Liability of the State in Tort — Administrative Law Notes

Liability of the State in Tort

In 1965 a man’s gold was seized by the police, kept in the police malkhana, and stolen by a corrupt head constable who fled to Pakistan. The owner sued the State — and lost, because seizing property is a “sovereign function” for which, said the Court, the State was not liable. That harsh case, Kasturi Lal (1965), became the villain of Indian administrative law, and the story of this topic is how the courts spent fifty years cutting it down until it is now, in practice, all but dead.

When is the State liable in tort?

The State can commit torts through its servants. Whether it must pay turns on the old distinction between sovereign and non-sovereign functions, drawn from Article 300, which makes the Union/States liable to be sued as the old East India Company could be:

Sovereign functions — functions that only a sovereign State can perform (defence, war, administration of justice, maintenance of law and order, in the old view). Historically, no liability for torts committed in their exercise (P&O Steam Navigation v Secretary of State (1861), the source of the distinction).
Non-sovereign functions — ordinary commercial or welfare activities that a private person could also do (running a workshop, a transport service, a hospital). Here the State is liable like any private employer (State of Rajasthan v Vidhyawati (1962)).

The decline of sovereign immunity — the exam narrative:

P&O Steam Navigation (1861) — drew the sovereign/non-sovereign line; State liable for non-sovereign (a dockyard workmen’s negligence).
State of Rajasthan v Vidhyawati (1962) — State liable for a government driver’s negligence (a non-sovereign act); a welfare State cannot claim wide immunity.
Kasturi Lal v State of U.P. (1965) — the low point: police seizure/custody of property held a sovereign function, so no liability for the theft.
N. Nagendra Rao v State of A.P. (1994) — sharply narrowed Kasturi Lal; in a welfare State very few functions are truly “sovereign”, and immunity is confined to a narrow core; the State was liable for negligent handling of seized goods.
State of A.P. v Challa Ramkrishna Reddy (2000) — no immunity where a fundamental right is violated; a prisoner killed by negligence — State liable.

A. Constitutional tort — compensation under Articles 32/226

Where a State officer violates a fundamental right (especially Art. 21 — custodial death, illegal detention, torture), the courts award monetary compensation directly under Articles 32/226 as a public-law remedy, bypassing the sovereign-immunity defence altogether. This is the constitutional tort:

Rudal Sah v State of Bihar (1983) — compensation for a man kept in jail 14 years after acquittal.
Bhim Singh v State of J&K (1985) — compensation for an MLA illegally detained to prevent him attending the Assembly.
Nilabati Behera v State of Orissa (1993) — compensation for a custodial death; sovereign immunity is no defence to a violation of Article 21.
D.K. Basu v State of West Bengal (1997) — laid down custody safeguards; State liable to compensate for custodial violence.

There is also absolute liability for hazardous enterprise: M.C. Mehta v Union of India (1987) (Oleum gas leak) — an enterprise carrying on a hazardous activity is absolutely liable for harm, without the exceptions of the old Rylands v Fletcher rule.

⚠️ DON’T CONFUSE — Liability in tort vs liability in contract

Tort liability concerns the State’s wrongful acts (negligence, false imprisonment, custodial death). It turns on the sovereign/non-sovereign distinction (now narrowed) and on the constitutional tort for fundamental-rights violations. Remedy: damages in a civil suit, or compensation under Arts 32/226.

Contract liability concerns the State’s agreements. It turns on the formalities of Article 299 — a valid government contract must be made in the President’s/Governor’s name, executed by an authorised person. Remedy: enforce the contract if Art. 299 is satisfied, else quasi-contractual relief (s.70 Contract Act).

Spotting it. A person injured/killed/detained by the State → tort (Topic 5). A person suing on a deal/tender/deposit/agreement with the State → contract (Topic 6).

Article 300(1): “The Government of India may sue or be sued by the name of the Union of India and the Government of a State may sue or be sued by the name of the State… in the like cases as the Dominion of India and the corresponding Provinces or States might have sued or been sued if this Constitution had not been enacted.”

In Simple Terms: The State is liable for torts by its servants, except (in the old view) for “sovereign functions”. Kasturi Lal (1965) used that to deny liability for police custody, but later cases (Vidhyawati, Nagendra Rao) narrowed sovereign immunity almost to nothing. And where a State officer violates a fundamental right — custodial death, illegal detention — the courts award compensation directly under Articles 32/226 as a constitutional tort, with no immunity defence.

flowchart TD
    ROOT["State liability in tort (Art. 300)"]:::root
    ROOT --> SOV["Sovereign functions<br/>(defence, law & order) — old: NO liability"]:::mid
    ROOT --> NON["Non-sovereign functions<br/>(commercial/welfare) — liable like a private person"]:::leaf
    SOV --> DECL["Narrowed: Vidhyawati -> Nagendra Rao<br/>immunity now a tiny core"]:::leaf
    ROOT --> CT["CONSTITUTIONAL TORT<br/>FR violation -> compensation under Arts 32/226<br/>Rudal Sah · Nilabati Behera · D.K. Basu"]:::good
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef mid fill:#FDECC8,stroke:#8a5a00,color:#000;
    classDef good fill:#D5F5E3,stroke:#1E8449,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

🧩 WORKED EXAMPLE — Death in custody

Facts. A young man is arrested on theft charges, tortured in custody and dies. His father claims compensation from the State, which pleads sovereign immunity (custody being a “sovereign” police function).

Rule. Where a person dies due to custodial torture, the State’s sovereign-immunity defence fails; the violation of Article 21 gives rise to a constitutional tort and the court awards compensation under Arts 32/226.

Apply. The death resulted from the State’s own agents violating the right to life. Following Nilabati Behera (1993) and D.K. Basu (1997), immunity is no answer to a breach of Article 21.

Conclusion. The State is liable to pay compensation to the father as a public-law remedy for the constitutional tort; sovereign immunity does not apply. Kasturi Lal is effectively displaced in fundamental-rights cases.

Case Laws

P&O Steam Navigation v Secretary of State (1861) — drew the sovereign/non-sovereign distinction; liability for non-sovereign acts.
State of Rajasthan v Vidhyawati (1962) — State liable for a government driver’s negligence (non-sovereign).
Kasturi Lal v State of U.P. (1965) — no liability for loss of seized property; police custody a sovereign function (now much narrowed).
N. Nagendra Rao v State of A.P. (1994) — sovereign immunity confined to a narrow core; State liable for negligent handling of goods.
Nilabati Behera v State of Orissa (1993) — compensation for custodial death under Art. 32; sovereign immunity no defence.
M.C. Mehta v Union of India (1987) — absolute liability of a hazardous enterprise (Oleum gas leak).

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