Case commentary – Ram Ghulam v. Government of U.P.

 
Pragalbhi Joshi, National Law University Odisha

Editor’s Note :

A recognised exception to Respondent Superior is where acts are done in discharge of duty imposed by law. If the act of a servant is alleged to be wrongful, then the aggrieved person has no remedy against the master (the State), as such. The rationale underlying this approach is that the State does not, in such cases, act as an employer. The public servant concerned acts under the statute, not a contract; and his action is not subject to the control of the State. Hence, the principle of vicarious liability of the master (for the wrongs committed by the servant in the course of his employment) does not apply.

Illustrative of the above approach, is the Allahabad case of Ram Ghulam Vs. Government of UP. The police had recovered some stolen ornaments and deposited it in the Malkhana. The property was again stolen from the Malkhana. The plaintiff (owner of the property) sued for damages, the suit being against the State of UP. Since the obligation of a bailee is a contractual obligation, it cannot arise independently from a contract. In the given case, the plaintiff did not hand over the ornaments to the Government. As for vicarious liability, the Government was not held liable, as its servant (the police) was performing his duty in the discharge of obligations imposed on him by law. Compensation was not awarded.

FACTS OF THE CASE

  1. The suit for revision was instituted by plaintiff against the Government of United Provinces so as to recover certain ornaments or their price.

  2. Plaintiff’s ornaments got stolen. Subsequently, they were recovered from another house. The police searched and seized the property by exercising the powers conferred to it under the Code of Criminal Procedure. Thereafter, they were kept in Collectorate Malkhana.But, this time again, they were stolen and were untraceable.

  3. The plaintiffs applied unsuccessfully to the Magistrate for an order for the restoration of the ornaments. But, it was dismissed on finding that the Government is not liable to compensate.

  4. The plaint alleged that the plaintiffs have learnt that the ornaments are not available at the Malkhana on account of the defendant’s servants, and that they have not been returned inspite of notice and ended the prayer with alternative reliefs.

ISSUES FRAMED BY THE COURT

  • Whether or not the Government was liable to indemnify the plaintiffs since it was in the position of a bailee and the ornaments were lost through its negligence or that of its servants?

  • Whether or not the Government was liable to indemnify the plaintiffs in accordance with the rule that a master is liable for the tortuous acts of his servants?

ISSUES OVERLOOKED BY THE COURT

  • Whether or not the Government was liable to indemnify the plaintiffs since it was in the position of a bailee and the ornaments were lost through its negligence or that of its servants?

No other issue was overlooked by the Hon’ble Allahabad High Court. All the issues arising from the case were dealt with.

DECISION OF THE COURT

Given by Seth J.

In Ram Ghulam , the first issue was overlooked. Since, the obligation of a bailee is a contractual obligation and cannot arise independently from a contract. In the given case, the plaintiff did not hand over the ornaments to the Government.

The rule embodied in the maxim “Respondent Superior”is a known exception. Accordingly, master is not liable for the acts of the servants which he performed in discharge of duty imposed by law. Therefore, the Government is not liable to compensate for the stolen ornaments.

REASONS FOR THE DECISION OF THE COURT

The first issue was not seriously considered. Since, the obligation for a bailee is a contractual one and shall not arise independently. In this case, the ornaments were not made over to the Government under any contract. So, the government never acquired the position of the bailee and is not liable to indemnify the plaintiffs.

The second issue was considered as a substantial question of law. Accordingly, Justice Seth said “Government is the political organizations through which the sovereign will of the State finds expression, and through which the State functions”. On reading the Section 176, Constitution Act, 1935 and Section 32, together it is found that such suits are  only maintainable against the Provincial Governments in respect of affairs of the Provinces, as could be maintained against East India Company before Government Of India Act,1858.Therefore, it was determined whether a suit for compensation was maintainable against East India Company for the tortious acts of its servants.

East India company held a dual character till 1858. It was that of a trading corporation and a body possessed of certain sovereign rights, although not fully sovereign. This reference was made in the case to decide whether the tortuous acts were committed to determine the responsibility of the Company or Secretary of State pursuant to commercial or non-commercial undertakings. Judicial opinion is divided on the point whether the immunity extends in respect of torts committed in the performance of all transactions carried on in the exercise of sovereign powers or is confined to particular kinds of transactions only .The suit shall fail on the ground that the alleged tortuous act was performed in discharge of an obligation imposed by law.

ANALYSIS OF THE DECISION

The issue of  the Government being liable to indemnify the plaintiffs since it was in the position of a bailee and the ornaments were lost through its negligence or that of its servants was overlooked. The reasoning given by the court is that since their did not exist any contractual obligation between the parties. This reasoning is not correct. Since, for the  creation of a bailment, no longer the consent is  required from the bailor.[i]

“Where possession of personal property of another is acquired and held under circumstances where the recipient, on principles of justice, ought to keep it safely and restore or deliver it to the owner, as for instance, where possession has been acquired accidentally, gratuitously, through mistake, or by agreement since terminated for some other purpose than bailment, the law, irrespective of any actual meeting of minds…imposes on the recipient the duties and obligations of a bailee. Such bailments are known as constructive or involuntary bailments.”[ii]

In Trustees of the Port of Bombay v. Premier Automobiles Ltd., the plaintiffs machinery was being imported from Italy, the charge of which was taken by the Board of the Port Trust of Bombay. While being transported on a trolley, it fell down due to the negligence of the Board’s employees and the plaintiff was sued for damages .It was held that the essence of bailment was possession and even if the goods came into the possession of the Board without any contract or consent of the owner, bailment would be constituted, but subject to the reservations and limitations of s 61B of the Bombay Port Trust Act. It further observed: technically and essentially subject to the limitations of an agreement, and the notion or privity used need not be introduced in an area where it is unnecessary, for bailment…arises out of possession, and essentially connotes the relationship between the person and the thing in his charge.[iii]

Bailment, therefore, may exist without the creation of a contract between the parties and may give rise to remedies which in substance may not be contractual.

The Law Commission of India recommended that specific provision be added to include such bailments.It has said  that the bailment maybe implied in fact or law. The judgement noted in the report was of Queen v. McDonald[iv]:

“It is not correct as it appears to me, to use the expression “contract of bailment”in a sense which implies that every bailment must necessarily in itself be a contract. I do not understand the definition of the term “bailment”. It is perfectly true that in almost all cases a contract either express or implied by low accompanies a bailment, but it seems to me that there may be a complete bailment without the contract. According to all the definitions, as for instance , those given in Sir William Jones, Blackstone and Kent’s Commentaries , it would appear that a bailment consists in the delivery of an article upon a condition or trust. It is true, I know, that the authors of various definitions go on to say that there is a promise or contract to restore the goods , but this is not, as it seems to me, the bailment itself, but “a contract that arises out of it”.The American Law recognise a contract of bailment by the implication of law.It is thus stated as “an actual contract or one implied in fact is not always to create a bailment; that such a contract may be implied in law and fact. Where, otherwise than by mutual contract of bailment, one person has lawfully acquired the possession of personal property of another and holds it under circumstances whereby he ought , upon principles of justice, to keep it safely and restore it or deliver it to the owner, for example where possession has been acquired accidentally,  fortuitously, though mistake by an agreement since treinated, or for some other purpose, such person and the owner of the property are , by operation of law, generally treated as bailee and bailor under a contract of bailment, irrespective of whether or not there has been any mutual assent, express or implies for such relationship. Such quasi- contracts of bailment include what are known as constructive and involuntary bailments.”[v][vi]

Thirteenth Report of the Law Commission of India, 1958, para 120, recommended adding 181 A as follows: 181A. Constructive bailment.— Where, otherwise than by a mutual contract of bailment, one person lawfully comes into possession of goods belonging to another and holds them under circumstances whereby he ought, upon principles of justice, to keep them safely and restore them or deliver them to the owner, then such person and the owner have the same mutual rights and liabilities as if they were bailee and bailor respectively under a contract of bailment.”[vii][viii]

As far as the second issue is concerned, the Court was correct in the matter.Since,  according to the reasoning of the Court : “The rule embodied in the maxim ‘respondent superior is subject to the well-recognized exception that a master is not liable for the acts of his servants performed in discharge of a duty imposed by law.”  Also, in the given case, the government was discharging its sovereign obligations towards the state, That is search and seizure. Therefore, it shall not be held liable for the same.

DEPARTURE FROM EARLIER PRECEDENTS

In the case of Secretary of State v. Hari Bhanji[ix]it was held that the jurisdiction of the Court was ousted in respect of acts of State and not with respect to acts done under colour of Municipal law. The case of Peninsular and Oriental Steam Navigation Co. v. Secy. of State[x] was discussed. Accordingly, it has not decided beyond that no character of sovereignty attached to the commercial operations of the Company and that it was liable to be sued in respect of wrongs done in the course of such operations, that it does not decide that no suit could be maintained in respect of wrongs done in the operation of sovereign rights, that every act performed in the exercise of sovereign rights is not an act of State and that acts of State are only such acts which do not pretend to justify themselves by any canon of Municipal law.

In the case of Dhackjee Dadaji vs. The East India  Company[xi], Sir Erskine Petre said that before Charter Act, 1833, no distinction was made between acts committed by the company in its commercial and political capacities. The learned judges had referred to the prior statutes at page 330 and observed that those statutes clearly provide for actions to be brought against the Company for its torts.

In the P&O case,[xii] the learned Judges pointed out that the East India Company was not a sovereign and therefore, not entitled to immunity. Though certain sovereign powers were delegated, but the servants were not public servants. The learned Chief Justice held :

“But where 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 a private individual delegated by a sovereign to exercise them, no action will lie”

All relevant provisions of Charter Acts and the Government Of India Act, 1858 were considered. The conclusion was that the company is not sovereign. Therefore, it cannot exercise any immunity.[xiii]

 
Edited by Neerja Gurnani

 

[i] KH Enterprises (Cargo Owners) v. Pioneer Container (Owners) (The Pioneer Container) [1994] 2 AC 324.

[ii] 8 Am Jur 2d, Val 8, 64.

[iii] Trustees of the Port of Bombay v. Premier Automobiles Ltd ,AIR 1981 SC 1982,.

[iv] Queen v. McDonald ,13 Q.B. 323 (326-327).

[v] 6 Am. Jur. (Rev. Ed.), Bailments, S.86.

[vi]Mulla: Indian Contract Act, 13th ed., 2007.

Available at:<http://www.lexisnexis.com/in/legal/search/commentarysubmitForm.do>, (accessed at 31st August, 2014).

[vii] Pollock And Mulla,INDIAN CONTRACT AND SPECIFIC RELIEF ACTS, 562 (8th ed., by Setalvad & Gooderson, 1957).

[viii] Contracts, Thirteenth Law Commission Report , 1958.

[ix] Secretary of State v. Hari Bhanji ,5 Mad. 273.

[x]Peninsular and Oriental Steam Navigation Co. v. Secy. of State, 5 Bom. H.C. App.

[xi]Dhackjee Dadaji v. The East India  Company, Morlev’s Digest, 307 (329-30).

[xii]P&O, 5 Bom. H.C.R. App.I.

[xiii] Liability Of State In Tort, First Report, Law Commission Of India,1956.

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