Position in England
Under traditional English Common Law, the Crown enjoyed absolute sovereign immunity, exempting the Government from vicarious liability for torts committed by its servants, while superior officials were treated as fellow servants.
Although the individual wrongdoer remained personally liable, the expanding role of the State made this immunity unjust.
Before legislative reform, the Crown defended suits against its employees and paid judgments as ex gratia payments.
Where the wrongdoer was unknown, the Treasury Solicitor provided a nominal defendant.
Royster v. Cavey
After Royster v. Cavey rejected the use of nominal defendants, the procedural workaround for suing the Government collapsed, leading to the Crown Proceedings Act, 1947.
The Act placed the Crown on the same footing as a private individual, making it liable under Section 2(1) for torts committed by its servants, breaches of employer duties, and occupier’s liability.
However, the Crown’s vicarious liability arises only where the servant’s act or omission gives rise to a valid cause of action in tort against the servant or their estate.
Position in India
Unlike England, which abolished sovereign immunity through the Crown Proceedings Act, 1947, India has no separate statute on State liability.
Article 300 of the Constitution recognizes the Union and States as juristic persons capable of suing and being sued, but it does not define the grounds of liability.
Instead, liability is determined by tracing Article 300 through the Government of India Acts of 1935, 1915, and 1858.
This means the State is liable only in cases where the East India Company would have been liable before 1858.
Peninsular and Oriental Steam Navigation Co. v. Secretary of State for India (1861)
In Peninsular and Oriental Steam Navigation Co. v. Secretary of State for India (1861), the Court distinguished between sovereign and non-sovereign functions while deciding the Government’s liability for employees who negligently dropped a heavy iron piece during dockyard repairs, injuring the plaintiff’s horse.
Chief Justice Peacock held that the State is immune for torts committed in sovereign functions, but vicariously liable for non-sovereign or commercial functions.
Since repairing a ship and maintaining a dockyard were non-sovereign activities, the Government was held liable for the employees’ negligence.
Nobin Chander Dey v. Secretary of State for India
In Nobin Chander Dey v. Secretary of State for India, the court held that even if a valid contract for a ganja license existed, the State was exempt from liability because regulating controlled substances is a sovereign function.
In contrast, the opposing view holds that the State is vicariously liable for its servants’ torts like any ordinary employer, except when performing an Act of State.
An Act of State is a defense available only in foreign affairs and not against its own citizens.
Secretary of State for India in Council v. Hari Bhanji
In Secretary of State for India in Council v. Hari Bhanji, the court narrowed sovereign immunity by holding that civil courts are barred only in cases of a true Act of State not justified by municipal law.
Where government officers act under statutory municipal law, the State cannot claim blanket sovereign immunity, and civil courts have jurisdiction to hear claims.
This principle was strongly endorsed by the Law Commission of India (First Report, 1956).
P.V. Rao v. Khushaldas
In P.V. Rao v. Khushaldas, the State claimed immunity, arguing that property requisition was a sovereign function.
The Bombay High Court rejected this defense, holding that under the P. & O. precedent, the State is liable for tortious acts except those amounting to an Act of State.
On appeal, Justice Mukherjea affirmed that P. & O. only recognized State liability in commercial undertakings and did not grant absolute sovereign immunity for all non-commercial statutory acts.
Rup Ram v. The Punjab State
In Rup Ram v. The Punjab State, the plaintiff was injured due to the rash and negligent driving of a PWD truck driver.
The State claimed immunity, arguing that transporting materials for road bridge construction was a sovereign function.
The Punjab High Court rejected this defense and held the State vicariously liable.
The Court ruled that the State’s liability for such negligence is the same as that of an ordinary private employer.
Vidyawati v. Lokumal
In Vidyawati v. Lokumal, the Rajasthan High Court held the State vicariously liable after a government jeep, driven rashly by a government employee, caused a pedestrian’s death.
Rejecting sovereign immunity, the Court observed that India is a Welfare State.
When the government performs ordinary, non-sovereign functions, it must be treated like any private employer and held liable for damages.
State of Rajasthan v. Vidyawati
In State of Rajasthan v. Vidyawati, the Supreme Court affirmed the High Court’s decision, holding that India is a Welfare State engaged in activities such as industry, public transport, and state trading.
The Court ruled that the State cannot claim sovereign immunity for the tortious acts of its servants while performing ordinary, non-sovereign functions.
Consequently, the State is vicariously liable like any private employer.
Kasturi Lal v. State of U.P.
In Kasturi Lal v. State of U.P., Ralia Ram’s gold and silver were seized by police under the Criminal Procedure Code (CrPC) and kept in the Police Malkhana.
Although the silver was returned, the Head Constable misappropriated the gold and fled to Pakistan.
The Supreme Court held that, as the police were performing a sovereign law enforcement function, the State was exempt from liability and was not vicariously liable for the officer’s tort.
Headmistress, Govt. Girls High School v. Mahalakshmi
In Headmistress, Govt. Girls High School v. Mahalakshmi, an Aya negligently delegated her duty of fetching drinking water to a 9th-standard student, who lost her right eye in an accident.
The court held that this negligence occurred in the course of employment.
Consequently, the court made the State vicariously liable for the employee’s tort.
A.H. Khodwa v. State of Maharashtra
In A.H. Khodwa v. State of Maharashtra, a government doctor negligently left a surgical mop inside a patient’s abdomen during a sterilization operation, causing fatal peritonitis.
The Supreme Court held that running a public hospital is a non-sovereign welfare function.
Consequently, the Court made the State vicariously liable, ruling that it cannot claim sovereign immunity for medical negligence by its employees.
Shyam Sunder v. State of Rajasthan
In Shyam Sunder v. State of Rajasthan, the Supreme Court held that famine relief work is a non-sovereign function, as it can also be performed by private individuals and charitable organizations.
Therefore, the State was held vicariously liable for the negligence of its government truck driver and could not claim sovereign immunity.Â
Indian Insurance Co. Assn. Pool v. Radhabai
In Indian Insurance Co. Assn. Pool v. Radhabai, the court held that transporting patients to a Primary Health Centre (PHC) is a non-sovereign function, as it is a public welfare activity also performed by private organizations.
Therefore, the State could not claim sovereign immunity and was held vicariously liable for the negligence of its government driver.
Mohammad Shafi v. Dr. Vilas
In Mohammad Shafi v. Dr. Vilas, the court held that running hospitals is a non-sovereign function, as providing healthcare is a welfare activity also performed by private entities.
Therefore, the State cannot claim sovereign immunity and is vicariously liable for the negligence of its hospital employees.