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The German Democratic Republic Vs. the Dynamic Industrial Undertaking Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract;Constitution
CourtMumbai High Court
Decided On
Case NumberAppeal No. 114 of 1970 (Suit No. 528 of 1969)
Judge
Reported inAIR1972Bom27; (1971)73BOMLR183; ILR1972Bom731; 1971MhLJ482
ActsCode of Civil Procedure (CPC), 1908 - Sections 11, 86, 87-A and 151
AppellantThe German Democratic Republic
RespondentThe Dynamic Industrial Undertaking Ltd.
Appellant AdvocateM.P. Amin, ;Rajani Patel, ;Suresh Parekh, ;P.R. Mridul and ;P.M. Amin, Advs., i/b., Khambatta and Nalin Kapadia Attorneys
Respondent AdvocateF.S. Nariman and N.D. Vyas, Advs., i/b., Mulla and Mulla Craigie Blunt and Caroe Attorneys
Excerpt:
civil procedure code (act v of 1908), sections 86, 87a, 151 - international law--letters patent, clause 15--whether foreign sovereign state when sued should file written statement--claim for immunity by sovereign state whether could be made by notice of motion--court how should ascertain whether foreign government recognised as sovereign state by government of india--principles of international law--applicability of, in india--notice of motion--whether order made on notice of motion necessarily an interlocutory order--decision affecting independent contention raised by defendant whether a 'judgment'.;a foreign sovereign state which claims immunity from being sued in court need not file any written statement at all till the claim for immunity, if raised, has been adjudicated upon and.....moody, j. 1. this is an appeal against the order of vimadalal, j. dt. 18th september 1970 passed by him on the notice of motion dated 14th august 1970 dismissing the notice of motion.2. the suit in which the notice of motion was taken out was filed on 5th june 1969. the plaintiffs are a company carrying on business in fertilizers. there are three defendants to the suit. it is stated in the plaint that the first defendant is a body corporate controlled by and/or is a department of the second defendant. the second defendant is the german democratic republic. the third defendant is a bank and is not directly concerned in the notice of motion. the plaintiffs entered into two contracts in writing with the first defendant for sale and supply of certain goods as more particularly mentioned in.....
Judgment:

Moody, J.

1. This is an appeal against the Order of Vimadalal, J. dt. 18th September 1970 passed by him on the Notice of Motion dated 14th August 1970 dismissing the Notice of Motion.

2. The suit in which the Notice of Motion was taken out was filed on 5th June 1969. The plaintiffs are a company carrying on business in Fertilizers. There are three defendants to the suit. It is stated in the plaint that the first defendant is a body corporate controlled by and/or is a department of the second defendant. The second defendant is the German Democratic Republic. The third defendant is a Bank and is not directly concerned in the Notice of Motion. The plaintiffs entered into two contracts in writing with the first defendant for sale and supply of certain goods as more particularly mentioned in the two contracts. It is stated in the plaint, as also in the main contracts, that the same were within the frame work of the Trade Agreement dated 18th December 1959 between the Government of the 2nd defendant and the Government of India. It is further averred in the plaint that there was an implied term of each of the two contracts that any agreement which may subsequently be arrived at between the Government of India and the 2nd defendant in connection with the exports from the 2nd defendant to India and from India to the second defendant under the Trade Agreement would be binding between the plaintiffs and the first defendant. The plaintiffs claim by this suit from the first and 2nd defendants a sum of over Rs. 20,00,000/- as and by way of payment of the balance of the price payable to the plaintiffs. Although the contracts were entered into between the plaintiffs and the 1st defendant, the plaintiffs seek to make the 2nd defendant was merely a Department of the second defendant.

3. After the Writ of Summons was served on the second defendant, the second defendant filed an appearance in the suit specifically stating therein that it was under protest. Thereafter the second defendant filed its written statement. It is stated in the first paragraph of the written statement that the second defendant has filed the written statement under protest and without prejudice to the rights and the contention of the second defendant that this Court had no jurisdiction to try or entertain or dispose of the suit against the second defendant for the reasons therein stated. The reasons stated are that the second defendant is a Sovereign Independent State and that all Sovereign States are subject to International Law and enjoy immunity according to the general principles of International Law. It is further stated in the written statement that for many years the Government of India has treated the second defendant as a Sovereign Independent State and has continued to do so and that since the year 1954 there have been several Trade Agreements between the Government of India and the Government of the second defendant. It is further stated that in order to look after certain commercial interests of the Government of India in the second defendant it was agreed that if and when a Trade Representative is appointed he will enjoy the same rights and privileges that are accorded to the Trade Representation of the second defendant in India and that in pursuance of that agreement a Trade Representation of the second defendant was set up in India and that it continues to enjoy diplomatic privileges of cypher and mail bag, as also certain other privileges. Later in the written statement, in its paragraphs 10 and 11, it is stated that the suit having been filed without prior consent of the Government of India as contemplated under Section 86 of the Code of Civil Procedure, the suit against the second defendant is liable to be dismissed. After taking such preliminary objections and after again specifically stating that in the event of the Court holding that the second defendant was not immune from the process of this Court, the written statement contains averments on the facts and submissions contained in the plaint. In support of its claim for immunity under International Law, the Written Statement relies upon certain Statements made by three Prime Ministers of India, being Pandit Jawaharlal Nehru, Lal Bahadur Shastri and Mrs. Indira Gandhi. The first is a statement made by Jawaharlal Nehru on 17th August 1961 in the Lok Sabha, as appearing from the 'Lok Sabha Debates' to the effect that 'India had trade relations with the East German Government that de facto India recognized it and that they have got a Trade Representative in India and that India is dealing with them in many ways.' The second is also a Statement made by Pandit Jawaharlal Nehru on 2nd September 1961 as appearing in 'Jawaharlal Nehru's Speeches', Volume Four, to the effect that it seemed to him obvious that certain facts of life should be recognised, that there are two independent entities; the Government of the Federal Republic of Germany and the Government of the German Democratic Republic. The same position was reiterated by Lal Bahadur Shastri in the Indo-Soviet Communique issued by him jointly with his Soviet counterpart, specifically stating that at that time the fact of the existence of the two German States could not be ignored. The same position was again re-affirmed in the Indo-Soviet Communique dated 16th July 1966 to which Mrs. Indira Gandhi was one of the two parties.

4. Thereafter the second defendant took out a Chamber Summons dated 10th March 1970 praying for an order that the issues mentioned din the Schedule 'A' to that Summons, with or without modifications, be tried and determined as preliminary issues so far as the second defendant was concerned and a date may be fixed for hearing of the preliminary issues. The four issues mentioned in the said Schedule 'A' are :-

'(1) Whether the defendant No. 2 enjoys immunity according to the general principles of International Law?

(2) If the answer to the first issue is in affirmative, then, whether this Honourable Court has jurisdiction to try or entertain or dispose of the suit ?

(3) Whether the suit against the defendant No. 2 is barred by the provisions of Section 86 of the Code of Civil Procedure ?

(4) If the answer to issue No. 3 is in affirmative, whether this Honourable Court has jurisdiction to try or entertain or dispose of the suit ?'

5. By his order dated 16th March 1970 Kantawala, J. dismissed that Chamber Summons. The second defendant's appeal against that order was dismissed by the Appellate Court on 6th July 1970 on the ground that the order of dismissal of the Chamber Summons was not a judgment within the meaning of Clause 15 of the Letters Patent of this Hon'ble Court and was therefore not appealable.

6. Thereafter the second defendant took out a Notice of Motion dated 14th August 1970, the two substantive reliefs prayed for therein being -

'(a) That the suit herein filed by the plaintiffs against the defendant No. 2 be dismissed.

(b) In the alternative to prayer (a) above this Honourable Court would be pleased to pass an order that the issues mentioned in Schedule 'A' herein with or without modification be tried and determined as preliminary issues as far as defendant No. 2 is concerned.'

The issues in the said Annexure 'A' are the same identical four issues which were mentioned in the Annexure 'A' to the said Chamber Summons and which we have re-produced above in our judgment.

7. To the affidavit in support of that Notice of Motion is annexed a copy of the letter dated 1st April 1970 addressed by the Attorneys of the second defendant to the Secretary, Ministry of External Affairs, Government of India, New Delhi. The letter referred to the present suit and the second defendant's contention about its immunity under International Law as well as under Section 86 of the Code of Civil Procedure and requests for answers to the two questions mentioned in that letter. The first question was whether, inter alia, the plaintiffs in this suit had made any application to the Government of India under the said Section 86 for filing this suit and what was the answer given by the Government of India. The second question was whether the German Democratic Republic was recognised de facto by the Government of India. There is also annexed to the affidavit a copy of the letter dated 1st August 1970 which is a letter in reply to the said letter dated 1st April 1970. The reply states :

'This is to certify that the Government of India has de facto relations with the German Democratic Republic. Accordingly that Government should enjoy immunity from jurisdiction of the local courts in suits and other proceedings similar to those enjoyed by any other Government, unless that Government has expressly waived its immunity.'

The letter is addressed from the Legal and Treaties Division of the Ministry of External Affairs, Government of India, New Delhi, and bears the signature 'K. K. Chopra', the Law Officer in that Department. The affidavit states that on 3rd August 1970 Mr. Swaran Singh, the Minister of External Affairs, Government of India, had, inter alia, made an announcement in the Parliament as follows :-

'The stage has now come when we feel that our growing economic, commercial and cultural relations should be reflected officially by the establishment of consular relations.'

8. In the affidavit in reply filed on behalf of the plaintiffs on that Notice of Motion it was contended that the certificate dated 1st August 1970 purported to be issued by Mr. K. K. Chopra was not issued by or on behalf of the Government of India and that in any event it was not a certificate of which judicial notices can at all be taken and that the certificate went no further than the said statements made by Pandit Jawaharlal Nehru.

9. In view of the said contention raised in the plaintiffs' affidavit in reply about the said certificate dated 1st August 1970, the second defendant obtained another certificate dated 15th September 1970 and annexed a copy of it to its affidavit in rejoinder. The certificate shows that it was issued by the Under Secretary, Ministry of External Affairs, Government of India, over the signature of Mr. Girish Dhume as Under Secretary. The certificate states that it was in continuation of the said certificate dated 1st August 1970 of Mr. K. K. Chopra, the Law Officer of that Ministry, and that Mr. Girish Dhume was directed on behalf of the Government of India had and continues to have de facto relations with the German Democratic Republic and that accordingly that Government should enjoy immunity from jurisdiction of the local courts in suits and other proceedings similar to those enjoyed by any other Government unless that Government has expressly waived its immunity. To that affidavit in rejoinder is annexed another letter dated 18th August 1970 from the Foreign Secretary, Ministry of External Affairs, New Delhi, to the Consulate General of the second defendant, New Delhi. It states that following the establishment of the Consulate General of the second defendant in India at New Delhi all the appropriate authorities in India were being informed about the change in the status of the Regional Trade Representation of the second defendant at Bombay, Calcutta and Madras to that of Consulates of the second defendant and about the appointment of Mr. Herbert Fischer as their Consul General at New Delhi. It further states that the Government of India presumed that necessary facilities would be accorded for the establishment of an equal number of Indian Consulates in the German Democratic Republic on a reciprocal basis as and when the Government of India decided to establish such Consulates.

10. As stated earlier, Vimadalal, J. by his said order under appeal dismissed the Notice of Motion.

11. It is necessary to bear in mind the exact applications made by the Notice of Motion and the contents of the order made thereon. Before the Notice of Motion was taken out, an application had been made by the earlier Chamber Summons for the trial of the same four issues again repeated in the Notice of Motion as preliminary issues. The four issues divide themselves into two groups, issues Nos. 1 and 2 relating to the claim for immunity under International Law and issues Nos.3 and 4 relating to the contention for dismissal of the suit in view of the provisions of Section 86 of the Code of Civil Procedure. That Chamber Summons had been dismissed, as also the second defendant's appeal in respect of the same. In view of those facts the same relief was again asked for by the Notice of Motion, but as prayer (b) thereof and in the alternative to prayer (a). It is clear that prayer (a) was made to predominate over prayer (b). By prayer (a) the 2nd defendant invited the court to dismiss the plaintiffs' suit. Prayer (a) was a new prayer and distinct from prayer (b). The object sought to be achieved by each of those two prayers (a) and (b) was similar, but there was a little distinction which should not go unnoticed. Prayer (b) only sought that the four issues be tried as preliminary issues and made an application for fixation of the date of such trial of preliminary issues. If either of the two groups of issues were tried as preliminary issues and either of them succeeded, the second defendant would achieve its object of having the entire suit dismissed as against itself. But that would happen only if and when the four issues were ordered to be tried as preliminary issues and were actually tried as such. But such a result depended on the issues being tried as preliminary issues. Prayer (a) went a step further and invited the Courts to dismiss the suit as against the second defendant at the stage of the Notice of Motion itself, in limine, without raising any preliminary issues.

(15th October 1970).

12. This distinction between the two prayers will have to be borne in mind when considering the arguments advanced before us in this appeal.

13. Mr. Nariman, the learned Counsel for the respondents, raised a preliminary objection, the same being that no appeal lies because of two grounds : The first ground is that on a construction of the Order under appeal, the Order does not dispose of prayer (a) and that prayer (a) is yet to be decided. The second ground is that the Order under appeal is not a 'judgment' within the meaning of Clause 15 of the Letters Patent and that it is therefore not appealable. In order to appreciate these two contentions it is necessary to know the exact phraseology of the Order under appeal. It is as follows :-

'Notice of Motion dismissed with costs on two grounds :-

(I) It is barred by the principles of res judicata in view of the order passed by Kantawala, J. : [1960]3SCR590 . In my opinion, there are no new facts which would make the principles of res judicata inapplicable.

(ii) Even if the subsequent correspondence now relied upon is taken to be in the nature of 'new facts' the same do not disclose any clear recognition of the 2nd defendant within the terms of Section 87-A(1) (a) of the Civil P.C., and the question still remains a question of fact, in regard to which, it is well settled, no preliminary issues can be framed or tried.'

The operative part of the Order makes it clear that what is dismissed is the entire Notice of Motion, which would include both prayers (a) and (b). It is true, as pointed out by Mr. Nariman, that if the said four issues were to be tried either as issues in the suit itself or even as preliminary issues, a regular hearing would have to take place and it would have been open to the parties to lead such evidence as they wanted to. But so far as the first two of the said four issues are concerned, both prayers, prayer (b) as well as prayer (a), concern the same (relief) (sic). Prayer (b) was merely for a direction that the first two issues be tried as preliminary issues and for fixing a date of hearing for that purpose. But, as seen earlier, prayer (a) is in a sense, totally different. Prayer (a) does not seek the decision of the first two issues as preliminary issues, but invites the Court in limine to dismiss the suit at the stage of the hearing of the Notice of Motion itself without the raising of any issues or trying any of them as a preliminary issue. Now the first ground stated by the learned Judge in support of his order is that the Notice of Motion was barred by the principles of res judicata in view of the orders made on the Chamber Summons and in the appeal against that Order. An analysis of these two orders on the Chamber Summons shows that the second defendant's application for trial of the four issues as preliminary issues was rejected. Prayer (b) sought to re-agitate for the same relief and it was held to be barred by res judicata. Prayer (a), however, was different. The earlier decision on the Chamber Summons was a refusal to try these issues as preliminary issues. It did not deal with the point as to whether the suit should be dismissed in limine. As a matter of fact no such application had been made. That being the position, it would be erroneous to say that prayer (a) was barred by the principles of res judicata. Prayer (a) had therefore to be disposed of on its own merits. The result, however, of the dismissal of prayer (a) of the Notice of Motion now is that the application has been heard on the Notice of Motion and disposed of. Even if the hearing of the suit proceeds, the said issues Nos. 1 and 2 will be deemed to have been disposed of on the Notice of Motion itself and will not be allowed to be re-agitated at the hearing. The effect of the order dismissing prayer (a) is therefore, that so far as the suit is concerned, the claim of the second defendant to immunity as a foreign Sovereign State has been finally disposed of and the only way the second defendant can agitate the same is by way of an appeal and certainly not in the suit itself.

14. Mr. Nariman also contended that the Order under appeal is an interlocutory order. In our opinion, there is no substance in this contention. An interlocutory order is an order by way of an aid to the proper adjudication of the claims and disputes arising in the suit itself, for example, orders by way of receiver, injunction, issuing of a commission for examination of witnesses, discovery, inspection, etc. Such orders do not finally dispose of any dispute or claim in the suit itself. This entire contention of Mr. Nariman appears to originate in the fact that the order has been made on a Notice of Motion. In our opinion, the mere fact that an order has been made on a Notice of Motion cannot by itself lead to the conclusion that the order is an interlocutory order. It is the relief asked for and the order made thereon which determines whether a particular order is or is not an interlocutory order. The normal procedure in this High Court for asking for a decree on award is by way of a Notice of Motion. If a decree is in fact passed on such a Notice of Motion, it cannot be said that the Motion and the order thereon were interlocutory. They clearly are final. Therefore, looking to the nature of the relief asked for by prayer (a) and the order made thereon, it is clear that the second defendant's claim to immunity has been finally disposed of so far as the hearing of the suit itself is concerned. It now remains to be considered whether the order under appeal is a 'judgment' within the meaning of Clause 15 of the Letters Patent and is therefore appealable.

15. So far as the order disposing of prayer (b) is concerned, the order is identical to that made on the Chamber Summons. In the appeal filed against that order it has already been held by a Division Bench that it is not a judgment and is therefore not appealable. That judgment is binding upon us. We must therefore hold that the order dismissing prayer (b) is for the same reasons not appealable. There is, however, another point of view from which the order dismissing prayer (b) can be looked at. The learned Judge has dismissed prayer (b) on the ground that it is res judicata. That aspect has, however, not been pressed into service by either party and we need not therefore consider the same. We, therefore, hold that the order dismissing prayer (b) is not a 'judgment' and is therefore not appealable. The consideration of the preliminary objection that the order is not appealable must, therefore, be confined to the extent that it dismisses prayer (a).

16. The order under appeal has been passed by a Single Judge of this High Court sitting on the Original Side. In order to be appealable, that order must amount to a 'judgment' within the meaning of Clause 15 of the Letters Patent of this High Court. A similar provision appears in the Letters Patent of various High Courts in India and there is a wide divergence of opinion between different High Courts as to the interpretation of that word 'judgment.' As far back as in 1872, in the case of The Justices of the Peace for Calcutta v. The Oriental Gas Company, (1872) 8 B LR 433, the Chief Justice Sir Richard Couch said :

'We think that 'judgment' in Clause 15 means a decision which affects the merits of the question between the parties by determining some right or liability. It may be either final, or preliminary, or interlocutory, the difference between them being that a final judgment determines the whole cause or suit, and a preliminary or interlocutory judgment determines only a part of it, leaving other matters to be determined.'

17. The interpretation of that word 'judgment' again arose before the same High Court a couple of years later in Hadjee Ismail Hadjee Hubbeeb v. Hadjee Mahomed Hadjee Joosub (1874) 13 B LR 91. The order which fell for consideration in that case was an order refusing to rescind leave granted under Clause 12 of the Letters Patent. The order was held to be a 'judgment' because it went to the whole subject-matter of the suit and decided whether the suit was to go on or not. These two judgments and interpretation put on the word 'judgment' by the Calcutta High Court has consistently been followed in this High Court upto now. Some other High Courts have, however, put a different interpretation on the word 'judgment', but in view of the Calcutta High Court and this High Court having taken for such a long time, it is not necessary to refer to the judgments of other High Courts taking any other view.

18. In Jivanlal v. P. R. Vakharia and Co. : AIR1933Bom85 , a Division Bench of this High Court held that the decision of a Judge under Section 10 of the Code of Civil Procedure is a 'judgment' within Clause 15 as it was not a mere order relating to the procedure in the suit and as it affected the question whether the court had jurisdiction to entertain a suit which involved a determination of a right of a party who might be adversely affected if the court determined that it had jurisdiction and that it was therefore appealable as a 'judgment' under Clause 15. Apart from saying that it was not a procedural order, the test adopted was that the question involved was whether the court had jurisdiction to entertain the suit, and secondly, that it would involve the determination of the party's right adversely affected by it. If the order for stay was granted, the party's right to litigate that suit in the court in which it was filed would get stayed as provided for under Section 10 of the Code of Civil Procedure. It therefore affected the party's right to proceed or not to proceed with the suit before the forum in which it was filed.

19. The same point arose for consideration before a Division Bench of this High Court in Jai Hind Iron Mart v. Tulsiram, : AIR1953Bom117 . It was held that an order refusing stay under Section 10 of the Code of Civil Procedure is a 'judgment' and therefore appealable under Clause 15 on the same ground, viz., that the order was not merely procedural, but was an order dealing with the jurisdiction of the Court.

20. Later on the identical point arose before the Calcutta High Court and a Division Bench of that High Court in Sohrab Modi v. Mansata Film Distributors, : AIR1957Cal727 , held that an order refusing stay of a suit under Section 10 of the Code of Civil Procedure was appealable as a 'judgment' under Clause 15 because it affected the question of jurisdiction of the court to entertain or proceed with a suit or proceeding and the decision on that question affected the merits of the controversy between the parties because an order refusing to stay involved assumption of jurisdiction and in so far as it negatived the defendant's contention that the suit cannot be proceeded with the upheld the plaintiff's claim that the suit must proceed, it affected the merits of a part of the controversy between the parties, the particular controversy being a controversy in the suit as to where the subject-matter should be tried.

21. In Ashrumati Debi v. Rupendra Deb, : [1953]4SCR1159 , an occasion arose for the Supreme Court to interpret the word 'judgment' as occurring in Clause 15 of the Letters Patent of the Calcutta High Court. The order which fell for consideration before the Supreme Court was an order for transfer of a suit under Clause 13 of the Letters Patent. It was held that such an order for transfer neither affected the merits of the controversy between the parties to the suit itself, nor did it terminate or dispose of the suit on any ground and that it was therefore not a 'judgment' and not appealable. The divergent views of the different High Courts as to the interpretation of the word 'judgment' were pointed out in that case before the Supreme Court, but after referring to some of them the Supreme Court has rested content by deciding the particular case which arose before it without laying down any general interpretation which directly or impliedly resolves such divergence of opinion between different High Courts. In our opinion, therefore, the earlier judgments of this High Court on the point continue to apply with full effect without in any way being doubted or shaken by this particular judgment of the Supreme Court.

22. Mr. Nariman, however, relied upon a judgment of a Division Bench of this High Court in Govardhan Lalji v. Chandraprabhavati 27 Bom LR 1496 : AIR 1926 Bom 136. In the judgment delivered by him on behalf of the Bench Macleod, C. J. has, after considering certain judgments cited before him, observed :-

'After considering very carefully what was set forward as a definition of 'judgment' in that case, I prefer myself to consider each decision as it comes before me, and to form my own opinion whether it is a judgment or not for the purpose of deciding whether an appeal lies.'

This remark occurring in this very judgment, as also perusal of the judgment generally, show that the decision in that case was confined to the facts of that case and cannot be of any assistance by way of yielding a principle for determination of the meaning of 'judgment' as it occurs in Clause 15.

23. The ratio of the three above decisions holding that an order refusing to stay a suit under Section 10 is a 'judgment' is that the decision refusing to stay affected the merits of a part of the controversy between the parties and finally decided the question as to jurisdiction of the court. The point to notice is that the order refusing stay did not concern any controversy as to procedure in the suit and what is more, it did not dispose of any dispute raised by the defendant as to the facts constituting the plaintiff's cause of action of any claim made by the plaintiff in the suit. The e defendant's application for stay totally bypassed any contention as to the cause of action and the claim of the plaintiff in the suit. These three decisions are instances where what was in controversy between the parties and what was decided by the order under appeal in each of them, did not concern the plaintiff's cause of action or claim in the suit, but concerned a totally independent contention urged by the defendant as to whether the suit should at all be allowed to be proceeded with. We have, therefore, not referred to the decisions of the Calcutta High Court or of this Court which have determined the meaning of 'judgment' from other view points, for example, as to whether the decision partly or wholly decided the case or finally decided only a part of the plaintiff's claim in suit because what was considered was the plaintiff's claim and whether it was wholly or partly decided or whether it was finally decided or not.

24. A decision can, in certain circumstances, be a 'judgment' and therefore appealable even if it affects an independent contention raised by the defendant, a contention which does not at all concern or raise a dispute about any part of the plaintiff's cause of action or claim in the suit. As a matter of fact, the point decided in the said case of Hadjee Ismail Hadjee Hubbeeb v. Hadjee Mahomed Hadjee Joosub (1874) 13 B LR 91, was that an order refusing to revoke the leave granted under Clause 12 of the Letters Patent was a 'judgment' and the ratio was that it was appealable as it affected the jurisdiction of the court. Similar was the position in the case of R. N. Airline Corpn. v. Manorama : AIR1966Cal319 . It was an appeal against an order of a Single Judge of the Calcutta High Court refusing the defendant's application for dismissal of the suit made on the ground that the court had no jurisdiction to entertain the suit because of the Sovereign immunity claimed by the defendant Corporation as a department of a foreign Sovereign State, and the Appellate Court held that as the judgment under appeal had determined a right or liability affecting the merits of the controversy between the parties and as the decision affected the whole subject-matter of the suit and decided the question whether the suit was to go on or not, it was a 'judgment' within the meaning of Clause 15.

25. In the case before us the position is identical as that in the last case referred to decided by the Calcutta High Court. The point decided by the refusal of prayer (a) on the Notice of Motion is, as noticed earlier, that the second defendant's claim as to immunity and want of jurisdiction against it has been finally disposed of adversely to the second defendant. The second defendant, as a result, will be compelled to enter upon its defence on the merits of the cause of action and claim made in the suit. The second defendant's claim to immunity has been finally negatived. It is, therefore, in our opinion, a 'judgment' within the meaning of Clause 15 of the Letters Patent and is therefore appealable.

26. Mr. Amin, the learned Counsel for the second defendant, contended that the second defendant is entitled to immunity as a foreign Sovereign State, firstly, under the principles of International Law and, secondly, in view of the provisions of Section 86 of the Code of Civil Procedure.

27. So far as the second claim under Section 86 is concerned, it was sought to be tried as preliminary issues, being issues Nos. 3 and 4 of the four issues referred to earlier. The Chamber Summons making that application was dismissed and so was the appeal filed against the same dismissed. Prayer (b) of the Notice of Motion in so far as it concerns the said issues Nos. 3 and 4 is identical. The effect of the order of dismissal of the Chamber Summons and the appeal against the order thereon is that those two issues will have to be dealt with at the hearing of the suit. The Notice of Motion merely repeats that prayer and as no appeal lies against the order dismissing that prayer, we hold that it is not competent for the second defendant to again agitate it in this appeal against the order passed on the Notice of Motion. The result is that what remains to be considered in this appeal is the claim for immunity as made by the 2nd defendant in prayer (a) of the Notice of Motion.

28. In respect of this contention which survives for our determination Mr. Nariman advanced two contentions. The first was that it is an issue in the suit itself and that it was not competent to the second defendant to raise the point and invite its decision on a Notice of Motion. His second contention was that in view of the provisions of Section 86 of the Code of Civil Procedure, the privilege of claiming immunity as a foreign Sovereign State, even to the extent that may be available under the principles of International Law, is not available in India.

29. So far as the first contention of Mr. Nariman in concerned, he argued that even the claim for absolute immunity under International Law can be tried only at the hearing of the suit as there is no procedure in India permitting it to be tried otherwise. He pointed out that in England a specific procedure is provided for under O. 22, R. 8, of the Supreme Court Rules as applicable in 1970, the corresponding provision prior thereto being contained in O. 22, R. 30. He pointed out that the procedure so provided is by way of an application to set aside the Writ. Now it is true that there is no specific provision in India corresponding the said provision in England either in the Code of Civil Procedure or in the Rules of this Court applicable on its Original Side. Procedural rules are, however, only to secure a fair and orderly determination of claims to substantive rights, whether made in a suit or in any other legal proceeding. In the matter before us the second defendant claims immunity from being sued in this court. That claim is a claim to a substantive right. From the nature of things it is obvious that it is necessary to decide that claim first as, if that claim is upheld, it would obviate the necessity of the second defendant being compelled to defend the suit on other points and having to undergo all the procedure like discovery, inspection, participating at the trial by cross-examination and leading its own evidence and possibly an appeal or appeals thereafter against the decision in the suit. It is true that the second defendant has in fact filed its written statement and the claim for immunity has been made in it at the forefront. The point about waiver of the immunity has not been advanced. Now the fact that the second defendant has filed its written statement does not, by itself, so far as this point is concerned, make any difference. A foreign Sovereign State which claims such immunity need not file any written statement at all till the claim for immunity, if raised has been adjudicated upon and rejected. Although there is no specific procedure provided in the Code of Civil Procedure or in the Original Side Rules of this Court basically it is necessary that a claim to immunity should be decided at the earliest opportunity and that the party who makes such a claim should have an opportunity to 'move' the Court, i.e., apply to the court, for such a early decision. Now a Notice of Motion means, as the very phrase indicates, that a person gives notice to all the concerned parties that the applicant, who usually is, though not necessarily so, a party to the suit intends to make a 'motion', i.e., 'move' the Court for the reliefs mentioned in the notice which is given. Some applications are permitted under the Original Side Rules to be made if they are of the nature specified in Rule 89 by way of a Chamber Summons. Applications not falling within the items specified in R. 89 must, if the suit or legal proceeding in which they are to be made is not on a daily board, be made in open court and the only procedure followed in the High Court for making such an application is by way of a notice of motion. There are provisions in the original Side Rules which mention specifically some of such applications as having to be made by way of a notice of motion, as, for example, receiver, injunction, decree on award, etc. Such provisions requiring the procedure of a Notice of Motion are, however, not exhaustive. By long practice many other applications like, for example, those for recording a compromise, for a decree on admission, for setting aside a decree, for committal for contempt of court and a host of others are made by way of Notices of Motion. Justice requires that the 2nd defendant should be allowed to apply for an early determination of its claim for immunity in order to avoid the necessity of defending the claims made in the suit as mentioned earlier. In our opinion, therefore, the only procedure by which the 2nd defendant could make and get an opportunity to establish its claim to immunity so far as the Original Side of this High Court is concerned, would be by way of a Notice of Motion. We, therefore, hold that the procedure by way of a Notice of Motion adopted in this case by the 2nd defendant was the correct procedure. But it may be stated that even if we had reached a contrary conclusion, we would have yet held the procedure to be correct in the exercise of our inherent powers under Section 151 of the Code of Civil Procedure. The judgment in B. Mohanlal & Co. v. A. Yolibai 34 Bom LR 714 : AIR 1932 Bom 271 is an authority for the proposition that where the rules of procedure do not provide for any specific procedure to be followed, the procedure by way of a Notice of Motion can be held to be the correct procedure by the Court under its inherent powers under Section 151 of the Code of Civil Procedure. A similar view was also taken by a Full Bench of the Calcutta High Court in : AIR1966Cal319 where it was held that although there is no provision in the Code for the foreign Government entering a conditional appearance to the suit as is provided for in the Supreme Court Rules in England, nor is there provision in the Code of Civil Procedure for giving notice of motion for an order that the Writ should be set aside on the ground that it had imploded foreign Sovereign State, the procedure by way of a Notice of Motion is the correct procedure and that a foreign Ruler or a foreign State directly or indirectly impleaded in the proceedings filed in a court in India would not be left without any remedy by the absence of any specific procedure in the Code of Civil Procedure. It was further held that since laws are general rules, they cannot regulate all cases that may possibly happen and any particular point not specifically dealt with must be governed by general principles.

30. Mr. Nariman's second contention was that the doctrine of immunity of a foreign Sovereign State as available under International Law is not available in India in view of the provisions of Sections 86 and 87-A of the Code of Civil Procedure. Before dealing with this point, we will first consider what is the position in International Law.

31. The doctrine of immunity of a foreign Sovereign State from being sued in the Municipal Courts of England was recognized in Aksionairnoye Obschestvo A. M. Luther v. James Sagor & Co. (1921) 3 KB 532. That case further lays down certain principles which are of help to us in deciding this case. The first is that the courts in England will not inquire into the validity of the acts of a foreign government which has been recognised by the Government of England. The second principle is that in that respect whether the foreign government has been recognised as a Government de jure or de facto would make no difference. The third point to be noted from this judgment is that evidence about the status of being a foreign Sovereign State was allowed to be led not only during the hearing of the appeal, but even 'since writing .............. the judgment.'

32. The doctrine of immunity in International Law was again recognised in England in the judgment of the House of Lords in Duff Development Co. v. Kelantan Government (1924) AC 797. Moreover, it was held in that case that it was the settled practice of the Courts in England to take judicial notice of the status of any foreign Government and for that purpose, in any case of uncertainty, to seek information from a Secretary of State; and the information so received was conclusive. In his Speech Viscount Cave observed :-

'No doubt the engagements entered into by a State may be of such a character as to limit and quality, or even to destroy, the attributes of sovereignty and independence x x x x x; and the precise point at which sovereignty disappears and dependence begins may sometimes be difficult to determine. But where such a question arises it is desirable that it should be determined not by the Courts, which must decide on legal principles only, but by the Government of the country, which is entitled to have regard to all the circumstances of the case. Indeed, the recognition or non-recognition by the British Government of a State as a sovereign State has itself a close bearing on the question whether it is to be regarded as sovereign in our courts. In the present case the reply of the Secretary of State shows clearly that notwithstanding the engagements entered into by the Sultan of Kelantan with the British Government that Government continues to recognise the Sultan as a sovereign and independent ruler, and that His Majesty does not exercise or claim any rights or sovereignty or jurisdiction over that country. If after this definite statement a different view were taken by a British Court, an undesirable conflict might arise; and, in my opinion, it is the duty of the Court to accept the statement of the Secretary of the State thus clearly and positively made as conclusive proof upon the point.'

33. Later, in his Speech Viscount Finlay observed :-

'It is settled law that it is for the court to take judicial cognizance of the status of any foreign Government. If there can be any doubt on the matter the practice is for the court to receive information from the appropriate department of His Majesty's Government, and the information so received is conclusive. x x x x x Such information is not in the nature of evidence; it is a statement by the Sovereign of this country through one of his Ministers upon a matter which is peculiarly within his cognizance.'

34. The principle of immunity of a foreign Sovereign State in International Law was again re-affirmed by the House of Lords in the Spain Republic v. Arantzazu Mendi (1939) AC 256. A perusal of the Speeches in that case shows that the procedure followed for ascertaining whether the foreign State was a Sovereign State was by the Court directing a letter to be written to the Foreign Office asking whether the particular Government of the foreign state was recognised by the English Government as a Sovereign State and placing reliance on the information received by way of a reply to that letter.

35. The same doctrine was again recognised in England in the judgment of the House of Lords in Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2) (1967) AC 853. It so transpired that in that case no point was originally taken as to whether the English Government had recognised de jure or de facto the German Democratic Republic or its Government or as to the application in the English Courts of the East German legislation or decrees. In the appeal to the Court of Appeal, however, a request was made that a letter be written to the Foreign Secretary requesting him to certify whether, inter alia, the English Government had granted recognition de jure or de facto to the German Democratic Republic or its Government and if yes, when. A contention having been urged before the House of Lords held that recognition was a matter which the Court of its own motion was bound to consider and that therefore the information so received could be relied upon. The point for determination, shortly stated, was whether the Court was bound to have regard to the basis on which the German Democratic Republic purported to act and that as the English Government had never granted recognition de jure or de facto to that Republic or its Government, the English Court must refuse to recognise as effective all legislation emanating from it, and all acts done under such legislation. Now what had happened in that case was that the information received by the court mentioned a part of the history since after the Second World War and what had happened as regards the coming into existence of the German Democratic Republic. The House of Lords, after analysing all the contents of the certificate, observed that the U. S. S. R. may have purported to confer independence or sovereignty on the German Democratic Republic, but that the certificate clearly required the Court to hold that whatever the U. S. S. R. may have purported to do, they did not in fact set up the German Democratic Republic as a Sovereign or independent State and that as the U. S. S. R. retained their right to govern its territory, they could not possibly have done so and the certificate required the Court to hold that they did retain that right. The House of Lords further held that if they were bound to hold that the German Democratic Republic was not in fact set up as a Sovereign independent State, the only other possibility was that it was set up as a dependent or subordinate organization through which the U. S. S. R. was entitled to exercise governing authority indirectly.

36. It should not go unnoticed that the decision of the House of Lords just referred to dealt with the German Democratic Republic, which appears in this suit also as the second defendant. Now this decision of the House of Lords does not in any way militate against the doctrine of immunity of the foreign Sovereign State. It also re-affirms that Court should obtain the necessary information about recognition of a foreign Sovereign State whether de facto or de jure from the Government of England. In that case it was held that the German Democratic Republic was not recognised by the British Government as an independent, i.e., Sovereign, State. Now it must be borne in mind that the conclusion was reached because of the contents of the certificate given by the British Government. The Court analysed the contents of that certificate and on the statements contained therein reached the conclusion which it did as mentioned by us earlier. As the conclusion reached in that case is in respect of the same foreign Government with which we are concerned, viz., the second defendant, two points have to be borne in mind. The first point is that the Court has to reach a decision on the relevant information made available to the Court from the Government of the country of that Court. We cannot reach the same conclusion as was reached by the House of Lords merely on the basis of the information supplied in that case to the English Court by the British Government. What we will have to rely upon is the information supplied to this Court by the Government of our country. The second point to be borne in mind is that it is the principles of International Law under which the second defendant has made a claim to immunity. It is a well-known fact that the same foreign Government may be recognised by a second Government and may not be recognised by a third Government. Therefore, the point which we have to consider is not whether the British Government recognised the second defendant as a Sovereign State, but whether the Government of our country has recognised the second defendant as a foreign Sovereign State.

37. The principles of International Law relating to immunity accepted by England as seen above have also been recognised in the United States of America. See American Jurisprudence, Vo. 14, page 385, Art. 191.

38. We will now turn to some of the decisions in our country on this point.

39. In N. Masthan Sahib v. Chief Commr., Pondicherry : AIR1962SC797 , the Supreme Court considered some of the above referred to English decisions, and particularly that reported in (1924) AC 797 and (1939) AC 256 and stated that the proposition laid down in the English decisions that a conflict is not to be envisaged between the executive Government and the judiciary appeared to the Supreme Court to rest on sound reasoning and except possibly in extreme cases the statement of the Government must be held binding on the court and to be given effect to by it.

40. At this stage it is convenient to see what well-known authorities on International Law have to say as regards the doctrine of immunity. A passage in Cheshire on International Law, 7th Edition, 1965, appearing at page 91, reads as under :-

'In accordance with the maxim par in parem non habet imperium, the English Courts are fully committed to the view that they will not exercise jurisdiction over the person or the property of a foreign sovereign State unless it is willing to submit to process.'

41. It is stated in paragraph 115a in Oppenheim's book on International Law, 8th Edition, 1954, at page 264 as under :-

'The third consequence of State equality is that - according to the rule par in parem non habet imperium - no State can claim jurisdiction over another. Therefore, although States can sue in foreign courts, they cannot as a rule be sued there, unless they voluntary submit to the jurisdiction of the court concerned. This rule applies not only to actions brought directly against foreign states, but also to indirect actions, as when, for instance, a sum in rem is brought against a vessel in the possession of a foreign State. Although, in giving effect to this rule, courts occasionally refer to the 'comity of nations' as the basis of their decision, the principle of immunity of severing States from the jurisdiction of the Courts of other States has in fact been treated by courts of most countries as a rule of International Law.'

42. Dicey on 'The Conflict of Laws', 8th Edition, 1967 (at page 126) states :-

'Sovereign immunity is not limited to actions arising out of the foreign sovereign's official acts but extends also to his commercial activities and even to personal contracts like contracts to marry. No distinction is drawn between act imperil and acta gestionis. Such a distinction, though it is clearly very difficult to draw, is discernible in the practice of many other States, and it may well be that English Courts have extended the doctrine of sovereign immunity considerably further than international practice strictly requires. The results have proved unfortunate and have led to widespread dissatisfaction.'

43. It may be stated that in recent years many States embark on industrial, business and commercial activities which are not confined only to their own territories but extend beyond their territories. Modern writers on International Law have expressed their own opinions as to whether the doctrine of immunity available to a foreign Sovereign State should be made available in respect of such transactions which are purely of a commercial nature. The point about making exception in the case of commercial activities, is to say the least, in a very fluid state and it is very likely that it will take considerable time to boil down to a well recognised principle of International Law. Mr. Nariman did invite our attention to some other passages, but, in our opinion, it is not necessary to refer to them. We have already referred to decided cases and some well-known authorities on International Law and it is quite clear that the doctrine of immunity has yet not been curtailed in England so as to exclude the doctrine of immunity from applying to commercial transactions. So far as English Courts are concerned, it is a settled doctrine till it is hereafter revised. It has also been recognised in India. See, for example, : AIR1966Cal319 . In International Law a foreign Sovereign State has absolute immunity. To carve out an exception is a matter having wide ramifications. Basically the matter concerns relations between India and foreign States. In a matter of that importance we are of the opinion that no occasion should arise for different High Courts to take differing views. It would result in chaos. If the doctrine which is well established for over a large number of years requires, in view of changed circumstances, to be at all modified, it is highly desirable that the Supreme Court as the highest Court of the land should, in a proper case, lay down the principles. We, for ourselves, prefer to follow the well-established doctrine.

44. At this stage it should be noticed that the said certificate dated 1st August 1970 given by the Law Officer in the Ministry of External Affairs, Government of India, New Delhi, uses the phraseology 'the Government of India has de facto relations with the German Democratic Republic.' The word used here is 'relations' and there is no mention of any 'recognition'. In the later letter dated 15th September 1970 written by the Under Secretary in the Ministry of External Affairs, Government of India, New Delhi, the phraseology is 'the Government of India had and continue to have de facto relations with the German Democratic Republic.' Even here the word used is 'relations' and not 'recognition.' In view of the English decisions approved by the Supreme Court in the above judgment it is the Court which has to ascertain whether the Government of the country recognises a foreign Government as a Sovereign State and that for that purpose necessary evidence can be allowed to be adduced even at the stage of an appeal.. In view of these principles Mr. Amin tendered before us a letter dated 28th September 1970 written by the Under Secretary in the Ministry of External Affairs. Government of India, New Delhi, addressed to the Attorneys of the second defendant in reply to a further inquiry made by their letter dated 15th September 1970 and as Mr. Nariman stated that he did not object to this letter being made a part of the record in vie of the authorities - already referred to by us, we took it on the record and marked it as Ex. A in this appeal.

45. We will now consider the effect of the evidence available to us on the record to ascertain whether the Government of India has recognised the second defendant as a Sovereign State, as it is not for the Court to pronounce any opinion on the point except on the information made available to the Court by the Government of India. Firstly, reliance has been placed on the said Statements made by three Prime Ministers of India, and India has had only three Prime Ministers since India attained independence. We refer only to the material words. Pandit Jawaharlal Nehru in his said statement dated 17th August 1961 has stated :'De facto we recognise it'. In his second statement dated 2nd September 1961 he stated: 'It seems to me obvious that certain facts of life should be recognised. There are two independent entities: The Government of the Federal Republic of Germany and the Government of the German Democratic Republic.' This Statement clearly refers to the Government of the German Democratic Republic, i.e., the 2nd defendant, as an independent entity. Having been referred to as the Government, the reference must be construed to mean when the adjective 'independent' is used that the second defendant was characterized as an independent i.e., Sovereign Government. In the said extract from the Indo-Soviet Joint Communique dated 20th May 1965 it is stated, inter alia, that at present the fact of the existence of the two German States cannot be ignored. The reference to one of the two German States referred to was obviously the second defendant. Lal Bahadur Shastri and Mrs. Indira Gandhi have subsequently re-affirmed the position as mentioned earlier. Next there is the evidence of several Trade Agreements between the two Governments, the Government of India and the Government of the German Democratic Republic. Those Agreements are Government to Government Agreement and they are entered on the basis that both the Governments which were parties to those Agreements were contracting as Sovereign States. Moreover, as seen earlier, there has been an exchange of Trade Representatives between the two countries. Later on the second defendant has established Consulate General in New Delhi and three Consulates in Bombay, Calcutta and Madras. It has already been stated earlier that the Government of India expects to correspondingly establish a Consulate General and Consulates within the territory of the second defendant. These are authoritative statements and acts of the Government of India. But, as seen earlier, these are not the only factors on the basis of which alone this court is required to reach a conclusion whether the Government of India recognises the second defendant as a Sovereign State.

16-10-1970.

46. By the said letter dated 1st August 1970 from the Law Officer Ministry of External Affairs, New Delhi, it has been certified that the Govt. of India has de facto relations with the second defendant. Thereafter by the said letter dated 15th September 1970, which is over the signature of the Under Secretary to the Ministry of External Affairs, it has been certified that the Government of India had and continues to have de facto relations with the second defendant. By the said letter dated 28th September 1970, Ex. A before us, a correction has been made in the said certificate dated 15th September 1970. The letter, read with this correction, amounts to a certificate that the Government of India de facto recognises the second defendant. The last two letters go further and state that the second defendant should enjoy immunity from jurisdiction of the local courts in suits and other proceedings similar to those enjoyed by any other Government unless that Government has expressly waived its immunity. This last statement is really a consequence which should normally follow from the recognition of the second defendant by the Government of India and it is a conclusion which normally it is for the court to reach. The only utility of this last portion, however, is that it confirms that what the Government of India intended to convey by their certificate was that the Government of India has accorded de facto recognition to the second defendant as a foreign Sovereign State.

47. Mr. Nariman, however, contended that in order that the second defendant may be held to be entitled to immunity, the recognition must be de jure and not merely de facto. The English authorities to which we have already referred do not make any such distinction. This is further supported by the following passage which occurs in Greig's International Law, 1970 Edition, at page 101 :-

'The statement that a particular entity has been recognised de jure or de facto is a convenient shorthand form of saying it has been recognised as a de jure or de facto Government. In other words, its status as a Government, and not the recognition, that is de jure or de facto.'

It is unnecessary to multiply further authorities to show that the recognition, de jure or de facto, has the same value for the purpose of deciding whether a particular foreign State is a Sovereign State and is entitled to immunity under International Law or not.

48. We, therefore, hold that the second defendant is a foreign Sovereign State and is entitled to immunity as claimed by it under the principles of International Law.

49. Mr. Nariman then contended that in India this principle of International Law can have no application because of the provisions contained in Section 86 of the Code of Civil Procedure. He contended that the Code being a codifying enactment and in as much as the principle of International Law has been recognised under Sections 86 and 87-A to the extent mentioned in those sections, only the relevant provisions of the Code can be looked at and the said principles of International Law can have no application whatever in India. This argument was advanced before the Supreme Court in the case of Ali Akbar v. United Arab Republic, : [1966]1SCR319 . In that case immunity was claimed both under the principles of International Law and under the said section 86. In that case, in the earlier part of his judgment Chief Justice Gajendragadkar has stated that it being the view of the court that Section 86 created a bar in that case, the court did not propose to consider whether the absolute immunity under International Law was available in that case. Dealing with the argument which is the same argument as the one advanced by Mr. Nariman as just stated, the Supreme Court observed :-

'It is true that this provision exempts the property of any Ruler from execution of any decree that may be passed against a Ruler, and apparently, the High Court thought that this tends to show that the Ruler of a foreign State within the contemplation of Section 86(1) must be the Ruler himself and not the State. In our opinion, this view is not well-founded. The provision that a decree passed against the Ruler of a foreign State shall not be executed against the property of such Ruler, rather tends to show that what is exempted is the separate property of the Ruler himself and not the property of the Ruler as the head of the State. A distinction is made between the property belonging to the State of which the Ruler is recognised to he the head, and the property belonging to the Ruler individually. We are, therefore, satisfied that Section 86(1) applies to cases where suits are brought against Rulers of Foreign States and that foreign States fall within its scope whatever be their form of Government. We have already indicated that whenever a suit is intended to be brought by or against the Ruler of a foreign State, it has to be in the name of the State and that is how the present suit has, in fact, been filed.

The effect of the provisions of Section 86(1) appears to be that it makes a statutory provision covering a field which would otherwise be covered by the doctrine of immunity under International Law. It is not disputed that every sovereign State is competent to make its own laws in relation to the rights and liabilities of foreign States to be sued within its own municipal courts. Just as an independent sovereign State my statutorily provide for its own rights and liabilities to sue and be sued, so can it provide for the rights and liabilities of foreign States to sue and be sued in its municipal Courts. That being so, it would be legitimate to hold that the effect of Section 86(1) is to modify to a certain extent the doctrine of immunity recognised by International Law. This section provides that foreign States can be sued within the municipal Courts of India with the consent of the Central Government and when such consent is granted as required by Section 86(1), it would not be open to a foreign State to rely on the doctrine of immunity under International Law, because the municipal courts in India would be bound by the statutory provisions such as those contained in the Code of Civil Procedure. In substance, Section 86(1) is not merely procedural; it is in a sense a counterpart of Section 84. Whereas Section 84 confers a right on a foreign State to sue. Section 86(1) in substance imposes a liability on foreign States to be sued, though this liability is circumscribed and safeguarded by the limitations prescribed by it . That is the effect of Section 86(1).

In Chandulal Khushalji v. Awad ilr(1897) 21 Bom 351, Strachey, J. had occasion to consider this aspect of the matter in relation to the provisos of Section 433 of the Code of 1882. What Section 433 does, said the learned Judge, 'is to create a personal privilege for sovereign princes and ruling chiefs and their ambassadors and envoys. It is a modified form of the absolute privilege enjoyed by independent sovereigns and their ambassadors in the Courts in England, in accordance with the principles of International Law. The difference is that while in England the privilege is unconditional, dependent only on the will of the sovereign or his representative, in India it is dependent upon the consent of the Governor-General in Council, which can be given only under specified conditions. This modified or conditional privilege is, however, based upon essentially the same principle as the absolute privilege, the dignity and independence of the Ruler, which would be endangered by allowing any person to sue him at pleasure, and the political inconveniences and complications which would result.' We are inclined to think that this view correctly represents the result of the provisions of Section 433 as much as of those contained in Section 86(1).'

What has to be noted is that the Supreme Court has held that the effect of Section 86(1) is 'to modify to a certain extent' the doctrine of immunity recognised by International Law and has further observed that it is a modified form of the absolute privilege enjoyed by independent sovereigns and their ambassadors in the Courts in England in accordance with the principles of International Law. The word used is 'modified'. It signifies that the doctrine of immunity applies in India but only with the modification as made by Section 86. We do not read this judgment to mean or imply that Section 86 wholly supplants the relevant doctrine under International Law. The word 'modified' shows that the principles of International Law would be applicable in India but that in its application Section 86 creates as exception. In International Law the immunity is absolute, subject only to the exception or exceptions recognised in International Law, one of such exceptions being when the foreign Sovereign State waives the privilege of immunity. Section 86 creates another exception, the exception being where the requisite consent is given by the Government of India as provided under Section 86. But the provisions of Section 86 would to that extent operate as another exception and to that extent 'modify' the principles of International Law. But subject to such exception the relevant principle of International Law would still be applicable in India. We have earlier referred to the case of : AIR1966Cal319 . In that case the view taken was that Sections 86 and 87 have no relation to the principles of private International Law based on the independence of a foreign sovereign or of a foreign State, but these provisions of the Code afford an additional protection or privilege to a foreign sovereign providing immunity from being sued in the Municipal Courts of this country without previous permission of the Central Government being obtained to the institution of such suits. This Calcutta Judgment envisages that principles of International Law about immunity apply in India and that simultaneously, that is, in addition. Section 86 also confers such immunity but to the extent provided in that section. In view of the above Supreme Court Judgment, however, in our view, it must be held that the principles of International Law about immunity apply in our country, but that they stand modified by the provisions of Section 86 and the modification, in our opinion, is to create an exception in cases where consent of the Government of India is obtained under Section 86. To the extent that the Calcutta Judgment is inconsistent with the said Supreme Court Judgment it must be deemed to be overruled or no longer good law.

50. Mr. Nariman contended that the said three certificates granted by the Government of India in its ministry of External Affairs are not sufficient to establish that the Government of India has in fact recognised the second defendant as the de facto Sovereign State. He contended, that we should obtain information from the Government of India on the following three questions :-

(1) Whether the Government of India recognises the Government of the second defendant as entitled to exercise governing authority in respect of the territories known as East Germany;

(2) Whether the Government of India recognises the State, that is, the second defendant, and the Government of U. S. S. R. or any other State or Government as de jure entitled to exercise governing authority in respect of those territories;

(3) Whether the Government of India recognises the second defendant as an independent foreign State.

In view of the conclusions which we have already reached on the material already on the record it is not necessary for this Court to have these further inquiries made of the Government of India.

51. It may be stated that Mr. Nariman has not at all argued that the second defendant has waived the privilege of immunity as a foreign Sovereign State and it does not therefore arise for decision.

52. In our opinion, therefore, the second defendant is entitled to the immunity available to a foreign Sovereign State under the principles of International Law. We therefore hold that prayer (a) of the Notice of Motion should have been and should be granted as the Government of India has recognised the second defendant as a de facto Sovereign State. We, therefore, dismiss the suit as prayed for in prayer (a) of the Notice of Motion.

53. The costs must follow the event and we therefore direct that the plaintiffs to the suit do pay the second defendant's costs of this appeal and of the Notice of Motion.

54. The amount of Rs. 500/- deposited as security for the costs of the respondents in this appeal be refunded to the Appellants.

* * * *

54. Appeal allowed.


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