1.

That the government officials did not discharge their duty and obligations under
instructions of Union Government and their act is not saved as a sovereign function
amidst apprehension of spread of Covid-19.

The factual matrix of the instant case points towards the event when Girdhari & Co. in May
2020 signed the agreement with the Government of India under Article 299 for supply of
200000 Tonnes of Wheat flour and 300000 Liters of edible oil.

It is pertinent to reproduce the relevant portion of Article 299 for better clarity:

2. That there was violation of Girdhari and Firm’s Fundamental right to do business and
breach of constitutional right of freedom of trade commerce and intercourse.

Freedom of trade and commerce is provided under article 19 of the Indian Constitution.
Although it is not available to companies due to its scope restricted to citizens, in different
pronouncements, it has been held that the rights of shareholders are not lost when they
proceed to form a company. The arguments under this issue are twofold: [1] That there exists
fundamental rights of the firms under the Indian Constitution. And [2] that there was the
violation of fundamental right of trade of Girdhari Lal and Company due to the negligent act of
the government officials that resulted in destruction of supply by mob rioting and heavy rains.

2.1 CORPORATE BODY IS A PERSON HAVING FUNDAMENTAL RIGHTS

It is submitted that certain fundamental rights incorporated under the constitution are available
for the protection of any person including corporate bodies and not merely to citizens. 1 This
rule is now expanded by the judgment in Bennett Coleman Co. v Union of India 2 where the
court remarked that, “fundamental rights of shareholders as citizens are not lost when they
associate to form a company”. In addition, if the petitioner is an incorporated company, the
petition shall not be dismissed at the threshold as held by the full-bench of Hon'ble Supreme
Court in Delhi Cloth and General Mills Ltd. v Union of India. 3

1 Chiranjitlal Chaudhari v. Union of India, A.I.R. 1951 S.C. 41.

2 Bennet Coleman Co. v. Union of India, A.I.R. 1973 S.C. 106.
3 Delhi Cloth and General Mills Ltd. v. Union of India, 1983 4 S.C.C. 166.
2.2. The negligent act of the government officials resulted in violation of fundamental rights
of trade and commerce of Girdhari Lal and Company.

In the instant case, after Adityaveer started supplying the items at desired locations of
Government of India, 200 trucks carrying essential items from Ahmedabad were caught and
seized and challaned under relevant law for breaking the lockdown by Rajasthan Government,
likewise 200 trucks are seized by Kolkata Governments and these trucks carrying tonnes of
wheat flour and edible oils are left open in Jaipur and Kolkata respectively. The value of the
items was Rs. 200 Crores. Due to negligence of Government Officials, trucks were left
unattended and being in open the supply was destroyed by mob rioting and heavy rains.

Premising on the above submissions in sub-issue 1, adityaveer’s right to trade are not lost as a
shareholder of the company. As there was negligence resulting into violation of the rights to
trade, aditya veer has the locus standi to file his case.

In a case of similar nature in kerala, when the petitioner’s hotel was ransacked in a mob attack,
causing damage to the property of the writ petitioner. The State was held liable for failure to
protect the petitioner’s hotel, which failure had resulted in infringement of the petitioner’s
right to carry on business and trade, as contained in article 19(1)(g) of the Constitution. 4

Additionally, for a similar factual matrix, the action taken by the Circle Officer in seizing the
goods was held to be not empowered by law. It is on that ground also that the act was illegal.
At the same time, in view of the fact that the Circle Officer was exercising delegated authority,
he was not taken to be doing an act in the discharge of his statutory duties. 5

4 P. Gangadharan Pillai v. State of Kerala, AIR 1996 Ker. 71.

5 Lasalgaon Merchants Co-operative Bank Ltd. v. Prabhudas Hathibhai, 1965 SCC OnLine Bom
66.
MORE MATERIAL ON SOVEREIGN IMMUNITY IN CASE
REQUIRED- CUT PASTE AND FRAME

This extract is taken from Lasalgaon Merchants Co-operative Bank Ltd. v.

Prabhudas Hathibhai, 1965 SCC OnLine Bom 66 : (1965) 67 Bom LR 823 : AIR
1966 Bom 134 : 1966 Mah LJ 341 at page 835

In this Court, Mr. Abhyankar raised another point of law. He emphasized the well-known
distinction between an action taken in exercise of the sovereign powers of the State and an
action in respect of commercial transactions or welfare activities. In a recent decision of the
Supreme Court in State of Rajasthan v. Mst. Vidhyawati [[1962] A.I.R. S.C. 933.] the Supreme
Court, after referring to the decisions of different High Courts and also referring to the
provisions of art. 300 of the Constitution of India, held that in respect of the acts done by the
subordinates or agents of the Government otherwise than in exercise of the sovereign powers,
the State can be made vicariously liable for the tortious act like any other employer. According
to the view taken by the Supreme Court, the Government is liable in respect of the acts done in
commercial transactions and also acts done in respect of the multifarious activities undertaken
by the Government in modern times. At the same time, it seems to have adhered to the view
that the Government would not be liable for acts of negligence of its servants in the discharge
of sovereign functions. Mr. Abhyankar argued that the levy of tax and the recovery of tax is
undoubtedly a sovereign function. No one except the State can possibly levy a tax or proceed to
recover the same. Since ancient times the power to levy a tax has been the specific hall-mark or
attribute of the sovereign power of the State. I agree with Mr. Abhyankar that the acts of
levying of a tax and its recovery are acts done in the exercise of sovereign functions. At the
same time, we cannot ignore the provisions of art. 265 of the Constitution of India, which lays
down that no tax shall be levied or collected except by authority of law nor the provisions of
art. 31(1) which lays down that no person shall be deprived of his property save by the
authority of law. The only power, which the State can exercise in the performance of sovereign
functions is to recover the tax under the authority of law. But in the present case, the Circle
Officer has proceeded to levy and recover the tax without any authority and, in fact, beyond the
authority. The immunity of the State in respect of acts done by its subordinates in the exercise
of sovereign powers cannot be considered as a dogma or a mantra and will have to be
considered on the facts of each case.

In this connection, I may refer to certain observations made by Basu in his “Commentary on the
Constitution of India”, 4th edn., Vol. IV, 1963, at page 404. After citing the passage from the
judgment of the Supreme Court in Vidhyawati's case, to the following effect (p. 940):
“…As already pointed out, the law applicable to India in respect of torts committed by a
servant of the Government was very much in advance of the Common law, before the
enactment of the Crown Proceedings Act, 1947, which has revolutionised the law in the
United Kingdom, also…. When the rule of immunity in favour of the Crown, based on
Common Law in the United Kingdom, has disappeared from the land of its birth, there is no
legal warrant for holding that it has any validity in this country, particularly after the
Constitution”,

the learned author observes:

“In explaining the reason why the Courts should take a broader outlook, the Supreme
Court appears to have endorsed the views expressed by the Rajasthan High Court in the
judgment appealed from Mt. Vidyawati v. Lokumal [[1957] A.I.R. Raj. 305.] .
‘…the State is no longer a mere police state…Ours is now a welfare State and it is in the
process of becoming a full-fledged socialistic State. Everyday, it is engaging itself in
numerous activities in which any ordinary person or group of persons can engage himself or
themselves. Under the circumstances, there is all the more reason that it should not be
treated differently from other ordinary employers when it is engaging itself in activities in
which any private person could engage himself’.
And so observed the Supreme Court—
 ‘Now that we have, by our Constitution, established a Republican form of
Government, and one of the objectives is to establish a Socialistic State with its varied
industrial and other activities, employing a large army of servants, there is no
justification, in principle or in public interest, that the State should not be held liable
vicariously for the tortious act of its servant’.
An instance of the broader outlook is to be found in the decision of the Allahabad High
Court in Prem Lal v. U.P. Govt. (cited above in another context). In this case, a motor vehicle
had been requisitioned by an order under the U.P. Requisition of Motor Vehicles Act, 1947.
The Court held that the order was mala fide and, hence, invalid and awarded damages for
the injury caused to the vehicle during the period of requisition. Obviously, compulsory
requisitioning of property under statutory powers is an act which a private person could
never do and it is a patent instance of exercise of the sovereign powers of the State.
According to the P. & O. dictum, … the suit could not be decreed. Nevertheless, the Court
(Dhavan J.) decreed the suit on the ground that—

‘…Judicial authority and public policy demand that the State to-day cannot claim
immunity from the tortious liability in respect of the tortious acts of its servants and
agents’.