Case Note & Summary
The dispute arose from a contract for the purchase of tea between the appellant, Mirza Ali Akbar Kashani, and the respondents, the United Arab Republic and its department, the Ministry of Economy, Supplies, Importation Department of the Republic of Egypt at Cairo. The appellant claimed damages of Rs. 6,07,346 for breach of contract, alleging that the respondents had placed an order with a third party without giving the appellant the benefit of first refusal as required by the contract. The United Arab Republic was formed on February 22, 1958, by the merger of Egypt and Syria and was recognized by the Government of India. The appellant filed the suit on August 10, 1959, on the Original Side of the Calcutta High Court without obtaining the consent of the Central Government under Section 86(1) of the Code of Civil Procedure, 1908. Leave under Clause 12 of the Letters Patent was granted by the trial judge. The respondents entered appearance and applied to revoke the leave, contending that the suit was in substance against the Ruler of the United Arab Republic and thus barred under Section 86, and that the foreign State enjoyed absolute immunity under International Law. The trial court rejected both contentions and dismissed the application. On appeal, the Division Bench of the Calcutta High Court agreed that Section 86(1) did not apply to a foreign State as such, but upheld the plea of immunity under International Law and rejected the plaint. The appellant then appealed to the Supreme Court with a certificate from the High Court. The Supreme Court considered whether Section 86(1) applies to suits against foreign States, whether the term 'Ruler' includes heads of republican states, and the interplay between statutory provisions and international law immunity. The Court held that as a matter of procedure no sharp distinction could be drawn between the Ruler of a foreign State and the foreign State itself, especially since Section 87 requires suits by or against a Ruler to be in the name of the State and Section 84 empowers a foreign State to sue. The Court interpreted 'Ruler of a foreign State' in Section 86(1) as including the head of any foreign State recognized by the Central Government, irrespective of whether the State is monarchical or republican, following the definition in Section 87(1)(b). The Court further held that Section 86(1) modifies the doctrine of immunity under International Law by providing a statutory framework under which foreign States can be sued in Indian courts with the consent of the Central Government. Since the appellant had not obtained such consent, the suit was barred. The Court did not find it necessary to decide the alternative plea of absolute immunity under International Law. The appeal was dismissed, and the rejection of the plaint was affirmed.
Headnote
A) Civil Procedure - Suit Against Foreign State - Requirement of Consent - Code of Civil Procedure, 1908, Section 86(1) - Section 86(1) applies not only to Rulers of foreign States but also to foreign States themselves; no distinction between Ruler and State for procedural purposes because Section 87 provides suit in name of State and Section 84 allows foreign State to sue - Court held that suit against United Arab Republic was barred for want of consent under Section 86(1) - Held that consent of Central Government is mandatory before instituting suit against foreign State (Paras 328 A-D, 334 B-C). B) Civil Procedure - Definition of 'Ruler' - Heads of Republican States Included - Code of Civil Procedure, 1908, Section 87(1)(b) - 'Ruler of a foreign State' includes any head of State recognized by Central Government, regardless of form of government (monarchical or republican) - Court reasoned that Legislature could not have intended different treatment for monarchical and republican States; definition introduced in 1951 clarified this - Held that the expression 'Ruler' in Section 86(1) covers heads of all foreign States (Paras 330 H-331 A, 331 E-F). C) International Law - Sovereign Immunity - Effect of Statutory Provision - Code of Civil Procedure, 1908, Sections 84, 86 - Section 86(1) modifies doctrine of absolute immunity under International Law; foreign States can be sued in Indian municipal courts with consent of Central Government, and when consent is granted, foreign State cannot claim immunity under International Law - Court held that Section 86(1) covers field otherwise covered by immunity doctrine, providing limited liability to be sued - Held that municipal statutory provisions prevail over international law immunity (Paras 332 B-H, 333 B-E). D) Civil Procedure - Bar of Suit - Consent Not Obtained - Code of Civil Procedure, 1908, Section 86(1) - Suit filed against foreign State without prior consent of Central Government is barred; such consent is a condition precedent - Court applied Section 86(1) to suit against United Arab Republic and held it barred; did not need to decide absolute immunity under International Law - Held that plaint was rightly rejected (Paras 334 B-C, 334 C).
Issue of Consideration
Whether Section 86(1) CPC requiring consent of Central Government applies to suits against foreign States (like United Arab Republic) and not just Rulers; whether 'Ruler' includes heads of republican states; whether doctrine of sovereign immunity under International Law can be claimed despite statutory provisions.
Final Decision
Supreme Court held that Section 86(1) CPC applies to suits against foreign States and 'Ruler' includes head of any foreign State; consent of Central Government was mandatory; suit filed without such consent was barred; accordingly, appeal dismissed and Division Bench's rejection of plaint affirmed. Court did not decide on absolute immunity under International Law.
Law Points
- Section 86(1) CPC applies to foreign States as well as Rulers
- 'Ruler' includes head of any foreign State regardless of form of government
- Section 86 modifies doctrine of international law immunity
- Consent of Central Government required before suit against foreign State
- Section 84 CPC is counterpart to Section 86
