(Dr. D.Y. Chandrachud, J.)

Admit. With the consent of Counsel, taken up for hearing and final disposal.

2. A suit has been filed by the Appellant for recovery of an amount of US $ 25 million together with interest at 19.5% per annum against the Respondents. The First Respondent is the sovereign head of Netherlands while the Second Respondent is the Union of India. The Appellant claims to have been the owner of a vessel which was taken on charter hire by the Dredging Corporation of India Ltd. on 10 November 1989. According to the Appellant, a national of the First Respondent was engaged as an expert to attach certain equipment to the vessel which was to operate on bed leveling operations at the Port of Old Mangalore. The vessel capsized. The Appellant alleges that it was due to the negligence of the expert. The Appellant instituted a suit against the First Respondent on the basis that under a Bilateral Trade Agreement between India and Netherlands, the Government of Netherlands has undertaken to reimburse and/or pay any amounts that may have become due by reason of any default inter alia by its employees/representatives. In paragraph 23A of the Plaint, the Appellant seeks to place reliance on Article 5 of the Bilateral Trade Agreement under which it is alleged that the Government of India was to bear the liability in respect of the damages caused by an expert in the performance of the task assigned and that any claim against the First Respondent shall to that extent be precluded.

3. The suit was instituted before this Court on 30 May 1994. A Notice of Motion was taken out by the First Defendant for dismissal of the suit against the First Defendant for non-compliance of Section 86 of the Code of Civil Procedure, 1908, on the ground that the plaint did not disclose any cause of action against the First Defendant and on the ground that the claim against the First Defendant is barred by limitation. The Learned Single Judge by the impugned order dated 20 January 2011, exercised jurisdiction under Order 7 Rule 11 of the Code of Civil Procedure, 1908, and dismissed the suit against both the First Defendant and the Union of India, the Second Defendant. In so far as the First Defendant is concerned, the suit was dismissed for want of permission of the Union of India under Section 86 of the Code of Civil Procedure, 1908, and also on the ground that no cause of action was revealed against the First Defendant and on the ground of limitation. The Learned Single Judge also proceeded to dismiss the suit against the Second Defendant on the ground of limitation and on the absence of a cause of action.

4. Now, in so far as the First Defendant is concerned, a suit against the sovereign head of the State of Netherlands could not have been instituted without the permission of the Union of India under Section 86(1) of the Code of Civil Procedure, 1908. Section 86(1) reads as follows:

“86. Suits against foreign Rulers, Ambassadors and Envoys. - (1) No foreign State may be sued in any Court otherwise competent to try the suit except with the consent of the Central Government certified in writing by a Secretary to that Government:

Provided that a person may, as a tenant of immovable property, sue without such consent as aforesaid a foreign State from whom he holds or claims to hold the property.”

The provisions of Section 86 have been held to be mandatory in the judgment of the Supreme Court in Veb Deautfracht Seereederei Rostock (D.S.P. Lines) a Department of the German Democratic Republic. vs. New Central Jute Mills Co. Ltd. (AIR 1994 SC 516).In that view of the matter, the dismissal of the suit as against the First Defendant for want of compliance with the provisions of Section 86 was correct. Where permission of the Union of India has not been obtained to institute a suit against a foreign State, the plaint would be liable to be rejected under Order 7 Rule 11 (d) on the ground that the suit appears from the statements in the Plaint to be ba