Misfeasance in public office

By B. P. Jeevan Reddy

IN AN innovative and refreshing departure, a Supreme Court Bench held in two matters concerning two former Union Ministers, Mr. Satish Sharma and Ms. Sheila Kaul: ``It is high time that the public servants were held personally responsible for their mala fide acts in the discharge of their functions.'' It was a case where, after elaborate verification, the court found that an allotment of petrol pumps in favour of 15 persons by Mr. Sharma was vitiated by a lack of transparency, nepotism and arbitrariness. The court found the allotments wholly mala fide, arbitrary and motivated by extraneous considerations.

The Bench directed Mr. Sharma to pay Rs. 50 lakhs by way of exemplary damages to the Government exchequer. Similarly, in the case relating to Ms. Kaul, the court directed her to pay Rs. 60 lakhs on finding that she had grossly abused the powers and discretion vested in her and that her acts amounted to misfeasance of public property by a public servant.

In coming to the conclusion that a public servant could be made liable for paying exemplary damages for his acts of misfeasance in public office, the Bench relied upon certain decisions of the Supreme Court as well as the House of Lords. The decisions in Ramana Dayaram Shetty and Lucknow Development Authority were relied upon to hold that in the matter of grant of largesse, the Government and its officials should act in a fair, just and transparent manner and that if they act maliciously and deliberately causing injury to the citizens of the state, they could be held liable for damages. The decision of the Privy Council in Rookes vs. Barnard was relied upon to hold that exemplary damages could be awarded for ``oppressive, arbitrary and unconstitutional action by the servants of the Government''.

The Supreme Court then concluded: ``We are of the view that the legal position that exemplary damages can be awarded in a case where the action of a public servant is oppressive, arbitrary or unconstitutional is unexceptionable''. The same principle was reiterated in the decision concerning Ms. Kaul.

The decisions established that technicalities cannot stand in the way of the courts doing full and complete justice and that public servants, in particular ministers, cannot escape the consequences of their mala fide acts and orders. This position did not, however, last long. Technicalities of law asserted their supremacy. The principle enunciated in the said decisions was overruled in a subsequent decision by the Supreme Court on a review petition filed by Mr. Sharma.

The decisions of the court (rendered in 1996 and 1999) have given rise to a situation which cries out for clarity. In the interest of clarity and certainty of law, it is necessary to coherently lay down the principles on which damages/exemplary damages can be levied upon public servants for misfeasance, malfeasance and nonfeasance. The desirability, indeed the necessity, of casting such a liability on public servants cannot be disputed. It is not only a salutary rule but one which contributes to and promotes good governance. Indeed this proposition is neither new nor novel nor radical. Such provisions exist in many enactments already on the statute. Reference may be made immediately to the provision in the Andhra Pradesh Cooperative Societies Act 1964.

A cooperative society has an elected managing committee to run its affairs/business and also a staff appointed to assist the persons in management. Both the elected members and the employees are within the ambit of the Act. There is no reason why this principle cannot be extended to the governing machinery at the Union and State levels, where also elected members form the Government and run and manage the affairs of the state with the assistance of a permanent bureaucracy. Even the statutory authorities should be within the purview of this rule. The protective clauses usually found in enactments only save the authorities from any suit or prosecution for acts done in ``good faith''; the protection does not and should not extend to acts done mala fide. Where the mala fide action causes loss to the state, i.e. people as such, it must be entitled to recover the loss from the concerned official/authority.

With a view to putting an end to all kinds of legal controversies and technicalities and placing the matter on a firm, clear and unambiguous footing, it is necessary to enact a law providing that where a public servant causes loss to the state by his mala fide act or omission, he should be made liable to make up for it. It is immaterial whether it is called damages or compensation or surcharge - the idea being restoring to the state the loss suffered by it because of the mala fide act of its official. Such a provision must be extended to all `public servants', as defined in the Indian Penal Code and the Prevention of Corruption Act, which expression has been interpreted to include members of Parliament/legislators and ministers. Such a law would have the merit of obviating several questions - whether the Government can be asked to pay damages to itself, whether the power to grant or allot some benefit can be called `property', whether such action of the public servant constitutes a tortious action, whether damages/exemplary damages can be awarded for such acts and if so on what basis and to what extent, whether a public office is a trust and questions of locus standi. It would also contribute to avoidance of multiplicity of proceedings and be more effective than a mere criminal prosecution under the IPC or the PC Act.

The law must, however, provide that proceedings thereunder be taken on the basis of information received including an audit report or a report of any commission, committee or body competent to examine the facts. The authority empowered to launch the proceedings must be an independent high level officer/agency whose tenure, conditions of service and independence should be firmly and fully guaranteed as has been done in the case of the Central Vigilance Commissioner. Different authorities may be prescribed for different classes of public servants.

Such a course has become absolutely essential and urgent. The public servants must be put on notice that they will make good the loss caused by them to the state by their mala fide acts, that they should no longer be under the cosy impression that their mala fide order/action would at best be set aside by the court and that nothing would happen to them personally. They should be made aware that a mala fide act or action carries the liability for damages/compensation.

Creating a personal liability of this kind would contribute greatly to good governance and emphasise the need for a transparent, fair and honest exercise of power. It would in no way dampen the initiative of the ministers or officials, nor would it inhibit them in any manner from effectively discharging their functions. A responsible Government and the concept of accountability are not antithetical to good governance; on the contrary, they promote it - they contribute to public good. Mere errors of judgment would certainly not expose the public servants to such a consequence but where their actions are mala fide, i.e. where the action or order has been taken/made knowing that it is contrary to law and prejudicial to the interest of the state or where the action/order is taken/made with corrupt or other oblique motives, they should be held responsible. If such acts result in loss to the state, they must be made liable to make good the same.

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