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

Citation: [1994] SUPP. 3 S.C.R. 144 · Decided: 06-09-1994 · Supreme Court of India · Bench: R.M. SAHAI · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
N. NAGENDRA RAO AND CO. 
v. 
STATE OF ANDHRA PRADESH 
SEPTEMBER 6, 1994 
[R.M. SAHAI AND B.L. HANSARIA: JJ.) 
Tort-Vicarious liability-Essential Commodities Act, 195~Sections 
6-A and 6-C(2}-Seizure and confiscation of a part of goods-Deterioration 
in quality of goods while in custody of the Stat~ether seizure of goods 
C under a statutory authority absolves State of liabi~tyfor damage or deteriora-
#on-#'hether person from whom goods are seized entitled to recover value 
of goods which are not confiscated-Held, State is vicariously liable for 
negligence of its officers-Held further, liability to return goods seized does 
not stand discharged by offering them in any condition-Where goods being 
D returned have deteriorated in quantity or quality, owner of goods entitled to 
be paid its price-Administrative Law. 
Tort-Sovereign immunity-Essential Commodities Act, 195~Sec­
tions 6-A and 6-C-Whether seizure of goods effected· under statutory 
provisions is an exercise of sovereign powers-Held, defence of sovereign 
E immunity not available when the State or its officers act negligently in 
discharge of their statutory dutitfs--Held further liability of the State even 
today is same as of the East India Company, and the defence did not apply 
to the Company-Suit filed by any person for negligence of the officers of the 
State cannot be dismissed as being in exercise of sovereign power-Further, 
the concept of sovereignty has changed over time and it now vests with the 
F people-Constitution of India, Article 30o-Govemment of India Act, 1858, 
Section 55. 
Tort-'Sovereignty' and 'acts of State' distinguished-Held, sovereignty 
rests in a person or body which is independent and supreme both externally 
G and internally-Whereas 'acts of State' may be act done by delegate of a 
sovereign within the limitS of the power vested which cannot be questioned in 
a municipal court. 
Essential Commodities Act, 195~Section 6-C(2}-Held, fiction of 
sale incorporated therein to protect the interest of the owner of the goods , to 
H be interpreted liberally and in favour of the owne.,-/nterpretation of statutes 
144 
·. 
-
N. NAGENDRARAOv. STATE 
145 
Interpretation of Statutes-Section 6-A(2)-!'May'~ held, keeping in A 
mind object of the statute and the contest in which it is used, to be read as 
shal~'Speedy and natural decay", held, not an expression of art and must 
be understood in a commonsense manner-"lt is expedient in the public 
interest'~ held, to be understood so as to advance the legislative objective of 
ensuring that the goods do not suffer either in quality or quantity. 
B 
The appellant carried on business in fertiliser and foodgrains under 
lincence issued by the appropriate authorities. In action taken under the 
Essential Commodities Act, 1955, on August 11, 1975, huge stocks of 
fertilisers, foodgrai~s and even non-essential goods were seized from the 
appellant's premises. The seized goods Were not distributed as directed by C 
the District Revenue Officer, or diverted to the places mentioned by the 
appellant, or released in favour of the appellant. On June 29, 1976, no 
serious infringement having been found, the Collector directed confisca-
tion of a nominal portion, and release of the rest of the seized stock to 
the appellant. This order was also not complied with, and it was in March D 
1977 a notice was issued to the appellant to take delivery of the stOck 
released in its favour. The appellant however found that the stock had 
deteriorated both a quality and quantity. The appellant thereafter made a 
demand for value of the stock released by way of compensation. 
In a suit filed for recovery of the amount, the Government raised, E 
among other grounds, the plea of sovereign immunity, discharge of 
statutory duty in good faith, absence of any right to claim damages when 
seizure has been found valid for part of the goods, and that the only right 
an owner of the goods has is to get back the stock irrespective of its 
~di~ 
F 
The trial court, taking the relationship between the appellant and 
the respondent as between a bailor and bailor and bailee, rejected the plea 
of sovereign immunity, and held that the Government had failed in dis-
charging their responsibility to maintain the seized goods in proper con~ G 
dition. On facts, the trial court found that the fertiliser fell in the category 
of goods of utility which deteriorated by lapse of time, that the record did 
not show any effort to dispose 

Excerpt shown. Read the full judgment & AI analysis in Lexace.