizure of the goods by the officials purporting to be under the municipal law is illegal and as the government ratified the action, the government is liable and as such they are accountable to the loss to the deterioration of the goods in quantity and quality. So holding, he decreed the suit for rs. 19,317 - 48 ps. As against rs. 22,000/ - claimed by the plaintiff with future interest at 12% from the date of suit till the date of decree on rs. 9,481 - 91 and at 6% on the decretal amount from the date of decree till the date of realisation. The defendant in the suit, therefore, preferred the appeal to this court.

(31) The appeal was heard by the division beach. There is difference of opinion between the two learned judges. Though the learned judges agree on the principle that the state is not liable for damages, if the acts complained of, come under the sovereign acts of the acts of the state, they differ from each other on the question whether the seizure made in exercise of the power given by the statute come under the sovereign power of the state. Raghuvir, j. Took the view that the seizure, even if it is made in exercise of the power given by the statute, is not a sovereign act and hence the state is liable for the loss sustained by the p'aintiff, consequent upon the seizure of the goods. In support of his view, the learned judge relied upon the ruling of the supreme court in state of rajasthan v. Mst. Yidhyavati, (1963) 1 s. C. J. 307 - air1962 s. C. 933. But rama lal, j. On the other hand, took the view that inasmuch as the goods were seized in exercise of the power given by the statute, the seizure, would come under a sovereign act and as such the state is not liable for the toss suffered by the plaintiff due to the seizure of the goods. For this view, the learned judge relied upon the ruling of the supreme court in kasturilal ratia ram jain v. State of u. P. (1965) 2 s. C. J. 318 - air1965 s. C. 1039 in which chief justice gajendragadkar held that the power to arrest a person, search him and to seize property found with him are powers conferred on the specified officers by statute and they are powers which can be properly characterised as sovereign powers and the claim for damages cannot be sustained. Rama rao, j. Therefore, set aside the judgment and decree of the trial court and allowed the appeal.

(32) As there is a difference of opinion between the two learned judges, they framed the following question for the opinion of the third judge under section 36 of the letters patent:

"whether the state of andhra pradesh is immune from the suit claim made by the plaintiff on the facts and circumstances of the case."

(33) My lord the chief justice posted the matter before me as per his orders dated 18. 11. 1983. Thus the matter came before me.

(34) Arguments were addressed by the learned government pleader for the appellant and sri m. Chandra sekhara rao for the respondent.

(35) The finding of the munsif - magistrate, khammam, is that the goods seized from the wagon no. 6703 is wheat raws' but not bulgar wheat and the seizure is, therefore, illegal and hence he discharged the accused. But the stock suffered deterioration and hence it was sold for a low price.

(36) The plaintiff contends that he is entitled to damages to the extent of difference between the cost price and the sale price from the state. The defence of the state is that the vigilance inspector seized the goods under the provisions of the a. P. Gift goods act and the seizure of the goods comes under sovereign act and the state government, therefore, is immune even though the seizure is illegal.

(37) It is now well settled that the state is not liable for damages if the act complained of comes under sovereign act or is referable to the sovereign functions of the state. Even raghuvir, j. Has no quarrel with this proposition of law.

(38) The question as the what are the sovereign acts in respect of which the state can claim immunity is a difficult one as they are not enumerated by any statute. But, on the basis of the chain of enactments beginning with the act of 1858 and ending with the constitution of india and also the judicial pronouncements thereon declare that the state is not liable for the acts that could have been done by the east india company in the exercise of what are usually termed as sovereign powers. The test is whether similar suit could have been laid against the east india company prior to 1858. The east india company started their career in india as a trading operation. In 1765, the company acquired territories by the grant of dewani by the moghul emperor. The british parliament allowed the east india company to exercise governmental functions, objected to the undoubted sovereignty of the crown in or over the same, by enacting the east badia company act, 1813. The east india company thus came to exercise both trading functions and governmental functions subject to the perogative of the british crown, until the sovereignly was assumed by the crown in 1858. It is, therefore, said that the east india company had i dual character viz. , that of a trader and that of sovereign. From this dual capacity of the company arose the dual principle of liability of the company (a) the company was subject to the jurisdiction of the municipal courts in all matters and proceedings undertaken by them, as a private trading company; (b) the company was not so subject in matters undertaken by them in exercise of their sovereign powers. Under the government of india act, 1858, the control and the governance of company's territories were transferred to the british crown.

(39) As to the liability of the crown, the respect of the acts done by it, section 65 of the government of india act, 1858 provides as follows:

"the secretary in state in council shall and may sue and be sued as well in india as in england by the name of secretary of state in council as a body corporate; and all persons and bothes politic shall and may have and take the same suits, remethes and proceedings, legal and equitable, against the secretary of state in council in india as they could have done against the said company."

This section makes it abandantly clear that the east india company would be liable for the acts done by the company in its trading capacity and would not liable for the acts done by the company or its servants, in the exercise of its "sovereign powers". Consequently, the company's successor, the secretary of state in council was also liable or not liable in like cases. The same legal position continued to exist, even under the government of india acts of 1919 and 1935, as section 32 of the government of india act of 1919 and section 176 of the government of india act of 1935 contain in similar language. Section 32 of the government of india act of 1915 as amended by the act, 1919 provides as follows: "every personal shall have the same remethes against the secretary of state in council as he might have had against the east india company, if the government of india act, 1858 and this act had not been passed. "

(40) Section 176 of the government of india act, 1935 provides that the federation of india and provincial government may sue or be sued in relation to their respective affairs in the like cases as the secretary of the state in council might have sued or been sued, if the government of india act, 1935 had not been passed. Section 176 of the government of india act, 1935 was adapted and modified by the indian independence act, 1947, which provides that the dominion of india and provincial government "may sue or be sued" in relation to their respective affairs in the like cases as the secretary in council might have sued or been sued if the indian independence act, 1947 has not been passed,

(41) It is worthy to note that the same legal position, which existed prior to the enactment of the constitution exists, even after the advent of constitution regarding the liability of the state. The can be gathered from the language employed in article 300 (1) of the constitution, which reads as follows: -

"the government of india may sue or be sued by the name of the union of india and government ef state may sue or sued in 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 is the like cases as the dominion of india and the corresponding indian states might have sued or been sued if this constitution had not been enacted."

(42) In order to determine the liability of the state in a case, the court has to decide whether the act complained of was done in the course of undertaking which could have been carried on by the east india company in its trading capacity or could have been carried on in exercise of its sovereign powers. This legal position was made clear from the following rulings.

(43) In moodlay v. Morton, (1785) 28 e. R. 1245 it was held that the east india company was liable to be sued in respect of transactions of the character of private business.

(44) In the secretary of state in council of india v. Kamachee boy sahaba, (1859) 7 m. La. 476 the privy council lays down as to what were the cases in which the east india company could be sued in the municipal courts. Dealing with the argument that the east india company were trustees of the crown and under certain restrictions were empowered to act as sovereign state with other sovereign states in india and that over the acts done in that particular case no municipal court had any jurisdiction, their lordships observed at page 530:

"the careful and able review of the several characters and acts of parliament beating upon the subject which they had the advantage of hearing from the bar, has satisfied them that the law, as it stood in the year 1839, to accurately stated ia the following passage in the judgment of the chief justice tindal in case of gibson y. East india company, in which after referring to various legislative enactments, he observes that from these - it to manifest that the east india company have been invested with powers and privileges of a two fold nature, perfectly distinct from each other; namely, powers to carry on trade as merchants, and (subject only to the prerogative of the crown to be exercised by the board of commissioners for the affairs of india) , power to acquire and retain and govern territory, to raise and maintain armed forces by sea and land, and to make place or war with the native powers of india. That acts done in the execution of these sovereign powers were not subject to the control of the municipal courts, either of india or great britain, was sufficiently established by the cases of the nabob of arcot r. The east india company, in the court of chancery, in the year 1793; and the east india company v. Syed ally, before the privy council in 1827. The subsequent statute, 3rd and 4th will iv, c85, in no degree diminishes the authority of the east india company to exercise, on behalf of the crown of great britain, and subject to the control thereby provided, these delegated powers of sovereignity."

This decision laid down the distinction between the acts which were done by the east india company in their capacity as trustees and merchants and the acts done by them in exercise of the sovereign power which were delegated to them by the crow and it was only in respect of the acts falling within the latter category that the municipal courts, in the opinion of their lordships had no jurisdiction or control. This was the position in 1839, as observed by their lordship of the privy council in 1859 and the passing of the statute, 3 and 4 will iv, c 85 made no difference to the position.

(45) In peninsula and oriental steam navigation company v. Secretary of state for india, (1868) 5 book h. C. R. (app.) 1 sir barent peacock, cj. Of the supreme court of calcutta drew a distinction between the acts of government, which were of a sovereign character, and those which were in the nature of private businesses, although performed in the exercise of governmental fucntions. His lordship held that the latter class of acts were clearly acts, in respect of which the government could be sued in the same way as private individuals. On this reasoning, his lordship held that the negligence of the government servant, in respect of which the damages were claimed in the particular case, was committed in the course of transaction in the nature of private business and so the suit against the secretary of state was maintainable. In this connection, his lordship observed at page 15 as follows:

"the east india company were not sovereign and therefore could not claim all exemptions of a sovereign and that they were not the public servants of a government, and, therefore, did not fall under the purview of the cases with regard to the liabilities of such persons; but they were a company to whom sovereign powers were delegated and who treated on their own account and for their own benefit and were engaged in transactions partly for the purpose of government and partly on their own account, which, without any delegation of sovereign rights might be carried on by private individuals. There is a great and clear distinction between the acts done in the exercise of what are usually termed sovereign powers, and as acts done in the conduct of undertaking which might be carried on by private individuals without having such powers delegated to them."

(46) The legal position may be taken as settled beyond any shadow of doubt on the question that a suit can lie against the government in respect of the acts done in the course of transactions of a private nature. Even with regard to the legal position that no suit or action can lie against the state, in respect of acts done in the exercise of sovereign powers or in discharge of sovereign functions which cannot be lawfully exercised except by a sovereign or a private individual delegated by sovereign to exercise them, there is no controversy. But the real difficulty lies in determining the question as to which are the transactions that fall within the category of sovereign acts, since it is now well settled that every transaction carried on by the state cannot be treated as a sovereign act, which can claim immunity and it is only those acts which can be declared as sovereign acts that are entitled to claim exemption from liability. There is divergence in the judicial opinion on account of the difficulty, in determining whether the particular act is committed by the government officials in exercise of the sovereign power or in discharge of statutory function referable to the exercise of sovereign powers delegated to the public servant or whether the particular act is committed in the course of a transaction not referable to the exercise of te sovereign power or whether the act is done not in the performance of any act of the state.

(47) The following decision threw much light on this aspect: in nobin chunder dey v. Secretary of state for india, (1876) ll. R. 1 calcutta 11. Nobin chunder dey sued the secretary of state for india to pay him compensation. At the public - auction, which was held by the government officers on 4th march, 1874 of licence to self certain exercisable liquors and drugs, the plaintiff became the highest bidder for the right to sell such liquors upon his purchases and did all that was necessary to entitle him to the licences. But, the government did not grant licence to him. He also paid the duties upon certain excisable articles of the same character which he kept in his godown notwithstanding this payment he could not obtain from the government officers the necessary papers to enable him to obtain these articles. The consequence was that he was obliged to close his shop. He contends that he sustained heavy damages upon the resale of goods as well as in other ways, entirely through the wrongful acts and default of the excise officials and he was therefore entitled in the first place to be compensation for all the damage which he had thus sustained, or failing that he was at least entitled to have the deposit which he paid, on the purchase of the licenses returned to him. The question that required consideration was whether the plaintiff's claim, even assuming that the plaintiff was right upon the merits, can be legally enforced by suit against the government of india. The plaintiff relied upon section 65 of the government of india act which provides that the secretary in state in council may be sued as a body corporate and that all persons might have taken the same remethes and proceedings against him in that capacity, as they might have had and taken before the act passed against the east india company.

(48) Garth, cj. Observed that, in order to decide this question, it will suffice to refer to one authority upon which the learned counsel for the plaintiff mainly relies in his arguments and which explains and distinguishes in the clearest manner those claims which could and those which could not have been enforced against the east india company before the act. That case in p. And 0. Company v. The secretary of state for india, (1868) 5 bom. H. C. R. (app.) 1. The learned chief justice observed:

"the case was heard by sir barnes peacock and two other judges of the supreme court, and resulted in a most learned and elaborate judgment, in which after going very fully into the provisions of the statute, and examining all the authorities with great care, the court decided that the government of india were responsible to the plaintiffs in that suit upon the express ground that the negligence complained of was an act once by their servants in carrying on the ordinary business of ship - builders (unconnected altogether with the exercise of sovereign powers) and which any firm or individual might have carried on for the same purposes. It was held that because the east india company would have been liable in such a case before the act, the government of india was equally liable after the act came into operation; and the distinction was very carefully drawn between acts done by the east india company in their private capacity and acts done by them in the exercise of those sovereign powers, which were entrusted to them by the crown for the purpose of government. ' there is a great and clear distinction (says sir barens peacock) "between acts done in the exercise of what are usually termed sovereign powers and acts done in the conduct of undertakings which might be carried on by private individuals without having such powers' delegated to them. And then sir barens peacock goes on to say: - "but where an act is done or a contract entered into in the exercise of powers of which we mean powers which cannot be legally exercised except by sovereign or private individual delegated by the sovereign to exercise them, no action will lie. "

(49) Garth, cj. Then observed that the persons who are said to have been guilty of the acts and default of which he complains, are the officers employed in that department of the government service, which relates to the imposition and collection of the excise duties. The ground of the complaint is that those officers have been guilty of various breaches of duty in not fulfilling obligations to the plaintiff, which they were bound to fulfil in that capacity. The chief justice further observed as follows:

"now it is impossible to doubt for a moment that the laws which are made in this or any other country for the taxation of the subject by the imposition of customs and duties, are laws which on only be made or enforced in the exercise of sovereign powers properly so called; and these sales, at which the plaintiff contends that he purchased the rights on which he claims, only constitute a portion of the machinery and arrangements by which the imposition and collection of the excise duties are regulated in this country. His claim is therefore clearly one of these which cannot be enforced against the government of india."

.

In shivabhan v secretary of stats for india, (1904) ll. R. 28 bom. 314 a chief constable seized goods in pursuance of a statutory power vested in him under section 550 of the criminal procedure code. The goods were perishable and were not forthcoming when the plaintiff demanded them. It was held that the secretary of state was not liable.

(50) In secretary of state for india in council v. Garapati. Somayya, (1926) 52 m. L. J. 446 - 24 l. W. 378 - air1926 madras 1084 the question whether the government was liable for the act of the district magistrate in cancelling in permit to a motor vehicle issued under madras motor vehicles rules on the ground that it improperly arose. Their lordship held that the district magistrate, in issuing the licence and cancelling it, had acted in pursuance of a statutory authority vested in him and hence the district magistrate is not liable.

(51) In maharani gurucharan kaur of nabha and another v. The province of madras and others, (1942) 2 m. L. J. 14 - i. L. R. (1942) mad. 696 - air1942 mad. 539 the wife and daughter of ex - maharaja of nabha claimed damages for wrongful detention against the province of madras and four police officials. In that case, the wife and daughter of ex - maharaja were not permitted to board a train for madras at kodaikanal road under a mistake that they were so ordered. But, the claim was held to be unsustainable. The learned judges observed: at page 36. The position is therefore reduced to this that the government could not be held liable either when an officer takes an action in pursuance of a statutory duty or when the act committed by him happens to be in excess of his authority unless in the later case the act is either done by the government's express orders or is subsequently ratified and adopted by it. Nor could any action be maintained against the government for a tort committed by its servants if in pawing the order in the performance of which the tort was committed the government was discharging its governmental functions as a sovereign.

(52) In babulal agarvalla v. Province of orissa and others. Air1954 orissa 225 the plaintiff was granted a licence to deal in foodgrains. Another merchant, p. W. 1, also obtained a similar licence and both these licensees came to orissa for the purpose of purchasing rice at cheap rates and exporting it to bengal for sale at high profits. The plaintiff opened a godown at khurda and through various agents purchased rice from several cultivators in the mofussil. Several bags of rice thus purchased by the plaintiff were seized by the police of khurda and jatni. The plaintiff contended that these seizures were unlawful as they were done in pursuance of a precencerted conspiracy on the part of the provincial government and its local officials to flout the orders of the government of india regarding the free movement of foodgrains from orissa to bengal and that though he had shown his licence to the sub - divisional magistrate khurda before commencing his business in khurda sub - division yet he was put to much necessarily harassment and huge loss by being entangled in several criminal cases for offences under the defence of india rule which were eventually withdrawn. Hence he claimed damages from the government of orissa.

(53) The main defence of the government of orissa was that they were not responsible for the tortious act, if any, committed by their subordinate officials and that there was no conspiracy between them and their officials, as alleged by the plaintiff.

(54) The learned judges examined whether each of the seizures was made in accordance with law. The learned judges held that there was no conspiracy between the government and their officials, involving the seizure of the goods of the plaintiff and held that it is well settled that the government is not liable for tortious act of their servants. They also held that the police officers appears to have acted within the authority, in respect of the 7th seizure, and hence the state cannot be liable for damages.

(55) In chodey janakiramaiah and co. V. State of andhra, (1964) 1 an. W. R. 253, a division bench consisting of chandra reddi, c. J. And narasimham, j. Had to deal with a case in a suit filed for damages against the state as the foodgrains seized on suspicion under the madras foodgrains (intensive procurement) order, (1948). The plaintiffs were the dealers in foodgrains. They were suspected to have purchased paddy and rice from a procuring agent who was holding the government stock. The anti - blackmarketing sub - inspector seized certain quantity of paddy and rice from the plaintiff's godown and prosecuted the plaintiffs for an offence under section 411, i. P. C. The case was subsequently withdrawn and the grains seized was ordered to be returned. But the plaintiffs refused to take delivery on the ground that it was damaged and unfit for consumption and also that it was of an inferior variety. The grain was therefore auctioned as ordered by the magistrate and the proceeds of the sale were credited to the court deposit. The plaintiffs thereafter filed the suit, claiming price of the paddy and the gunny bags seized from them alleging the seizure was illegal and that the state represented by the collector was liable for the claim. The trial court dismissed the suit and the same was confirmed. Hence the appeal to the high court. In the high court, it was contended that the courts below were wrong in holding that the state was not liable for the value of the plaintiffs goods seized by its officers. The learned counsel for the appellant contended that the state is liable for tortious acts of its employees, when the goods were wrongly seized and consequently they suffered loss. The bench examined :he entire case law on the aspect and held that the seizure was effected in exercise of sovereign power by the officials in, the discharge of the delegated power and hence the state is entitled to absolute immunity.

(56) In another decision of this court in j. Kuppanna chetty, anbati ranayya chatty and co. V. Collector of anantapur, (1965) 1 an. W. R. 183 - air1965 a. P. 457 it was held that, under article 300 of the constitution, the government of india and the state government may sue or be sued in the respective affairs in the like cases as dominion of india and the corresponding province or the corresponding indian states might have sued or been sued, if the constitution has not been enacted. Thus, the law which prevailed before 26th january, 1950 continues, but it is subject to any law that may be made by the parliament or a state legislature, under the powers conferred by the constitution. The law before the said date made the secretary of state for india in council and after the first april, 1937 the government of india and of the provinces of british india, liable in the circumstances in which the east india company could have been sued before 1858. The government is liable for the torts of its servants, committed in the course of transactions which any private person can engage. But, the government cannot be sued in respect of acts done by its servants in the exercise of its sovereign powers or sovereign acts, such as, the maintenance of a military road or a national highway, or a hospital out of state revenue. Also in the case of 'acts of state', i. E. Acts done by a government servant, under the authority of the government servant, under the authority of the government, with respect to a non - resident foreigner, the government would not be liable. Such acts are not justiciable in the ordinary courts of law. Making war of treaty, annexation of property belonging to an enemy country or national are examples of acts of state. The non - liability for such an acts is not the act is one committed by the public servant in the exercise of sovereign power but because it is in respect of a non - resident foreinger who cannot invoke the jurisdiction of the courts of this country and for an act which is not justiciable in the municipal courts. If an act is done by the government by itself or by its servants under the clour of municipal law, i. E. When it purports to be in the exercise of powers conferred by statute, but is really illegal and causes injury to any of its subjects, the government is liable for the injury. The government is not, however, liable for a wrong done by its servants in the course of official duties, but if the wrong was expressly authorised or later ratified by it. The government would be liable. The principle underlying this rests on the ground that the act was done by the government servant in the exercise of the authority or discretion vested in him by law or statute and not in pursuance of any implied authority of the government.

(57) In this, case the plaintiff, kuppanna chetty, ambati ramayya chetty and company of kadiri is a firm carrying on business as groundnut and mudy merchants. They took on lease a groundnut decorticating factory at kadiri known by the name vittal seshappa chetty sons, groundnut. Factory. The factory was under the management of one of the partners. Kuppanna chetty vittal subbayya chetty, son of seshayya chetty, was in arrears of income - tax relating to the years 1951 - 52 and 1952 - 53 to the extent of rs. 20,921 - 10 - 0 and rs. 9,005 - 4 - 0 respectively. The income - tax officer issued a certificate under section 46 (2) of the income - tax act, 1922 to the collector of bellary for realisation of the said arrears. The tahsildar, kadiri, was directed by the collector to attach the said factory, buildings and machinery, which he did on 17. 6. 1957. The attachment of the boiler engine and decorticator and engine, factory building and the godowns of the factory, etc. Was effected by the tahsildar in the presence of the deputy tahsildar, the village munsif and karnam, by locking and sealing the factory buildings, and keeping a watchman to guard the articles attached. It was made clear even at that time that the groundnut, etc. , stored by the plaintiff could be removed by them, in the presence of the village officers. The plaintiff firm made attempts to obtain permission for working the factory by approaching the revenue authorities, but in vain. The plaintiff then moved this court by writ petition no. 550 of 1957 for a direction for the removal of looks and the same was ordered on their furnishing security in a sum of rs. 30,000 but by the time the security was furnished the lease period had expired on 30. 9. 1957. The plaintiff's case is that the procedure followed by the tahsildar in locking the factory was contrary to law and his refusal to remove the locks even after they offered to furnish security was mala fide and that, by reason of his unlawful conduct. They have suffered loss to the tune of rs. 31,510 - 00. They accordingly sued the state of a. P. The collector of anantapur and the tahsildar of kadiri on the ground that they were jointly and severally liable.

(58) This court held that the conclusion is irresistible and that the tahsildar in the discharge of the duties imposed on his under the statute, viz. , the madras rev. Recovery act, effected the attachment illegally and caused damage to the plaintiff and has, therefore, committed a wrong or a tort even if he acted bona fide. Then, this court examined whether the government cannot be made liable even assuming that the tahsildar committed tort in discharge of his duties. The ultimate finding of the court on this question was that the suit against defendants 1 and 3 in their official capacity was dismissed.

(59) In bakshi amrik singh v. The union of india, (1974) a. C. J. 105, the fuller bench of the punjab high court had to examine whether the union of india was liable to pay damages. In that cause, the truck which caused the injury to amrik singh was an army truck. It was being driven by an army driver who had been detailed on duty for checking army personnel. It was engaged in that duty when it caused the accident resulting in injuries to the appellant. The question was whether the accident occurred in the course of discharge of sovereign functions of the state. ,

(60) The question that is to be asked in deciding this issue is whether the act in which the driver of the truck was engaged could be performed by private individuals. It cannot be disputed that only a military man can be deputed to check the military personnel on duty. It was for that purpose that the army vehicle was placed at the disposal of "the person who was put on this duty and he himself drove the vehicle to go about from place to place. While he was so moving about that, he caused the accident. In view of all these facts, the case differs from other cases of accidents. The checking of the army personnel on duty is a function which is intimately connected with the army discipline and it could not be performed by only a member of armed force and that too by such a member of the force who is detailed on such duty and is empowered to discharge that function. The fuller bench, therefore, held that the union of india cannot be liable for injuries sustained by a person, as a result of rash and negligent driving of an army vehicle by a member of military police who is discharge of the duty entrusted to him was proceeding to check the military personnel on duty.

(61) In all the above cited causes, it would be seen that the suits filed for damages against the state were held to be not maintainable, as they deal with the acts committed either in discharge of sovereign functions or in exercise of sovereign power.

(62) Now i will deal with the causes in which the state was held liable.

(63) In secretary of state v. Bari bhanji (1882) 5 madras 273 the view taken by the calcutta high court in nobin chunder dey v. Secretary of state, i. L. R. (1876) 1 cal. Ii was dissented. In that case, the respondent purchased a quantity of salt at bombay and paid excise on it at the rate of rs. 1 - 13 - 0 per maund, the rate leviable under the law was enforced, despatched it by sea to certain ports in this presidency. While salt was in transit, act xviii of 1878 was passed and came into force. By that act, the import duty on salt was raised to rs. 2 - 8 - 0 per maund, but by virtue of a notification issued by the governor - general in council under the authority of the indian tariff act, 1875 importers were allowed a deduction of the excise already paid and consequently they were chargeable only with the difference between the excise and the import duty. On the landing of the salt in this presidency, the collector required the respondents to pay the difference, 12 annas per maund, between the excise already paid and the import duty leviable under the act of 1878 and the respodents having complied with the collector's requirements in order to obtain possession of the salt, instituted this suit to recover the sums they had been compelled to pay. Among other pleas, the appellant pleaded that the court had no jurisdiction to entertain the suit. On this plea, judgment was given for the respondents. The state, therefore, preferred appeal. As there was difference of opinion between the judgment of the madras high court in collector v. P. Chitanbaram, (1876) ll. R. 1 madras 89 and the judgment of the calcutta high court in nobin chunder dey v. Secretary of state, ll. R. (1876) 1 calll the advocate general wanted to go into this question. The division bench examined the ruling in peninsular and oriental steam navigation company v. Secretary of state for india, (1868) 5 bom. H. C. R. (app) l and several other decisions. The learned judges observed that in peninsular and oriental steam navigation company v. Secretary of state for india, (1868) 5 bom h. C. R. (app.) 1 the distinction between the acts done by the company in the exercise of what are usually termed sovereign powers and the acts done by the company in the conduct of undertaking which might be carried on by the private individual who had no such powers delegated but they were pointed out. Though this distinction was referred to by the learned judges in nobin chunder dey's case, l. L. R. (1876) 1 cal. 11 the judges thought by mistake that the contract? was only part of the administrative contrivance and arrangement by which the government is accustomed to collect the excise duties and the levy of the excise duties and other portions of the public revenue certainly could not lawfully be done by private persons not delegated by the sovereign to do so, and held that the suit was a suit against the government itself in respect to an alleged contract made and for acts done in the exercise of sovereign powers and was therefore not maintainable.

(64) The learned judges observed that there are cases in which it has been held that the east india company was amenable to municipal courts on the grouh'd that the act complained of was committed in the conduct of undertaking which might be carried on by private persons.

(65) The learned judges fur the - observed as follows:

"in the conduct of the commercial operations of the compaay, the occurrence of actionable wrongs could be altogether avoided and it was obvious that no character of sovereignty attached to such operations. But the decision in the case of nobin chunder dey goes beyond the decisions to which we have referred. It is apparent that the learned judges had in view the able judgment in the peninsular and oriental i steam navigation company v. The secretary of state but whereas in that case after noticing the distinction above mentioned, the court held that exemption from suit could not be claimed in respect of the latter class of acts and expressed no opinion that all acts of the former class would enjoy such immunity; in nobin chunder dey's case it has been ruled that the liability of the government or of its officers to suit is restricted to acts of the latter class. It appears to us that this position cannot be maintained, and that the decided cases show that in the class of acts which are competent to the government and not to any private person, a distinction taken between those which tie outside the province of municipal law and those which fall within that law and that it is of the former only that in this country the municipal courts in british india cannot take cognizance. Acts done by the government in the exercise of sovereign powers of making peace and was and of concluding treaties obviously do not fall within the province of municipal law, and although in the administration of domestic affairs the government ordinarily exercises powers which are regulated by that law, yet there! are cases in which the supreme necessity of providing for the public safety compels the government to acts which do not pretend to justify themselves by any cannon of municipal law. The acts done thus done in the exercise of sovereign powers but which do not profess to be justified by municipal law are what we understand to be the acts of state of which municipal courts are not authorised to take cognizance."

The learned judges ultimately held that the acts of state of which the municipal courts of british india are debarred from taking cognizance, are acts done in the exercise of sovereign powers which do not profess to be justified by municipal law and that where an act complained of is professedly done under the sanction of municipal law and in the exercise of powers conferred by that law, the fact that it is done by the sovereign power and is not an act which could possibly be done by a private individual, does not oust the jurisdiction of the civil court.

(66) In miss veils v. Governor - general. A. I. R. 1946 lahore 50 the division bench of the lahore high court held that the sovereign activity in the crown stands on an absolutely different footing from the commercial functions undertaken by the crown. The state railway is a commercial organisation of carriers. In respect of the commercial activities of the crown, no special privilege can be claimed so far as suits for damages are concerned and hence no specific enactment making the crown specifically responsible for damages is necessary.

(67) The above statement of law was enunciated by the court against the contention raised by the learned advocate - general that the north western railway was a state railway and, therefore, the crown is made specifically responsible for damages by means of an enactment, no consequence, the defence of common employment has not been taken - away in the cases qf railways, which belong to the crown. This contention was rejected on the ground that the north western railway is a commercial organisation standing on the same footing as any other organisation of carriers, and in respect of the commercial activities of the crown, nib privilege can be. Claimed so far as the suit for damages are concerned.

(68) In secretary of state v. Sheo ram jee, air1952 nagpur 213, the respondent purchased certain forest coupe at an auction - sale held by the divisional forest officer of bilaspur on 20. 7. 1934 for rs. 2,300/ -. The amount was payable in four instalments. The first instalment was payable on 1. 5. 1935. Under this agreement, the respondent had the right to remove the forest produce from 20. 7. 1934 to 30. 6. 1935. It is alleged that the forest officer hampered and interfered with the removal of timber, thereby causing loss to him and hence the respodent filed the suit against the two defendants, namely the secretary of state in india in council and khan mohammad, the forest range officer, to recover rs. 2,500/ - as damages for the loss caused to the respondent by the wrongful acts, of defendant no. 2. One of the objections was that the suit could have been filed against the first defendant alone.

(69) When the matter came up before the learned subordiante judge, he held on the question of liability that the range officer defendant no. 2 ordered about 16 pairs of sawyers from the plaintiff's coupe to leave and go and work elsewhere and that there was considerable interval before the plaintiff was able to secure other sawyers and that was an unjustifiable interference with the extraction of timber. As the wrongful acts of defendant no. 2 arose out of the exercise of commercial or mercantile function, the secretary of state is liable for damages: (vide p. And o. Steam navigation case) against this decision, a letters patent appeal was preferred and the same came before the division bench consisting of bose and sen, jj. On this question, the division bench observed that a distinction has been drawn between the liability of the secretary of the state for the torts committed by its servants in exercise of sovereign powers and of commercial and mercantile functions, the secretary of state in india cannot be sued for damages arising out of an act done by the government. The learned judges followed the ruling in secretary of state y. Nagorao, air1943 nagpur 511. Ultimately, the bench held that there is no doubt that, in the present case, the acts of forest range officer arose out of the exercise of commercial or mercantile functions and were not in the exercise of sovereign powers. Accordingly, their lordships held that the defendant no. 1 was liable for damages for the wrongful acts committed by its servant defendant no. 2.

(70) In union of india v. Bhagwati prasad a. I. R. 1957 m. P. 159 the plaintiff - respondent, bhagwatiprasad was employed as a delivery - man by the government military farm, jabaipur. His duty was to supply milk to the customers. The milk used to be carried in a military truck* on 22nd november, 1947 the plaintiff met with an accident, when he was out on his duties. The accident occurred when the plaintiff had fallen down from the truck and came under its hind wheel. The injury resulted in the permanent disablement of the plaintiff to perform the duties as a delivery man. The injuries resulted in fracture of both public rami left and fracture medical malleolus left tibia and dislocation of right sacro - illic joint. According to the doctor, the injury has resulted in permanent disablement of the plaintiff. According to the plaintiff, he was sitting in front of the truck by the side of the driver and, when the truck was in motion, one of the milk cans, which were kept behind, got titled, and the truck was, therefore, stopped and he got down to arrange the milk can. After doing the needful, he came back and was boarding the truck. But, the driver negligently put it in motion, on account of which he fell down and came under the hind wheel. He claimed damages from the state. The liability of the union of india was resisted on the doctrine of state immunity. The state contended that the farm was run by the government in its sovereign rights and accordingly the union of india could not be made liable for the negligence of its servants.

(71) The bench observed that they are not concerned with an act of a government servant which was performed in the exercise of any statutory powers. Therefore, their lordships observed that they need not consider the law on the question. The case is governed by the ordinary law of liability of a master for the tort committed by his servant. On the basis of the evidence, the learned judges accepted the plaintiff's version regarding the accident and held that the driver was not partly careful in the discharge of his duties instead he started the truck before the plaintiff could take his seat. The bench, therefore, held that, in the circumstances, the union of india would be liable as the injury sustained by the plaintiff was caused by its servant's negligence, in the course of his employment.

(72) In union of india v. Smt. Jasso, a. I. R. 1962 punjab 315 the full bench, of the punjab high court had to examine the question as to the liability of state for tortious act of its servant. In that case, the deceased was run down and fatally injured by a military truck which was carrying coal and being driven by an army driver to the army general headquarters building in simla. The dependents of the deceased filed the suit for the recovery of compensation against the union of india, alleging that the death of the deceased was due to rash and negligent driving on the part of the solther who was driving the truck and that the union of india was liable to pay damages caused by the rash and negligent act of its employee. The defence of the government was two - fold, firstly the denial of any negligence on the part of the driver of the truck and secondly, that the union of india was not liable for the tortious acts of its servants. The bench considered the second question and observed:

"a study of the authorities as a whole appears to indicate that the law on the point is fairly clear and well settled and that the decision of any case of this kind must depend on its own facts. The first of these decisions in the case of the peninsular and oriental steam navigation co. V. Secretary of state, (1868) 5 bom. H. C. R. (app.) 1. It was in that case that it was laid down that the government of india would be liable for damages in the same circumstances as would have been the east india company would be liable for damages in the same circumstances as would have been the east india company and this proposition has never been disputed. It was held that the secretary of state in council of india is liable for the damages occasioned by the negligence of servants in the service of government if the negligence in such as would render an ordinary employer liable."

The bench also considered next the case in secretary of state v. Hari bhanji i. L. R. (1882) 5 mad. 273 and observed: from these authorities, it. Would appear that the government's immunity from actions in respect of the acts of its servants is limited to cases involving the use of sovereign powers. In a case like the present no question of any act of state can arise since acts of state can only be taken against persons not subjects of the government concerned, and the question which thus arises in this case is whether the act of the servant which gave rise to the suit for damages in one which was carried out in exercise of the sovereign powers of the state. Their lordships finally examined the case before them and observed that it is not suggested that the truck driver had any peculiar duties assigned to him by any law or rule, nor that there was anything special about his employment. On the face of it, therefore, there seems no reason why his employer, although the state, should not shoulder the responsibility for his negligent act committed in the course of his employment just as an ordinary employer would.

(73) The learned judges finally held that it is difficult to see how it can possibly be held that such a routhe task as the driving of a truck loaded with coal from some depot or store to the general headquarters building simla presumably for the purpose of heating the rooms, is something done in exercise of a sovereign power, since such a thing could obviously be done by a private person. The learned judges further observed that

"such being the case, the mere fact that the truck happened to be army truck and the driver a military employee cannot make any difference to the liability of the government for damages for the tortious act of the driver."

(74) In chandrasadani and company v. State of kerala, i. L. R. (1966) 2 kerala 154 a suit for damages was filed against the state of kerala. The trial court decreed the suit holding that damage was caused to the appellant, due to the negligence of the officers of the state. This finding was upheld by the first appellate court and the decree passed by the trial court was confirmed. Hence second appeal was preferred in the high court. Raghavan, j. Observed that, in a welfare state, the state's activities are so broad - based that every aspect of human life comes within their scope for control and regulation. The state also undertakes trade, commerce transport and similar activities. Merely because the activities of the state are in the interest of the public, it cannot be said that the state will not be liable for the tortious acts of its officers. The activities of a welfare state are not merely confined to maintenance of law and order. There is a distinction between the acts committed by the servants employed by the state where such acts are referable to the exercise of sovereign powers delegated to them and acts committed by public servants, which are not referable to the delegation of any sovereign powers, have to be realised particularly at the present time when, in pursuit of their welfare ideal, the government of the states as well as the government of india naturally and legitimately enter into many commercial and other undertakings and activities, which have no relation with the traditional concept of governmental activities in which the exercise of sovereign power is involved. If the acts committed by government employees, in relation to other activities which may be conveniently described as non - governmental or non - sovereign, citizens who have to be confined to the traditional concept of governmental activities and should not be enlarged to embrace all acts of a welfare state like ours. The learned judge also observed that the idea of profit for the government should not be the guiding factor, in a case like this. It is possible to conceive of a case where the government purchases the entire grain stock from producers and sells it to consumers at a loss. Still it cannot be said that the sale is a governmental activity or a sovereign act. The learned judge ultimately held that the act of the collector, who was responsible for the damage to the appellant, was not within the traditional filed of governmental, activities. The state is, therefore, liable in damages.

(75) In union of india v. Sugabai, air 1969 bombay 13 the first defendant, who was employed as a driver in the defence department, while driving the military truck, dashed the bicyclce of abdul majeed with the result that abdul majeed received severe injuries and thed on the spot. His wfie and children filed a suit for the recovery of damages against the driver, who is the first defendant and the union of india, who is the second defendant, the plaintiffs contend that the first defendant was on government duty when the accident took place and hence both the defendants were liable for damages. Defendant no. 1 denied that he was rash and negligent in driving the truck. Defendant no. 2 took up the defence that they were not liable for the tort, alleged to have been committed by the first defendant, as the latter was in military service. The learned district judge did not accept any of these contentions and passed decree for payment of rs. 30,000/ - and costs against the second defendant. Aggrieved with the decree, the union of india preferred an appeal before the high court. The learned government pleader contended before the bench that the union of india was wrongly held liable for the tortious act of defendant no. 1. The evidence brought on record shows that the first defendant was attacked as a military driver to the school of artillery conducted by the defence department of the government of india at deolali. A machine of the school of artillery called "records sounding ranging" and some other equipment has been sent for repair to a military workshop and, after the work of repair was over, defendant no. 1 was, at the time of the accident, transporting the machine and the other equipment in the military truck from the workshop to the school of artillery. It is in the evidence that "records sounding ranging" is a machine for locating enemy guns. The machine was to be used at the school of artillery for giving training to military officers. The learned government pleader argued that the first defendant in the case while transporting the record sounding ranging machine and other equipment from the workshop to the school of artillery was thus exercising the sovereign power delegated to him and the union of india, was therefore, not liable for the torts committed ia the course at the duty. The learned judges did not accept this contention and observed thus: we are unable to agree that the immunity of the state for the torts committed by its servants can be extended in the manner suggested by the learned government pleader. In our view, there is a fallacy in the assumption that every act which is necessary for the discharge of a sovereign function and which is undertaken by the state involves an exercise of sovereign power. Many. Of these acts do not require to be carried out by the state through its servants. For instance, the army unit stationed at deolali requires a regular supply of food. Foodgrains purchased for the army unit may be transported to the military camp in trucks belonging to private agency. They may also be transported in military trucks by employees of the defence department. The fact that the army unit is maintained in the exercise of the state's sovereign power and the further fact that supply of food is essential for the maintenance of the army unit do not justify the conclusion that, if the food is transported to the army camp in military trucks instead of private trucks, the drivers of the military trucks exercise a sovereign power delegated to them by the state. To take another instance, the maintenance of military barracks have to be kept in proper repair. If instead of entrusting the work of repairing the barracks by private contractors, the state sets up a departmental unit for the purpose, the work done by the state employees in repairing the barracks cannot be said to have been done in exercise of delegated sovereign power, even if the work of repairing the barracks is essential for the maintenance of the army unit. It appears to us that in deciding whether a particular act was done by a government servant in discharge of a sovereign power delegated to him, the proper test is whether it was necessary for the state for the proper discharge of its sovereign function to have the act done through its own employee rather than through a private agency. Referring to the case before them, the learned judges observed that the transport of records sound ranging machine and other equipment from the workshop to the school of artillery was necessary for the proper training of army personnel, but it was not necessary to transport the said equipment through a military truck driven by an employee of the defence department. The equipment could have been carried through a private carrier without any material detriment for the discharge by the state of its sovereign function of maintainiug the army and training army personnel. It is easy to appreciate that, in certain circumstances, the transport of machines through military trucks can be regarded as an act done in the exercise of the state's sovereign power. The machines may have to be carried for the immediate use of the army engaged in the active military duty. In such a case, the transport of the machines through military truck may be regarded as an exercise of the state's sovereign power. The learned judges observed that the transport of the machine could have been arranged through a private carrier, without any material deteriment to the running of the school of artillery, and it must follow that defendant no. 1 was not exercising any delegated sovereign power of the state when he transported the equipment in a military truck and caused the fatal accident by his negligence.

(76) In indian insurance company association pool, bo a bay v. Radhabai, air1976 m. P. I64 the vehicle involved in the accident belonged to the state. At the relevant time, it was allotted to the primary health centre, nainpur. At about 9 p. M. One satyanarayana approached dr. Tiwari assistant civil surgeon, nainpur with a request that the vehicle be allowed to be taken to a place at a distance of 12 miles from nainpur where some children were seriously ill with a view to bring them for treatment at nainpur. This request was allowed by dr. Tiwari. The vehicle was entrusted to lallu, who was driver in government, employment for being the ailing children. When the vehicle left the hospital premises, it was being driven by lallu. Satyanarayana was also in the vehicle. Lallu stopped the vehicle near the petrol depot of narendra kumar jain and got down to take petrol in a petrol can. After taking petrol, when the vehicle left the depot of narendra kumar jain it was driven by satyanarayana, who was on the steering wheel and lallu was sitting beside him. After some distance from the petrol depot the accident happened. The vehicle first struck an empty cot belonging to one panda which was on the right hand side of the road. The vehicle then served towards the left and hit the cot on which babuial was sleeping. Babuial thes on the spot. The tribunal found that the road was sufficiently wide and had the vehicle been properly driven the accident would not have happened. The tribunal held that lallu was negligent in permitting satyanarayana to drive the vehicle. The tribunal held that the accident happened in the course of the employment and the state was vicariously liable for the negligence of lallu. In the appeal filed by the state, the learned government pleader contended that the vehicle was entrusted to lallu, who was the driver in the employment of the state, to take the vehicle for bringing to the hospital the ailing children and at that time the accident took place and the state is, therefore, not liable. The bench held that, in cases where the state is sued for tortious acts of its servants and where plea of immunity based on employment referable tp sovereign functions is raised, the court before upholding the plea must find that the impugned act was committed in the course of an undertaking or employment which falls within the area of traditional sovereign functions. The learned judges ultimately held that the defence of immunity must, therefore, fail.

(77) In nandram heeralal v. Union of india, air1978 m. P. 209, a six year boy met with an accident by an army vehicle. Hence compensation was claimed. The learned judges held that the act of driving the vehicle in bringing back the officers from the place of exercise to the college of combat mhow, was not an act which could be lawfully exercised by a sovereign or a person by virtue of delegation of sovereign rights. And therefore, although the maintenance of army is a sovereign function of the union of india from it alone it does not follow that the union is immune from all liability for any tortious act committed by an army personnel.

(78) All the above cited decisions noted the distinction pointed out by sir barens peacock, c. J. In peninsular and oriental steam navigation company v. Secretary of state for india, (1868) 5 bom. H. Cr. (app. 1) between the acts of government which were in the nature of private business, although performed in the exercise of governmental functions. The learned judges, while disposing of each case, gave reasons as to how the facts and circumstances of the particular case did not satisfy them in coming to the conclusion that the act complained of was committed in discharge of the sovereign functions or in exercise of sovereign power. They, on the other hand, held that the facts of a particular case clearly show that the facts of a particular case clearly show that the act complained of was committed in the nature of private business although performed in the course of the employment of the government.

(79) Now, i have to consider the view expressed by the supreme court which deal with the question as to when the state is or is not liable. The first case is the state of rajasthan v. Mst, vidhyawathl, (1963) 1 s. C. J. 307 in that case, the car of the government was sent to the workshop for necessary repairs and, after repairs were carried out, the driver while driving the car along the public road to the residence of the collector knocked down one jagadishial, who thed three days later. The widow of jagdishlal and a minor daughter filed a suit for compensation for rs. 25,000/ - from the defendants, who are the state and the driver. The state contented the suit contending that it was not liable for the tortious acts of its employment. The trial court decreed the suit against the driver and dismissed against the government. The plaintiffs preferred an appeal to the high court and the high court allowed the appeal and decreed the suit against the government also. Thereupon, the state of rajasthan filed an appeal before the supreme court contending that it was not liable as the car was maintained by the government in exercise of sovereign powers and not as part of any commercial activity of the state.

(80) Their lordships of the supreme court compared the corresponding provisions of section 32 of the. Government of india act, 1915 section 176 (1) of the government of india act of 1935 with the provisions of article 300 (1) of the constitution and observed that the provisions of article 300 (1) are mutatis mutandis the same as that of the provisions of section 31 (1) of the government of india act of 1915 and the provisions of section 176 (1) of the government of india act, 1935. Their lordships also observed that sub - section (2) of section 32 has specified reference to remethes and has provided that the remethes against the secretary of state in council shall be the same as against the east india company, if the government of india acts of 1858 and 1915 had not been passed. Thus, section 65 of the government of india act of 1858, sub - section (2) of section 32 of government of india act of 1915, section 176 (1) of the government of india act of 1935 and article 300 (1) of the constitution declare that the state would be liable to the extent that the east india company was liable. Then, their lordships examined as to the extent of liability of the east india company for the tortious act of its servants committed in the course of their employment as such. Their lordships considered the leading case of the supreme court of calcutta in peninsular and oriental steam navigation company v. Secretary of state for india. (1868) 5 bom. H. C. R. (app.) 1 and approved the principles laid down in that case, and answering the said question, their lordships observed that the exact question before them arose in the case in peninsular and oriental steam navigation company v. Secretary of state for india, (1868) 5 bom. H. C. R. (app. 1). Their lordships further observed that the supreme court of calcutta considered the provisions of section 65 of the act of 1858 and held ultimately that there is a great and clear distinction between the acts done in the exercise of what are usually termed sovereign powers and acts done in the conduct of undertaking, which might be carried on by private individuals, without having such powers delegated to them.

(81) In para. 11, their lordships of the supreme court of india observed as follows:

"it was also argued before that court that the east india company having the two - fold character of a sovereign power and of a trading company, it would be very difficult to determine whether a particular act had been done in the exercise of sovereign powers or of its activity in relation to trade and business. In answer to this contention, it was pointed out by the court that the company would not have been liable for any act done by its officers of solthers in carrying on hostility or in seizing property as prize property or while engaged in military or naval action. In such cases no action would have lain even against the officers themselves. But the company would have been liable for the negligence of their servants or officers in navigating a river steamer or in repairing the same or in doing any act in connection with such repairs."

In para. 12 their lordships further observed as follows: -

"the argument that a distinction had to be drawn between the liability under a contract and that arising out of a wrongful act, and that the latter category of liability would not be within the mischief of the words of the section (section 65) was rightly repelled with reference to the words of the state, which said "debts lawfully contracted and expenses or liabilities incurred" would include a liability arising out of a tortious act. The court, after an elaborate consideration of all possible arguments in favour of the secretary of state, came to the following conclusion, which is rightly summed up in the head - note in these words: the secretary of state in council of india is liable for the damages occasioned by the negligence of servants in the service of government if the negligence in such as would render an ordinary employer liable. "

(82) In para. 15 their lordships, ultimately gave their decision for the case before them viewing the case from the point of first principle, there should 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 and functioning as such, as any other employer. The immunity of the crown in the united kingdom was based on the old feudalistic notions of justice, namely, that the king was incapable of doing a wrong and therefore of authorising or instigating one and that he could not be sued in his own courts. Their lordships further observed that "in india, ever since the time of the east india company, the sovereign has been held liable to be sued in tort or in contract and the common law immunity never operated in india. Now that we have by our constitution establsihed a republican from of government and one of the objectives is to establish a socialistic state with its varied industrial and other activities employing a large army of servants, there is no justification, in principle, or in public interest, that the state should not be liable vicariously for the tortious act of the servant. Their lordships further observed that "as the cause of action in this case arose after the coming into effect of the constitution, in our opinion, it would be only recognising the old established rule, going back to more than 100 years at least if we uphold the vicarious liability of the state. Article 300 of the constitution itself has saved the right of parliament or the legislature of a state to enact such law as it may think fit and proper in this behalf. But so long as the legislature has not expressed its intention to the contrary, it must be held that the law is what it has been ever since the days of the east india company. "

(83) Their lordships finally opined that the act complained of does not come under the act committed by the government servant in exercise of the sovereign power or in discharge of the sovereign function and their lordships, therefore, held that the state is liable to pay damages.

(84) In the second case reported in kasturilal v. State of u. P. , (1965) 2 s. C. J. 318 the supreme court took the view that the act complained of was done in the discharge of the sovereign function or in discharge of statutory function referable to and ultimately based on the delegation of the sovereign power of the state to such public servant. In this case, m/s. Kasturilal ralia ram jain is a firm which deals in bullion and other things at amritsar. It was registered under the indian partnership act. Ramia ram was one of the partners. On 20th september, 1947 ralia ram was arrived at meerut by the frontier mall about midnight. His object in going *o meerut was to sell gold, silver and other goods in the meerut market. Whilst he was passing through the chapula bazar with this object, he was taken into custody by three police constables. His belongings were then searched and he was taken to the kotwali police station. He was detained in the police lock up there and his belongings which consisted of gold, weighing 103 tolas 5 mashas and 1. Ratti and silver weighing 2 maunds and 64 seers, were seized from him and kept in police custody. On 21st september, 1947 he was released on bail, and some time thereafter the silver seized from him was returned to him. Ralia ram than made repeated demands for the return of the gold which had been seized from him, and since he could not recover the gold from the police officers, he filed the present suit against the respondent in which he claimed a decree that the gold seized irom him was returned to him, should either be returned to him, or in the alternative, its value should be ordered to be paid to him. The alternative claim thus made by him consisted of rs. 11,075 - 10 - 0 as the price of the gold and rs. 355/ - as interest by way of damages as well as future interest.

(85) The said claim was resisted by the respondent on several grounds. It was argued that the respondent was not liable to return either the gold or to pay its money value. The respondent alleged that the gold in question had been taken into custody by one mohammed amir who was then the head constable and it had been kept in the police malkhana under his charge, mohd. Amir however, misappropriated the gold and fled away to pakisthan on the 17th october, 1947. He had also misappropriated some other cash and articles deposited in the malkhana before he left india. The respondent further alleged that a case under section 409, i. P. C. As well as 29 of the police act had been registeied against mohd. Amir. The respondent pleaded that this was not a case of negligence of the police officers and that even if negligence was held proved against the said police officers the respodent - state could be said to be liable for the loss resulting from such negligence.

(86) Then their lordships examined the provisions of cr. P. C. Regarding the powers of the police officers to arrest any person in whose possession anything is found which may, reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing. It is under this provision that ralia ram was arrested at mid night, and his arrest therefore can be said to be justified under section 54 (1) (iv). Their lordships also considered the provisions of 550 of the code which empowers a police officer to seize property suspected to be stolen and also the provisions of section 51 which confers power on the police officer to search a person. Their lordships also examined the provisions of section 528 providing for the procedure as to how the police officer had to deal with the question of safe custody of these goods. In view of this provision and also the u. P. Police regulations and police chapter xiv, their lordships observed that there can be no escape from the conclusion that the police officers were negligent in dealing with ralia ram's property, after it was seized from him. Even if it is accepted that the goods were misappropriated by the head constable, md. Amir, their lordships felt that they were satisfied that the trial court was right in coming to the conclusion that the loss suffered by the appellant by the fact that the gold seized from ralia ram has not been returned to it, is based on the negligence of police officers, employed by the respondent, and that raises the question of law which their lordships have set out at the commencement of the judgment.

(87) Their lordships then examined the main question whether the state is liable for damages. This question was examined with reference to article 300 (1) of the constituion and also the decision of the supreme court in the state of rajasthan v. Mst. Vidhyawati, (1963) 1 s. C. J. 307. For this purpose, their lordship once again considered the leading authority, pronounced by the supreme court of calcutta in peninsular and oriental steam navigation company v. Secretary of state for india in council. His lordship gajendragadkar, c. J. Speaking for the court, paid glowing tributes to the judgment pronounced by peacock, c. J. His lordship observed

"it is remarkable tribute to the judgment pronounced by chief justice peacock in that case that eversince, the principles, enunciated in the judgment, have been consistently followed by all judicial decisions in india and except on one occasion, no dissent has been expressed in respect of them. It seems somewhat ironical that the judgment of this importance should not have been reported in due course of in calcutta but found a place in the law reports in p. And 0. Steam navigation company's case, (1868) 5 bom. H. C. R. (app.) 1."

(88) Gajendragadkar, cj. Then discussed as to what that case decided. The chief justice observed as follows: - "the chief justice enunciated a principle which has been consistently followed in all subsequent decisions. Said the learned cj. , "there is a great and clear distinction between acts done in the exercise of what are usually termed sovereign powers, and acts done in the conduct of undertakings which might be carried on by private individuals without having such powers delegated to them. " having thus enunciated the basic principle, the chief justice stated another proposition as flowing from it. He observed that "where an act is done, or a contract entered into in the exercise of powers usually called sovereign powers by which we mean powers which cannot be lawfully exercised except by sovereign or private individual delegated by a sovereign to exercise them no action will lie. " his lordship gajendragadkar, c. J. Summarised the dictum as follows: "naturally it follows that where an act is done, or a contract is entered into, in the exercise of powers which cannot be sovereign powers, action will lie. That, in brief is that decision of the supreme court in calcutta in the case of the peninsular and oriental steam navigation co, (1868) 5 bom. H. C. R. (app. 1). On the basis of this, his lordship enunciated further in para. 21 at page 1046:

"thus it is clear that this case recognises a material distinction between acts committed by the servants employed by the state where such acts are referable to the exercise of sovereign powers delegated to public servants, and acts committed by public servants, and acts committed by public servants which are not referable to the delegation of any sovereign powers. If a tortious act is committed by a public servant and it gives rice to a claim for damages, the question to ask is: was the tortious act committed by the public servant in discharge of statutory functions which are refereable to, and ultimately based on. The delegation of the sovereign powers of the state to such public servant? if the answer is in the affirmative, the action for damages for loss caused by such tortious act will not lie. On the other hand, if the tortious act has been committed by a public servant in discharge op duties assigned to him not by virtue of the delegation of any sovereign power, an action for demages would he. The act of the public servant committed by him during the course of his employment is, in this category of cases, an act of servant, who might have been employed by a private individual for the same purpose. This distinction which is clear and precise in law, is sometimes not borne in mind in discussing questions of the state's liability arising from tortious acts committed by public servants. That is why the clarity and precision with which this distinction was emphasised by chief justice peacock as early as 1861 has been recognised as a classic statement of this subject."

(89) His lordship then considered the ruling of the supreme court in state of rajasthan v. Mst. Vidhyavati, (1963) 1 s. C. J. 307 and observed that, in that case, the claim for damages against the state of rajasthan was based on the negligent act committed by the employee of the state of rajasthan while he was driving a jeep car from the workshop to the collector's residence. His from the workshop to the collector's residence. His lordship observed that, in that case the court was required to consider the question whether the negligent act committed by the government - employee during the driving of the jeep car from the workshop to the collector's residence for the collector's use gave rise to a valid claim for damages against the state of rajasthan or not? dealing with that question, his lordship observed that in dealing with such cases it must be borne in mind that, when the state pleads immunity against claim for damages resulting from the injury caused by negligent acts of its servants, the area of employment referable to sovereign powers must be strictly determined. Before such a plea is upheld, the court must always find that the impugned act was committed in the course of an undertaking or employment which is referable to the exercise of sovereign power and in the case of the state of rajasthan, (1963) 1 s. C. J. 307 this court took the view that the negligent act in driving the jeep car from 'the workshop to the collector's bungalow for the collector's use could not claim such a status. In fact, the employment of a driver to drive the jeep car for the use of a civil servant is itself an activity which is not connected in any manner with the sovereign power of the state at all. That is the basis on which the decision must be deemed to have been founded and it is this basis which is absent before them.

(90) Thus, his lordship gave cogent reasons as to how kasturilal's case, (1965) 2 s. C. J. 318 can be distinguished from that of the state of rajasthan, (1963) 1 s. C. J. 307 for holding that the state is not liable.

(91) As the tortious act complained of was committed by the police officer in discharge of sovereign functions, which are referable to and ultimately based on the delegation of the sovereign powers of the state to such public servant, the state was held not liable in kasturilal's case, (1965) 2 s. C. J. 318. As the tortious act committed by the driver in discharge of his duties assigned to him not by virtue of any delegation of sovereign power, the state was held liable for the rash and negligent act committed by the driver in the case of rajasthan v. Mst. Vidhyawati, (1963) 1 s. C. J. 307. Thus these two decisions provide as best examples to the classic distinction pointed out by sir barens peacock, c. J. In p. And o. Case, (1868) 5 bom. H. C. R. (app.) 1 in between the acts done in the exercise of what are usually termed sovereign powers and the acts done in the conduct of undertaking, which might be carried on by private individuals without having such powers delegated to them. Thus it is clear that the ruling in kasturilal's case, (1965) 2 s. C. J. 318 is based upon the act committed by the public servant in discharge of statutory function referable to be exercise of sovereign powers delegated to the public servants, while the ruling in the state of rajasthan, (1963) 1 s. C. J. 307 is based upon the acts committed by public servant which are not referable to the delegation of any sovereign powers, though they are committed in the course of his employment. These two cases deal with the two different principles laid down by peacock, c. J. As to when the state is or is not liable.

(92) Sri chandrasekhara rao, the learned counsel for the respondent, contends that in kasturilal's case, (1965) 2 s. C. J. 318 their lordship have not correctly applied the principle enunciated by their lordship in the state of rajasthan's case, (1963) 1 s. C. J. 307 and peacock, c. J. In p. And 0. Case, (1868) 5 bom. H. C. R. (app.) 1. According to him, their lordships held in state of rajasthan's case, (1963) 1 s. C. J. 307 that the state is liable for tortious act committed by their employees even if they are committed in the course of their duties and, in such a case their lordships ought to have held in kasturilal's case, (1965) 2 s. C. J. 318 that the state is liable for the loss sustained by the plaintiff on account of the act committed by the police. Sri chandrasekhara rao's main contention is that the east india company would not have treated the seizure of the property as an act committed in discharge of the sovereign functions or in exercise of sovereign power delegated to the company's servants and, in such a case, the state cannot claim immunity and the state is, therefore, liable and their lordships ought to have held in kasturilal's case, (1965) 2 s. C. J. 318 that the state is liable.

(93) I find it difficult to accept this contention. I have already shown above that the case of rajasthan, (1963) 1 s. C. J. 307 and the case of kasturilal, (1965) 2 s. C. J. 318 deal with two different principles enunciated by the chief justice peacock in p. And 0. Case, (1868) 5 bom. H. C. R. (app.) 1. Further, his lordship gajendra - gadkar, c. J. Has given cogent reasons as to how the facts and circumstances of case of rajasthan, (1963) 1 s. C. J. 307 differ from the facts and circumstances of kasturilal's case, (1965) 2 s. C. J. 318. The learned chief justice unhestatingly declared in kasturilal's case, (1965) 2 s. C. J. 318 that the power to seize the property like the power to arrest and search the person by a police officer is the power conferred on the specified police officer by statute and they are powers which can be properly characterised as sovereign powers and so there is no difficulty. In holding that the act which gave rise to the present claim for damages has been committed by the employees of the respondent during the course of its employment and the employment in question being the category which can claim the special characteristics of sovereign power, the claim cannot be sustained and is, therefore, not sustainable.

(94) The view expressed by gajendragadkar, c. J. In kasturilal's case, (196512 s. C. J. 318 is an effective answer to sri chandra - sekhara rao's contention that the seizure of the property by the police officer is not a sovereign act.

(95) It is now well settled that, no person except a police officer who alone is empowered by the code of criminal procedure that can arrest or can conduct a search of a person or seize the property from a person and it is an exclusive privilege and power conferred by the legislature on a police officer. If any other person, who is not authorised by the statute, does these acts, he is liable for criminal prosecution or for civil action as the case may be. Hence the acts of arrest, search of or seizure of property from a person by the police officer, in discharge of his statutory functions, are rightly treated as sovereign acts. The same answer will hold good even to the contention raised by sri chandrasekhara rao that the east india company would not have claimed the seizure of property by its officials as a sovereign act. It is true that it might not be a sovereign act, if the property was seized by its (company's) officials in pursuance of its commercial activity. But, if the property was seized by the officials of the east india company in exercise of the sovereign power, the seizure under these circumstances was certainly an act of sovereign. This fact that the east india company was enjoying and exercising these two types of functions admits, in my view, of, no dispute. Though the east india company were not sovereign, there is no doubt that they were the company to whom sovereign powers were delegated. They were also a company who traded on their own account and for their own benefits. They were engaged in transactions partly for the purpose of government and partly on their own account, which, without any delegation of sovereign rights, might be carried on by private individuals. It is on the basis of this reasoning that chief justice peacock declared in p. And o. 's case, (1868) 5 bom. H. C. R. (app.) 1 at page 15 that there is a great and clear distinction between the acts done in the exercise of what are usually termed sovereign powers and acts done in the conduct of undertakings which might be carried on by private individuals without having such powers delegated to them. In fact, the judgment of peacock, cj. At page 16 throws light on the question whether the seizure of property made in pursuance of sovereign function or in exercise of the sovereign power is a sovereign act or not. I feel it necessary to extract here the relevant passages at page 15. The learned chief justice stated in p. And 0. Case, (1868) 5 bom. H. Cr. (app.) 1 as follows:

"but where an act is done or a contract is entered into the exercise of powers usually called sovereign powers, by which we mean powers which cannot be lawfully exercised except by sovereign or private individual delegated by a sovereign to exercise them, no action will lie."

The learned chief justice also referred on page 16 to the case of mountstuart elphinstone and another v. Heera chund becreechund, 1, knapp. P. C. C. 316, in which it was held as follows: -

"an action would not lie for a seizure of property, when the proper character of the transaction was that of a hostile seizure, made, if not fiagrante, yer nondum cessante bellow. It may be difficult in some cases to determine whether an act is done in the exercise of powers usually called sovereign powers by individuals to whom such powers have been lawfully delegated. It is clear that the east india company would not have been liable for any act done by any of its officers or solthers in carrying on hostilities, or for the act of any of its naval officers in seizing as prize property of a subject under the supposition that it was the property of an enemy nor for any act done by a military or naval officer or by any solther or sailor, whilst engaged in military or naval duty, not for any act of any of its officers or servants in the exericse of judicial functions. In many of such cases an action would not lie even against the person who actually committed the act."

(96) It is, therefore, clear from the decision in mountstuart elphinstone and another v. Heerachund becreechund, 1 knapp. P. C. C. 316 that no action would lie for a seizure of property when the act is done in the exercise of the powers usually called sovereign powers by individuals to whom such powers have been lawfully delegated. On the basis of this view, 1 hold that the east india company could not have been held liable for the seizure of the property especially when the property was seized in the exercise of sovereign powers by individuals to whom such powers have been lawfully delegated. It is for these reasons that i find no substance in the comments made by sri chandrasekhara rao. Obviously, sri chandrasekhara rao, has lost sight of the distinction pointed out by peacock, c. J. In p. And 0. Case, and the reasons given by his lordships gajendragadkar, c. J. In kasturilal's case, as to why the state was held liable in the case of state of, rajasthan, (1963) 1 s. C. J. 307 and as to why the state cannot be held liable in the case of kasturilal , (1965) 2 s. C. J. 318. Hence i have to hold that the seizure of the property in the case on hand was made by the police officers by the statute and the state, is therefore, entitled to claim immunity.

(97) Since i have taken the view that the state is not liable for the damages for the acts complained of, i agree with the view taken by my learned brother rama rao, j. And respectfully disagree with the view taken by my learned brother, raghuvir, j. And my answer to the question is the state of andhra pradesh is immune from the suit claim made by the plaintiff in the facts and circumstances of the case.

(98) Post before the bench for final orders. This appeal and cross - objections coming on for hearing upon perusing the judgment rendered by the honourable mr. Justlce. Punnayya, dated 6. 7. 1984. The court delivered the following judgment:

(99) Now we have received the judgment of punnayya, j. Agreeing with the judgment of one of us - following the majority view among three of us, the appeal has to be allowed and the cross objections will have to be dismissed. The appeal is accordingly allowed and the cross objections are dismissed. No order as to costs.