Statutory seizure and preservation duties defeat sovereign immunity where seized goods deteriorate and compensation becomes payable.

Statutory seizure under the Essential Commodities Act carries a duty to preserve seized goods with reasonable care, fairness and promptitude. Negligent deterioration or non-disposal of the goods is not protected by sovereign immunity because the statute imposes a custodial obligation that cannot be defeated by the sovereign/non-sovereign function distinction. Where only part of the seized goods is confiscated and the remainder cannot be returned in usable condition, the return-or-value provisions require compensation for the non-returned goods with reasonable interest. A tender of deteriorated goods does not satisfy the statutory duty to return the commodity or its value.

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Issues: (i) Whether the State could avoid liability for negligent deterioration and non-disposal of seized essential commodities on the plea of sovereign immunity. (ii) Whether, after only part of the seized goods was confiscated and the remainder could not be returned in usable condition, the owner was entitled to the value of the goods with interest under the statutory scheme.

Issue (i): Whether the State could avoid liability for negligent deterioration and non-disposal of seized essential commodities on the plea of sovereign immunity.

Analysis: The power to seize and the interim power to sell or otherwise preserve seized commodities under the Essential Commodities Act, 1955 are statutory powers that carry a corresponding duty to act with reasonable care, fairness, and promptitude. The goods, once seized, are held in a custodial capacity and their preservation is integral to the object of the legislation. The doctrine of sovereign immunity does not protect negligent discharge of such statutory duties, and the older distinction between sovereign and non-sovereign functions cannot defeat liability where the statute itself imposes a duty to preserve the property and prevent loss by deterioration.

Conclusion: The plea of sovereign immunity was not available to the State against liability for negligent handling of the seized goods.

Issue (ii): Whether, after only part of the seized goods was confiscated and the remainder could not be returned in usable condition, the owner was entitled to the value of the goods with interest under the statutory scheme.

Analysis: The confiscation provision under Section 6-A and the return-or-value provision under Section 6-C operate to ensure that if the goods, or the non-confiscated portion of them, cannot be returned for any reason, the owner must be compensated as if the goods had been sold to the Government, with reasonable interest. Partial confiscation does not extinguish the owner's right to the remaining goods or their value. A tender of goods that have deteriorated in quality and quantity is not a valid discharge of the statutory obligation to return the essential commodity.

Conclusion: The owner was entitled to recover the value of the released goods with interest, and the State remained liable despite partial confiscation.

Final Conclusion: The decree for compensation was restored and the appeal succeeded because negligent failure to preserve and return the seized commodities attracted statutory liability, not sovereign immunity.

Ratio Decidendi: Where the State, acting under a regulatory statute, seizes property and the statute requires preservation and return or payment of value if return becomes impossible, negligent failure to maintain the property renders the State vicariously liable and sovereign immunity cannot bar compensation.

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