N Nagendra Rao v State of Andhra Pradesh Case Summary 1994

N Nagendra Rao v State of Andhra Pradesh Case Summary 1994

N Nagendra Rao v State of Andhra Pradesh Das case deals with the vicarious liability of the State when the tort has been committed by the employee of the State and the immunity of the State was reduced in these types of cases.

Facts of N Nagendra Rao v State of Andhra Pradesh:

  • The plaintiff-appellant N. Nagendra & Co. is in fertilizer and food grains business under license. Its premises were visited by the Police Inspector, Vigilance Cell and huge stocks of fertilizers, food grains and even non-essential goods were seized.
  • On the report submitted by the Inspector, the District Revenue Officer in exercise of powers under Section 6-A of the Essential Commodities Act, 1955 Act directed the fertilizer to be placed in the custody of Assistant Agricultural Officer for distribution to needy and the food grains and non-essential goods in the custody of Tahsildar for disposing it off immediately and depositing the sale proceeds in the Treasury. The AAO did not take any steps to dispose of the fertilizer.
  • The appellant made an application that since no steps were being taken, the fertilizer shall deteriorate and shall be rendered useless, causing enormous loss to him. Request was made for diverting the fertilizer either to the places mentioned by the appellant as the demand was more there or to release it in his favor for disposal and deposit of the sale price.
  • But neither any order was passed by the DRO nor the AAO took any action. Meanwhile, the appellant’s license was cancelled. After repeated requests, the collector ordered that the goods be returned to the appellants. However, the AAO did not comply with the orders. After repeated consultations with various ministers, when the appellants finally got the stock, it was spoiled both in quality and quantity.
  • In the present case, the non-disposal of the goods seized under various control orders issued under the Essential Commodities Act, 1955 caused a loss to the appellants.
  • 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 a total value of Rs.1,06,125 towards the damaged stock with interest thereon at the rate of 6%.
  • However, this order was struck down by the High Court of Andhra Pradesh, which decided the case on the ratio of Kasturilal case. The appellants appealed against the High Court judgement and thus approached the Supreme Court using Article 133(1).

Contention & Issues:

  1. Whether the employees of the state were negligent in disposing of the goods?
  2. Whether the seizure of the goods in exercise of statutory powers under the said Act immunizes the State completely, from any loss or damage suffered by the owner?

Ratio & Decision:

Justice RM Sahai: The Supreme Court upheld the view in the Vidyawati case and rejected the view of the Kasturilal case.

The court held that administration of justice, maintenance of law and order, and repression of crime, etc. are among the primary and inalienable functions of a constitutional Government, the State cannot claim any immunity.

The act of seizure of goods for the public interests is under the welfare state functions and not under the primary functions.

Regarding the principle of vicarious liability, it was held that if the officers can be sued personally for negligence and misfeasance in the discharge of public duty, the State can also be held liable for the actions of its servants.

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 appellants the amount as decided by the trial court with costs.

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