Misfeasance In Public Office – A Lame Elephant In Law
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Category: General Law
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MISFEASANCE IN PUBLIC OFFICE – A LAME ELEPHANT
IN LAW Rajnish Maniktala, Senior Advocate, High Court of Himachal Pradesh, Shimla. Dinkar Bhaskar, Advocate, High Court of Himachal Pradesh, Shimla.
ABSTRACT
The tort of misfeasance in public office makes the officers responsible for malicious abuse of power and performing official acts which are unlawful to their knowledge and it causes injury either to individual concerned or the State exchequer. The doctrine developed in England and is being followed by Indian Courts, which have held public officials responsible for their unlawful acts and have awarded the damages caused to individuals or the State exchequer. However, two issues arise with respect to application of this branch of law of torts. One is - there have been very few such cases where the Courts have held the officer guilty while quashing the order being illegal, which in many cases, in knowledge of officer concerned, is contrary to law.
Second is - a three-judge bench of Supreme Court reviewed its judgments whereby damages were awarded against the public officers for having caused loss the State exchequer on the ground that there was no identifiable plaintiff, even though, act was held to be illegal. It implies that the Courts will be unable to award damages for illegal acts of public officers which come to light in public interest litigations or where the Courts take up the matters suomoto. The judgment, even doubted by another three-judge bench of Supreme Court, inhibits development of this branch of law. Keywords: Law of torts, misfeasance in public office, damages, holding public officers responsible, malicious abuse of power.
Introduction
Misfeasance in public office, in brief, is where a person holding a public office, performs an act in discharge of his official duties in violation of law, which he knows that it is against the provisions of law and it causes damage. He is responsible for the consequences and is required to compensate the person wronged, by way of payment of damages. He cannot say that the illegal order passed by him can be quashed but he cannot be directed to pay damages for wrongful act done knowingly. The tort of misfeasance in public office can be a tool for reining such public officials who pass illegal orders for whatever considerations, knowing fully well the provisions of law. The law of torts including the tort of misfeasance in public office has been inherited by India from common law as it existed in England.
The development of law on this category of tort has been reflected in many important decisions of highest Courts there. Similarly, the Courts in India have also come across a number of such situations, where this provision of law has been put in practice by quashing the illegal orders passed by officers holding public offices and directing them to pay damages . However, despite the fact that there have not been a number of cases, where provisions of tort of misfeasance in public office have been applied, but at the same time development and application of this law has been inhibited by a judgment of Supreme Court of India holding that even though top persons holding highest public offices were found to be guilty of misusing the powers conferred upon them, no damages could be awarded against them.
The correctness of this decision has been doubted by another similar strength bench of Supreme Court, but the matter has not been resolved in the span of last twenty years. This paper discusses the law on tort of misfeasance in public office, its development in Common Law of England and its application in India and most importantly the immense need to apply this tort for holding public officials responsible for their illegal acts committed with the knowledge that what they are doing is contrary to law. Misfeasance in Public Office-Definitions
1. Black’s Law Dictionary
The improper performance of some act, which a person may lawfully do.
2. Sir William Wade
Misfeasance in public office is malicious abuse of power, deliberate maladministration, and unlawful acts causing injury. It is a tort (misfeasance) imposing liability on a public officer, who does an act which, to his knowledge, amounts to abuse of his office and which causes damage.
3. De Smith
A public authority or a person holding a public office may be liable for tort of misfeasance in public office, where: (1) There is exercise or non-exercise of public power, whether common law, statutory, or from some other source. (2) Which is either: a. Affected by malice towards plaintiff, or b. Decision maker knows that it is unlawful. (3) Plaintiff is in consequence deprived of a benefit or suffers other loss. There may not be any direct evidence of the existence of malice. The court may draw an adverse inference, e.g., from the fact that the decision was unreasonable and that it could only be explained by the presence of such motive.
4. Halsbury’s Laws of England
Deliberate abuse of public office or authority, bad faith on the part of a public officer or authority, results in civil liability. ENGLISH CASE LAW
1. Dunlop versus Woollahra Municipal Council1
1 (1981) 1 All ER 1202
Plaintiff purchased land for development and further sale. At that point of time, three storeys of construction were permitted. Further storeys could only be constructed with permission from statutory authorities. The Municipal Council passed a resolution imposing three storey restriction. Plaintiff sued for consequent loss on the grounds of misfeasance in public office, including others. The Privy Council rejected the claims, observing “although the council as a statutory corporation exercising local government functions was a public officer within the scope of tort of abuse in public office, but in the absence of malice or knowledge of resolution’s invalidity, the action of the council could not amount to misfeasance sufficient to constitute a tort.
” So, as an essential ingredient of tort of misfeasance in public office, it was clarified that it required either malice on part of the person concerned or knowledge as to what he was doing was invalid.
2. Bourgoin SA versus Ministry of Agriculture, Fisheries and Food2
In the present case, the plaintiffs were involved in the production of frozen turkeys in France and their sale and distribution within the United Kingdom. On September 1, 1981, the Ministry of Agriculture of United Kingdom, purporting to act for the prevention of the spread of a disease into the United Kingdom, revoked the said license prohibiting such import from France. Since the European Court held that the withdrawal of license was in violation of the EEC Treaty and was ultra vires, the defendant revoked the said order and permitted resumption of imports from November, 1982. The Plaintiffs claimed damages on the ground that the withdrawal of license had caused substantial damage to the Plaintiffs and had amounted to misfeasance in public office on the ground that the withdrawal of license was contrary to Article 30, and it was known to the defendant.
Still the defendant exercised the power and caused damage to the Plaintiffs. While applying the ingredients of the tort of misfeasance in public office, it was held that: i. The minister’s purpose in revoking the license was to protect English turkey
2 (1986) QB 716
producers. ii. He knew that it involved failure of United Kingdom’s obligation under Article 30. iii. He knew that the revocation would cause damage to the Plaintiffs in their business. iv. That the protection of English producers from foreign competition was not the purpose for which the powers were conferred upon him. v. Relying upon Administrative Law by Professor Wade, it was observed that the tort required as a necessary element either malice or knowledge and that the malice and knowledge were alternatives. Even though the claim for the damages was not allowed in the appeal on the ground of availability of remedy under the EEC treaty, however, the ingredients of tort of misfeasance in public office were clearly laid down.
3. Three Rivers District Council v. Governor and Company of Bank of England3
The Bank of Credit & Commerce International S.A. (BCCI) was in the business of accepting deposits from investors. Due to the large-scale frauds, the BCCI failed. The plaintiffs were 6000 depositors from around the world. Their claim was that the Bank of England wrongly granted license to BCCI or failed to revoke it when it knew that the BCCI would collapse, as was apparent from an official report. Accordingly, the plaintiffs claimed that Bank was liable to them for misfeasance in public office. The House of Lords reiterated the ingredients of the tort of misfeasance in public office: “The tort involved an element of bad faith and arose- When a public officer exercised his powers specifically intending to injure the plaintiff, Or
3 (1996) 3 All ER 558 – House of Lords
When he acted in knowledge of, or with reckless indifference to, the illegality of his act and in knowledge of or with reckless indifference to the probability of causing injury to the plaintiff.” It was held that the losses which had been foreseen by a public officer, as a probable consequence of his act, were recoverable. INDIAN CASE LAW
1. Lucknow Development Authority vs MK Gupta4
This case examined the liability of statutory authorities engaged in development of plots, construction of flats for timely delivery to applicants who booked these, where the authorities had to fulfil the promises. While holding them responsible, the Court relied upon observations of Prof. Wade on Misfeasance in Public Office and observed: “A public functionary if he acts maliciously or oppressively and the exercise of power results in harassment and agony then it is not an exercise of power but its abuse. No law provides protection against it. He who is responsible for it must suffer it. Compensation or damage as explained earlier may arise even when the officer discharges his duty honestly and bona fide. But when it arises due to arbitrary or capricious behaviour then it loses its individual character and assumes social significance.
Harassment of a common man by public authorities is socially abhorring and legally impermissible. It may harm him personally but the injury to society is far more grievous. Crime and corruption thrive and prosper in the society due to lack of public resistance. Nothing is more damaging than the feeling of helplessness. An ordinary citizen instead of complaining and fighting succumbs to the pressure of undesirable functioning in offices instead of standing against it. Therefore, the award of compensation for harassment by public authorities not only compensates the individual, satisfies him personally but helps in curing social evil. It may result in improving the work culture and help in changing the outlook. ” With respect to the liability as to who should be liable to pay the compensation for
4 (1994) 1 SCC 2434
capricious acts of public officials, the Court said: “When the court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers' money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law. It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries.”
2. Common Cause versus Union of India5
Captain Satish Sharma, Minister of Petroleum, allotted petrol pumps to persons related to politicians, relatives of members of Oil Selection Boards, and relatives of various officials in the ministry. No applications were invited for allotment of petrol pumps, nor were any such applications ever received. The court held that all such allotments were arbitrary, nepotistic, being motivated by extraneous considerations. Emphasizing the nature of the State being a welfare State, it was noted that the Minister, being the executive head of the ministry, holds it in trust on behalf of the people and cannot act in arbitrary manner. The discretionary power could not be exercised arbitrarily, being in violation of Article 14 of the Constitution of India.
While basing its observations on tort of misfeasance in public office the Court observed that the public servant should be held personally responsible for their malafide act in discharge of their functions as a public servant. The Court quoted the definition of Misfeasance in Public Office by Prof. Wade, according to which the tort should contain the following ingredients:
5 (1996) 6SCC 530
a. The act should be committed by malicious abuse of power. b. The act should amount to deliberate maladministration, which shows knowledge on the part of the public officer that what he is doing is not authorised by law. As such the malice and knowledge are alternatives. c. The said unlawful act should cause injury. While holding that the allotment of petrol pumps was illegal, arbitrary, and discriminatory, as such, the same was quashed. At the same time, Captain Satish Sharma was issued a show cause notice as to why he should not be prosecuted for criminal breach of trust and be made liable to pay damages for his malafide actions.
3. Common Cause vs Union of India6
Pursuant to the judgement in Common Cause versus Union of India7 a show cause notice was issued to Captain Satish Sharma, Minister of Petroleum, as to why exemplary damages should not be awarded against him. The Court noted various judgements including Ashby v. White8 and quoted the observations of Lord Wilberforce: “If public officers will infringe men's rights, they ought to pay greater damages than other men to deter and hinder others from like offences” and “Excessive and insolent use of power is certainly something against which citizens require as much protection today”. Accordingly, the Court held that exemplary damages can be awarded in case where the action of public servant is oppressive, arbitrary, or unconstitutional. Captain Satish Sharma was held liable to pay exemplary damages amounting to Rs. 50,00,000 to the Government exchequer.
6 (1996) 6 SCC 593
7 (1996) 6 SCC 530
8 (1703) 2 Ld Raym 938; 92 ER 126
4. Shiv Sagar Tiwari vs Union of India9
The two judge bench of the Apex Court while delivering the judgement opened the judgement with a quote from Edmund Burke “Among a people generally corrupt, liberty cannot long exist” and “An arbitrary system indeed must always be a corrupt one”. The matter pertains to allotment of shops/stalls by Smt. Shiela Kaul, the minister of Urban Development wherein the shops had been allotted to her relatives/employees/domestic servants and family friends. The Court had ordered registration of First Information Report under Section 120B, 420, 468, 471 of Indian Penal Code and Prevention of Corruption Act. The report of the Central Bureau of Investigation demonstrated that the allotees had been selected because of the relationship with the minister or her personal staff. No procedure known to law was ever followed.
While quoting Professor Wade on administrative law, it was observed that the breach of statutory duty gives rise to liability in public law which is known as misfeasance in public office. The public officers are required to be made liable in damages for malicious, deliberate or injurious wrong doing as a part of misfeasance in public office. The Court also quoted the decisions in Bourgoin SA versus Ministry of Agriculture, Fisheries and Food10 and Dunlop versus Woollahra Municipal Council11 (already noted in earlier part of this paper). Since in this case there was no injury to the third party the court noted that this fact was not enough to make the principles of misfeasance in public office applicable because there was a loss to the state exchequer. Accordingly, the allotment of shops was cancelled and show cause was issued to Smt.
Shiela Kaul as to why damages should not be awarded against her.
4. Common Cause vs Union of India12
This case arose out of a review petition filed by Capt. Satish Sharma against the judgment
9 (1996) 6 SCC 558
10 (1986) QB 716
11 (1981) 1 All ER 1202
12 (1999) 6 SCC 667
in Common Cause vs Union of India13 and Common Cause versus Union of India14 vide which he had been held liable for commission of tort of misfeasance in public office for allotment of petrol pumps to his nears and dears and damages amounting to Rs. 50 Lacs was imposed upon him. In the review petition, a number of grounds had been taken to submit that the act of the minister fell short of misfeasance in public office, and no exemplary damages could be awarded independent of tort. While deliberating upon the issue, the ingredients of tort of misfeasance in public office were crystallised while quoting Sir William Wade and De Smith, as well as taking note of various judgements which have already been discussed supra. The ingredients of tort of misfeasance in public office were crystallised as follows: a.
The said tort is malicious abuse of power, deliberate maladministration, and unlawful act causing injury, b. The tort imposes liability on a public officer who does an act maliciously, c. or alternatively, the act should be such which to his knowledge, amounts to abuse of his office, d. and the said act causes damage, Importantly, De Smith was also quoted with approval with respect to the absence of direct evidence of the existence of malice. The court in such a situation is to make adverse inferences from the surrounding circumstances, like that the decision was unreasonable or that it could only be explained by the presence of such a motive.
However, the three-judge bench allowed the review petition by holding that ingredients of misfeasance were not met on the ground that there has to be an identifiable plaintiff or claimant whose interest was damaged by a public officer maliciously or with the required knowledge. According to Court, damage to state exchequer could not be termed as damage
13 (1996) 6 SCC 593
14 (1996) 6 SCC 530
to identifiable plaintiff. Even though the court said that the conduct of the petitioner was wholly unjustified but it fell short of misfeasance in public office. The exemplary damages of Rs. 50 Lacs was ordered to be refunded.
5. Sheila Kaul versus Shiv Sagar Tiwari15
In this case also, a review petition was filed before a three judge bench against the judgment in Shiv Sagar Tiwari v. Union of India16. The court took notice of the reviewed judgement in Captain Satish Sharma’s case, Common Cause vs Union of India17 vide which it was held that the act, even though unjustified, fell short of misfeasance in public office and direction for the payment of Rs. 50 Lacs as damages was recalled. Rightly so, this three-judge bench did not agree with the conclusions drawn by the earlier three-judge bench, but it expressed its inability to comment upon the said judgment on the ground that the judgment was rendered by a similar strength bench.
The court observed: “We prima facie do not agree with several conclusions of law, but since the judgment has been rendered by a three judge bench, we cannot go into the question except referring the matter to a Constitution bench. We make it clear that the correctness of the reviewed judgement of this court in Common cause can appropriately be considered in an appropriate case by a constitution bench. ” However, the Court quashed the damages part of judgment under review on the ground of ill health of Smt. Shiela Kaul and not interfering with criminal prosecution. DIRECTIONS IN THE MATTER OF DEMOLITION OF STRUCTURES, IN RE18 Recently, the Supreme Court denounced the practice of State in demolishing the houses of citizens using bulldozers, without issuance of any notice or conducting proceedings known to law.
While coming to the conclusion, the Court took note of various concepts like rule of law, principles of natural justice, separation of powers between different organs of the
15 (2002) 10 SCC 667
16 (1996) 6 SCC 599
17 (1999) 6 SCC 667
18 (2025) 5 SCC 1
State and accountability of public officers exercising the powers vested in them through public trust. Most importantly, while arriving at the finding that use of bulldozers for such demolitions was in breach of law, it also relied upon the principles of “misfeasance in public office” as upheld by Court in In Common Cause v. Union of India19. Though the Court fell short of imposing damages for unlawful acts of officers of State. INHIBITING DEVELOPMENT OF LAW AND DENYING ACCOUNTABILITY OF PUBLIC OFFICIALS In the course of dealing with public officials, several orders are passed that affect public in myriad ways. Most of these orders do not reach Courts. Some of such orders reach Courts either by way of Public Interest Litigations or petitioners individually approach the Courts. Many of such orders are quashed also on the grounds that these are contrary to provisions of law.
When the orders are contrary to law, the public official holding the responsible position, is expected to know the legal provisions. But in many cases, orders are passed for considerations that are outside the four corners of law. Now, here, why the public official should not be held liable for wrong and illegal order passed knowing fully well that the order was in violation of law. In such circumstances, following observations assume great importance: “If public officers will infringe men’s rights, they ought to pay greater damages than other men to deter and hinder others from the like offences” (Ashby vs White20). “No public officer can say ‘you may set aside an order on ground of malafides but you cannot hold me personally liable” (Common Cause21).
So, wherever the orders are passed by the Courts quashing the orders of public officials as having been vitiated by malice in law and with the knowledge that these were contrary to provisions of law, follow-up action in form of imposition of damages must proceed -
19 (1999) 6 SCC 667
20 (1703) 2 Ld Raym 938
21 (1996) 6 SCC 530
whether the proceedings are in form of Public Interest Litigations or an individual action. Judgment of Supreme Court in Review Petition in Capt. Satish Sharma case has turned upside down the position of law with respect to liability of public officials for commission of tort of misfeasance in public office. The Court while recalling the order of imposing the damages, even though observed: “Suffice it to say that conduct of the petitioner was wholly unjustified, it falls short of misfeasance in public office”. The reason for saying so, primarily, is reflected in the observations that there has to be an identifiable plaintiff or claimant whose interest was damaged by public officer maliciously. SUCH INTERPRETATION WILL EMBOLDEN THE ERRING PUBLIC OFFICIALS & THE NECESSITY TO CONSIDER REVIEW OF JUDGMENT Since as per judgment of Supreme Court in review petition of Capt.
Satish Sharma case22, tort of misfeasance in public office can only occur, when there is an identifiable claimant who approaches the Court and who suffers the damage. As a necessary implication, it excludes all those cases, where such issues come before the Courts in any other way including public interest litigations undertaken by conscious citizens or where the matters are taken up suo-moto by the Courts. It can be seen that in both the Common Cause judgments, huge illegalities in allotment of petrol pumps or shops were brought before the Court by way of public interest litigations. It defies all the logic, as to why the Courts should be deprived of power to impose damages on erring public officers just for the reason that the claimant who suffers damage has not approached the Court.
As such, the Apex Court needs to have a relook at the this judgment at the earliest, as recommended by another three judge bench in Sheila Kaul versus Shiv Sagar Tiwari23.
22 (1999) 6 SCC 667
23 (2002) 10 SCC 667