Judgment R. M. SAHAI, J.:- Is the State vicariously liable for negligence of its officers in discharge of their statutory duties was answered in the negative by the High Court of Andhra Pradesh on the ratio laid down by this Court in M/s. Kasturi Lal Ralia Ram Jain v. State of U.P., AIR 1965 SC 1039 : (1965 (2) Cri LJ 144), while reversing the decree for payment of Rs. 1,06,125.72 towards value of the damaged stock with interest thereon at the rate of 6 granted by the trial Court for loss suffered by the appellant due to non-disposal of the goods seized under various control orders issued under the Essential Commodities Act, 1955 (hereinafter referred to as the Act). But for determining correctness of the view taken by the High Court granted certificate under Art 133(1) of the Constitution of India as the case involved, substantial questions of law, of general importance. Although the claim of he appellant was negatived mainly on the sovereign power of the State, but, that was only one of the reasons, as the High Court further held that the goods of the appellant having been seized in the exercise of statutory power for violation of the Control Orders and the seizure having been found, by the appropriate authorities, to be valid at least for part, no compensation was liable to be paid to the appellant for the goods which were directed to be returned. The further questions, therefore, that arise for consideration are, whether seizure of the goods in exercise of statutory powers under the Act immunises the State, completely, from any loss or damage suffered by the owner. Whether confiscation of part of the goods absolves the Suite from any claim for the loss or damage suffered by the owner for the goods which are directed to be released or returned to it. 2. Since the High Court did not interfere with the findings recorded by the trial Court and decided the appeal as a matter of law, it is not necessary to narrate the facts in detail, except a gist of it so far it is helpful in deciding the issues in question. It has been found and is not disputed that the appellant carried on business in fertiliser and foodgrains under licence issued by the appropriate authorities. It has been found and is not disputed that the appellant carried on business in fertiliser and foodgrains under licence issued by the appropriate authorities. Its premises were visited by the Police Inspector, Vigilance Cell on 11th August, 1975 and huge stocks of fertilisers, foodgrains and even non-essential goods were seized. On the report submitted by the Inspector, the Disrict Revenue Officer (in brief the DRO) on 31st August, 1975, in exercise of powers under S. 6A of the Act, directed the fertiliser to be placed in the custody of Assistant Agricultural Officer (in brief AAO) for distribution to needy ryots and the foodgrains and non-essential goods in the custody of Tehsildar for disposing it of immediately and depositing the sale proceeds in the Treasury. The AAO did not take any steps to dispose of the fertiliser. Therefore. the appellant made applications on 17th September, 1975 and 21st September, 1975 before the DRO and or 11th February, 1976 before AAO that since no steps were being taken the fertiliser shall deteriorate and shall be rendered useless causing huge loss to the appellant. Request was made for diverting the fertiliser either to the places mentioned by the appellant as the demand was more there or to release it in it favour for disposal and deposit of the sale price. But neither any order was passed by the DRO nor any action was taken by the AAO On 29th June, 1976 the proceedings under S. 6A of the Act were decided and the stock of horsegram (food grain) was confiscated as the appellants licence had been cancelled. A regards fertiliser it was held that the explanation of the appellant for difference in stock was not satisfactory. The only violation of Control Orders found was improper maintenance of accounts. In consequence of this finding, rather in absence of any material to prove that the appellant was guilty of any serious infringement such as black marketing or adulteration or selling at higher price that the controlled price, the Collector was left with little option except to direct confiscation of part of the stock and the rest was released in favour of the appellant. That the confiscated stock was only nominal, shall be clear from a comparative chart of the stock seized and released : Stock seized Stock confiscated (bags) 1. Ammonium Sulphate 392 bags 29 2. Ammonium Phosphate 6 bags 2 3. That the confiscated stock was only nominal, shall be clear from a comparative chart of the stock seized and released : Stock seized Stock confiscated (bags) 1. Ammonium Sulphate 392 bags 29 2. Ammonium Phosphate 6 bags 2 3. Puskhhal (12-6-6) 787 bags x 4. Super Phosphate 1247 bags x 5. Murate of Potash 15 bags 5 bags 6. Super Phosphate 135 bags of 40 kgs. each. 4 bags 7. Super Phosphate 125 bags of 50 kgs. each 12 bags 8. Urea 2 bags 3 bags 9. Ammonium Phosphate 581 bags (19.5; 19.5; 0) x 10. Complex 17: 17: 17 121 bags x 11. Complex 14: 28: 14 36 bags x 12. Mixture 0 : 12 : 80 13 bags x The appropriate authority while directing release of the stock of equivalent value therefor made it subject to consent of the Vigilance Officer. But this condition was deleted on 15th October, 1976 in appeal filed by the appellant. 3. Despite Collectors order and the order passed in appeal by the Sessions Judge, the AAO did not release the stock and the efforts of the appellant with the Chief Minister, Revenue Minister, Agriculture Minister and various other departmental heads did not yield any result. However, the AAO issued a notice in the last week of March, 1977 to the appellant to take delivery of the stock released in its favour. But when the appellant went to take delivery it found that the stock had been spoilt both in quality and quantity. Therefore, after getting its objection endorsed by the Officer concerned the appellant came back and made a demand for value of the stock released by way of compensation. When no response came it gave notice and filed the suit for recovery of the amount which has given rise to this appeal. The suit was contested amongst other grounds on sovereign immunity of the State, discharge of statutory duty in good faith, absence of any right to claim damages when seizure has been found to be valid for part of the goods, absence of any right to claim value of the goods as the only right an owner of the goods has to get back the stock irrespective of its condition etc. 4. 4. The trial Court did not accept the defence and held that the relationship between the appellant and the respondent was of a bailor and bailee and the bailee could not refuse delivery of the goods nor it could delay it when it was demanded by the appellant. It further held that the deterioration of the goods in the custody of the respondents was not in exercise of sovereign function of the State. The Court held that the seizure of the goods was no doubt in pursuance of statutory obligation but once it was seized then it was the responsibility of the State Government to ensure that the goods were maintained in proper condition. But they failed in discharging their obligation and in any case there was no justification for retaining the goods after the order was passed by the Sessions Judge directing the AAO to return the goods without any permission from the Vigilance Inspector. The trial Court was also of the opinion that the fertiliser fell in the category of those goods the utility of which deteriorated by lapse of time. The trial Court did not believe the AAO, who appeared as witness, that he tried to dispose of the stock as there was nothing on the record to show that any such effort was made. Not only that, even when the higher authorities directed him to sell away the stocks and make a compliance report he did not make any effort nor contacted any co-operative society, depot or super bazar. The trial Court found that there was nothing on record to show that any ryot or cultivator had refused to purchase the seized stocks of fertilisers on the ground that its quoted price was higher than the market price. It was further held, after discussing various letters sent by the appellant, that it was evident that the appellant had been repeatedly requesting the AAO to take prompt and necessary measures to dispose of the seized fertilizers or stocks and to release its value but no steps were taken by him. The trial Court believed appellants version, which stood supported from the evidence of the respondents, that when new fertilizers come in the market the demand for it is more than for old stocks. The trial Court believed appellants version, which stood supported from the evidence of the respondents, that when new fertilizers come in the market the demand for it is more than for old stocks. Therefore, the trial Court was of opinion that it was incumbent on the respondents to have taken prompt and immediate steps to dispose of the fertilizers before expiry of the relevant season. The trial Court did not believe the AAO that he could not dispose of the stock as the appellant was insisting that the sale should not be made below a particular price, as no such restriction was placed by the DRO, and the AAO who was duty bound to comply with directions of his superior failed to carry it out. In these circumstances the trial Court held the AAO acted negligently in not disposing of the stocks in time but also in failing to obtain necessary directions from the DRO if no purchaser was forthcoming or, if any doubt was entertained by him, regarding the right of the appellant for the rates at which the stocks were to be sold. It was in these circumstances and on the findings recorded on the negligence of the AAO that the trial Court decreed the suit in part for the loss suffered by the appellant. In appeal the findings recorded by the trial Court on negligence were not interfered but the decree was set aside as a matter of law relying on the ratio of M/s. Kasturi Lal (supra) and the Full Bench decision of that Court in State of Andhra Pradesh v. Devarasetty Rama Murthy, 1985 (2) An WR 402. 5. Prior to adjudicating upon the legal issues, it appears appropriate to examine in brief the objective of the Act, the provisions dealing with search, seizure and confiscation and the nature of their powers and manner of its exercise as it shall assist in determining if the statutory authorities are responsible for any loss or damage to the stocks and, if so, to what extent. The Act was enacted in the interest of the general public for the control of the production, supply and distribution of essential commodities and trade and commerce. The Act was enacted in the interest of the general public for the control of the production, supply and distribution of essential commodities and trade and commerce. In M/s. Diwan Sugar & General Mills (Pvt.) Ltd. v. Union of India, AIR 1959 SC 626 : 1959 (2) SCR 123, It was held that the prime object of the legislation was to secure availability of essential commodities to the general public at fair prices and to protect their interest by way of equitable distribution. "Essential commodity" under Cl. (a) of S. 2 of the Act means any of the commodities mentioned therein. It extends to such varied items as cattle fodder, coal, component parts and accessories of automobiles, cotton and woollen textiles, foodstuffs, iron and steel, paper, petroleum, raw cotton, jute and any other class of commodity notified by the appropriate Government. S.3 is the main provision directed towards securing equitable distribution of the essential commodity and its availability at fair prices. To achieve this objective, its various sub-sections confer powers on Government to issue orders regulating or even prohibiting production, supply and distribution of such goods. Cl. (j) of sub-sec. (2) of S. .3 empowers the Government to make any provision for any incidental or supplementary matter including in particular, the entry, search or examination of such premises, aircraft, vessels, vehicles etc. to make seizure by a person authorised to make such entry, search or examination. But the power in respect of the articles has been made subject to reasonable belief that a contravention of the order has been, is being, or about to be committed. The reach of the sub-section is very wide as it empowers the person authorised to seize even if any contravention is about to be committed. The expression reason to believe has been interpreted by this Court to mean that even though formation of opinion may be subjective but it must be based on material on the record. It cannot be arbitrary, capricious or whimsical. It is, thus, a check on exercise of power to seize the goods. The procedure after seizure is provided for by S.6A of the Act. Sub-sec. (1) of it is extracted below :- "6A. It cannot be arbitrary, capricious or whimsical. It is, thus, a check on exercise of power to seize the goods. The procedure after seizure is provided for by S.6A of the Act. Sub-sec. (1) of it is extracted below :- "6A. Confiscation of essential commodity.- (1) Where any essential commodity is seized in pursuance of an order made under S. 3 in relation thereto, a report of such seizure shall, without unreasonable delay, be made to the Collector of the district or the Presidency Town in which such essential commodity is seized and whether or not a prosecution is instituted for the contravention of such order, the Collector may, if he thinks it expedient so to do, direct the essential commodity so seized to be produced for inspection before him, and if he is satisfied that there has been a contravention of the order may order confiscation of- (a) the essential commodity so seized; (b) any package, covering or receptacle in which such essential commodity is found; and (c) any animal, vehicle, vessel or other conveyance used in carrying such essential commodity : It requires a report of seizure of the essential commodity to be made without unreasonable delay to the Collector of the district who is empowered to direct confiscation if he is satisfied that there has been a contravention of the order. This requirement is to ensure that the higher authority shall apply its mind and take necessary steps in accordance with law. For instance, in this case even non-essential goods were seized. If the Collector would have applied its mind and perused the report he would have immediately directed release of such goods instead of directing its sale by Tehsildar as the provision of the Act and the Control Orders do not apply to non-essential goods. The exercise of power was obviously mechanical. This is being mentioned only to demonstrate the nature of power and how it is expected to be exercised. Nothing turns on it so far this appeal is concerned. The exercise of power was obviously mechanical. This is being mentioned only to demonstrate the nature of power and how it is expected to be exercised. Nothing turns on it so far this appeal is concerned. But what needs to be mentioned is that since the power is very wide as a person violating the Control Orders is to be visited with serious consequences leading not only to the confiscation of the seized goods, packages or vessel or vehicle in which such essential commodity is found of is conveyed or carried, but is liable to be proseeuted and penalised under S. 7 of the Act, it is inherent in it that those who are entrusted with responsibility to implement it should act with reasonableness, fairness and to promote the purpose and objective of the Act. Further, it should not be lost sight of that the goods seized are liable to be confiscated only if the Collector is satisfied about violation of the Control Orders. The language of the section and its setting indicate that every contravention cannot entail confiscation. That is why the section uses the word may. A trader indulging in black-marketing or selling adulterated goods etc. should not, in absence of any violation, be treated at par with technical violations such as failure to put up the price list etc. or even discrepancies in stock. 6. However, this appeal is primarily concerned with nature of power exercised by the Collector under sub-sec. (2) of S. 6A of the Act the purpose and objective of which is to make interim arrangement of the goods which are seized. The sub-section is extracted below :- "Where the Collector, on receiving a report of seizure or on inspection of any essential commodity under sub-sec. (2) of S. 6A of the Act the purpose and objective of which is to make interim arrangement of the goods which are seized. The sub-section is extracted below :- "Where the Collector, on receiving a report of seizure or on inspection of any essential commodity under sub-sec. (1), is of the opinion that the essential commodity is subject to speedy and natural decay or it is otherwise expedient in the public interest so to do, he may- (i) order the same to be sold at the controlled price, if any, fixed for such essential commodity under this Act or under any other law for the time being in force; or (ii) where no such price is fixed, order the same to be sold by public auction : Provided that in the case of any such essential commodity the retail sale price whereof has been fixed by the Central Government or a State Government under this Act or under any other law for the time being in force, the Collector may, for its equitable distribution and availability at fair prices, order the same to be sold through fair price shops at the price so fixed." When a statute gives a power and requires the authority to exercise it in public interest then the person exercising the power must be vigilant and should take it as a duty to discharge the obligation in such a manner that the object of the enactment is carried into effect. The purpose of sub-sec. (2) is for protecting the goods seized by the Collector whether they are eatables or they are foodstuffs or they are iron steel, as, if they are spoilt or they deteriorate then it is a loss not only to the owner but to the society. Loss in value of goods or its deterioration in quality and quantity would be in violation of the purpose and spirit of the Act. Even though the section uses the word may but keeping in view the objective of the Act and the context in which it has been used it should be read as shall; otherwise it would frustrate the objective of the sub-section. Even though the section uses the word may but keeping in view the objective of the Act and the context in which it has been used it should be read as shall; otherwise it would frustrate the objective of the sub-section. Once goods are seized, they are held by the State through the Collector and his agents as custodia societus, unless it is found that the detention was illegal in which case it shall be deemed to have been held for the benefit of the person from whom it was seized. In either case, its proper maintenance and early disposal is statutory duty. It is more so as the proceedings do not come to an end quickly. The rationale of the provision appears to be that penalise the person who acts in contravention of the order but protect the goods as they are essential for the society. Loss in value of the goods in quality or quantity is neither in public nor in societys interest. Therefore, the Collector has to form an opinion if the goods seized are of one or the other category and once he comes to conclusion that they fall in one of the categories mentioned in the sub-section then he has no option but to direct their disposal or selling of in the manner provided. The expression speedy and natural decay does not need any elucidation. It is not an expression of art and must be understood in a common sense manner. The other expression, it is otherwise expedient in the public interest has also to be understood so as to advance the legislative objective of ensuring that the goods do not suffer either in quality or quantity. For instance, fertilizer may not be susceptible to speedy and natural decay but it is expedient in public interest to ensure that it is either sold to the agriculturist or dispose of at least before the next season. This interim arrangement comes to an end once an order of confiscation is passed. 7. But what happens when the goods seized are not confiscated. This interim arrangement comes to an end once an order of confiscation is passed. 7. But what happens when the goods seized are not confiscated. That has been provided for by sub-section(2) of S.6C relevant part of which reads as under :- "Where an order under S. 6A is modified or annulled by the State Government, or where in a prosecution instituted for the contravention of the order in respect of which an order of confiscation has been made under S. 6A, the person concerned is acquitted, and in either case it is not possible for any reason to return the essential commodity seized, such person shall, except as provided by sub-sec. (3) of S. 6A, be paid the price therefor as if the essential commodity had been sold to the Government with reasonable interest calculated from the day of the seizure of the essential commodity; and such price shall be determined." 8. This sub-section ensures that a person who has been prosecuted or whose goods have been confiscated does not suffer if the ultimate order either in appeal or in any proceeding is in his favour. It is very wide in its import as it statutorily obliges the Government to return the goods seized or to pay the value of the goods if for any reason it cannot discharge its obligation to return it. The circumstances in which the goods are to be returned are; (a) an order under S. 6A is modified or annulled by the State Government; (b) where the goods were confiscated in consequence of prosecution of the person and he is acquitted; (c) and in all these cases where it is not possible for any reason to return the essential commodity seized. This provision cuts across the argument of the State that where even part is confiscated the person whose goods are seized is not liable to be compensated for the remaining. The section is clear that if only part of the goods are confiscated then the remaining has to be returned. The very first part of the sub-section indicates that where the order of confiscation, is modified in appeal meaning thereby if confiscation is confined to part only the Government is bound to release or return the remaining or pay the value thereof. The very first part of the sub-section indicates that where the order of confiscation, is modified in appeal meaning thereby if confiscation is confined to part only the Government is bound to release or return the remaining or pay the value thereof. But what is more significant of this sub-section which widens its reach is the expression, and in either case it is not possible for any reason to return the essential commodity seized then, the State shall be liable to pay the market price of the value with interest. The expression, for any reason should be understood in broader and larger sense as it appears from the context in which it has been used. The inability to return, giving rise to the statutory obligation of deeming it as sale to the Government may arise for variety of reasons and extends to any failure on the part of the Government. For instance, the goods might have been sold in pursuance of interim arrangement under S. 6A(2). Or it might have been lost or stolen from the place of storage. The goods might have deteriorated or rusted in quality or quantity. The liability to return the goods seized does not stand discharged by offering them in whatever condition it was. Confiscation of part of the goods thus could not affect the right of owner to claim return of the remaining goods. Nor the owner is bound to accept the goods in whatever condition they are. The claim of the respondent, therefore, that the appellant was bound to accept the goods in whatever condition they were is liable to be rejected. 9. Having discussed the scheme of the Act, the stage is now set for examining whether the High Court was justified, in reversing the decree of the trial Court for compensation, and dismissing the suit of the appellant, as the seizure of the goods having been effected under the statutory provisions it was an exercise of sovereign powers. Thus, squarely covered by the ratio laid down by this Court in Kasturi Lal (supra). Thus, squarely covered by the ratio laid down by this Court in Kasturi Lal (supra). Immunity of the State from compensating its citizens for a wrong done by it or its officers either for its activities of commercial or private nature or for acts of State or for those for which suit could be brought into Municipal Courts has been through various stages due to reflection of English juristic philosophy that king can do no wrong, and its extension and application to our system of governance. In England it was recognised that the King could not be sued. "In illustrating the doctrine that the Queen can do no wrong Prof. Dicey gives what he describes as an "absurd example", if Queen were herself to shoot the Prime Minister through the head, "he says", no court in England could take cognizance of the act". The basis for it in England was both substantive and procedural. The former flowed from the divine right of the Kings and the latter from the feudal principle that the King could not be sued in his own Courts. Yet it did not mean that he was above law. The true meaning of the expression that King can do no wrong meant, that the King has no legal power to do wrong(H.W.R. Wade, Administrative Law, Sixth Edition). Therefore, the institution of the petition of rights was founded upon the theory that the King, of his own free will, graciously orders right to be done. But the petition lay only to recover unliquidated damages for breach of contract by the Crown. It was not extended by the Courts to claims arising out of torts. In Viscount Canterbury v. The Attorney General, 1 PH 306 (41 English Reports Chancery p. 648, one of the questions that arose was whether the Crown was liable to make good the loss for the fire which had been caused by the personal negligence of the Commissioners. The answer given was that even though the officer, who was guilty of negligence was liable personally, the liability did not extend to the Crown. The answer given was that even though the officer, who was guilty of negligence was liable personally, the liability did not extend to the Crown. This immunity peculiar to the English system found its way in our system of governance through various judgments rendered during British period, more particularly after 1858, even though the maxim "lex non protest peccare" that is the King can do no wrong had no place in ancient India or in medieval India as the Kings in both the periods subjected themselves to the rule of law and system of justice prevalent like the ordinary subjects of the States. According to Manu, it was the duty of the King to uphold the law and he was as much subject to the law as any other person. In the Vedic period Kingship was purely secular institution. Ancient Indian Philosophers were not prepared to recognise the divinity of the unworthy Kings (G.P. Verma - State Liability in India). It was said by Brihaspati where a servant commissioned by his master does any improper act, for the benefit of his master, the latter shall be held responsible for it". Even during Muslim rule the fundamental concept under Muslim law like Hindu Law was that the authority of King was subordinate to that of the law. It was no different during British rule. The Courts leaned in favour of holding the State responsible for the negligence of its officers. See Narayan Krishna Laud v. Gerard Norman, Collector of Bombay, 5 Bombay High Court Reports 1868-69 p. 1, a decision which has been approved in State of Rajasthan v. Mst. Vidhyawati, AIR 1962 SC 933 . 10. This principle was statutorily recognised when East India Company was taken over by the Crown. Section 68 of the Government of India Act, 1858 permitted the Secretary of the State in Council to sue or be sued. It was a departure from the English common law that no proceedings, civil or criminal, could be filed against the Crown. In The Peninsular & Oriental Steam Navigation Company v. The Secretary of State for India, Bombay High Court Reports, Vol. It was a departure from the English common law that no proceedings, civil or criminal, could be filed against the Crown. In The Peninsular & Oriental Steam Navigation Company v. The Secretary of State for India, Bombay High Court Reports, Vol. 5 (1868-69) Appendix A p. 1, which came up before the SC of Calcutta, on a reference made by the Subordinate Judge, on the liability of the State for negligence of its officers, Chief Justice Peacock held that since East India Company was not a sovereign, its liability for negligence of its officers would be same as of an employer for acts of its employee. But the observations which were to influence the Courts for years to come, both before coming into force of the Constitution and thereafter, were made while deciding the other issue whether the Secretary of the State in Council was personally liable. It was observed that there was a clear distinction between acts done in exercise of what are usually termed sovereign powers and acts done in the conduct of undertakings which might be carried on by private individuals without having such powers delegated to them. To that extent there could have been little difficulty. But the learned Chief Justice in the next breath went on to observe : "It is clear that the East India Company would not have been liable for any act done by any of its officers or soldiers in carrying on hostilities, or for the 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 functions". Whether this was obiter dicta or not but this concession in favour of East India Company, a trading concern, was both unnecessary and unfortunate. It resulted in clothing the Company with powers which in law it did not have. The observations were irreconcilable with the earlier principle evolved that the Company being not a sovereign it could not claim sovereign immunity. Therefore, even though the Company was not sovereign yet it was made sovereign for carrying on hostilities and seizing the property. It resulted in clothing the Company with powers which in law it did not have. The observations were irreconcilable with the earlier principle evolved that the Company being not a sovereign it could not claim sovereign immunity. Therefore, even though the Company was not sovereign yet it was made sovereign for carrying on hostilities and seizing the property. And this enunciation of law, even though incorrect and uncalled for, was seized upon and extended further in Nobin Chunder Dey v. Secretary of State for India, ILR 1 Cal 11 (1876) where the English principle of sovereign immunity of the Crown was applied and plaintiffs claim for recovery of damages against the State for non-issuing of the excise pass and in the alternative for refund of the auction money was rejected as it was an act done by the Government in exercise of sovereign power of the State. This decision and its application in numerous cases led to denial of relief to citizens and different principles were evolved but each revolving round basic doctrine of sovereign immunity. It was dissented by the Madras High Court in The Secretary of State for India in Council v. Hari Bhanji, ILR 5 Madras, 273 (1882) and it was observed that Nobin Chunder Dey (supra) did not properly comprehend the law laid down in Peninsular (supra). The Chief Justice of the Madras High Court, after dealing with Peninsular and its erroneous application in Nobin Chunder Dey, (supra) observed that defence of sovereign immunity was available in those limited cases where the State could not be sued for its acts, such as making war or peace, in Municipal Courts. Relevant observations are extracted below :- "Acts done by the Government in the exercise of the sovereign powers of making peace and war and of concluding treaties obviously do not fall within the province of municipal law, and although in the administration of domestic affairs the Government ordinarily exercises powers which are regulated by that law, yet there are cases in which the supreme necessity of providing for the public safety compels the Government to acts which do not pretend to justify themselves by any canon of municipal law. Acts thus done in the exercise of sovereign powers but which do not profess to be justified by municipal law are what to be the acts of state of which municipal Courts are not authorised to take cognizance. Acts thus done in the exercise of sovereign powers but which do not profess to be justified by municipal law are what to be the acts of state of which municipal Courts are not authorised to take cognizance. (Emphasis supplied) The doctrine or the defence by the act of State, is not the same as sovereign immunity. The former flows from the nature of power exercised by the State for which no action lies in civil court whereas the latter was developed on the divine right of Kings. 11. When the law was in this fluid state, the Constitution was enforced and in Province of Bombay v. Khushaldas S. Advani, AIR 1950 SC 222 , Justice Mukherjea, one of the members of the 7 Judges Bench, who was in minority made following obsrvations approving the ratio laid down in Hari Bhanji (supra). On this aspect there was no conflict in majority and minority opinions. The Honble Judge observed: "It is true that the East India Company was invested with powers and functions of a twofold character. They had on the one hand powers to carry on trade as merchants; on the other hand they had delegated to them powers to acquire, retain and govern territories to raise and maintain armies and to make peace and war with native powers in India. But the liability of the East India Company to be sued was not restricted altogether to claims arising out of undertakings which might be carried on by private persons.; but other claims if not arising out of acts of State could be entertained by Civil Courts, if the acts were done under sanction of municipal law and in exercise of powers conferred by such law. The law on this point was discussed very ably by the Madras High Court in Secretary of State. v. Hari Bhanji, 5 Madras 273." The learned Judge also considered the Peninsular case (supra) and observed as under :- "Much importance cannot in my opinion be attached to the observation of Sir B. Peacock in Peninsular and Oriental Steam Navigation Co. v. Secretary of State, 5 Bom HCR App 1. In that case the only point for Consideration was whether in the case of a tort committed in the conduct of a business the Secretary of State for India could be sued. The question was answered in the affirmative. v. Secretary of State, 5 Bom HCR App 1. In that case the only point for Consideration was whether in the case of a tort committed in the conduct of a business the Secretary of State for India could be sued. The question was answered in the affirmative. Whether he could be sued in cases not connected with the conduct of a business or commercial undertaking was not really a question for the Court to decide." But it was not till 1962 that an occasion arose for this Court to examine the tortious act by servant of the State and whether a citizen who was wronged by it was entitled to claim compensation. in Mst. Vidhyawati (supra), the driver of a Government vehicle while driving the car along with public road knocked down a person who was walking on the footpath by the side of the public road on Udaipur city causing him multiple injuries, including fractures of the skull and backbone, resulting in his death three days later in the hospital where be had been removed for treatment. The suit of his widow, minor daughter and mother was decreed, on the finding that the driver was guilty of negligence. But the decree was granted against the driver only. In appeal, however, the High Court decreed the suit against the State as well. This Court after examining in detail the scope of Article 300 of the Constitution of India and the earlier provisions in the Government of India Act beginning from Section 68 of the Act of 1858 approved decision in Narayan Krishna Laud (supra) and observed that the decision in Viscount Canterbury (supra) being based upon the principle that the King can-not be guilty of personal negligence or misconduct and consequently cannot be responsible for the negligence or misconduct of his servants was not applicable as held in Peninsulars case (supra) as the liability of the Secretary of State in place of East India Company was specifically provided for. The Court further held :- "This case also meets the second branch of the argument 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. The Court further held :- "This case also meets the second branch of the argument 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. In this connection it has to be remembered that under the Constitution we have established a welfare state, whose 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. In so far as the State activities have such wide ramifications involving not only the use of sovereign powers but also its powers as employers in so many public sectors, it is too much to claim that the State should be immune from the consequences of tortious acts of its employees committed in the course of their employment as such. In this respect, the present set up of the Government is analogous to the position of the East India Company, which functioned not only as a Government with sovereign powers, as a delegate of the British Government, but also carried on trade and commerce, as also public transport like railways, post and telegraphs and road transport business ...........". The Court after dealing with case law and Article 300 proceeded further to hold :- "Viewing the case from the point of view of first principles, there should be no difficulty in holding that the State should be as much liable for tort in respect of a tortious act committed by its servant within the scope of his employment and functioning as such, as any other employer. The immunity of the Crown in the United Kingdom was based on the old feudalistic notions of Justice, namely, that the King was incapable of doing a wrong, and, therefore, of authorising or instigating one, and that he could not be sued in his own courts. In India, ever since the time of the 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. In India, ever since the time of the 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. Now that we have, by our Constitution, established 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 servent. This Court has deliberately departed from the common Law rule that a civil servant cannot maintain a suit against the Crown. In the case of State of Bihar v. Abdul Majid, 1954 SCR 786 , this Court has recognised the right of a Government servant to sue the Government for recovery of arrears of salary. When the rule of immunity in favour of the Crown, based on Common Law in the United Kingdom, has disappeared from the land of its birth, there is no legal warrant for holding that it has any validity in this country, particularly after the Constitution. As the cause of action in this case arose after the coming into effect of the Constitution, in our opinion, it would be only recognising the old established rule, going back to more than 100 years at least, if we uphold the vicarious liability of the State. Art. 300 of the Constitution itself has saved the right of Parliament or the Legislature of a State to enact such law as it may think fit and proper in this behalf. But 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." (Emphasis supplied) But this Constitution Bench decision was distinguished in Kasturi Lal (supra) by another Constitution Bench as, the facts in Vidhyavatis case (supra) fall in a category of claims which is distinct and separate from the category in which the facts of the present case fall. The Bench, therefore, relying on the observation in Peninsulars case (supra) which were held to be obiter in Province of Bombay (supra) proceeded to hold :- "Thus, it is clear that this case recognises a material distinction between acts committed by the servants employed by the State where such acts are referable to the exercise of sovereign powers delegated to public servants, and acts committed by public servants, which are not referable to the delegation of any sovereign powers. If a tortious act is committed by a public servant and it gives rise to a claim for damages, the question to ask is : was the tortious act committed by the public servant in discharge of statutory functions which are referable to, and ultimately based on, the delegation of the 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 tortious act will not lie. On the other hand, if the tortious act has been committed by a public servant in discharge of duties assigned to him not by virtue of the delegation of any sovereign power, an action for damages would lie. The act of the public servant committed by him during the course of his employment is, in this category of cases, an act of a servant who might have been employed by a private individual for the same purpose. This distinction which is clear and precise in law, is sometimes not borne in mind in discussing questions of the States liability arising from tortious acts committed by public servants ............". The Bench did not avert to Hari Bhanjis case (supra) which was approved by this Court in Province of Bombay (supra). 12. However, since 1965 when this decision was rendered the law on vicarious liability has marched ahead. The ever increasing abuse of power by public authorities and interference with life and liberty of the citizens arbitrarily, coupled with transformation in social outlook with increasing emphasis on human liberty resulted in more pragmatic approach to the individuals dignity, his life and liberty and carving out of an exception by the Court where the abuse of public power was violative of the constitutional guarantee. Such infringements have been held to be wrong in public law which do not brook any barrier and the State has been held liable to compensate the victims. Such infringements have been held to be wrong in public law which do not brook any barrier and the State has been held liable to compensate the victims. (See Rudul Shah v. State of Bihar, (1983) 4 SCC 141 Sebastian M. Hongray v. Union of India, (1984) 3 SCC 82; Saheli, a Womens Resources Centre v. Commissioner of Police Delhi, AIR 1990 SC 513 , State of Maharashtra v. Ravikant S. Patil, (1991) 2 SCC 373 . In Nilabati Behera (Smt.) alias Lalita v. State of Orissa, (1993) 2 SCC 746 ; Honble Mr. Justice J.S. Verma observed as under (at page 1966 of AIR) : ".........It may be mentioned straightway that award of compensation in a proceeding under Article 32 by this Court or by the High Court under Article 226 of the Constitution is a remedy available in public law, based on strict liability for contravention of fundamental rights to which the principle of sovereign immunity does not apply, even though it may be available as a defence in private law in an action based on tort..........." In the same decision, it was observed by Honble Dr. Justice A. S. Anand :- "..........The purpose of public law is not only to civilize public power but also to assure the citizen that they live under a legal system which aims to protect their interests and preserve their rights. 13. Sovereign immunity as a defence was, thus, never available where the State was involved in commercial or private undertaking nor it is available where its officers are guilty of interfering with life and liberty of a citizen not warranted by law. In both such infringements the State is vicariously liable and bound constitutionally, legally and morally, to compensate and indemnify the wronged person. In both such infringements the State is vicariously liable and bound constitutionally, legally and morally, to compensate and indemnify the wronged person. But the shadow of sovereign immunity still haunts the private law, primarily, because of absence of any legislation even though this Court in Kasturi Lal (supra) had expressed dissatisfaction on the prevailing state of affairs in which a citizen has no remedy against negligence of the officers of the State and observed : - ".............In dealing with the present appeal, we have ourselves been disturbed by the thought that a citizen whose property was seized by process of law, has to be told when he seeks a remedy in a court of law on the ground that his property has not been returned to him, that he can make no claim against the State. That, we think, is not a very satisfactory position in law. The remedy to cure this position, however, lies in the hands of the Legislature". Necessity of the Legislation apart, which shall be adverted later, it is necessary to mention that in subsequent decisions rendered by this Court the field of operation of the principle of sovereign immunity has been substantially whittled down. In Shyam Sunder v. State of Rajasthan, AIR 1974 SC 890 : (1974 Lab IC 598) where the question of sovereign immunity was raised and reliance was placed on the ratio laid down in Kasturi Lals case (supra), this Court after considering the principle of sovereign immunity as understood in England and even applied in America observed that there was no logical or practical ground for exempting the sovereign from the suit for damages. In Pushpa Thakur v. Union of India, 1984 ACJ SC 559, this Court while reversing a decision of the Punjab & Haryana High Court, 1984 ACJ 401 which in its turn placed reliance on a Full Bench decision of that very Court in Baxi Amrik Singh v. Union of India, 1973 PLR Vol. 75 p. 1 : 1974 ACJ 105 held that where the accident was caused by negligence of the driver of military truck the principle of sovereign immunity was not available to the State.