Court caseAIR 1965 SC 1039

Ralia Ram, a partner of the appellant firm of jewellers at Amritsar, went to Meerut to sell gold and silver. Late at night he was arrested by police constables on suspicion of possessing stolen property, and 103 tolas of gold and over two maunds of silver were seized from him and kept in the police malkhana. He was released on bail the next day and the silver was returned, but the gold was not: Head Constable Mohammad Amir, who was in charge of the malkhana, misappropriated it and fled to Pakistan. The firm sued the State for the return of the gold or its value, alleging negligence of the police in keeping it.

Gajendragadkar CJ, for the Constitution Bench, found that the police had been negligent (the gold had been kept without proper safeguards and no proper accounts had been maintained), but held the State not liable. The power to arrest, to search and to seize property and to keep it in a malkhana is conferred by statute and is "referable to and ultimately based on the delegation of the sovereign powers of the State"; the act of the police was therefore done in the exercise of sovereign power, and under the rule traced from P. and O. Steam Navigation (1861) through Article 300 no action lies against the State for torts committed in the exercise of such power. The Court distinguished Vidyawati, where driving a jeep was not a sovereign act, and expressed regret that the legislature had not enacted the law contemplated by Article 300(1) to remove the anomaly.