Liability of the Administration

Introduction

The administration is the one who makes the laws sometimes, but can it be made liable for his actions under the law which it makes? The constitution is made by the state, but Constitution binds the state too and checks the exercise of power by the state. The personnel in the administration, both make and implement the laws, and if they commit any negligence because of which harm is caused to any individual, then can he make a claim against the administration, under the law of the land. Now the ‘king too can commit wrong’ (and most often it is the king, i.e. the administration who does the wrong) and he does not evade the chains of laws, if he neglects law and tries to overpower it, by causing harm to it. How is the liability of the administration placed then? This question is answered all over in this article. The 2 major areas where the liability can be entrapped is ‘tort’ and ‘contract’. So liabilities under both is described serially (with privileges and immunities the administration can claim).

Liability of Administration in Tort

To what extent the administration would be liable for the torts committed by its servants is a complex problem especially in developing countries with ever widening State activities. The liability of the government and administration in tort is governed by the principles of public law inherited from British Common Law and the Provisions of the Constitution.

The whole idea of vicarious liability of the state for the torts committed by its servants is based on 3 principles.

Respondeat Superior (Let the principal be liable).
Qui-Facit per Alium Facit per se (He who acts through another does it himself).
Socialization of Compensation.

Article 300 of the Constitution of India deals with the extent of liability of the Union of India and the government of a State, but it does not lay down liability in specific terms. The root of the provision can be traced back to section 65 of the Government of India Act, 1858, which laid down that on the assumption of the Government of India by the British Crown, the Secretary of State for India-in-Council would be liable to the same extent as the East India Company was previously liable. This is certainly a strange way of determining the liability of a state governed by a Constitution. It is because of this ‘Strange way’ with resultant confusion and complexity that the Law Commission recommended a legislation on the subject too. Accepting the recommendation, the government introduced two Bills, ‘The Government Liability in Tort’, in Lok Sabha in 1965 and 1967, neither of which emerged as an Act. The government allowed the Bills to lapse on the ground that they would bring an element of rigidity in the determination of the question of liability.

The first judicial interpretation of State Liability during the East India Company was made in John Stauart’s case, 1775. It was held for the first time that 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 1775 (1 Bro-CC 469), the Privy Councili expressed the opinion that Common law doctrine of sovereign immunity was not applicable to India.

Some judgments during British Rule India, do tell us, how the law of administrative tortious liability evolved in Indian conditions.

In P. and O. Steam Navigation Co. v. Secy. Of State for India [(1861) 5 Bom HC Report, Appendix ‘A’] the Supreme Court allowed an action against the secretary of state for the negligent act of the government workers. In this case, the workers employed by the Kidderpore Dockyard, which was a government dockyard, were carrying iron bars across a public way passing through the port, which bars they dropped on the road. The noise so created scared the horses of the carriage in which the plaintiff was sitting and he sustained injuries. Sir Barnes Peacock, C.J. who delivered the judgment of the court, held that Company had been invested with sovereign functions but this did not make it a sovereign authority.

The term ‘sovereign’ and ‘non-sovereign’ function created confusion in the later development of the law, as has been Peacock C.J., held, “It is clear that East India Company would not have been liable for any act of any of its naval officers in seizing as prize property of a subject, under the supposition that it was the property of an enemy, nor for any act done by a military or naval officer, or by any soldier or sailor whilst engaged in military or naval duty, nor for any acts of any of its officers or servants in the exercise of judicial and sovereign functions.”

The other interpretation of the P and O’s case was that the immunity extended only to cases which may be covered within the definition only to cases which may be covered within the definition of the term ‘acts of 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 justiciable. This line of reasoning was adopted by the court in State of India-in-Council v. Hari Bhanji. [(1882) ILR 5 Mad 273].

The evolution of law in this field was predominantly restricted to judicial pronouncements, even after the independence of India.

In State of Rajasthan v. Vidyawati (Mst.) [AIR 1962 SC 933], the Supreme Court of India held the State vicariously liable for the tort committed by its servants. The facts of the case were that in February 1952, a driver of the government jeep, while driving back from the workshop, knocked down a person on the footpath, causing multiple injuries including fracture of the skull and the backbone, which resulted in his death. A suit by the widow of the deceased and her minor daughter for compensation was decreed by the trial judge against the driver but not against the State. On appeal, the High Court decreed the suit against the State also.

Hence, State of Rajasthan, went in appeal before the Supreme Court. The main argument on behalf of the State was that it was not liable for tortious acts of its employees for in similar circumstances the East India Company would not have been liable, as the jeep was maintained in the exercise of sovereign powers and not as a part of the commercial activity of the state. Sinha, C.J., dismissing the appeal by the State of Rajasthan held that the immunity rule of the Crown in England cannot be applied in India. Holding, the state vicariously liable for the tortious acts of its servants. More importantly, the distinction between sovereign and non-sovereign functions for the purpose of determining the State liability was not recognized, and the only immunity which the state could have claimed was ‘acts of state’.

Unfortunately, only 3 years later, in Kasturi Lal v. State of U.P. [AIR 1965 SC 1039], the Supreme court, speaking through J. Gajendragadkar, re emphasized on the difference between Sovereign and Non-sovereign functions. The facts involved that the plaintiff was going to Meerut to sell good, silver other goods. As he was passing through the city, he was taken into custody by three policemen. He was searched and all the gold and silver was taken into custody and he was put in the lock-up. On his release, his gold was not returned, though silver was immediately returned. The gold had been misappropriated by the Head Constable who fled to Pakistan. The Court held, that State is not liable because the functions of arrest and the seizure of the property are sovereign functions of the state. If the act is sovereign, no act of negligence on the part of employees of the State would render State liable.

The distinction between sovereign and non-sovereign functions is a juristic blasphemy which leads to absurd and arbitrary conclusions. There is no uniformity in decisions, and it becomes very complex to determine which function is sovereign. Differences of Opinion is clear in different judgments rendered by High Courts and Supreme Court.

In Khatri (II) v. State of Bihar [AIR 1981 SC 928], an important question was raised regarding the liability of the government for wrongful arrest and detention. Moving ahead in the direction of a new dimension of the right to life and person liberty, Justice Bhagwati, held that, “Why should the court prepared not be prepared to forge new tools and devise new remedies for the purpose vindicating the most precious of the precious fundamental rights to life and personal property.”

In Rudul Shah v. State of Bihar, [AIR 1983 SC 1086], the Court speaking through Justice Chandrachud, provided compensation to the person who was under illegal detention for more than 14 years. The Court ordered compensation of Rs. 30,000 for the injustice and injury did to Rudul Shah and his helpless family, because of the wrong actions of officials of the Government. The Court similarly granted monetary compensation in the case of Nilabati Behra v. State of Orissa [AIR 1993 SC 1960] and spelt out the principles on the liability of the State in the case for payment of compensation for the tort so committed and also held, that if no other redress is available then the government is strictly liable to pay the victim the monetary compensation for breach of fundamental rights of the victim by State or its employees.

In Bhim Singh v. State of J.K. [1985 4 SCC 677], the Supreme Court awarded the exemplary cost of Rs. 50,000 on account of the authoritarian manner in which the police played with the liberty of the appellant.

Similarly, in Mahavir Singh v. State of Rajasthan [1987 2 SCC 342], the court granted rupees one lakh for the custodial death of a young boy who had been arrested on a theft charge.

In SAHELI, A Women’s Resource Centre v. Commr. Of Police [1990 1 SCC 422], the Supreme Court quoted with approval its decision in Vidhyawati Case and held that the State is responsible for the tortious acts of its servant committed within the scope of his employment like any other employer. It further that the doctrines of sovereign immunity, are of feudalistic origin, and cannot be applied in a democratic country like India. In this case, a women’s organization known as SAHELI had filed a writ against the government for compensation on behalf of two poor women who had been mercilessly beaten by the landlord in collusion with the police. The Court not only awarded Rs. 75,000/- as compensation but also opined that amount can be recovered from the police offers responsible for the tort. Therefore, the classification of governmental functions into sovereign and non-sovereign for the purpose of determining governmental liability in tort is no longer a valid classification.

In N. Nagendra Rao & Co. v. State of A.P. [1994 6 SCC 205], the Court reiterated that the doctrine of sovereign immunity stands diluted in the context of the modern concept of sovereignty and thus the distinction between sovereign and non-sovereign functions no longer survives. The court observed that state is immune only in cases of facts of State like a defense of the country, administration of justice, maintenance of law and order and repression of crime except when article 21 of the constitution are breached. IN this case, the court also confirmed the principle of personal liability of the negligent officer.

In Lucknow Development Authority v. M.K.Gupta [1994 1 SCC 243], where supreme court observed that, “when public servant by mala fide, oppressive and capricious acts in performance of official duty causes injustice, harassment, and agony to common man and renders the state or its instrumentality liable to pay the damages to the person aggrieved from public fund, the State or its instrumentality is duty-bound to recover the amount of compensation so paid from the public servant concerned. ”

In Chairman Railway Board v. Chandrima Das [2000 2 SCC 465], court held that, when a woman even though a foreign national, is gang-raped by railway employees in Railways Yatri Niwas, held, the Union of India, which runs the Railways as a commercial activity, would be vicariously liable to a compensation to the victim of the rape.

Though the court has recognized the Governmental liability under tort law, but most of the cases have been fought with the sword of fundamental rights, hence the justice is meted out, because in Indian Conditions, getting Compensation for torts is cumbersome and time taking process, and problem aggravates when one of the party is the state itself.

Liability of Administration under Contract

According to Common Law, before 1947, the Crown could not be sued in a court on a contract. The privilege was traceable to the days of feudalism when a lord could not be sued in his own courts. Another maxim which was pressed into service was that the ‘King can do no wrong’. A subject could, however, seek redress against the Crown through a petition of right in which he set out his claim, and if the royal fiat was granted, the action could then be tried in the court. The royal fiat was granted as a matter of course and not as a matter of right, and there was no remedy if the fiat was refused. The Crown Proceedings Act, 1947, abolished this procedure and permitted suits being brought against the Crown in the ordinary courts to enforce contractual liability, a few types of contracts is, however, excepted.

The Contractual Liability of the Union of India and States is recognized by Constitution under art. 294, 298, 299, 300. Article 294 provides that executive powers of union and of each state shall extend to the carrying on any trade, business and the acquisition holding and disposal of property and the making of Contracts for any purpose. Article 299 lays down modes of the manner of execution of such contracts and some requirements. The requirements include, that Contracts be made in the name of President/Governor, all contracts to be executed by such persons and in such manner as president/governor directs, and the contract is to be executed on behalf of President/Governor.

The Supreme Court in Karamshi Jethabhai v. The State of Bombay [AIR 1964 SC 1714], emphasized that according to art. 299, the words “expressed to be made and executed” clearly shows that there must be a formal written contract executed by the duly authorized person.

But, in Chatturbhuj v. Parashram [1954 SCR 817], the Supreme Court held that a contract could be oral, or maybe by correspondence, in an emergency, a contract may be made by Government, without following ‘ponderous legal document couched in a particular form’. Such a Contract was upheld in Union of India v. Rallia Ram [1963 AIR 1685] also.

There can be no implied contract between the government and another person, as has been held by the Supreme Court in K.P. Chowdhary v. State of M.P. [AIR 1967 SC 203].

In Union of India v. N.K. (P) Ltd. [AIR 1972 SC 915], the court held, that if the director was authorized to sign the contract, but it was signed by Secretary, Railway Board, the Contract is not valid. SO, if the Contract is not signed by an authorized officer, it is not binding.

In D.G. Factory v. State of Rajasthan [AIR 1971 SC 141], the court emphasized on the point that the contract must be executed ‘on behalf of the President/Governor.’ In the case, the Contract signed by IG Police, but it did not state that the agreement was executed “on behalf of the Governor”. The court held, that in a suit for damages filed by the Contractor for breach of Contract, as the requirement of art. 299(1) was not complied with, the contract was not enforceable.

The objective of article 299 (1) is to safeguard the Government and not to saddle the Government with obligations, which are made by unauthorized officers or in excess of authority. Saving public funds is essential. Hence, if the contract is invalid, the Government cannot later ratify and make it valid, as was held in Mulamchand v. State of M.P. [1968 AIR 1218]. The reason is that when there is no contract ‘at all’, the question of ratification does not arise.

Hence, article 299 is mandatory in the sense that Government is not bound by the contract if the requirements of article 299 are not complied with.

The Government, if enjoys the benefit of the performance of the other party to the contract, would be bound to give recompense on the principle of quantum merit or quantum valebat (service or goods received), principles of quasi-contract as provided under sections 65 and 70 of Indian Contract Act, 1872. Besides this, the doctrine of promissory estoppel may apply on the facts. But, the President or the Governor is not personally liable on the Contract. This is the modern principle which operates when governmental liability is to be fixed.

In State of West Bengal v. B.k. Mondal [1962 AIR 779], a Government officer ordered for the construction of a building for the Government office as per the rules of the Department. The Contractor completed the building. Government officer took possession and began using it. But, no payment was made. The Government argued that as the contract was not according to Art. 299(1) it was a ‘no contract’. The Supreme court held indeed that there was no contract; but, Government is made liable to pay compensation, in accordance with section 70 of the Contract Act, i.e. for ‘unjust enrichment’.

There are some exceptions too, which were earlier used by the administration to evade their liability. Executive necessity is one of them. The principle states that although government can be bound through its officers by a contract similar to anyone else is liable to pay damages; Government is not competent to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises. The essence of the doctrine is that Government cannot hamper the freedom of the future actions of Parliament in matters which concern the welfare of the State. It has been held that the Government cannot fetter its discretion in executive matters by contractual obligations. While the existence of executive necessity is firmly established, its parameters are neither firm nor fixed.

The Amphirite v. the King [1921 2 KB 500] was the first case where the exemption was given to the government. However, in Robertson v. Minister of Pensions [1949 1 KB 227], Lord Denning J. observing against the Government held that “Crown cannot escape by saying that estoppels do not bind the Crown for that doctrine has long been exploded. Nor can the Crown escape by pressing in aid the doctrine of executive necessity that is the doctrine that the crown cannot fetter its executive action.”

In India, this issue came in the Indo Afghan case [AIR 1968 SC 718], where the Supreme court held that, “we are unable to accede to the contention that executive necessity releases the Government from honoring its solemn promises relying on which the citizens have acted to their detriment.”. Similarly in M/s Sterling Comp. Ltd. v. M/s M&N Publication, court negated the defense of executive necessity, and held that it can’t be given liberally. So, now this exception is rarely given.

The other defense Sovereign functions. This defense is also obliterated as now the state’s responsibility is recognised more broadly.

Besides all this, It has been observed in Eurasian Equipment & Chemicals Ltd. v. State of West Bengal [AIR 1975 SC 266] that, “Judicial quest in administrative matters has to find the right balance between the administrative discretion to decide matters contractual or political in nature or issues of social policy and the need to remedy any unfairness. A state need not enter into a contract with anyone, but when it does so it must do so fairly without discrimination and without unfair procedure; and its action is subject to judicial review under Article 32 of the Constitution of India.”

In Mahabir Auto v. Indian Oil Corporation [AIR 1990 SC 1031], the court recognised the freedom of government to enter into business with anybody, but subject to the condition of ‘reason and fair play’ as well as ‘public interest’.

And where the government is dealing with the public, whether by way of giving jobs or by entering into contracts or issuing quotas etc. it cannot arbitrarily use its power of discretion and in such matters must conform to certain standards or norms which are not arbitrary, irrational or irrelevant, as has been held in Y. Konda Reddy v. State of AP [AIR 1997 AP 121].

Hence, courts can take up the contractual matters by exercising their powers of the judicial review too, if it violates any fundamental right of the persons involved therein, and the decision of the government involves arbitrariness.

Conclusion

As it is now clear that even personnel working under the ‘authority’ of ‘administration’ can be held personally liable, in addition to ‘liability of state’ per se, but even with this, the number of wrong committed by the administration, are increasing day by day. The recent trend of the soaring number of Public Interest Litigation (PILs) being filed in administrative matters, both in High Courts and Supreme Courts, clearly show the situation that, the administration is not working properly even when the judiciary has tried to tighten its hands.

The situation can only be changed if the personal liability of individual neglecting officers, with their senior officials also, is strictly and rigorously recognised, and strict actions be taken against them, by emphasising on the human rights violation of the victims. The system can only be changed if ‘administration’ is changed, and the latter can be changed only if ‘liabilities’ are attracted to it, on both civil and criminal aspects.

– Harshdeep Singh Bedi

(NLIU, Bhopal)

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