9911796707
TMI Blog1970 (10) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... irst defendant for sale and supply of certain goods as more particularly mentioned in the two contracts. It is stated in the plaint, as also in the main contracts, that the same were within the frame work of the Trade Agreement dated 18th December 1959 between the Government of the 2nd defendant and the Government of India. It is further averred in the plaint that there was an implied term of each of the two contracts that any agreement which may subsequently be arrived at between the Government of India and the 2nd defendant in connection with the exports from the 2nd defendant to India and from India to the second defendant under the Trade Agreement would be binding between the plaintiffs and the first defendant. The plaintiffs claim by this suit from the first and 2nd defendants a sum of over ₹ 20,00,000/- as and by way of payment of the balance of the price payable to the plaintiffs. Although the contracts were entered into between the plaintiffs and the 1st defendant, the plaintiffs seek to make the 2nd defendant was merely a Department of the second defendant. 3. After the Writ of Summons was served on the second defendant, the second defendant filed an appearance in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jawaharlal Nehru on 17th August 1961 in the Lok Sabha, as appearing from the Lok Sabha Debates to the effect that India had trade relations with the East German Government that de facto India recognized it and that they have got a Trade Representative in India and that India is dealing with them in many ways. The second is also a Statement made by Pandit Jawaharlal Nehru on 2nd September 1961 as appearing in Jawaharlal Nehru's Speeches , Volume Four, to the effect that it seemed to him obvious that certain facts of life should be recognised, that there are two independent entities; the Government of the Federal Republic of Germany and the Government of the German Democratic Republic. The same position was reiterated by Lal Bahadur Shastri in the Indo-Soviet Communique issued by him jointly with his Soviet counterpart, specifically stating that at that time the fact of the existence of the two German States could not be ignored. The same position was again re-affirmed in the Indo-Soviet Communique dated 16th July 1966 to which Mrs. Indira Gandhi was one of the two parties. 4. Thereafter the second defendant took out a Chamber Summons dated 10th March 1970 praying for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts for answers to the two questions mentioned in that letter. The first question was whether, inter alia, the plaintiffs in this suit had made any application to the Government of India under the said Section 86 for filing this suit and what was the answer given by the Government of India. The second question was whether the German Democratic Republic was recognised de facto by the Government of India. There is also annexed to the affidavit a copy of the letter dated 1st August 1970 which is a letter in reply to the said letter dated 1st April 1970. The reply states : This is to certify that the Government of India has de facto relations with the German Democratic Republic. Accordingly that Government should enjoy immunity from jurisdiction of the local courts in suits and other proceedings similar to those enjoyed by any other Government, unless that Government has expressly waived its immunity. The letter is addressed from the Legal and Treaties Division of the Ministry of External Affairs, Government of India, New Delhi, and bears the signature K. K. Chopra , the Law Officer in that Department. The affidavit states that on 3rd August 1970 Mr. Swaran Singh, the Minister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India presumed that necessary facilities would be accorded for the establishment of an equal number of Indian Consulates in the German Democratic Republic on a reciprocal basis as and when the Government of India decided to establish such Consulates. 10. As stated earlier, Vimadalal, J. by his said order under appeal dismissed the Notice of Motion. 11. It is necessary to bear in mind the exact applications made by the Notice of Motion and the contents of the order made thereon. Before the Notice of Motion was taken out, an application had been made by the earlier Chamber Summons for the trial of the same four issues again repeated in the Notice of Motion as preliminary issues. The four issues divide themselves into two groups, issues Nos. 1 and 2 relating to the claim for immunity under International Law and issues Nos.3 and 4 relating to the contention for dismissal of the suit in view of the provisions of Section 86 of the Code of Civil Procedure. That Chamber Summons had been dismissed, as also the second defendant's appeal in respect of the same. In view of those facts the same relief was again asked for by the Notice of Motion, but as prayer (b) thereof and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dant within the terms of Section 87-A(1) (a) of the Civil P.C., and the question still remains a question of fact, in regard to which, it is well settled, no preliminary issues can be framed or tried. The operative part of the Order makes it clear that what is dismissed is the entire Notice of Motion, which would include both prayers (a) and (b). It is true, as pointed out by Mr. Nariman, that if the said four issues were to be tried either as issues in the suit itself or even as preliminary issues, a regular hearing would have to take place and it would have been open to the parties to lead such evidence as they wanted to. But so far as the first two of the said four issues are concerned, both prayers, prayer (b) as well as prayer (a), concern the same (relief) (sic). Prayer (b) was merely for a direction that the first two issues be tried as preliminary issues and for fixing a date of hearing for that purpose. But, as seen earlier, prayer (a) is in a sense, totally different. Prayer (a) does not seek the decision of the first two issues as preliminary issues, but invites the Court in limine to dismiss the suit at the stage of the hearing of the Notice of Motion itself without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Motion cannot by itself lead to the conclusion that the order is an interlocutory order. It is the relief asked for and the order made thereon which determines whether a particular order is or is not an interlocutory order. The normal procedure in this High Court for asking for a decree on award is by way of a Notice of Motion. If a decree is in fact passed on such a Notice of Motion, it cannot be said that the Motion and the order thereon were interlocutory. They clearly are final. Therefore, looking to the nature of the relief asked for by prayer (a) and the order made thereon, it is clear that the second defendant's claim to immunity has been finally disposed of so far as the hearing of the suit itself is concerned. It now remains to be considered whether the order under appeal is a judgment within the meaning of Clause 15 of the Letters Patent and is therefore appealable. 15. So far as the order disposing of prayer (b) is concerned, the order is identical to that made on the Chamber Summons. In the appeal filed against that order it has already been held by a Division Bench that it is not a judgment and is therefore not appealable. That judgment is binding upon us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent interpretation on the word judgment , but in view of the Calcutta High Court and this High Court having taken for such a long time, it is not necessary to refer to the judgments of other High Courts taking any other view. 18. In Jivanlal v. P. R. VakHaria and Co. AIR1933Bom85 , a Division Bench of this High Court held that the decision of a Judge under Section 10 of the Code of Civil Procedure is a judgment within Clause 15 as it was not a mere order relating to the procedure in the suit and as it affected the question whether the court had jurisdiction to entertain a suit which involved a determination of a right of a party who might be adversely affected if the court determined that it had jurisdiction and that it was therefore appealable as a judgment under Clause 15. Apart from saying that it was not a procedural order, the test adopted was that the question involved was whether the court had jurisdiction to entertain the suit, and secondly, that it would involve the determination of the party's right adversely affected by it. If the order for stay was granted, the party's right to litigate that suit in the court in which it was filed would get stayed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arose before it without laying down any general interpretation which directly or impliedly resolves such divergence of opinion between different High Courts. In our opinion, therefore, the earlier judgments of this High Court on the point continue to apply with full effect without in any way being doubted or shaken by this particular judgment of the Supreme Court. 22. Mr. Nariman, however, relied upon a judgment of a Division Bench of this High Court in Govardhan Lalji v. Chandraprabhavati 27 Bom LR 1496 : AIR 1926 Bom 136. In the judgment delivered by him on behalf of the Bench Macleod, C. J. has, after considering certain judgments cited before him, observed :- After considering very carefully what was set forward as a definition of 'judgment' in that case, I prefer myself to consider each decision as it comes before me, and to form my own opinion whether it is a judgment or not for the purpose of deciding whether an appeal lies. This remark occurring in this very judgment, as also perusal of the judgment generally, show that the decision in that case was confined to the facts of that case and cannot be of any assistance by way of yielding a principle for deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Calcutta High Court refusing the defendant's application for dismissal of the suit made on the ground that the court had no jurisdiction to entertain the suit because of the Sovereign immunity claimed by the defendant Corporation as a department of a foreign Sovereign State, and the Appellate Court held that as the judgment under appeal had determined a right or liability affecting the merits of the controversy between the parties and as the decision affected the whole subject-matter of the suit and decided the question whether the suit was to go on or not, it was a judgment within the meaning of Clause 15. 25. In the case before us the position is identical as that in the last case referred to decided by the Calcutta High Court. The point decided by the refusal of prayer (a) on the Notice of Motion is, as noticed earlier, that the second defendant's claim as to immunity and want of jurisdiction against it has been finally disposed of adversely to the second defendant. The second defendant, as a result, will be compelled to enter upon its defence on the merits of the cause of action and claim made in the suit. The second defendant's claim to immunity has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responding provision prior thereto being contained in O. 22, R. 30. He pointed out that the procedure so provided is by way of an application to set aside the Writ. Now it is true that there is no specific provision in India corresponding the said provision in England either in the Code of Civil Procedure or in the Rules of this Court applicable on its Original Side. Procedural rules are, however, only to secure a fair and orderly determination of claims to substantive rights, whether made in a suit or in any other legal proceeding. In the matter before us the second defendant claims immunity from being sued in this court. That claim is a claim to a substantive right. From the nature of things it is obvious that it is necessary to decide that claim first as, if that claim is upheld, it would obviate the necessity of the second defendant being compelled to defend the suit on other points and having to undergo all the procedure like discovery, inspection, participating at the trial by cross-examination and leading its own evidence and possibly an appeal or appeals thereafter against the decision in the suit. It is true that the second defendant has in fact filed its written statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d make and get an opportunity to establish its claim to immunity so far as the Original Side of this High Court is concerned, would be by way of a Notice of Motion. We, therefore, hold that the procedure by way of a Notice of Motion adopted in this case by the 2nd defendant was the correct procedure. But it may be stated that even if we had reached a contrary conclusion, we would have yet held the procedure to be correct in the exercise of our inherent powers under Section 151 of the Code of Civil Procedure. The judgment in B. Mohanlal Co. v. A. Yolibai 34 Bom LR 714 : AIR 1932 Bom 271 is an authority for the proposition that where the rules of procedure do not provide for any specific procedure to be followed, the procedure by way of a Notice of Motion can be held to be the correct procedure by the Court under its inherent powers under Section 151 of the Code of Civil Procedure. A similar view was also taken by a Full Bench of the Calcutta High Court in AIR1966Cal319 where it was held that although there is no provision in the Code for the foreign Government entering a conditional appearance to the suit as is provided for in the Supreme Court Rules in England, nor is there provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved :- No doubt the engagements entered into by a State may be of such a character as to limit and quality, or even to destroy, the attributes of sovereignty and independence x x x x x; and the precise point at which sovereignty disappears and dependence begins may sometimes be difficult to determine. But where such a question arises it is desirable that it should be determined not by the Courts, which must decide on legal principles only, but by the Government of the country, which is entitled to have regard to all the circumstances of the case. Indeed, the recognition or non-recognition by the British Government of a State as a sovereign State has itself a close bearing on the question whether it is to be regarded as sovereign in our courts. In the present case the reply of the Secretary of State shows clearly that notwithstanding the engagements entered into by the Sultan of Kelantan with the British Government that Government continues to recognise the Sultan as a sovereign and independent ruler, and that His Majesty does not exercise or claim any rights or sovereignty or jurisdiction over that country. If after this definite statement a different view were taken by a B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , was whether the Court was bound to have regard to the basis on which the German Democratic Republic purported to act and that as the English Government had never granted recognition de jure or de facto to that Republic or its Government, the English Court must refuse to recognise as effective all legislation emanating from it, and all acts done under such legislation. Now what had happened in that case was that the information received by the court mentioned a part of the history since after the Second World War and what had happened as regards the coming into existence of the German Democratic Republic. The House of Lords, after analysing all the contents of the certificate, observed that the U. S. S. R. may have purported to confer independence or sovereignty on the German Democratic Republic, but that the certificate clearly required the Court to hold that whatever the U. S. S. R. may have purported to do, they did not in fact set up the German Democratic Republic as a Sovereign or independent State and that as the U. S. S. R. retained their right to govern its territory, they could not possibly have done so and the certificate required the Court to hold that they did retain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has recognised the second defendant as a foreign Sovereign State. 37. The principles of International Law relating to immunity accepted by England as seen above have also been recognised in the United States of America. See American Jurisprudence, Vo. 14, page 385, Art. 191. 38. We will now turn to some of the decisions in our country on this point. 39. In N. Masthan Sahib v. Chief Commr., Pondicherry AIR1962SC797 , the Supreme Court considered some of the above referred to English decisions, and particularly that reported in (1924) AC 797 and (1939) AC 256 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. 40. At this stage it is convenient to see what well-known authorities on International Law have to say as regards the doctrine of immunity. A passage in Cheshire on International Law, 7th Edition, 1965, appearing at page 91, reads as under :- In accordance with the max ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of commercial activities, is to say the least, in a very fluid state and it is very likely that it will take considerable time to boil down to a well recognised principle of International Law. Mr. Nariman did invite our attention to some other passages, but, in our opinion, it is not necessary to refer to them. We have already referred to decided cases and some well-known authorities on International Law and it is quite clear that the doctrine of immunity has yet not been curtailed in England so as to exclude the doctrine of immunity from applying to commercial transactions. So far as English Courts are concerned, it is a settled doctrine till it is hereafter revised. It has also been recognised in India. See, for example, AIR1966Cal319 . In International Law a foreign Sovereign State has absolute immunity. To carve out an exception is a matter having wide ramifications. Basically the matter concerns relations between India and foreign States. In a matter of that importance we are of the opinion that no occasion should arise for different High Courts to take differing views. It would result in chaos. If the doctrine which is well established for over a large number of y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hru in his said statement dated 17th August 1961 has stated :'De facto we recognise it'. In his second statement dated 2nd September 1961 he stated: It seems to me obvious that certain facts of life should be recognised. There are two independent entities: The Government of the Federal Republic of Germany and the Government of the German Democratic Republic. This Statement clearly refers to the Government of the German Democratic Republic, i.e., the 2nd defendant, as an independent entity. Having been referred to as the Government, the reference must be construed to mean when the adjective independent is used that the second defendant was characterized as an independent i.e., Sovereign Government. In the said extract from the Indo-Soviet Joint Communique dated 20th May 1965 it is stated, inter alia, that at present the fact of the existence of the two German States cannot be ignored. The reference to one of the two German States referred to was obviously the second defendant. Lal Bahadur Shastri and Mrs. Indira Gandhi have subsequently re-affirmed the position as mentioned earlier. Next there is the evidence of several Trade Agreements between the two Governments, the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de facto recognition to the second defendant as a foreign Sovereign State. 47. Mr. Nariman, however, contended that in order that the second defendant may be held to be entitled to immunity, the recognition must be de jure and not merely de facto. The English authorities to which we have already referred do not make any such distinction. This is further supported by the following passage which occurs in Greig's International Law, 1970 Edition, at page 101 :- The statement that a particular entity has been recognised de jure or de facto is a convenient shorthand form of saying it has been recognised as a de jure or de facto Government. In other words, its status as a Government, and not the recognition, that is de jure or de facto. It is unnecessary to multiply further authorities to show that the recognition, de jure or de facto, has the same value for the purpose of deciding whether a particular foreign State is a Sovereign State and is entitled to immunity under International Law or not. 48. We, therefore, hold that the second defendant is a foreign Sovereign State and is entitled to immunity as claimed by it under the principles of International Law. 49. Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een filed. The effect of the provisions of Section 86(1) appears to be that it makes a statutory provision covering a field which would otherwise be covered by the doctrine of immunity under International Law. It is not disputed that every sovereign State is competent to make its own laws in relation to the rights and liabilities of foreign States to be sued within its own municipal courts. Just as an independent sovereign State my statutorily provide for its own rights and liabilities to sue and be sued, so can it provide for the rights and liabilities of foreign States to sue and be sued in its municipal Courts. That being so, it would be legitimate to hold that the effect of Section 86(1) is to modify to a certain extent the doctrine of immunity recognised by International Law. This section provides that foreign States can be sued within the municipal Courts of India with the consent of the Central Government and when such consent is granted as required by Section 86(1), it would not be open to a foreign State to rely on the doctrine of immunity under International Law, because the municipal courts in India would be bound by the statutory provisions such as those contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be applicable in India but that in its application Section 86 creates as exception. In International Law the immunity is absolute, subject only to the exception or exceptions recognised in International Law, one of such exceptions being when the foreign Sovereign State waives the privilege of immunity. Section 86 creates another exception, the exception being where the requisite consent is given by the Government of India as provided under Section 86. But the provisions of Section 86 would to that extent operate as another exception and to that extent modify the principles of International Law. But subject to such exception the relevant principle of International Law would still be applicable in India. We have earlier referred to the case of AIR1966Cal319 . In that case the view taken was that Sections 86 and 87 have no relation to the principles of private International Law based on the independence of a foreign sovereign or of a foreign State, but these provisions of the Code afford an additional protection or privilege to a foreign sovereign providing immunity from being sued in the Municipal Courts of this country without previous permission of the Central Government be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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