State of Rajasthan vs Mst Vidhyawati : Case Analysis

By Mounica Kasturi, SLS Pune

Editor’s Note: In this case, the claim for damages was made by the dependants of a person who died in an accident caused by the negligence of the driver of a jeep maintained by the Government for official use of the Collector of Udaipur while it was being brought back from the workshop after repairs. The Rajasthan High Court took the view-that the State was liable, for the State is in no better position in so far as it supplies cars and keeps drivers for its Civil Service. The Supreme Court upheld the same and observed that for acts done in the course of employment but not in connection withsovereign powers of the State, State like any other employer is vicariously liable.

FACTS OF THE CASE

  1. Lokumal was a temporary employee of the State of Rajasthan, as a motor driver on probation. In February 1952, he was employed as the driver of a Government jeep car, registered as No. RUM 49, under the Collector of Udaipur. The said car was given for necessary repairs at a workshop.
  2. After the repairs were finished, Lokumal, while driving the car back along a public road, in the evening of February 11, 1952, knocked down one Jagdishlal, who was walking on the footpath by the said of the public road in Udaipur city, causing him multiple injuries, including fractures of the skull and backbone, resulting in his death three days later, in the hospital where he had been removed for treatment.
  3. The plaintiffs who are Jagdishlal’s widow, Vidyawati and a minor daughter, aged three years, through her mother as next friend sued the said Lokumal and the State of Rajasthan for damages for the tort aforesaid. They claimed the compensation of Rs. 25,000/- from both the defendants.
  4. The suit was majorly contested by the state of Rajasthan, i.e. defendant no. 2 and defendant no. 1, Lokumal, remained ex parte. The present suit has been contended before the Hon’ble Supreme Court, by the State of Rajasthan, as the appellant on the ground that it was not liable for the tortious act of its employee.

Procedural History:

  1. The Trial Court, after an elaborate discussion of the evidence, decreed the suit against the first defendant ex-parte and dismissed it without costs against the second defendant. On appeal by the plaintiffs, the High Court of Rajasthan allowed the appeal and decreed the suit against the second defendant also, with costs in both the Courts.
  2. The State of Rajasthan applied for and obtained the necessary certificate “that the case fulfills the requirements of Art. 133(1)(c) of the Constitution of India”. The High Court rightly observed that an important point of law of general public importance, namely, the extent of the liability of the State, in tort, was involved.
  3. But in view of the fact that both the Courts below have agreed in finding that the first defendant was rash and negligent in driving the jeep car resulting in the accident and the ultimate death of Jagdishlal, it is no more necessary to advert to all the questions raised by way of answer to the suit, except the one on which the appeal has been pressed before us.

ISSUES RAISED

  1. Whether the state, earlier to the commencement of Constitution, Art. 300, be liable in a similar situation akin to the state of Rajasthan.
  2. Whether the rash and negligent driving of Jeep car, which led to the claim in the suit was being maintained “in exercise of sovereign power” and not as part of any commercial activity of the State.

RULES APPLICABLE

  1. Article 133(1), Constitution of India, 1950
  2. Article 294, Constitution of India, 1950
  3. Article 295 Constitution of India, 1950
  4. Article 300 Constitution of India, 1950
  5. Section 2(1), Crown Proceedings Act, 1947

ANALYSIS

In the instant case, the Hon’ble Supreme Court has decided to hear the following case in the appeal, in furtherance of the certificate given by the Hon’ble Rajasthan High Court under Article 133, as the question of interpretation of Article 300 was involved, which was a substantial matter of law.

The Supreme Court first recognized that the government could be sued.  In the case of State of Bihar v. Abdul Majid[1], this Court has recognized the right of a government servant to sue the Government for recovery of arrears of salary. It further proceeded to analyze the liability of the state with respect to the Government of India Act, 1935, and others and held that the liability of the state post-independence is the same as that of the East India Company as held in the case of Peninsular and Oriental Steam Navigation Co. v. The Secretary of State for India.[2]  The issue that arose for consideration was the extent of the vicarious liability of Government for the tortious acts of its employees, acting in the course of their employment.

The general rule of common law, guaranteeing sovereign immunity is 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. However, with changing the concept of the state and our constitution establishing a welfare state, the functions are not confined only to maintaining law and order but extend to engaging in all activities including industry, public transport, state trading, to name only a few of them. The possible ramifications arising out these acts are wide and it is not possible to give immunity to all such acts of state. Thus, in the given scenario, it is imperative to understand the difference in the sovereign and non- sovereign functions of the state. Only, for the acts covered under the sovereign functions, the state can claim immunity.

The Supreme Court upheld the view of the High Court.  The Supreme Court upheld that the state must be equally liable as other companies for the acts of its employees. The concept of sovereign immunity and the rule of ‘King can do no Wrong’ are no longer applicable. The Crown Proceedings Act removes such unlimited immunity in the Common Law countries. Also our constitution envisages a Republican form 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.

The next question that was to be answered was whether the act of driving the car back from the repair shop was an exercise of sovereign powers of the state. As the act is not in furtherance of the sovereign functions, the immunity cannot be claimed.

In deciding the instant case, much reliance was placed on the case of Peninsular & Oriental Steam Navigation Company[3]. In that case, the plaintiff filed an action under Section 55 of Act IX of 1850 to recover from the Company Rs 350 being the damages sustained by reason of injuries caused to a horse of the plaintiff through the negligence of certain servants of the Company. Sir Barnes Peacock, holding the Company liable, said:

“There is great and clear distinction between acts done in the exercise of what are usually termed as sovereign powers, and acts done in the conduct of undertaking which might be carried on by private individuals without having such power delegated to them…. When an act is done or 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.”

The Court has deliberately departed from the Common Law rule that a civil servant cannot maintain a suit against the Crown.  It would thus, not be appropriate for the State in these circumstances to continue to raise the plea of ‘sovereign power’ or of ‘sovereign immunity’ to escape its liability in tort.

The principles of common law have been brought into our country for the evolution of tort. When the rule of immunity has been done away with in the common law itself, the purpose of still having it in our country does not sound logical. Further, after the enforcement of the Constitution, it becomes the supreme law of the land and the Constitution does not recognize any such immunity, rather it provides for the contrary.[4]

Further, the article itself has provided for the right of Parliament or the Legislature of a State to enact such law as it may think fit and proper in this regard. The legislature in its wisdom has not exercised its right and enacted any provision pertaining to the immunity of the government for the acts of its officials or servants. Thus, 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.

JUDGMENT AND CONCLUSION

The position of law, obtaining both prior and subsequent to 1858, the position obtaining under Article 300 of the Constitution and the facts and circumstances leading to the formation of the State of Rajasthan, were all reviewed by the Supreme Court in State of Rajasthan v. Vidyawati, The act of the driver was not an act in the exercise of a sovereign function. The Court said that the employment of driver of a jeep car for the use of a civil servant was an activity which was not connected in any manner with the sovereign power of the State at all.  In this case, court rejected the plea of immunity of the State and held that the State was liable for the tortious act of the driver like any other employer.

The Court has very aptly decided the instant case and formed a strong precedent for many more cases that arose with respect to the vicarious liability of the state for the acts of its employers.

RESEARCH

1. Article 133(1) of the Constitution of India :

Article 133(1) of the Constitution of India reads as follows:

“(1) An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies-

(a) that the case involves a substantial question of law of general importance; and

(b) that in the opinion of the High Court the said question needs to be decided by the Supreme Court”

Article 133 discards the distinction between appellate and original jurisdictions of the High Court. Article 133 deliberately uses words which are as wide as language can make them. It includes all judgments, decrees, and orders passed in the exercised of appellate or ordinary original civil jurisdiction.

No appeal in a civil matter lies as a right to the Supreme Court. An appeal can lie only on a certificate of the High Court which is issued when the above two questions are satisfied.[5]

For the purposes of Article 133(1), the proper test to determine whether a question of law is substantial or not is whether it is of general public importance, or whether it directly and substantially affects the rights of the parties, and if so, whether it is either an open question in the sense that it is not finally settled by the highest court, or is not free from difficulty, or calls for discussion of alternative views.[6]

The Supreme Court has emphasised that for the grant of the certificate, the question, howsoever important and substantial, should also be of such pervasive import and deep significance that in the High Court’s judgment it imperatively needs to be settled at the national level by the highest court, otherwise, the Apex Court will be flooded with cases of lesser magnitude.[7]

In exercising its jurisdiction under Article 133, the Supreme Court does not ordinarily interfere with findings of fact and it is all the more reluctant to do so when there are concurrent findings of the two courts below.[8]

2. Tort Law

Meaning-

A tort is a civil wrong for which the remedy is an action for unliquidated damages and which is not exclusively the breach of a contract, or the breach of a trust, or the breach of other merely equitable obligation[9]. Tort is the French equivalent of the English word ‘wrong’ and of the Roman law term ‘delict’. The word tort is derived from the Latin word, ‘tortum’ which means twisted or crooked or wrong. When one’s behavior is crooked or twisted or different from that of others, then he is said to have committed a tort.

Tort law defines the conditions under which a person is entitled to damage compensation if his or her claim is not based on contractual obligation. Damage result from the loss or impairment of property, health, life or limb, from the infringement of rights or from pure financial or non-financial losses. Economically speaking every reduction of the individual’s utility level caused by a tortious act can be regarded as the damage. Tort law rules aim at drawing a just and fair line between those noxious events that should lead to damage compensation and others for which the damage should lie where it falls.

Evolution of tort law-

In England, after the Normans had become well-established, the first major development in tort law was called ‘appeal of felony’. This meant that in cases involving such serious crimes as rape or murder, the plaintiff or a close relative was allowed to bring a civil action against the alleged perpetrator. Still, there were restrictions which we now recognize as statutes of limitations. A formal complaint had to be made, with all diligence, to some authority: the bailiff, or in more unfortunate circumstances, the coroner. Later, if his claim was deemed valid, the plaintiff would be permitted to bring his suit before a court of competent jurisdiction.

Then, as time passed and the common law solidified, many people began to find its boundaries far too restrictive. This impelled them to seek and find loopholes. One way to circumvent common law courts was to become, in name at least, a member of the clergy. This method fostered the term ‘benefit of clergy’. Given this freedom, the number of ‘clergymen’ soon multiplied. This increased the power of Ecclesial courts to hear and decide cases, thereby diminishing King Henry’s authority. Due to this branch of the court being controlled by the chancellor, it was dubbed the court of chancery.

A further incentive to plead before the courts of chancery was the fact that the common law courts could award only money damages. This meant that if a rose garden was being destroyed by a neighbor’s horse, the gardener could be recompensed only in financial terms. The destruction of his garden and his emotional sense of loss was viewed as being outside the judgments available via common law. Conversely, courts of equity could order a perpetrator to do or refrain from doing whatever action had caused the plaintiff’s distress, if the judge viewed it as valid.

Thus, the law of equity, developing from the chancery system, came into being. In a sense, these courts took on the more humane, psychological aspects of cases. Arguably, the law of equity evolved in order to soften the boundaries of common law. A further incentive for litigants lay in the fact that claims brought in courts of equity were heard in English, rather than the traditional Latin. This meant that, in theory at least, the words deployed in courts of equity were understandable to aristocrat and peasant alike. This accessibility made the Latin spoken in common law courts seem elitist, arbitrary, bordering on unjust.

Tort law in India

In India, the term tort has been in existence since the pre-independence era. While India generally follows the UK approach, there are certain differences which may indicate judicial activism, hence creating controversy. Tort law in India, like her common-law counterparts, stems from both statute and common law. However, tort law as such has not been codified.  As tort law is a relatively young area of law in India, apart from referring to local judicial precedents, courts have readily referred to case law from other common law jurisdictions, such as UK, Australia, and Canada.

Indian Courts recognize the concept of contributory negligence. Contributory negligence means the failure by a person to use reasonable care for the safety of either of himself or his property so that he becomes blameworthy in part as an “author of his own wrong”. In the absence of reasonable care on the part of the claimant, courts are likely to reduce the liability of the injurer. “The rule of negligence with the defense of contributory negligence holds an injurer liable if and only if he was negligent and the victim was not. In India, this rule requires a proportional sharing of liability when both parties were negligent. That is, the compensation that the victim receives gets reduced in proportion to his or her negligence.”

Another area of tort that developed in India which differs from the UK is the availability of constitutional torts. Creating constitutional torts is a public law remedy for violations of rights, generally by agents of the state, and is implicitly premised on the strict liability principle. The tort was further entrenched when the court allowed compensation to be awarded as “a remedy available in public law; based on strict liability for the contravention of fundamental rights to which the principle of sovereign immunity does not apply, even though it may be available as a defense in private law in an action based on tort”[10]. This approach is vastly different from the approach taken in the UK as compensation for damages is not an available public law remedy.

Damages in the law of torts in India are premised on the concept of restitutio ad integrum.[11] India adopts a compensatory method and advocates “full and fair compensation” in all cases. In determining the quantum of damages, the Indian court will look to similar cases that may enable comparison. India’s formulation of damages for tort cases is premised on the multiplier method, awarding compensation based on the degree of compromise to the earning ability of the victim.[12]

The rule on absolute liability was established by the Indian Courts marking a high level of activism in the case of Union Carbide Corporation v. Union of India[13]. It is an extremely strict approach, where even acts of God are not recognized as a defense. There is widespread criticism against this rule. It is believed that the implementation of such a rule endangers the growth of science and technical industries, as investors have to take the risk of liability given that there is no defense to the rule[14].

3. Vicarious Liability

This is a form of strict, secondary liability that arises under the common law doctrine of agency, respondeat superior, the responsibility of the superior for the acts of their subordinate, or, in a broader sense, the responsibility of any third party that had the “right, ability or duty to control” the activities of a violator. Respondeat Superior means “let the master answer.” This means that a master is liable in certain cases for the wrongful acts of his servant, and a principal for those of his agent.[15]

Under this doctrine, master is responsible for want of care on servant’s part toward those to whom master owes a duty to use care, provided failure of the servant to use such care occurred in course of his employment.[16] Doctrine only applies when the relation of master and servant existed between defendant and wrongdoer at time of injury sued for, in respect to every transaction from which it arose.[17]

Employers are vicariously liable, under the respondeat superior doctrine, for negligent acts or omissions by their employees in the course of employment (sometimes referred to as ‘scope of employment’). For an act to be considered within the course of employment, it must either be authorized or be so connected with an authorized act that it can be considered a mode, though an improper mode, of performing it.

The classic statement of the law until the recent cases was the formulation in Salmond, Law of Torts : a wrongful act is deemed to be done in the course of the  employment: If it is either

(1) a wrongful act authorized by the master, or

(2) a wrongful and unauthorized mode of doing some act authorized by the master.

Qui facit per alium facit per se is a Latin legal term meaning, “He who acts through another does the act himself.” It is a fundamental maxim of the law of agency.[18] This is a maxim often stated in discussing the liability of employer for the act of employee[19].

DEVELOPMENT IN INDIA

1. General

So far as Indian law is concerned, the maxim ‘the king can do no wrong’ was never fully accepted. Absolute immunity of the Government was not recognized in the Indian legal system prior to the commencement of Constitution and in a number of cases the Government was held liable for tortuous acts of its servants.

2. Constitutional Provision

Under Article 294 (4) of the Constitution, the liability of Union Government or a State Government may arise ‘out of any contract or otherwise. The word otherwise suggests that the said liability may arise in respects of tortuous acts also. Under Article 300 (1), the extent of such liability is fixed. It provides that the liability of the Union of India or State Government will be the same as that of Dominion of India and the Provision before the commencement of the Constitution.

Before commencement of Constitution

The English law with regard to immunity of the Government for tortuous acts of its servants is partly accepted in India. The High Court observed: as a general rule this is true, for it is an attribute of sovereignty and universal law that a state cannot be used in its own courts without its consent.’ Thus a distinction is sought to be made between ‘sovereign functions’ and ‘non-sovereign functions’ of the state. The State is not liable in tort.

After the commencement of the Constitution

The court held that the rule of immunity based on the English law had no validity in India. After the establishment of the Republican form of Government under the Constitution, there was no justification in principle or in public interests that the state should not hold liable for vicariously for the tortuous acts of its servants.

In Kasturi Lal v. State of U.P[20], a certain amount of gold and silver was attached by police authorities from one Mr.X on suspicion that was stolen property. It was kept in Government malkhana which was in the custody of Head Constable. The Head constable misappropriated the court. A suit for damages was filed by Mr.X against the state for the loss caused to him by the negligence of police authorities of the state. The Supreme Court held that the state was not liable police authorities were exercising ‘sovereign functions’. The Constitution Bench of court, Gajendragadkar, C.J observed:

“If a tortuous act is committed by the public servant and it gives rise to claim for damages, the question to ask is: Was the tortuous act committed by the Public servant in discharge of stuatory functions or the delegation of 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 tortuous act will not lie. On the other hand, if tortuous act has been committed by a public servant in discharging of duties assigned to him not by virtue of the delegation of any sovereign power an action for damages would lie.”[21]

The Court stated that distinction between sovereign and non-sovereign power no more exists. It all depends on the nature of the power and manner of its exercise. No civilized system can permit an executive to play with the people of its country and claim that it is entitled to act in any manner as it is sovereign. The functions state as “sovereign and non-sovereign” or ‘governmental and non-governmental’ is not sound. It is contrary to modern jurisprudence thinking. Since the doctrine has become outdated and sovereignty now vests in the people, the state cannot claim any immunity and if a suit is maintainable against the officer personally, there is no reason to hold that it would not be maintainable against the state.

Where vicarious liability is imposed on an employer, both the employee and employee will be held jointly liable. This operates to allow the employer to claim a contribution from the employee under the Civil Liability (Contribution) Act 1978. It must be noted that in the context of an independent contractor, an employer would be held vicariously liable where he authorized or ratified the tort[22].

It is clear that vicarious liability will continue to operate significantly for an employee’s acts committed within the “course of employment.” However, the case of Lister has expanded the approach taken by the courts in determining the circumstances for the applicability of vicarious liability and has broadened the extent of the “in the course of employment” criteria. Although essential, these criteria have expanded to the point of allowing claims for vicarious liability in cases where liability would not have arguably been imposed. The extension of the liability to statutory duty only highlights this point. In turn, the expansion of vicarious liability will have far-reaching implications for employers in the future.

3. Sovereign

Black’s Law Dictionary:
(Sixth Edition)

The supreme, absolute, and uncontrollable power by which any independent state is governed; supreme political authority; the supreme will; paramount control of the constitution and frame of government and its administration; the self-sufficient source of political power, from which all specific political powers are derived; the international independence of a state, combined with the right and power of regulating its internal affairs without foreign dictation; also a political society, or state, which is sovereign and independent.

The power to do everything in a state without accountability, –to make laws, to execute and to apply them, to impose and collect taxes and levy contributions, to make war or peace, to form treaties of alliance or of commerce with foreign nations, and the like.

Sovereignty in government is that public authority which directs or orders what is to be done by each member associated in relation to the end of the association. It is the supreme power by which any citizen is governed and is the person or body of persons in the state to whom there is politically no superior. The necessary existence of the state and that right and power which necessarily follow is “sovereignty.” By “sovereignty” in its largest sense is meant supreme, absolute, uncontrollable power, the absolute right to govern. The word which by itself comes nearest to being the definition of “sovereignty” is will or volition as applied to political affairs.

Sovereignty is the quality of having independent authority over a geographic area, such as a territory. It can be found in a power to rule and make laws that rests on a political fact for which no pure legal definition can be provided.

 4. Sovereign Immunity

Sovereign immunity, or crown immunity, is a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution.

In constitutional monarchies, the sovereign is the historical origin of the authority which creates the courts. Thus the courts had no power to compel the sovereign to be bound by the courts, as they were created by the sovereign for the protection of his or her subjects.

At their core, what sovereign immunity doctrines prohibit is generally clear: a suit against an unconsenting sovereign (whether a state, a tribe, a foreign nation, or the federal government) for money damages. When suits fall outside this configuration, however, courts often have difficulty determining exactly how far the doctrine should extend. What should courts do, for example, when a sovereign is not a named defendant in a given suit but will have to join the litigation if it wishes to defend its interests? What about a suit that is against a party closely affiliated with the sovereign and that aims to influence the sovereign’s exercise of its traditional prerogatives? In situations like these, some courts have held that sovereign immunity bars the suit from going forward – even though, under the formal doctrinal definition of sovereign immunity, it is by no means clear that any obstacle to these suits exists[23].

Sovereign immunity, the principle derived from the ancient truism that the “king can do no wrong” and holding that nation is immune from the jurisdiction of other nations’ courts, is recognized by virtually every nation in the world. Despite the principle’s universality, however, its application differs across states. Some states extend sovereign immunity as a matter of comity, while others have codified the doctrine in their jurisdictional statutes. Some states, such as China, afford foreign states absolute immunity, while the majority of nations, including the United States, have adopted a more restrictive approach that immunizes foreign states from suit in connection with sovereign acts but leaves them subject to suit in connection with commercial acts.

5. Article 300 of The Constitution

Article 300 of the Constitution says that the Government of India may sue or be sued by the name of the Union of India and Government of a State may sue or be sued by the name of the State, or of the Legislature of a State. Thus the Constitution makes the Union and the States as juristic persons capable of owning and acquiring property, making contracts, carrying on trade or business, bringing and defending legal action, just as private individuals. The legal personality of the Union of India or a State of Indian Union is thus placed beyond doubt by the express language of Article 300.

Article 300 (1) provides that the Government of India may be sued in relation to its affairs in the like case as the Dominion of India, subject to any law which may be made by Act of Parliament. The Parliament has not made any law and therefore the question has to be determined as to whether the suit would lie against the Dominion of India before the Constitution came into force.

Thus, so long as the Parliament or the State Legislature do not enact a law on the point, the legal position in this respect is the same as existed before the commencement of the Constitution. Before present Constitution came into force the East India Company, and after Government of India Act, 1858, which transferred the Government of India to Her Majesty with its rights and liabilities, the Secretary of State Council were liable for the tortuous acts of their servants committed in the course of their enjoyment.

The Supreme Court held that the Secretary of State for India was liable for the damages caused by the negligence of Government servants because the negligent act was not done in the exercise of a sovereign function. The Court drew a distinction between acts done in exercise of “sovereign power” and acts done in the exercise of “non-sovereign power” that is, acts done in the conduct of undertakings which might be carried on by a private person—individuals without having such power[24].

In India ever since the time of 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

Clause (1) of Article 300 of the Constitution provides first, that 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; secondly, that the Government of India or the Government of a State may sue or be sued in relation to their respective affairs in the like cases as the Dominion of India and the corresponding Provinces or the corresponding Indian States might have sued or be sued, “if this Constitution had not been enacted”, and thirdly, that the second mentioned rule shall be subject to any provisions which may be made by an Act of Parliament or of the Legislature of such State, enacted by virtue of powers conferred by the Constitution.

Even though more than 50 years have elapsed since the commencement of the Constitution, no law has so far been made by Parliament as contemplated by article 300, notwithstanding the fact that the legal position emerging from the article has given rise to a good amount of confusion. Even the judgments of the Supreme Court have not been uniform and have not helped to remove the confusion on the subject, as would be evident from what is stated hereinafter.

A. Government of India Act, 1833

Under the Act of 1833 (3 and 4 William IV ch. 85), enacted by the British Parliament, the governance of India was entrusted to the East India Company. The Act declared that the Company held the territories in trust for His Majesty, his heirs, and successors. When the government of India was taken over by the British Crown in 1858, an Act was passed in that year (Act 21 and 22 Vic. ch.106), entitled the Government of India Act, 1858, Section 65 of that Act declared that the Government’s liability in this behalf shall be the same as that of the Company. It would be appropriate to set out the section in full:

  “The Secretary of State in Council shall and may sue and be sued as well in India as in England by the name of the Secretary of State in Council as a body corporate; and all persons and bodies politic shall and may have and take the same suits, remedies and proceedings, legal and equitable, against the Secretary of State in Council of India, as they could have done against the said Company; and the property and effects hereby vested in Her Majesty for the purposes of to Government of India, or acquired for the said purposes, shall be subject and liable to the same judgments and executions as they would, while vested in the said Company, have been liable, to in respect of debts and liabilities lawfully contracted and incurred by the said Company.”

B. Government of India Act of 1915:

This very provision, contained in the Act of 1858, was practically continued by section 32 of the Government of India Act, 1915. Sub-sections (1) and (2) of that section read as follows:

     “(1)      The Secretary of State in Council may sue and be sued by the name of the Secretary of State in Council, as a body corporate.

      (2)       Every person shall have the same remedies 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.”

C. Government of IndiaAct of 1935

 Even when the Government of India Act, 1935, was enacted, (replacing the Act of 1915), the same legal position was continued by section 176(1) of the Act, which read as follows:

“The Federation may sue or be sued by the name of the Federation of India and a Provincial Government may sue or be sued by the name of the Province, and, without prejudice to the subsequent provisions of this Chapter, may, subject to any provisions which may be made by an Act of the Federal or a Provincial Legislature enacted by virtue of powers conferred on that Legislature by this Act, sue or be sued in relation to their respective affairs in the like cases as the Secretary of State in Council might have sued or been sued if this Act had not been passed.”

6. East India Company

The East India Company (EIC), originally chartered as the Governor and Company of Merchants of London trading into the East Indies, and more properly called the Honourable East India Company, was an English and later from 1707 British joint-stock company formed for pursuing trade with the East Indies but which ended up trading mainly with the  Indian subcontinent, Qing Dynasty, China, North-West Frontier Province and Balochistan.

Commonly associated with trade in basic commodities, which included cotton, silk, indigo dye, salt, saltpeter, tea and opium, the Company received a Royal Charter from Queen Elizabeth in 1600, making it the oldest among several similarly formed European East India Companies. Shares of the company were owned by wealthy merchants and aristocrats. The government owned no shares and had only indirect control. The Company eventually came to rule large areas of India with its own private armies, exercising military power and assuming administrative functions.  Company rule in India effectively began in 1757 after the Battle of Plassey and lasted until 1858 when, following the Indian Rebellion of 1857, the Government of India Act 1858 led to the British Crown assuming direct control of India in the era of the new British Raj.

The Crown could not be sued in tort for acts of its servants in the course of their employment. But it was not accepted in this country even during the rule of the East India Company. The East India Company which came to India initially for carrying on trade gradually became ruler of a great part of this country and made yet another part under its subjugation. It was not a sovereign body but was delegate of the Crown. Its powers and extent of political authority were gradually regulated by certain legislations passed by the British Parliament. The British Crown took over the reins of this country directly in 1858 after the armed uprising in India against the English rule termed by the British Rulers as Sepoy Mutiny of 1857 was quelled.

The vicarious liability of the Government in the absence of any statutory rules or contours depended on the extent and exercise of the power by the Government or the head of the Government. In the pre-independence period, the extent of tortious liability of the State and its immunity was subject matter of dispute before existing Courts. “The liability of the State was dependent on the nature of the act and the category of power in which it was placed viz sovereign or non-sovereign power of the State. Sovereign powers of the State were never defined and in the absence of any clear cut distinction between sovereign and non-sovereign  powers of the State Courts of law were faced some times with difficulties in resolving the disputes.

The plank for defense by State in cases pertaining to State liability used to be that the acts of omission or commission complained of were within the realm of sovereign powers of the State and as such State was not liable. The first judicial interpretation of State liability during the East India Company was made in John Stuart’s case, 1775. It was held for the first time that the Governor General in Council had no immunity from Court’s jurisdiction in cases involving the dismissal of Government servants.

In Moodaly v. The East India Company[25], the Privy Council expressed the opinion that the Common law doctrine of sovereign immunity was not applicable to India. After the assumption of sovereign powers by the British Crown in 1858. The first enactment regarding the administration of Country was enacted in 1858 known as Government of India Act 1858. Later on, it was replaced by the Government of India Act 1915 and 1935. Sec. 58 of the Act of 1858, the provisions of which remained on Statute Book in subsequent Government of India Acts, for the first time spelled out the tortious liability of State in Statutory terms. It provided that Secretary of State may sue or be sued which read as follows “The Secretary of State in Council may sue and be sued as well in India as in England in the name of the Secretary of State in Council as a body corporate and all persons and bodies politic shall and may have and take the same suits remedies and proceedings legal and equitable against the Secretary of State in Council of India as they could have done against the said company, and the property and effects hereby vested in Her Majesty for the purposes of the Government of India acquired for the said purpose shall be subject and liable to the same judgments and executions as those vested in the said Company would have been liable to in respect of debts and liabilities lawfully contracted and incurred by the said Company.”

The Madras High Court in Secretary of State v. Hari Bhanji [26], held that immunity of East India Company extended only to “Acts of the State”. The defense of an act of State is not available against a citizen. Acts of State are directed against another sovereign State or its sovereign personally or its subjects and is based on policy consideration and not on law administered by municipal Courts they are not justifiable.

7. Employer and Employee

The term ‘Employee’ is defined under Section 2(9) as follows: Any person employed for wages in or in connection with the work of a factory or establishment to which the Act applies.

In order to qualify to be an employee, under ESI Act, a person should belong to any of the categories:

  • Those who are directly employed for wages by the Principal Employer within the premises or outside in connection with work of the factory or establishment.
  • Those employed for wages by or through an immediate employer in the premises of the factory or establishment in connection with the work thereof.
  • Those employed for wages by or through an immediate employer in connection with the factory or establishment outside the premises of such factory or establishment under the supervision and control of the Principal Employer or his agent.
  • Employees whose services are temporarily lent or let on hire to the Principal Employer by an immediate employer under a contract of service (employees of Security Contractors, Labour Contractors, Housekeeping contractors etc., come under this category).
  • Employees employed directly by the Principal Employer in any part, department, branch situated in the same station or elsewhere, in connection with administration of the factory or establishment for purchase of raw materials, sale or distribution of the products of the factory etc.

Exclusions are

  • An apprentice engaged under the Apprentice Act, 1961
  • Any members of Navy, Army or Air Force and
  • Any person whose wages (excluding overtime wages) exceed Rs 15,000/- per month.

Broadly, all categories of employees, Regular, Casual, Badli, Temporary Contract etc., comes under the covered category. Employees engaged on loading, unloading, movement of raw-material, Gardening, Guest House Maintenance, watch and ward, House Keeping, cleaning, civil construction, repairs of building etc., erection, repairs and maintenance of machinery, plant, equipment furniture, fixtures etc., either engaged directly by the principal employer or through a contractor stand covered.

If the contractors’ employees are engaged on any work of the factory or establishments out-side its premises, the factor of supervision of the Principal Employer or his agent is considered necessary for the purpose of such employees coverage.

Even the paid Directors of a company are “employees” if they are in receipt of salary not exceeding Rs. 15,000/- per month. However, a proprietor and working partners receiving a salary are excluded from the coverage.

Part-time employees employed on a contract of service are also employees.

8. Negligence

In general terms, negligence is “the failure to use ordinary care” through either an act or omission. That is, negligence occurs when:

  • somebody does not exercise the amount of care that a reasonably careful person would use under the circumstances, or
  • somebody does something that a reasonably careful person would not do under the circumstances.

Proximate Cause

Proximate cause exists where the plaintiff is injured as the result of negligent conduct, and the plaintiff’s injury must have been a natural and probable result of the negligent conduct. In order for a defendant to be liable, the plaintiff must establish both negligence and proximate cause.

It is typically not necessary for liability that the defendant’s negligence be either the only proximate cause of an injury or the last proximate cause. A defendant may be liable even where an injury has multiple proximate causes, and whether those causes occur at the same time or in combination. A plaintiff may be able to bring a cause of action against two or more defendants by proving that the acts of each were proximate causes of the plaintiff’s injury, even where the defendants’ negligent acts were distinct.

Imagine a situation where a plaintiff is driving down the road and is suddenly cut off by a person who runs through a stop sign on a side street. The plaintiff slams on her brakes, and is able to avoid striking that car. However, the plaintiff is rear-ended by another driver who was not paying attention to the events in front of his car. The plaintiff may be able to bring an action against both drivers – the one who cut her off and the one who rear-ended her – on the basis that their negligent acts, although independent, were both proximate causes of her injuries.

The Elements of a Negligence Action

A typical formula for evaluating negligence requires that a plaintiff prove the following four factors by a “preponderance of the evidence”:

  1. The defendant owed a duty to the plaintiff (or duty to the general public, including the plaintiff);
  2. The defendant violated that duty;
  3. As a result of the defendant’s violation of that duty, the plaintiff suffered injury; and
  4. The injury was a reasonably foreseeable consequence of the defendant’s action or inaction.

For example, a person driving a car has a general duty to conduct the car in a safe and responsible manner. If a driver runs through a red light, the driver violates that duty. As it is foreseeable that running a red light can result in a car crash, and that people are likely to be injured in such a collision, the driver will be liable in negligence for any injuries that in fact result to others in a collision resulting from the running of the red light[27].

Negligent torts are the most prevalent type of tort. Negligent torts are not deliberate actions, but instead, present when an individual or entity fails to act as a reasonable person to someone whom he or she owes a duty to. The negligent action found in this particular tort leads to a personal injury or monetary damages. The elements which constitute a negligent tort are the following: a person must owe a duty or service to the victim in question; the individual who owes the duty must violate the promise or obligation; an injury then must arise because of that specific violation; and the injury causes must have been reasonably foreseeable as a result of the person’s negligent actions[28].

9. Damages

In law, damages are an award, typically of money, to be paid to a person as compensation for loss or injury. The rules for damages can and frequently do vary based on the type of claim which is presented (e.g., breach of contract versus a tort claim) and the jurisdiction.

At common law, damages are categorized into compensatory damages and punitive damages. Compensatory damages are further categorized into special damages, which are economic losses such as loss of earnings, property damage and medical expenses, and general damages, which are non-economic damages such as pain and suffering and emotional distress.

The purpose of damages is to restore an injured party to the position the party was in before being harmed.  The nature and extent of the harm and substantial evidence produced by plaintiffs are taken into consideration by the jury before awarding damages.

Compensatory or expectation damages

Compensatory damages, called actual damages, are paid to compensate the claimant for loss, injury, or harm suffered as a result of (see requirement of causation) another’s breach of duty. (e.g., in a negligence claim under tort law). Expectation damages are used in contract law.

Quantum (measure) of damages

  • Breach of contract duty – (ex contractu)

On a breach of contract by a defendant, a court generally awards the sum that would restore the injured party to the economic position they expected from performance of the promise or promises (known as an “expectation measure” or “benefit-of-the-bargain” measure of damages).

When it is either not possible or not desirable to award the victim in that way, a court may award money damages designed to restore the injured party to the economic position s/he occupied at the time the contract was entered (known as the “reliance measure”), or designed to prevent the breaching party from being unjustly enriched (“restitution”) (see below).

Parties may contract for liquidated damages to be paid upon a breach of the contract by one of the parties. Under common law, a liquidated damages clause will not be enforced if the purpose of the term is solely to punish a breach (in this case it is termed penal damages). The clause will be enforceable if it involves a genuine attempt to quantify a loss in advance and is a good faith estimate of economic loss. Courts have ruled as excessive and invalidated damages which the parties contracted as liquidated, but which the court nonetheless found to be penal.

  • Breach of tort duty – (ex delicto)

Damages in tort are generally awarded to place the claimant in the position that would have been taken had the tort not taken place. Damages in tort are quantified under two headings: general damages and special damages.

In personal injury claims, damages for compensation are quantified by reference to the severity of the injuries sustained (see below general damages for more details). In non-personal injury claims, for instance, a claim for professional negligence against solicitors, the measure of damages will be assessed by the loss suffered by the client due to the negligent act or omission by the solicitor giving rise to the loss. The loss must be reasonably foreseeable and not too remote. Financial losses are usually simple to quantify but in complex cases which involve loss of pension entitlements and future loss projections, the instructing solicitor will usually employ a specialist expert actuary or accountant to assist with the quantification of the loss.

  • General damages

General damages, sometimes styled hedonic damages, compensate the claimant for the non-monetary aspects of the specific harm suffered. This is usually termed ‘pain, suffering and loss of amenity’. Examples of this include physical or emotional pain and suffering, loss of companionship, loss of consortium, disfigurement, loss of reputation, loss or impairment of mental or physical capacity, loss of enjoyment of life, etc.This is not easily quantifiable and depends on the individual circumstances of the claimant. Judges in the United Kingdom base the award on damages awarded in similar previous cases.

General damages are generally awarded only in claims brought by individuals when they have suffered personal harm. Examples would be personal injury (following the tort of negligence by the defendant), or the tort of defamation.

  • Speculative damages

Speculative damages are damages that have not yet occurred, but the plaintiff expects them to. Typically, these damages cannot be recovered unless the plaintiff can prove that they are reasonably likely to occur.

  • Special damages

Special damages compensate the claimant for the quantifiable monetary losses suffered by the plaintiff. For example, extra costs, repair or replacement of damaged property, lost earnings (both historically and in the future), loss of irreplaceable items, additional domestic costs, and so on. They are seen in both personal and commercial actions.

Special damages can include direct losses (such as amounts the claimant had to spend to try to mitigate problems) and consequential or economic losses resulting from lost profits in a business. Special damages basically include the compensatory and punitive damages for the tort committed in lieu of the injury or harm to the plaintiff.

Damages are divided into different categories based on the type of recovery such as:

  1. Compensatory damages: This type of damages provides a plaintiff with an amount that is necessary to replace a loss or compensate for an injury.  Compensatory damages are issued only to the limit of loss and not more.
  2. Future damages: This type of damages is provided only when there is a reasonable apprehension of a loss or injury in the future because of a negligent or malicious act or omission of a defendant.  However, there should be a satisfactory basis to award future damages.
  3. Incidental damages: Incidental damages are awarded to a plaintiff when certain expenses that are incidental to the loss or damage.  The expenses should be incidental to the loss and should be reasonable.
  4. Punitive damages: This category of damages is awarded against a wrong-doer for his/her negligent, malicious act, or omission that causes grievous damage to another.  Punitive damages also act as a deterrent to others who tend to act in a similar manner.  The number of punitive damages to be awarded lies within the discretion of the jury or judge based on the extent of the plaintiff’s injury and the wrong-doers behavior.
  5. Nominal damages are awarded to an individual in action when the individual suffers no substantial injury or loss that is to be compensated.  In such actions, a plaintiff’s rights are violated by a defendant’s wrongful conduct or breach of a legal duty. However, when the nature and extent of the injury are minimum, nominal damages are only awarded.
  6. Temperate damages or moderate damages are more than nominal damages.  For awarding temperate damages, courts should be convinced that there was a breach of legal duty by the defendant, but when the loss suffered by the plaintiff cannot be deduced with clarity.

Compensatory damages are paid to a plaintiff to compensate for the loss and injury incurred.  General damages compensate a claimant for the non-monetary aspects of the specific harm suffered[iv].  This is usually termed pain, suffering, loss of consortium, loss of earning, mental anguish, and loss of amenity.  Mostly, general damages are awarded to individuals in actions for compensation in personal injury.  Special damages are awarded to claimants for compensating monetary loss[v].  Such damages are provided in personal and commercial actions.  The loss of irreplaceable items, car rentals, medical expenses, and repair or replacement of damaged property are included under special damage.

Compensatory damages are awarded to claimants when there is a breach of contract and there is substantial evidence of the breach.  A jury considers the economic losses due to loss of future profits and loss of opportunity suffered by the plaintiff before awarding damages.  The assets of the defendant are also taken into consideration by the jury before calculating the amount to be awarded as compensation.

In tort cases, compensatory damages can be awarded in personal injury cases and when there is injury to personal rights and property rights.  The measure of compensatory damages must be real and tangible.  However, fixing an amount as damages is not an easy task for the jury when damages are sought for emotional distress and pain and suffering.

A plaintiff can recover for a number of different injuries suffered as a result of another person’s wrongful conduct.  Compensatory damages can be awarded for cost of medical expenses and treatment, cost of living with a disability, loss of wages and earning capacity, cost of replacement or repair of property, funeral expenses, pain and suffering resulting from an injury, loss of consortium of spouse or parents, mental anguish, emotional distress, loss of enjoyment of life, loss of opportunity, and physical disablement and deformity.

Formatted on 27th February 2019.

Footnotes

[1] [1954] S.C.R. 786

[2]  (1868-69) 5 Bom. H. C. R. 1

[3] Supra Note 2

[4] Article 300, Constitution of India, 1950

[5] Nathoo Lal v. Durga Prasad, AIR 1954 SC 355; Chunnilal Mehta v. Century Spinning & M. Co. Ltd., AIR 1962 SC 1314

[6] M. Gopaiah v. SMSLC Coop. Soc., AIR 1981 AP 182, Durga Associates, Raipur v. State of UP, AIR 1982 All. 490

[7] SBI v. N. Sundara Money, AIR 1976 SC 1111

[8] Rajinder Chand v. Mst. Sukhi, AIR 1957 SC 286

[9] Salmond’s definition of tort

[10] Rudul Sah v State of Bihar (1983) 4 SCC 141, Nilabati Behara v State of Orissa (1993) 2 SCC 746.

[11] Destruction of Public and Private Properties v State of A.P. and Ors (2009) 5 SCC 212.

[12] Bijoy Kumar Dugar v. Bidya Dhar Dutta (2006) 3 SCC 242; Spring Meadows Hospital v. Harjot Ahluwalia (1998) 4 SCC 39 and Klaus Mittelbachert v. East India Hotels AIR 1997 Del 201.

[13] AIR 1992 sc 248

[14] Indranil Ghosh, The Concept of Strict and Absolute Liability: A Critique, Lawyers Club India.

[15] Black’s Law Dictionary, Edition 4

[16] Shell Petroleum Corporation v. Magnolia Pipe Line Co. Tex.Civ.App., 85 S.W. 2d 829, 832.

[17] James v. J.S. Williams & Sons 177 La. 1033, 150 So. 9, 11.

[18] Stroman Motor Co. v Brown, 116 Okla 36, 243 P 133.

[19] 35 Am J1st M & S § 543

[20]  AIR 1965 SC 1039

[21] Supra Note 20

[22] www.oldsquare.co.uk/pdf_articles/3100178.pdf‎

[23] www.cci.gov.in/images/media/ResearchReports/SmritiPradhan.pdf

[24] http://www.neerajaarora.com/doctrine-of-sovereign-immunity/

[25] 1775 (1 Bro-CC 469)

[26] (1882) ILR Madras 273

[27] http://emoglen.law.columbia.edu/ELH/baker/Ch23.pdf

[28] https://bookshop.blackwell.co.uk/extracts/9780199211364_lunney.pdf

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