State Liability — Tortious (Art 300) & Contractual (Art 299) — Constitutional Law II Notes

State Liability — Tortious (Art 300) and Contractual (Art 299)

In 1965, a jeweller’s gold, seized by the police on suspicion, vanished from the police malkhana [store-room]. He sued the State — and lost, because the Supreme Court in Kasturilal said the police were exercising a “sovereign function,” for which the State was immune. That harsh result set off decades of judicial effort to shrink the immunity. Understanding that story is the key to every State-liability problem.

Can you sue the State?

The question splits into two: liability for torts (wrongs by government servants) and liability in contract.

A. Tortious liability (Article 300)

The provision. Article 300(1) says the Union/State may sue and be sued in the same way as the Dominion of India / the Provinces could before the Constitution — which traces back to the old Government of India Act and ultimately to the East India Company. So the State’s tort liability is as it was historically.

The sovereign / non-sovereign distinction — the heart of the topic. The courts split State functions into two:

Sovereign functions — functions that only a State can perform (defence, police powers, administration of justice, tax collection). For torts committed while performing these, the State was traditionally immune.
Non-sovereign functions — commercial or welfare activities that a private person could also do (running a transport service, a workshop, a hospital). For these, the State is liable like a private employer.

The line of cases (learn this arc):

P&O Steam Navigation v Secretary of State (1861) — drew the sovereign/non-sovereign line; no liability for sovereign functions.
State of Rajasthan v Vidyawati (1962) — a government jeep driver negligently killed a pedestrian; driving the Collector’s car was a non-sovereign function, so the State was liable. The Court signalled that in a welfare State, immunity should shrink.
Kasturilal v State of U.P. (1965) — seized gold lost by the police; seizure was a sovereign function, so the State was not liable. This is the high-water mark of immunity.
N. Nagendra Rao v State of A.P. (1994) and Common Cause v Union of India (1999) — the immunity was sharply narrowed: in a modern welfare State, the sovereign-function defence is confined to a very small core, and the citizen’s fundamental rights (Article 21) override the old immunity.
Nilabati Behera v State of Orissa (1993) — for violation of the right to life in custody, the State pays compensation as a public-law remedy under Article 32/226, regardless of the sovereign-immunity plea — the modern route around Kasturilal.

B. Contractual liability (Article 299)

The provision. A contract made by the Government must satisfy Article 299(1): it must be (i) expressed to be made by the President or the Governor, (ii) executed on his behalf, and (iii) executed by a person authorised by him. These are mandatory formalities — a contract that flouts them is not enforceable against the Government (Bhikraj Jaipuria; K.P. Chowdhry).

Protection of the officer (Article 299(2)). Neither the President/Governor nor the officer executing the contract is personally liable on it — the contract binds the Government (if valid), not the signer.

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 … might have sued or been sued if this Constitution had not been enacted.”

Article 299(1): “All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State … and all such contracts … shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise.”

In Simple Terms: For torts, the old rule immunised the State when its servant was doing a “sovereign” job (police, army) but made it liable for “non-sovereign” jobs (running a vehicle service). Modern courts have shrunk that immunity almost to nothing, especially where a fundamental right like life is violated — then the State must pay compensation. For contracts, a deal with the government binds it only if it is made in the President’s/Governor’s name and signed by an authorised officer; otherwise it is unenforceable, though the signing officer is personally safe.

🧩 WORKED EXAMPLE — the vehicle accidents, the lost jewellery, the custodial torture

Facts. (a) A Minister’s security-vehicle driver, (b) a PWD truck on famine-relief duty, and (c) a military vehicle carrying jawans each cause a fatal accident; and (d) jewellery seized by the police is lost in custody, while (e) police third-degree methods injure a detainee.

Rule. The State is liable for torts of its servants doing non-sovereign functions (Vidyawati); it was traditionally immune for sovereign functions (Kasturilal), but that immunity is now narrow, and for violations of the right to life the State pays public-law compensation under Article 21/32/226 (Nilabati Behera, N. Nagendra Rao).

Apply. (a) Ferrying a Minister is not a core sovereign act — closer to Vidyawati, so the State is liable. (b) A PWD truck on relief work is a non-sovereign/commercial activity — the State is liable. (c) A military vehicle on a non-combat errand (transporting a football team) is arguably non-sovereign; even if labelled sovereign, modern law leans toward liability where negligence causes death. (d) Loss of seized jewellery is the classic Kasturilal fact — but under the modern approach (narrowed immunity, Article 21 public-law remedy) the owner can claim compensation from the State. (e) Custodial torture violates Article 21; the State must pay compensation (Nilabati Behera, D.K. Basu), and the guilty officers face criminal action.

Conclusion. In each case the State is liable on the modern approach: non-sovereign functions attract ordinary tort liability, and even the Kasturilal-type custody loss and custodial torture now yield compensation as a public-law remedy for the violation of the right to life. Always give a definite verdict of liability, noting the shift away from the old immunity.

flowchart TD
    ROOT["State Liability"]:::root
    ROOT --> T["Tort (Art 300)"]:::leaf
    T --> T1["Sovereign function -> immune (old: Kasturilal)"]:::leaf
    T --> T2["Non-sovereign -> liable (Vidyawati)"]:::leaf
    T --> T3["Immunity now narrowed; Art 21 compensation (Nagendra Rao, Nilabati Behera)"]:::leaf
    ROOT --> K["Contract (Art 299)"]:::leaf
    K --> K1["Formalities: President's/Governor's name; authorised execution"]:::leaf
    K --> K2["Non-compliance -> unenforceable"]:::leaf
    K --> K3["299(2): officer not personally liable"]:::leaf
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

[C-10] State of Rajasthan v Vidyawati (1962) — the State is liable for a tort committed by its servant in a non-sovereign function (driving a government car).
[C-9] Kasturilal v State of U.P. (1965) — no liability for a tort committed while exercising a sovereign function (police seizure).
N. Nagendra Rao v State of A.P. (1994) — the sovereign-immunity defence is confined to a narrow core; a welfare State is generally liable.
Nilabati Behera v State of Orissa (1993) — public-law compensation for a custodial death under Article 21, immune to the sovereign-function plea.
Bhikraj Jaipuria v Union of India (1962) — a government contract not complying with Article 299(1) is void and unenforceable.

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