Court case(1999) 6 SCC 667

In a public interest petition about the allotment of retail outlets for petroleum products (petrol pumps) out of the discretionary quota of the then Minister for Petroleum, the Supreme Court in 1996 found that the allotments had been made arbitrarily, cancelled them, and directed the minister personally to pay Rs 50 lakh to the Government as exemplary damages for misfeasance in public office. The former minister sought a review of that direction. In reviewing it, the Court examined the nature of the tort of misfeasance in public office, the power to award exemplary damages in writ proceedings, and the law on the liability of the State and its officers in tort, including the doctrine of sovereign immunity.

On review the Supreme Court recalled the direction to pay exemplary damages. It held that the ingredients of the tort of misfeasance in public office had not been established against the former minister, and that, since the Government itself was a party to the wrong as the allotting authority, it could not be the recipient of damages for that wrong. In the course of its judgment the Court traced the development of the State's liability for the torts of its servants from P. and O. Steam Navigation through Vidyawati and Kasturilal to later decisions, and treated the sovereign-function test of Kasturilal as having been considerably eroded, observing that the doctrine of sovereign immunity has little place in modern conditions.