Regulatory Role in Loss Adjustment and Cost Allocation

The law of torts plays a regulatory role by setting standards of conduct and
encouraging people to act responsibly. The threat of tort liability can deter
negligence, recklessness, and other wrongful behavior.
Before the advent of comprehensive social welfare systems, tort law was
often the only mechanism for an injured party to seek redress and shift the
financial burden of their injury from themselves to the person who caused it.
This mechanism achieves:
 Compensation: It aims to restore the injured party to the position
they would have been in had the tort not occurred, primarily through
monetary damages. This directly adjusts the loss by shifting it from the
victim to the tortfeasor.
 Deterrence: By holding individuals and entities accountable for their
wrongful acts, tort law incentivizes them to take precautions and avoid
causing harm. This regulatory aspect influences behavior and
potentially reduces future accidents or wrongs, thus impacting the
overall cost of such events to society.
 Loss Spreading: In modern times, especially with the rise of
insurance, the cost of tortious liability is often spread across a larger
pool (e.g., through insurance premiums), rather than falling solely on
the individual tortfeasor. This further aids in the adjustment and
allocation of costs.
Substantiation with Leading Case Law
1. Donoghue v. Stevenson [1932] AC 562 (UK): The Birth of Modern
Negligence
This landmark case established the modern concept of negligence and the
"neighbour principle." Mrs. Donoghue consumed ginger beer containing a
decomposed snail and suffered illness. She sued the manufacturer, despite
having no direct contractual relationship. Lord Atkin famously articulated the
"neighbour principle," stating:
"You must take reasonable care to avoid acts or omissions which you can
reasonably foresee would be likely to injure your neighbour. Who, then, in
law is my neighbour? The answer seems to be persons who are so closely
and directly affected by my act that I ought reasonably to have them in
contemplation as being so affected when I am directing my mind to the acts
or omissions which are called in question."
This case vastly expanded the scope of tort liability, moving beyond
established categories and emphasizing the duty of care owed to foreseeable
victims. It fundamentally shaped how losses from careless acts are adjusted
and allocated.
2. Rylands v. Fletcher (1868) LR 3 HL 330 (UK): Strict Liability for
Dangerous Escapes
This case laid down the principle of strict liability for the escape of
dangerous things from one's land. Mr. Rylands' mill reservoir burst and
flooded Mr. Fletcher's coal mines. The House of Lords held Rylands liable,
even though he was not negligent. The principle established was:
"A person who, for his own purposes, brings on his land and collects and
keeps there anything likely to do mischief if it escapes, must keep it in at his
peril; and if he does not do so, is prima facie answerable for all the damage
which is the natural consequence of its escape."
This ruling signifies a shift in cost allocation, placing the burden of losses
from inherently dangerous activities on those who undertake them,
regardless of fault.
3. Ashby v. White (1703) 2 Ld Raym 938 (UK): Injuria Sine Damno
This case illustrates the principle of injuria sine damno (injury without
actual damage). The defendant, a returning officer, wrongfully refused to
allow the plaintiff, a qualified voter, to cast his vote. Even though the
candidate the plaintiff intended to vote for won, and thus he suffered no
actual monetary loss, the court held that his legal right to vote had been
infringed, and he was entitled to damages. This case underscores that tort
law protects legal rights, even in the absence of tangible harm,
demonstrating its role in upholding fundamental entitlements and allocating
the cost of their violation.
Position in India
The law of torts in India is largely based on the English common law
principles, adapted and modified by judicial pronouncements to suit Indian
conditions. While there is no comprehensive codified law of torts in India
(unlike contract law or criminal law), specific statutes address certain torts
(e.g., Motor Vehicles Act, 1988 for motor accident claims, Consumer
Protection Act, 2019 for consumer grievances).
Key aspects of the position in India:
Reliance on Judicial Precedent: Indian courts heavily rely on English
common law principles and Indian High Court and Supreme Court judgments
to decide tort cases.
Constitutional Torts: A unique development in Indian tort law is the
concept of "constitutional torts," where the state can be held liable for the
violation of fundamental rights by its officials. This goes beyond traditional
private law torts and offers a public law remedy for state-induced wrongs.
Rudul Sah v. State of Bihar (1983) 4 SCC 141: This is a landmark case
where the Supreme Court awarded monetary compensation for the illegal
detention of a person, acknowledging the state's liability for infringing
fundamental rights. This marked a significant departure from the traditional
doctrine of sovereign immunity.
Bhim Singh v. State of J&K (1985) 4 SCC 677: The Supreme Court
awarded exemplary damages for illegal detention of an MLA, emphasizing
that monetary compensation can be an appropriate remedy for violation of
constitutional rights.
Absolute Liability (A departure from Strict Liability): In India, the
Supreme Court developed the principle of "absolute liability" in cases
involving hazardous industries, going beyond the strict liability laid down in
Rylands v. Fletcher.
M.C. Mehta v. Union of India (Oleum Gas Leak Case) (1987) 1 SCC
395: Following the Oleum gas leak, the Supreme Court held that an
enterprise engaged in a hazardous or inherently dangerous industry owes an
absolute and non-delegable duty to the community to ensure that no harm
results from the carrying on of such activity. It stated that the enterprise is
strictly liable for any harm caused, and no exceptions to strict liability (like
Act of God or plaintiff's fault) would apply. This imposed a much higher
standard of care and responsibility on industries dealing with dangerous
substances, significantly altering loss allocation in such scenarios.
Developing Areas: Indian courts are increasingly addressing new areas of
tortious liability, such as medical negligence, environmental torts, and
privacy invasion, reflecting societal changes and the need for legal redress in
emerging contexts.
Challenges: Despite its evolution, tort law in India faces challenges like the
uncodified nature leading to uncertainty, lengthy judicial processes, and the
relatively low awareness among the general public about their rights under
tort law.
In conclusion, the law of torts, both historically and in its contemporary
application, plays a critical regulatory role in adjusting losses and allocating
their costs. From its origins as the primary recourse for the injured before the
welfare state, it has evolved to encompass a wide range of civil wrongs, with
landmark cases shaping its principles. In India, while heavily influenced by
common law, the judiciary has carved out unique doctrines like constitutional
torts and absolute liability, demonstrating its commitment to ensuring justice
and providing remedies for the plight of the injured in a rapidly developing
society.