Case Note & Summary
The respondent, Shapoorji Pallonji & Co., filed a summary suit under Order XXXVII of the Code of Civil Procedure, 1908 against the appellant, Qatar Airways, for recovery of Rs. 59.22 lakhs with interest, arising from a contract for interior decoration work at the appellant's offices. The appellant, a company incorporated under Qatari law, filed an affidavit in response to the Summons for Judgment, challenging the maintainability of the suit on the ground that prior permission of the Union Government under Section 86 CPC was not obtained. The learned Single Judge held the suit maintainable, leading to this appeal. The appellant contended that it is a state-owned entity and thus a 'foreign state' under Section 86 CPC, requiring government consent to sue. The respondent argued that the appellant is a separate legal entity, not a foreign state, and that Section 86 does not apply. The Union of India supported the respondent's position. The Division Bench analyzed the definition of 'foreign state' under Section 87A CPC and the principles of sovereign immunity. The Court held that Section 86 applies only to foreign states, not to commercial entities incorporated under foreign law. The appellant, being a company with its own legal personality, is not a foreign state. Even if state-owned, it engages in commercial activities (air transport) and is not entitled to immunity. The Court dismissed the appeal, affirming the Single Judge's order on maintainability, and remanded the matter for consideration of the appellant's leave to defend application on merits.
Headnote
A) Civil Procedure - Maintainability of Suit - Section 86 CPC - Foreign State - The appellant, a Qatari share holding company, contended that the suit filed against it under Order XXXVII CPC was not maintainable without prior permission of the Union Government under Section 86 CPC. The Court held that Section 86 applies only to foreign states, not to commercial entities incorporated under foreign law. The appellant is a juristic entity separate from the State of Qatar and does not qualify as a foreign state. (Paras 1-19) B) Civil Procedure - Sovereign Immunity - Commercial Activities - The appellant argued that it is a state-owned entity entitled to sovereign immunity. The Court rejected this, holding that even if the appellant is state-owned, it is engaged in commercial activities (air transport) and not entitled to immunity under international law or Section 86 CPC. (Paras 20-30) C) Civil Procedure - Summary Suit - Leave to Defend - The Court held that the appellant's application for leave to defend was not considered on merits as the appeal was limited to the issue of maintainability. The matter was remanded to the Single Judge for consideration of the leave to defend application. (Paras 31-32)
Issue of Consideration
Whether a suit against a foreign company, which is a juristic entity incorporated under the laws of Qatar, requires prior permission of the Union Government under Section 86 of the Code of Civil Procedure, 1908.
Final Decision
Appeal dismissed. Order of Single Judge holding suit maintainable affirmed. Matter remanded to Single Judge for consideration of appellant's leave to defend application on merits.
Law Points
- Section 86 CPC applies only to foreign states
- not to commercial entities incorporated under foreign law
- Sovereign immunity not available to state-owned corporations engaged in commercial activities
- Leave to sue under Section 86 CPC not required for suits against foreign companies
