Jurisprudence, Interpretation and General Laws · Administrative Laws

Liability of the State and Government Privileges

Updated 11 October 2026 · Fact-checked

Liability of the State means when the Union or a State can be sued for wrongs or contracts. Article 300 allows suits against them. Courts now deny immunity for non-sovereign acts and for rights violations. Promissory estoppel binds the government to its promises. Privilege protects state-affairs documents from disclosure, subject to court review.

Understand Liability of the State and Government Privileges

Under the English rule, the King could do no wrong, so the Crown could not be sued. India did not copy this fully. Article 300 of the Constitution says the Union or a State may sue and be sued in relation to its affairs, in the same way as the Dominion of India or the provinces could before the Constitution. So you must look at the pre-Constitution position to know the extent of liability.

For torts, the old law split state functions into two kinds. Sovereign functions are those that only a state can do, such as making war, policing and administering justice. Non-sovereign functions are those a private person could also do, such as running a commercial undertaking. The State was immune for sovereign functions and liable for the rest. In P. & O. Steam Navigation Co. v. Secretary of State for India (1861), the Calcutta Supreme Court held the Secretary of State for India in Council (the successor of the East India Company) liable for negligence in a non-sovereign function. In State of Rajasthan v. Vidyawati (1962), the State was held liable for the negligence of the driver of a government jeep. The driver was a government employee returning from a workshop after repairs. In Kasturilal Ralia Ram Jain v. State of U.P. (1965), the Supreme Court held that the State was not liable for the loss of gold seized by police, because seizure was done in exercise of sovereign power. Kasturilal did not overrule Vidyawati. It distinguished it, because the jeep was being used for a non-sovereign purpose, while the police seizure of gold was a sovereign act. The Court said it was for Parliament to change the law.

Later, courts narrowed the immunity where fundamental rights are violated. In Rudul Sah v. State of Bihar (1983) and Nilabati Behera v. State of Orissa (1993), the Supreme Court awarded compensation under writ jurisdiction for illegal detention and custodial death. Sovereign immunity is no defence to a violation of Article 21 in such cases. Many students also note that the Law Commission has recommended reform, but no general statute has replaced Article 300.

For contracts, Article 299 sets formal conditions. A contract made in the exercise of the executive power of the Union or a State must be expressed to be made by the President or Governor, and executed by a person authorised by them. If the form is not followed, the contract is not binding or enforceable against the government (or by it) as a contract. However, quasi-contractual relief under Section 70 of the Indian Contract Act, 1872 may still be available. This applies where the other party lawfully did something for the government, not gratuitously, and the government accepted the benefit.

Promissory estoppel stops the government from going back on a clear promise when the other party has relied on it and changed their position. In Motilal Padampat Sugar Mills v. State of U.P. (1979), the Supreme Court held that the doctrine applies against the government, and that the promisee need only show that it altered its position in reliance on the promise. It does not have to prove actual detriment or injury. The doctrine cannot override public interest or be used against the law. Privilege allows the State to withhold documents relating to unpublished affairs of State. The court decides whether the claim is valid. In the new evidence law, this sits in Section 129 of the Bharatiya Sakshya Adhiniyam, 2023 (formerly Section 123 of the Evidence Act, 1872).

Key rules to remember

Article 300(1): Union or State may sue or be sued in relation to its affairs, as the Dominion or Provinces could before the Constitution; Parliament or the State Legislature may change this by law. Liability follows the pre-Constitution position.
Sovereign vs non-sovereign test: Sovereign function: immunity (traditional rule). Non-sovereign function: liable like a private person; The distinction has been narrowed. It does not protect against violation of fundamental rights.
Article 299(1) contract form: Contract made in the exercise of executive power + expressed to be made by (in the name of) President/Governor + executed by a person authorised to do so on their behalf; A contract not in this form is not binding or enforceable against the government (or by it) as a contract. Quasi-contractual relief under Section 70 of the Indian Contract Act, 1872 may still be available.
Promissory estoppel: Clear promise + intention to be acted upon + reliance and change of position = promisor cannot go back; Applies against the government. It does not apply where it would defeat public interest or a statute.
Privilege for state affairs documents: Claim by head of department + court decides validity + withholding only if disclosure harms public interest; The court may examine the claim. It is not final just because the government says so.

How to solve Liability of the State and Government Privileges questions

Use this method for a problem question or a short note on state liability or privilege.

1Identify the type of claim: tort, contract, promise or document disclosure.
2Quote the provision: Article 300 for suits, Article 299 for contracts, or the evidence law for privilege.
3For tort, classify the act as sovereign or non-sovereign and name the matching case.
4Check if a fundamental right such as Article 21 is violated. If yes, mention writ compensation.
5For a promise, test the elements of promissory estoppel and check for public interest or statutory bar.
6Apply the rule to the facts in two or three lines.
7Close with a clear conclusion: liable or not liable, enforceable or not, privileged or not.

Quickest way: Three-question check

When to use it: Use when you have about five minutes for a short answer or a case-based question.

Ask: what is the claim? Tort, contract, promise or document.
Ask: which rule decides it? Sovereign test, Article 299, estoppel elements or public interest test.
Write the rule, one case name, one line of application and the conclusion.

Common mistakes in Liability of the State and Government Privileges

Saying the State is never liable for torts.
Students remember only Kasturilal and stop there.
Fix: State the sovereign and non-sovereign split, then add Vidyawati and the later rights-based compensation cases.
Treating Kasturilal as still fully good law.
Notes list the case without its later treatment.
Fix: Say it was decided on a sovereign function, that it distinguished Vidyawati (a non-sovereign jeep journey) rather than overruling it, and that courts later allowed compensation for violation of fundamental rights.
Ignoring Article 299 formalities in contract questions.
Students apply ordinary contract law only.
Fix: Check the form of the contract first: authority, expression and execution.
Saying promissory estoppel applies without exception.
Students learn that it binds the government and overlook limits.
Fix: Add that it cannot be used against a statute or where public interest outweighs the promise.
Writing that the government's privilege claim is final.
The word privilege suggests absolute protection.
Fix: State that the court can decide whether the claim is valid and balance it against public interest and justice.

Worked examples

Example 1

The driver of a State government department's jeep, returning from a workshop after routine repairs, negligently runs over a pedestrian, Ramesh, causing injury. Ramesh sues the State. Decide.

Show the solution

Claim: tort of negligence against the State. Article 300 allows a suit against the State.
Test: was the act done in exercise of sovereign power? Under Kasturilal, the State is immune where the act is linked with sovereign power.
Driving a department jeep back from a workshop is a routine errand. It is not a function that only a sovereign can perform, because any private employer could do the same.
In Vidyawati, the State was held liable where a government employee negligently drove a government jeep returning from a workshop after repairs. The facts here match Vidyawati. Kasturilal later distinguished Vidyawati rather than overruling it: the jeep was used for a non-sovereign purpose, while the police seizure of gold was sovereign.
The Kasturilal immunity therefore does not apply on these facts.

Answer: The State is likely to be liable. Under Article 300 it can be sued, and negligent driving of a government vehicle on a routine errand is not a sovereign function. Following Vidyawati, Ramesh can claim damages.

Example 2

A State government announces that new industries in a notified area will be exempt from sales tax for five years. Sunrise Pvt Ltd sets up a factory there relying on this. After the factory starts, the government withdraws the exemption by executive order with no change in the law and no overriding public need shown. Can Sunrise enforce the promise?

Show the solution

Issue: whether promissory estoppel applies against the government.
Rule: if the government makes a clear promise intending it to be acted upon, and the other party relies on it and changes position, the government cannot go back. This was held in Motilal Padampat Sugar Mills.
Facts: the promise of a five-year exemption was clear and public. Sunrise set up the factory relying on it, so it altered its position.
Limits: estoppel cannot override a statute or public interest. Here the withdrawal was by executive order, and no public interest is shown.
Also, promissory estoppel is an equitable doctrine, so it is not defeated merely because the promise is not a formal Article 299 contract.

Answer: Yes. Sunrise can enforce the promise by relying on promissory estoppel. The government must honour the exemption for the promised period, unless it proves that a real overriding public interest requires otherwise.

Exam tips

Always name the case with its rule in one line. Examiners award marks for the correct case and holding, not for long narration.
In tort questions, show the evolution: old rule, sovereign and non-sovereign split, then compensation for rights violations.
For short notes on promissory estoppel, include the limits as well as the rule. This shows depth.
In privilege answers, use the current law, the Bharatiya Sakshya Adhiniyam, 2023, and not the repealed Evidence Act.
End every problem answer with a one-line conclusion.

Practice questions from Administrative Laws

Liability of the State and Government Privileges: frequently asked questions

What did Kasturilal Ralia Ram Jain v. State of U.P. decide?

The Supreme Court held that the State was not liable for the loss of gold seized by police, because the seizure was an exercise of sovereign power. The Court added that any change in the law was for Parliament.

Is sovereign immunity still available in India?

It survives in a narrow form for acts truly done in exercise of sovereign power. It is not a defence where fundamental rights are violated, as courts award compensation in such cases, for example in Rudul Sah and Nilabati Behera.

Does promissory estoppel apply against the government?

Yes. Courts have held that the government is bound by its clear promises on which people have relied. It cannot be used against a statute or where public interest requires otherwise.

What does Article 300 say?

It provides that the Union or a State may sue or be sued in relation to its affairs, in the same way as the Dominion of India or the provinces could before the Constitution came into force. Parliament or a State Legislature can change this by law.