1970 Supreme(Bom) 146

IN THE HIGH COURT OF BOMBAY
IN THE HIGH COURT OF BOMBAY
N.A. Mody and G.N. Vaidya, JJ.
Appellants: The German Democratic Republic
Vs.
Respondent: The Dynamic Industrial Undertaking Ltd.
Appeal No. 114 of 1970 (Suit No. 528 of 1969)Decided On: 16.10.1970
Counsels:
For Appellant/Petitioner/Plaintiff: M.P. Amin, Rajani Patel, Suresh Parekh, P.R. Mridul and P.M. Amin, Advs., i/b., Khambatta and Nalin Kapadia Attorneys
For Respondents/Defendant: F.S. Nariman and N.D. Vyas, Advs., i/b., Mulla and Mulla Craigie Blunt and Caroe Attorneys

Headnote:

JUDGMENT - [KEYWORD] - [SUBJECT] - [ACT SECTION LIST] - [SUMMARY] Vimadalal, J. dismissed the Notice of Motion dated 14th August 1970, filed by the German Democratic Republic (GDR) seeking dismissal of the suit filed against it by a company on the grounds of immunity under International Law and Section 86 of the Code of Civil Procedure (CPC). The company appealed against the order. The main issues were whether the GDR was entitled to immunity as a foreign Sovereign State under International Law and whether Section 86 of the CPC barred the suit against the GDR. FINDING OF THE COURT: 1. The order dismissing prayer (a) of the Notice of Motion is appealable as a "judgment" within the meaning of Clause 15 of the Letters Patent of the High Court. 2. The GDR is entitled to immunity as a foreign Sovereign State under the principles of International Law. 3. Section 86 of the CPC does not bar the suit against the GDR as it only modifies the doctrine of immunity recognized by International Law to a certain extent. ISSUES: 1. Whether the order dismissing prayer (a) of the Notice of Motion is appealable as a "judgment" within the meaning of Clause 15 of the Letters Patent of the High Court. 2. Whether the GDR is entitled to immunity as a foreign Sovereign State under the principles of International Law. 3. Whether Section 86 of the CPC bars the suit against the GDR. RATIO DECIDENDI: 1. An order refusing to stay a suit under Section 10 of the CPC is appealable as a "judgment" under Clause 15 of the Letters Patent as it affects the question of jurisdiction of the court to entertain or proceed with a suit or proceeding and the decision on that question affects the merits of the controversy between the parties. 2. 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. The principles laid down in this case are 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 and that whether the foreign government has been recognised as a Government de jure or de facto would make no difference. 3. 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. Kelatan Government (1924) AC 797. It was held 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. 4. The same doctrine was again recognised in England in the Spain Republic v. Arantzazu Mendi, (1939) AC 256. 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. 5. The principle of immunity of a foreign Sovereign State in International Law was again re-affirmed by the House of Lords in the Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), (1967) (.....) AC 853. It was 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. 6. The principles of International Law relating to immunity accepted by England have also been recognised in the United States of America. 7. In N. Masthan Sahib v. Chief Commr., Pondicherry, AIR 1962 SC 797, the Supreme Court considered some of the above referred to English decisions 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. 8. The Government of India has de facto relations with the GDR and recognizes it as a foreign Sovereign State. 9. Section 86 of the CPC creates a statutory provision covering a field which would otherwise be covered by the doctrine of immunity under International Law. It modifies to a certain extent the doctrine of immunity recognised by International Law. FINAL DECISION: The appeal was allowed. The order of the lower court dismissing the Notice of Motion was set aside. The GDR was held to be entitled to immunity as a foreign Sovereign State and the suit against it was dismissed. MAIN LEGAL POINT: The doctrine of immunity of a foreign Sovereign State from being sued in the Municipal Courts of a country is recognized under International Law. In India, this doctrine is modified to a certain extent by Section 86 of the Code of Civil Procedure, which allows foreign States to be sued with the consent of the Central Government. CATEGORY: Civil Procedure SUB-CATEGORY: Jurisdiction and Immunity of Foreign States