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The present case of Secretary of State v. Hari Bhanji (1882) finds itself embedded in the intersection of Torts Law and Constitutional Law, meeting midway on the issue of state or government liability. In this case, a suit was instituted to reclaim the excess amount of excise duty charged by the State on the shipment of salt. The Madras High Court turned down the pleas of immunity made by the defendant and noted that there is no immunity given to the acts committed under the municipal law. The High Court also asserted that the immunity given to the East India Company shall be extended strictly to “acts of state”.
The facts of the given case are such that the respondents had bought a batch of salt in Bombay and sent it off to certain ports in Madras after paying the requisite excise duty as specified under the law in force at the time. However, while this shipment was in transit, the Customs and Excise Act of 1787, was amended, as a result of which, the rate of excise duty on salt was increased. Upon arrival at the port, the defendant merchant was directed to pay the difference. After many objections, the merchant made the payment unwillingly and under compulsion, only to obtain the possession of the batch of salt. Subsequently, he filed a suit for the recovery of the same. In this case, the Court held that the State will be as liable towards its subjects as any ordinary employer would be.
The provision that lies at the centre of this case was Section 65 of the Government of India Act, 1858. This section states that, “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.”
This section later became Section 32 of the Government of India Act, 1915, followed by becoming Section 176 of Government of India Act, 1935 which referred to the liability of the Dominion and provinces of India. After the enactment of the Constitution of Independent India, Article 300 was written down as its successor.
Another central statute directly involved in the case is the Customs and Excise Act, 1787. By its passage, the import duty on salt was increased to 13 annas per maund.
Explanation of the Concept
The main concept that lies here is the concept of vicarious liability. This originates from an ancient Latin maxim, ‘rex non potest peccare’, which literally translates to “the King can do no wrong”. This maxim implies that the master cannot be held liable for the acts of his servant, even if they are committed in the course of his employment. It is the opposite of the doctrine of vicarious liability as we know it today.
Simply put, it refers to a situation where a person is held responsible for the actions or omissions of another. This is based on the principle of ‘qui facit per se per alium facit per se’, meaning “He who does an act through another is deemed in law to do it himself”.
The East India Company had the dual role of performing commercial functions and of exercising sovereign power as a representative of the British Crown. It was in the latter role that the East India Company claimed sovereign immunity based on the aforementioned Latin maxim.
Upon a careful study of pre-constitutional cases on the topic of the Government’s liability in Torts, we find the case of P. & O. Steam Navigation Co. v. Secretary of State to beone of the most important and landmark cases on this issue. The Supreme Court of Calcutta in this case held that if any action was done in the exercise of sovereign functions then the State or the East India Company shall not be held liable for the same. The Court went on to classify the acts of the Secretary of State and draw a distinction between the two, namely, sovereign and non-sovereign acts. The Secretary was held liable for acts committed under the non-sovereign category and obtained immunity for acts done under the sovereign category.
Following the Peninsular case, the other courts took two opposing views on the topic. In the case of Nobin Chander Dey, it was held that in consideration of the acts done in the course of sovereign functions by the Company, no suit could be instituted against them. While in the Hari Bhanji case, the Court gave answers to two pertinent questions:
- Whether the defendant was a sovereign entity and hence, could not be sued in his own courts without his consent
- In relation to the charter of the Act in question of which the relief was claimed.
On the aforementioned questions, the Court made it clear that the immunity and relief given to the Crown in England does not extend to the East India Company in India. Moreover, all the Charter Acts have recognized the Company’s right and liability to sue and to be sued. Additionally, the jurisdiction of the civil courts cannot be ousted by the simple fact that the contended action was done by sovereign powers and is an act which could not have been committed by a private person or body.
One of the main arguments advanced was that a sovereign cannot be sued in his own courts without express consent and that a sovereign is not amenable to the jurisdiction of a municipal court on the issue of ‘acts of state’.
The view taken in the Hari Bhanji case was supported in the cases of Ross v. Secretary of State and Kishan Chand v. The Secretary Union of India. On similar lines, in Secretary of State vs. Cockraft, the ruling was that “if the State derived benefit from the exercise of sovereign powers, then it would be held liable”.
There are numerous examples of vicarious liability in our daily lives. Some of them are as follows:
- Liability of a principal for tort committed by his agent
- Liability of a master for a tort by his servant
- Liability of a partner for the tort of his partner
It is matter of irony that our country continues to practice of the English maxim, ‘the King can do no wrong’, in order to gain immunity for any tort from the exercise of ‘sovereign power’. This principle was criticised in many cases as it was against justice, equity, and good conscience. The maxim was abolished in the United Kingdom, by way of the Crown Proceeding Act of 1947. Thereby holding, everyone (including the Crown) equal before law, with no one entity being superior than another. We need to adopt a similar stance and move beyond the roots of our colonial past.
The recommendations made in the first Report of the Law Commission were not implemented. And a Bill entitled “The Government (Liability in Tort) Bill” was introduced in the Lok Sabha in 1967 and again in 1969 but lapsed both times.
In the course of many diverse judicial decisions, confusion still persists and the awarding of compensation is still left to the subjective views of the judges. Due to delay and incertitude, the government and authorities grow complacent and continue to escape liability under tort. Understandably, it is inappropriate for the government to continue to raise the plea of ‘sovereign power’ and rely on old decisions of ‘sovereign immunity’.
Author: Nikita Prakash from Symbiosis Law School, Pune.
Editor: Astha Garg, Junior Editor, Lexlife India