This article has been written by Tanya Gupta, a student pursuing BA LLB from Ideal Institute of Management and Technology and School of Law, affiliated to Guru Gobind Singh Indraprastha University, Delhi.  This article focuses on the brief explanation of the case N. Nagendra Rao v. State of Andhra Pradesh, AIR 1994 SC 2663.

INTRODUCTION

This case is related to the concept of negligence and the principle of sovereign immunity.

Equivalent Citation

1994 SCC (6) 205

Bench

Sahai R.M. (J)

Hansaria B.L. (J)

Decided On

6 September, 1994

Court

Supreme Court, India

Relevant Law

Essential Commodities Act, 1955 (“hereinafter as an Act”)

Concept

Negligence

Facts

The appellant, N. Nagendra Rao carried on a business and deals in fertilizers and food grains under a license issued by the appropriate authorities. On 11 August, 1975 the Police Officer, Vigilance Cell visited its premises and seized a huge stock of fertilizers, food grains and non- essential goods. On 31 August, 1975 the report submitted by the Inspector, the District Revenue Officer(hereinafter as DRO), in the exercise of powers under Section 6 -A of the Act, directed the fertilizers to be placed in the custody of the Assistant Agricultural Officer(hereinafter as AAO) for distribution to needy persons and the food grains and non- essential goods in the custody of the Tehsildar. The role of Tehsildar was to dispose of the food grains and non-essential goods immediately and deposit the sale proceeds in the Treasury. But, the AAO did not take any steps to dispose of the fertilizers. Therefore, the appellant made applications on 17 September, 1975 before the DRO and on 11 February, 1976 before AAO, no steps were being taken the fertilizers shall deteriorate and shall be rendered useless causing a huge loss to the appellant. The request was made by the appellant for diverting the fertilizers either to the place mentioned by the appellant as the demand was more there or to release it in its favour for disposal and deposit of the sale price. But neither any order was passed by the DRO nor any action was taken by AAO. On, 29 June, 1976 the proceedings under section 6- A of the Act were decided and the stock of food grain was confiscated as the appellant’s license had been cancelled. After repeated requests, the collector ordered that the goods be returned to the appellant. However, the AAO did not comply with the orders. After repeated consultations with various ministers, when the appellant finally obtained the stock back but it was spoiled both in quantity as well as in quality.

Issue Before the Court

The issue raised before the Apex Court were:

  1. Whether the seizure of the goods in exercise of statutory powers under the Act immunizes the state, completely, from any loss or damage suffered by the owner.
  2. Whether confiscation of part of the goods absolves the state from any claim for the loss or damage suffered by the owner for the food grains which are directed to be released or returned to it. 

Ratio of the Case

This case of N. Nagendra must be read in the light of Vidhyawati Case. In this case, the liability was imposed on the state and the concept of sovereign immunity was not adopted. In N. Nagendra Rao’s case as well when the state seized certain goods under Essential Commodities Act for public welfare, the onus fell on the state to ensure that the said goods are carefully preserved as is necessary. Thus, the state was held liable to pay the compensation for the loss incurred. 

 The Apex Court in Kasturilal Case, held that that state cannot be held liable to compensate the appellant as the act of the state falls under the sovereign function of the state. This view can nevertheless be accepted. Sovereign immunity as a defense can never be available where the state was involved in commercial or public activity and it interferes with the life and liberty of a citizen. The state must be legally and morally bound to compensate the victims for the wrongs committed. No doubt the state must have protection so as to conduct its activities for the public interest without being sued every now and then by the people. However, this cannot be applied to every case where the state fails to take necessary care to protect the interests of the public. The state cannot have the absolute power to act according to its whims and fancies.

With respect to the principle of vicarious liability, it was held that if the officers can be sued personally for the negligence in discharge of public property, there is no rationale for the proposition that even if the officer is liable the state cannot be sued. Now, since the doctrine has become outdated and sovereignty rests with the people, the state cannot claim any immunity. Thus, the state of Andhra Pradesh was directed to pay the appellant the amount as directed by the trial Court.

Decision of the Court

The trial court held that the state while performing its duty under a statute has been negligent and issued a decree for the payment of Rs. 1,06,125 towards the damaged stock along with the interest at the rate of 6%.

The HC of A.P. struck down the order of the trial court and decided the case on the basis of the ratio of Kasturilal case.

The appellant appealed in the SC against the judgment passed by the HC of A.P. The Apex Court held that if the officers can be sued personally for negligence in discharge of public property, there is no rationale for the proposition that even if the officer is liable the state cannot be sued.  The Apex Court dealt with the concept of sovereign immunity, meaning sovereignty rests with the people, the state cannot claim any immunity. Thus, the State of A.P was directed to pay the appellant the amount of Rs. 1,06,125 as decided by the trial Court along with the interest at the rate of 6%. 

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