Peninsular and Oriental Steam Navigation Company

V.
Secretary of State for India
(Case analysis towards partial fulfillment of assessment in the subject of
Law of Torts)

SUBMITTED BY:
Madhurima Gadre
(1063)
1st semester,
BBA LLB (Hons.)

SUBMITTED TO:
Ms. Rosmy Joan,
Faculty of Law,
NLU Jodhpur

National Law University, Jodhpur

Summer Session
(July - November 2013)
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ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide Ms.
Rosmy Joan for her exemplary guidance, monitoring and constant encouragement throughout
the course of this case study. The blessing, help and guidance given by her from time to time
shall carry me a long way in the journey of knowledge on which I am about to embark.
I also take this opportunity to express a deep sense of gratitude to the staff of the library for their
cordial support, valuable information and guidance, which helped me in completing this task
through various stages.
I am obliged to staff members of NLU, Jodhpur for the valuable information provided by them in
their respective fields. I am grateful for their cooperation during my venture.
Through the medium of this case study in the subject of Law of Torts, I have tried my best in
giving the reader a full analysis of the material facts, relevant laws with their interpretation, and
the judgment of the court and its impact on future cases.
Lastly, I thank the Almighty, my parents, brother, sister and friends for their constant
encouragement without which this Herculean task would not be possible.

Madhurima Gadre.
(1 st Sem. BBA. LLB)

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TABLE OF CONTENTS

Sr. No.

CONTENTS

Pg. No.

1.

Introduction

2.

Chapter 1

Summary of Facts
3.

Chapter 2

Proceedings before the Court

4.

Chapter 3

Questions before the Court and Verdict

5.

Chapter 4

Reasons of the Court and Ratio Decidendi

6.

Chapter 5

Significance of the Case

7.

Bibliography

10

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INTRODUCTION
The oft quoted authority on the construction of Section 65 of the 1858 Act is the decision of the
Supreme Court of Calcutta rendered in 1861 in the case of Peninsular & Oriental Steam
Navigation Co. v. Secretary of State for India1. Section 65 of the Government of India Act,
1858 which is the parent source of the law relating to the liability of the Government provides:
"All persons and bodies politic shall and may have and take the same suits, for India as they
could have done against the said Company."
This Provision was continued by Article 300(1) of the Constitution of India which reads:
The Governor of India may sue or be sued by the name of the Union and the Government of a
State may sue or be sued by the name of the State and may, subject to any provisions which may
be made by Act of Parliament or of the Legislature of such State enacted by virtue of powers
conferred by this Constitution, sue or be sued in relation to their respective affairs in the like
cases as the Dominion of India and the corresponding Provinces or the corresponding Indian
States might have sued or been sued if this Constitution had not been enacted.
In India the story of the birth of the doctrine of Sovereign Immunity begins with the decision of
Peacock C.J. in Peninsular and Oriental Steam Navigation Co. v. Secretary of State for India.
The judgment was given long way back in 1861, when the notion The King can do no wrong
was still prevalent under the English Common Law and therefore, the King was not liable for the
wrongs of its servants.
The classic decision on the subject is the Peninsular and Oriental Steam Navigation Co. v.
Secretary of State for India, as this was the first case in which the distinction between sovereign
functions and non-sovereign functions was made.

1 (1868-1869) 5 Bom HC Rep App 1 [Decided in 1861 and reported in the Newspaper Englishman of October 23,1861, and
republished in Appendix A to the Bombay High Court Reports, Vol. V, of the year 1868-69.]

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SUMMARY OF FACTS

A servant of the plaintiff Company was proceeding from Garden Beach of Calcutta in a
carriage drawn by a pair of horses belonging to the plaintiff, and driven by the coachman
in their course of employment.

While the coach was passing along Kidderpore Dockyard which is a government
dockyard of which the Superintendent of Marine is the head, certain workmen in
Government employment were engaged in riveting a piece of iron funnel casing.

It weighed about 300 kilos and 8 or 9 feet long and about 2 feet high.

The men carrying the load were walking along the middle of the road. The coachman
called out to warn the men who were carrying the iron.

The men attempted to get out of the way, those in front tried to go to one side and those
behind tried to go to the other.

The consequence of this was the loss of time, which brought the carriage close up to
them, before they had left the centre of the road.

They got alarmed at the proximity of the carriage and suddenly dropped the iron and ran
away.

The iron fell with a great noise which started the plaintiff's horses which thereupon
rushed forward violently and fell on the iron resulting in injuries to one horse.

The suit was brought by the plaintiff Company to recover Rs. 350/- on account of the
damage, and the claim against the Secretary of State was on the ground that the negligent
act was done by a servant of the Government.

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PROCEEDINGS BEFORE THE COURT

The case was decided by a Full Bench, consisting of Peacock, C.J., and Jackson and Wells JJ,

of the Supreme Court of Calcutta.

That the injuries to the horse were due to negligence of the defendant's servants was not

disputed before the learned judge, and the case proceeded on this basis.
Sir Barnes Peacock, Chief Justice, held that the Government of India through the Secretary of
State, were liable to the same extent as the East India Company would have been liable prior
to the Constitution Act of 1858 by which the Crown took over the Government of India from

the East India Company.

One objection raised against the suggested liability was that the East India Company was a
sovereign power and, like the Crown in England not liable for the tortuous acts of their

servants.
In this connection the learned judge observed as follows:
The East India Company was a company to whom sovereign powers were delegated and
who traded on their own account and for their own benefit and were engaged in transaction
partly for the purpose of government and partly on their own account which without any
delegation of sovereign rights might be carried on by private individuals. There is a great and
clear distinction between acts done in exercise of what are usually termed sovereign powers
and acts done in the conducts of undertakings which might be carried on by private
individuals without having such powers delegated to them.

The learned Chief Justice overruled that objection holding that the East India Company was
not the sovereign although certain sovereign powers had been delegated to them and they
could not therefore claim immunity in every case.

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QUESTIONS BEFORE THE COURT AND VERDICT

Questions before the Court:

1. Whether or not acts of East India Company come under the exercise of sovereign powers of
the State?
2. What was the extent of liability of the East India Company for the tortuous acts of its
servants committed in course of their employment as such?
3. Whether the Secretary of State was liable for the damage occasioned by the negligence of the
Government servants, assuming them to have been guilty of such negligence which would
have rendered an ordinary employer liable?

Verdict of the Court:

The plaintiff's claim against the Secretary of State was allowed to succeed.
Also, the East India Company was not the sovereign although certain sovereign powers had
been delegated to them and they could not therefore claim immunity in every case.

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REASONS OF THE COURT & RATIO DECIDENDI

Reasons for the Judgment:

1. Where an act is done in exercise of sovereign powers, there would be immunity and no
action would lie. But since the East India Company had a dual capacity and were at one time
actually trading on their own account and were thus engaged in transactions partly for the
purposes of government and partly on their own account, they would be liable for the
wrongful act of any servant of theirs if such act was done in the course of a transaction
unconnected with the exercise of sovereign functions.
2. Considering the facts of this case, the workmen employed by the Government at the
dockyard were not doing anything in the exercise of sovereign powers, but that the act was
done in the conduct of an undertaking which might be carried on by a private individual
without having sovereign powers delegated to him, and that the East India Company would
have been liable, and consequently the Secretary of State for India was also liable for the
negligent acts of its servants.
3. Accidents like this if caused by the negligence of servants employed by the Government, the
East India Company would be liable and the same liability is attached to the Secretary of
State.

Ratio Decidendi:
If an act is done in the course of an ordinary undertaking not involving the exercise of sovereign
powers, the employer or the master, even if it be the State, would be liable. But where an act is
done, or a contract is entered into, in the exercise of sovereign powers, by which means power
which cannot be lawfully exercised except by a sovereign or private individual relegated by a
sovereign to exercise them, no action will lie.

SIGNIFICANCE OF THE CASE

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1. The observations which were made while deciding this case- whether the Secretary of the
State was personally liable, influenced the courts for years to come, both before coming into
force of the Constitution and thereafter.
2. Even after the Constitution came into force, there was no substantial departure from the line
of thought enunciated in the P & O Steamship case.
3. The distinction between sovereign and non-sovereign functions in the context of vicarious
liability of the State in tort, originated as a result of the reading of this judgment by various
courts.
4. It was a judgment of far reaching importance and has always been cited as the leading case
on the subject.
5. No doubt, in course of time, the scope of the expression sovereign functions came to be
considerably narrowed down and there was greater readiness, on the part of various courts, to
regard many Governmental acts as non-sovereign. This has considerably reduced the
practical importance of this distinction, which, however, still continues to survive, in theory.2
6. Courts approved the distinction made by Peacock C J between Sovereign and Non-sovereign
functions, but they also mentioned that it is difficult to consider the judgment to be relevant
today, as the scope of sovereign function of the State has widened.

2 Aman Hingorani, State Liability in Tort - Need for a Fresh Look, (1994) 2 SCC (Jour) 7

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BIBLIOGRAPHY

Treatises:

Ratanlal & Dhirajlal, The Law of Torts, Revised by G.P. Singh ( Wadhwa and Co Nagpur,25 th
edition,2008 )

S.K.Kapoor, The Law of Torts along with the Consumer Protection Act ( Central Law
Agency, Allahabad, 5th edition,1999 )

Articles:
Aman Hingorani, State Liability in Tort - Need for a Fresh Look, (1994) 2 SCC (Jour) 7
Rakesh Kumar, Doctrine of the constitutional law: Evolution and Evaluation,
www.legalservicesindia.com/articles/dct.htm
REPORTS:

Law Commission of India, First Report: Liability of the State in Tort ( Government of India,
1956 )

National Commission to Review the Working of the Constitution, A consultation Paper On:
Liability of the State in Tort

WEBSITES:

www.legalserviceindia.com

www.manupatra.com
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www.indiankanoon.org

www.lawyersclubindia.com

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