N. NAGENDRA RAO AND CO. v. STATE OF ANDHRA PRADESH

B "On the facts of the present case, the State Government no doubt seized the said vehicles pursuant to the power under the Customs Act. But the power to seize and confiscate was dependent upon a customs offence having been committed or a suspicion that such offence had been committed. The order of the Customs officer was c not final as it was subject to an appeal and if the appellate authority found that there was no good ground for the exercise of that power, the property could no longer be retained and had under the Act to be returned to the owner. That being the position and the property being liable to be returned there was not only a statutory obligation to return but until the order of confiscation became final an implied obligation to preserve the property intact and for that purpose to take such care of it as a reasonable person in like circumstances is expected to take. Just as a finder of property has to return it when its owner is found and demands it, so the State Government was bound to return the said vehicles once it was found that the seizure and confiscation were not sustainable. There being thus a legal obligation to preserve the property intact ~d also the obligation to take reasonable care of it so as to enable the Government to return it in the -same condition in which it was seized, the position of the State Government until the order be- F came final would be that of a bailee. If that is the correct position once the Revenue Tribunal set aside the order of the Customs officer and the Government became liable to return the goods the owner had the right either to demand the property seized or its value, if, in the meantime the State Government had precluded itself from returning the property either by its own act or that of its agents or servants. This was precisely the cause of action on which the respondent's suit was grounded. The fact that an order for its disposal was passed by a Magistrate would not in any way interfere with or wipe away the right of the owner to demand the return of the property or the obligation of the Government to return it."

N.NAGENDRARAOv.STATE[SAIW,J.) 185

Similarly, in Smt. Basava Kom Dyamogouda Patil v. State of Mysore A & Anr., AIR 1977 SC 1749, the question arose regarding powers of the Court in indemnifying the owner of the property which is destroyed or lost whilst in the custody of the Court. The goods were seized from the possession of the accused. They were placed in the custody of the Court. When the appeal of the accused was allowed and the goods were directed to be returned it was found that they had been lost. The Court, in the circumstances, held :-

"It is common ground that these articles belonged to the com- plainant/appellant and had been stolen from her house. It is, therefore, clear that the articles were the subject-matter of an offence. This fact, therefore, is sufficient to clothe the Magistrate with the power to pass an order for return of the property. Where the property is stolen, lost or destroyed and there is no prima f acie defence made out that the State or its officers had taken due care and caution to protect the property, the Magistrate may, in an appropriate case, where the ends of justice so require, order payment of the value of the property. We do not agree with the view of the High Court that once the articles are not available with the Court, the Court has no power to do anything in the matter and is utterly helpless." E Therefore, where the goods confiscated or seized are required to be returned either under orders of the Court or because of the provision in the Act, this Court has not countenanced the objection that the goods having been lost or destroyed the own<!r of the goo'ds had no remedy in private law and the Court was not empowered to pass an order or grant p decree for payment of the value of goods. Public policy requires the court to exercise the power in private law to compensate the owner where the damage or loss is suffered by the negligence of officers of the State in respect of cause of action of for which suits are maintainable in civil court. Since the seizure and confiscation of appellant's goods was not in exercise of power which could be considered to be act of State of which no G cognizance could be taken by the civil court, the suit of the appellant could not be dismissed. In either view of the matter, the judgment and order of the High Court cannot be upheld.

Before parting with this case, the Court shall be failing in its duty if H

186 SUPREME COURT REPORTS [1994) SUPP. 3 S.C.R.

A it is not brought to the attention of the appropriate authority that for in.ore than hundred years, the law of vicarious liability of the State for negligence of its officers has been swinging from one direction to other. Result of all this has been uncertainty of law, multiplication of litigation, waste of money of common man and energy and time of the courts. Federal of Torts Claims B Act was enacted in America in 1946. Crown Proceedings Act was enacted in England in 1947. As far back as 1956 the First Law Commission in its Report on the liability of the State in tort, after exhaustive study of the law and legislations in England, America, Australia and France, concluded :

"In the context of a welfare State it is necessary to establish a just c relation between the rights of the individual and the responsibilities of the State. While the responsibilities of the State have increased, the increase in its activities has led to a greater impact on the citizen. For the establishment of a just economic order industries are nationalised. Public utilities are taken over by the State. The State has launched huge irrigation and flood control schemes. The_ D production of electricity has practically become a Government concern. The State has established and intends to establish big factories and manage them. The State carries on works departmen- tally. The doctrine of laizzez faire - which leaves every one to look after himself to his best advantage has yielded place to the ideal E of a welfare State - which implies that the State takes care of those who are unable to help themselves."

The Commission after referring to various· provisions in the Legislation of other countries observed :

F "The old distinction between sovereign and non-sovereign func- tions or governmental and non-governmental functions should no longer be invoked to determine the liability of the State. As Professor Friendman observes :

'It is now increasingly necessary to abandon the lingering fiction of a legally indivisible State, and of a feudal concep- tion of the Crown, and to substitute for it the principle of legal liability where the State, either directly or through in- corporated public authorities engages in activities of a com- mercial, industrial or managerial character. The proper test is not an impracticable distinction between governmental and

N. NAGENDRARAOv. STATE [SARAI, J.] 187

non-governmental functions, but the nature and form of the activity in question.n

Yet unfortunately the law has not seen the light of the day even though in wake of Kasturi Lal (supra), "Govt. (Liability in Tort) Bill, 1965" was introduced but it was withdrawn and reintroduced in 1967 with certain modifications suggested in it by the Joint Committee of the Parliament but . B it lapsed. And the citizens of the independent nation who are governed by its own people and Constitution and not by the Crown C:II'e still faced, even after well-nigh fifty years of independence, when they approach the court of law for redress against negligence of officers of the State in private law, with the question whether the East India Company would have been liable and, if so,, to what extent for tortious acts of its servants committed in course of its employment. Necessity to enact a law in keeping with the dignity of the country and to remove the uncertainty and dispel the misgiv- ings, therefore, cannot be doubted.

F01; these reasons, the appeal succeeds and is allowed. The judgment and order of the High Court is set aside and that of the trial court decreeing the suit of the appellant is restored with costs.

U.R. Appeal allowed.