TaxTMI 
TaxTMI 
2026 (1) TMI 257
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....gs of pure Silver Lumps, being transported from Hyderabad to Salem, were seized, by the officials of the 2nd respondent-police station. Apart from this, cash of Rs. 2,05,000/- had also been seized. Subsequently, said silver and cash were ordered to be confiscated and an option of paying a fine of Rs.35 lakhs in lieu of confiscation, was also given to the petitioner. The aforesaid fine, was calculated by taking the rate of silver at Rs. 66,667/- per kg. This order of confiscation was challenged by the petitioner, by way of W.P. No. 4782 of 2021 before this Court. This Writ Petition came to be disposed of, on 21.06.2021, with liberty to the petitioner to seek appropriate appellate remedy. The appeal filed by the petitioner, came to be dismissed on 24.11.2022 and further appeal to the GST Tribunal was not filed as the GST Tribunal has not yet come into existence. In view of these developments, the petitioner paid a sum of Rs. 39,20,000/- which was the tax, penalty and fine levied by the 1^st respondent. This payment was made on 21.03.2023. After such payment, the 1st respondent issued a release order requesting the 2nd respondent to release the goods i.e., 105 kgs Silver and the seize....
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....n account of the theft of such silver would have to be compensated. 6. The learned Government Pleader, on the other hand, relies upon the Judgment of the Hon'ble Supreme Court in the case of Kasturi lal Ralia Ram Jain vs. State of Uttar Pradesh. AIR 1965 SC 1039, to contend that the seizure of silver by the officials of the 2nd respondent was in exercise of the sovereign power of the State and no claim for compensation, on account of any loss suffered on account of such exercise of sovereign power, would be maintainable before a Court. 7. In Kasturi lal Ralia Ram Jain vs. State of Uttar Pradesh's case, the partner of a firm was detained in Meerut, along with gold, silver and other goods that he had brought with him to sell in Meerut. However, the gold seized from him was not returned even after he had obtained bail and was entitled for such return of the gold. Thereafter, a suit was filed for damages and interest on account of the lost gold. The appeals filed against the orders of this case, reached the Hon'ble Supreme Court. In the Hon'ble Supreme Court a defense was taken that the arrest of the person and seizure of the gold and other goods was in pursuance ....
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....vereign powers of the State to such public servant ? If the answer is in the affirmative, the action for damages for loss caused by such tortious act will not lie. On the other hand, if the tortious act has been committed by a public servant in discharge of duties assigned to him not by virtue of the delegation of any sovereign power, an action for damages would lie. The act of the public servant committed by him during the course of his employment is in this category of cases, an act of a servant who might have been employed by a private individual for the same purpose....". The Court emphasized the distinction between 'sovereign functions' and 'non-sovereign functions' particularly at the present time when in pursuit of the welfare ideal, the Central and State Governments are entering into many commercial and other undertakings and activities "which have no relation with the traditional concept of governmental activities in which the exercise of sovereign power is involved". The Court observed that 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 oth....
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.... referable to the sovereign power, or function, as may be called, of the State. The obligation to ensure the safety of the prisoners, enjoined upon the State by Rule 48 of the Madras Prisons Rules, is incidental to the said sovereign power. If we apply the principle of Kasturi Lal (supra), it is evident that the suit must fail notwithstanding our finding of negligence on the part of prison officials. Indeed, that is what the trial Court has done. The question, however, arises whether this immunity of the State overrides the right to life and liberty guaranteed by Art. 21 of the Constitution? In short, whether it is open to the State to deprive a citizen of his life and liberty otherwise than in accordance with the procedure prescribed by law and yet claim an immunity on the ground that the said deprivation of life occurred while the officers of the Slate were exercising the sovereign power of the State? 28. It is contended by the learned Addl. Advocate-General, appearing for the respondents-defendants, that in the three cases before the Supreme Court, referred to above, the State did not put forward the defence of sovereign functions, and that, moreover, they were cases of....
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.... violation of law on the part of citizens, it is equally necessary to ensure that the State officials do not act with gross negligence and do not abuse their powers, to the detriment of life and liberty of the citizens. Both are equally important. State power does not confer a licence upon its officials to act contrary to law, or to grossly negligent in their duties, to the detriment of life and liberty of the citizens-So long as the officials act fairly and with reasonable care, no action can lie. Only where they abuse their powers, act with gross negligence, resulting in deprivation of life and liberty of the citizens, does the State become liable for compensation. 9. There have been a number of judgments, of the Hon'ble Supreme Court, wherein the concept of "Constitutional tort" was invoked and compensation had been granted, even in cases where the interests of private persons had been affected. A Constitution bench, of the Hon'ble Supreme Court in Kaushal Kishor v. State of U.P. 8 (2023) 4 SCC 1 : 2023 SCC OnLine SC 6 at page 140, had held as follows: 160. The judicial journey actually started off on a right note with the decision in State of Bihar v. Abdul Majid [S....
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....ested and detained in police custody and the gold and silver that he was carrying was seized by the police. When he was released later, the silver was returned but the Head Constable who effected the arrest misappropriated the gold and fled away to Pakistan in October 1947. The suit filed by Kasturi Lal for recovery of the value of the gold, was resisted on the ground that this was not a case of negligence of the servants of the State and that even if negligence was held proved against the police officers the State could not be held liable. While upholding the contention of the State, this Court said : (AIR p. 1046, para 21) "21. ... If a tortious act is committed by a public servant and it gives rise to a claim for damages, the question to ask is : was the tortious act committed by the public servant in discharge of statutory functions which are referable to, and ultimately based on, the delegation of the sovereign powers of the State to such public servant? If the answer is in the affirmative, the action for damages for loss caused by such tortious act will not lie. On the other hand, if the tortious act has been committed by a public servant in discharge of duties assig....
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....nstitution and accordingly directed the State of Jammu and Kashmir to pay Bhim Singh a sum of Rs 50,000 as compensation. 3. People's Union for Democratic Rights v. State of Bihar [People's Union for Democratic Rights v. State of Bihar, (1987) 1 SCC 265 : 1987 SCC (Cri) 58] • A public interest litigation was filed against the illegal shooting by police officers against members of a peaceful assembly. • Several were injured and 21 died (including children) due to this incident. • While the State had paid a compensation of Rs 10,000 each to heirs of the deceased, this Court found it insufficient and directed payment of Rs 20,000 to dependants of each deceased and Rs 5000 to each injured person. 4. Saheli v. Commr. of Police [Saheli v. Commr. of Police, (1990) 1 SCC 422 : 1990 SCC (Cri) 145] • Two women were forcefully evicted from their homes. The landlord was aided by the SHO and SI in the assault that led to demise of the nine-year-old son of one of the women. • This Court awarded compensation of Rs 75,000 to the mother of the deceased child. 5. Supreme Court Legal Aid Committee v. State of Bi....
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....g with his subordinates abducted and killed seven persons due to personal vengeance. • This Court ordered an inquiry by CBI. After CBI filed a report, this Court directed the State to pay Rs 1.5 lakhs to the legal heirs (to be recovered from guilty policemen later) and State to pay costs quantified at Rs 25,000. 10. Paschim Banga Khet Mazdoor Samity v. State of W.B. [Paschim Banga Khet Mazdoor Samity v. State of W.B., (1996) 4 SCC 37] • The callous attitude on the part of the medical authorities at various Government-run hospitals in Calcutta in providing treatment to a train accident victim was highlighted in this case. • This Court directed the State to pay Rs 25,000 for the denial of its constitutional obligations of care. 11. D.K. Basu v. State of W.B. [D.K. Basu v. State of W.B., (1997) 1 SCC 416 : 1997 SCC (Cri) 92] • In a public interest litigation involving incidents of custodial violence in West Bengal, this Court issued guidelines for law enforcement agencies to follow when arresting and detaining any person. • This Court also discussed the award of compensation as a remedy for violation of funda....
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....nts as the silver was stolen from the police station itself. The loss of such a large amount of silver and cash would absolutely impinge on the right of the petitioner, under Article 19(1)(g) to carry on his trade or business. In such circumstances, the petitioner is entitled to compensation for the loss suffered by him on account of the sheer negligence on the part of the officials of the State in protecting the property which has been seized from the son of the deceased. 11. The undisputed facts are that 105 kgs of pure silver was seized from the son of the petitioner along with cash of Rs. 2,50,000/- weighting 81.567 kgs and cash of Rs.10 lakhs was handed over to the petitioner. The contention of the petitioner that only 27 kgs out of the aforesaid 81.567 kgs was pure silver and the remaining 54.567 kgs contained only 60% silver. It would not be possible for this Court to go into the question of the purity of the silver, handed over to the petitioner. There is also no material, on the basis of which this Court would be able to ascertain the impurity contained in 54.567 kgs of silver lumps. In the circumstances, this Court can only take into account the short fall of silver as....