The case of Kasturilal, which is also known as ‘gold case’ is considered a landmark case in law of torts regarding vicarious liability of the state for the wrongful acts of its employees.

Facts of the Case

This case was reached in supreme court through the way of appeal.

Appellant’s side

  • The appellant was a firm which used to deal in bullion and other goods at Amritsar. It was duly registered under the Indian Partnership Act. Ralia Ram was one of its partners.
  • On the 20th September, 1947 Ralia Ram arrived at Meerut by the Frontier Mail about midnight. His object in going to Meerut was to sell gold, silver and other goods in the Meerut market. Whilst he was passing through the Chaupla Bazar with this object, he was taken into custody by three police constables. His belongings were then searched and he was taken to the Kotwali Police Station.

Section 54 (I) (iv) of the Code of Criminal Procedure (old crpc) provides that any police officer may, without an order from a Magistrate and without a warrant, arrest any person in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing. It is under this provision that Ralia Ram was arrested at midnight.

  • He was detained in the police lock-up there and his belongings which consisted of gold, weighing 103 tolas 6 mashas and 1 ratti, and silver weighing 2 maunds and 6 1/2 seers, were seized from him and kept in police custody.

Section 550 (old crpc) confers powers on police officers to seize property suspected to be stolen. so, gold and silver in the possession of Ralia Ram were seized in exercise of the powers conferred on the police officers under s. 550 of the Code.

  • On the 21st September, 1947 he was released on bail, and some time thereafter the silver seized from him was returned to him.
  • Ralia Ram then made repeated demands for the return of the gold which had been seized from him, and since he could not recover the gold from the police officers, he filed the present suit against the respondent in which he claimed a decree that the gold seized from him should either be returned to him, or in the alternative, its value should be ordered to be paid to him.
  • The alternative claim thus made by him consisted of Rs. 11,075-10-0 as the price of the gold and Rs. 355 as interest by way of damages as well as future interest.

Respondent’s Side

It was urged that the respondent was not liable to return either the gold, or to pay its money value.

  • The respondent alleged that the gold in question had been taken into custody by one Mohammad Amir, who was then the Head Constable, and it had been kept in the police Malkhana under his charge.
  • Mohd. Amir, however, misappropriated the gold and fled away to Pakistan on the 17th October, 1947. He had also misappropriated some other cash and articles deposited in the Malkhana before he left India.
  • The respondent further alleged that a case under section 409 of the Indian Penal Code as well as s. 29 of the Police Act had been registered against Mohd. Amir, but nothing effective could be done in respect of the said case because in spite of the best efforts made by the police department, Mohd. Amir could not be apprehended.
  • Alternatively, it was pleaded by the respondent that this was not a case of negligence of the police officers, and that even if negligence was held proved against the said police officers, the respondent State could not be said to be liable for the loss resulting from such negligence.

Questions before the Court

  • whether the police officers in question were guilty of negligence in the matter of taking care of the gold which had been seized from Ralia Ram, and
  • whether the respondent was liable to compensate the appellant for the loss caused to it by the negligence of the public servants employed by the respondent.

Journey through the Courts

Trial Court

The trial Court found in favour of the appellant on both these issues, and since the gold in question could not be ordered to be returned to the appellant, a decree was passed in its favour for Rs. 11,430-10-0.

Allahabad High Court

The respondent challenged the correctness of this decree by an appeal before the Allahabad High Court. These pleas have been upheld by the High Court.

It found that no negligence had been established against the police officers in question and that even if it was assumed that the police officers were negligent and their negligence led to the loss of gold, that would not justify the appellant’s claim for a money decree against the respondent.

Supreme Court

The appellant then moved supreme court after obtaining a certificate from High court.

The question of Negligence

UP police regulation of that time prescribed the procedure to keep the valuable seized properties. According to those regulations, gold and silver which had been seized from Ralia Ram had to be kept in a separate box under lock and key in the Treasury; and that, admittedly, was not done in the present case.

Court’s decision on the first question

The court held that,

  • there can be no escape from the conclusion that the police officers were negligent in dealing with Ralia Rani’s property after it was seized from him.
  • Not only was the property not kept in safe custody in the treasury, but the manner in which it was dealt with at the Malkhana showed gross negligence on the part of the police officers.
  • A list of -articles seized does not-appear to have been made and there is no evidence that they were weighed either.
  • It is true that the respondent’s case is that these goods were misappropriated by Head Constable Mohd. Amir; but that would not assist the respondent in contending that the manner in which the seized property was dealt with at the police station did not show gross negligence.
  • Therefore, the court was satisfied with the decision of trial Court in coming to the conclusion that the loss suffered by the appellant by the fact that the gold seized from Ralia Ram has not been returned to it, is based on the negligence of the police officers employed by the respondent.

Now, when negligence is proved, the next question is about the vicarious liability of the state.

The question of vicarious Liability

The counsel of the appellant urged that when the question of negligence is proved there should be no difficulty to make liable the state for the negligence of police officers. In supports of this argument, counsel referred the case of ‘State of Rajasthan v. Vidyawati[1]’ where the court held liable the state for the negligence of its employee.

It should be noted that, after independence, ‘vidyawati case’ was the first landmark case when vicarious liability was considered. After two years of that case, the present case was discussed before the supreme court on the same question.  

However, in the present case, the court rejected to consider the vidyawati case as same case on the issue, according to the court, the facts in the Vidhyawati case fall in a category of claims which is distinct and separate from the category in which the facts in the present.

The court said,

“It is necessary to limit the area of these affairs of the State in relation to the exercise of sovereign power so that if acts are committed by Government employees in relation to other activities which may be conveniently described as non- governmental or no sovereign. citizens who have a cause of action for damages should not be precluded from making their claim against the State. That is the basis on which the area of the state immunity against such claims must be limited; and this is exactly what has been done by this Court in its decision in the Vidhyawati case.

In the present case, the act of negligence was committed by the police officers while dealing with the property of Ralia Ram which they had seized in exercise of their statutory powers. Now, the power to arrest a person, to search him, and to seize property found with him, are powers conferred on the specified officers by statute and in the last analysis, they are powers which can be properly characterised as sovereign powers; and so, there is no difficulty in holding that the act which gave rise to the present claim for damages ‘has been committed by the employee of the respondent during the course of its employment; but the employment in question being of the category which can claim the special characteristic of sovereign power, the claim cannot be sustained.”

The court rejected the claim of appellant but while concluding the judgment, the court made important observation-

“Before we part with this appeal, however, we Ought to add that it is time that the Legislatures in India seriously consider whether they should not pass legislative enactments to regulate and control their claim of immunity in cases like this on the same lines as has been done in England by the Crown Proceedings Act, 1947.

It will be recalled that this doctrine of immunity is based on the Common Law principle that the King commits no wrong and that he cannot be guilty of personal negligence or misconduct, and as such cannot be responsible for the negligence or misconduct of his servants. Another’ aspect of this doctrine was that it was an attribute of sovereignty that a State cannot be sited in its own courts without its consent.

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 we 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 bands of the Legislature. The result is, the appeal fails, but in the circumstances of this case, we direct that the parties should bear their own costs throughout.”


Kasturilal Ralia Ram Jain vs The State Of Uttar Pradesh; 1965 AIR 1039, 1965 SCR (1) 375

[1] 1962 AIR 933