A foreign state is not entitled to absolute immunity from suit in respect of commercial transactions.

( 1 ) THE plaintiff instituted this suit with leave under Clause 12 of the Letters Patent for a decree for Rs. 6,07,346/ -. The plaintiff's claim arises out of an agreement between the plaintiff and the defendants through defendant No. 2 in respect of supply of tea. There was an agreement in the month of December 1957. The quantity supplied under that agreement to the defendants had been paid for. In the month of March 1958 another agreement was entered into on behalf of the defendants through defendant No. 2. It was agreed that the defendants would accept and/or buy and/or purchase from the plaintiff 2,00 tons of tea. The goods were to be shipped from Calcutta during the months of May and June 1958. The plaintiff was to be paid by means of letter of credit at Calcutta. The other terms of the agreement contained, inter alia, a clause that no further order shall be placed in India by the defendant who would give to the plaintiff the first refusal of their future requirements a month before the expiry of the contract, subject to the fixation of prices prevailing at the time.

( 2 ) THE plaintiffs case is that the said term was the basis of the agreement and was entered into for the purpose of enabling the plaintiff to buy tea in the local market in India without competition from others in order to supply to the defendants at the contracted rate. In pursuance of the agreement the plaintiff supplied 600 tons of tea. The defendants paid for the same.

( 3 ) IN the month of June/july 1958 the time for shipment was extended upto August 31, 1958. The plaintiff's case is that in breach of the agreement on July 29, 1958 the defendants placed order with Messrs. Standard Stores Agency (Private) Ltd. of Calcutta for the supply of 4,500 tons of tea. The said order according to the plaintiff was placed during the tenure of the contract between the plaintiff and the defendants without giving the plaintiff the first refusal for the future requirement of the defendants.

( 4 ) THE breach of contract upset the local market of Egyptian quality of tea in India and thereby prevented the plaintiff from buying the tea for supplying the same to the defendants at contracted price. The plaintiff states that the balance quantity of 1,400 tons of the tea could not be delivered to the defendants on account of wrongful conduct on the part of the defendants though the plaintiff was ready and willing to perform the plaintiff's part or the contract.

( 5 ) UNDER these circumstances the plaintiff claims damages under two heads. First, the loss of profit and/or the income that the plaintiff would have earned if the plaintiff was allowed to deliver the balance quantity that is 1,400 tons, secondly, the profit that the plaintiff would have earned if the order for 4,500 tons placed by the defendants with Messrs. Standard Stores Agency (Private) Ltd. was placed with the plaintiff and/or loss of profit suffered by the plaintiff for the same.

( 6 ) I am not called upon to express any opinion on the merits or demerits of the plaintiffs claim.

( 7 ) THIS application was made on behalf of the defendants, The United Arab Republic and the Ministry of Economy, Supplies Importation Department of the Republic of Egypt at Cairo for revocation of leave under Clause 12 of the Letters Patent, for rejection and/or taking off the plaint of the file and for stay of the proceedings till the final disposal of this application.

( 8 ) COUNSEL on behalf of the defendants contended first that the suit was incompetent in the absence of consent of the Central Government under Section 813 of the Code of Civil Procedure. Secondly, it was contended that the United Arab Republic is a foreign State and cannot be impleaded in a suit in this country on the principle of absolute immunity.

( 9 ) SECTIONS 83 to 87a in the Civil Procedure Code appear under the heading "suits by aliens and by or against foreign rulers, ambassadors and envoys". Under Section 86 of the Code it is enact