Case: Veb Deutfracht Seereederei Rostock A Dept. Of The German De Vs. New Central Jute Mills Co. Ltd And Anothers

impossible to say - no doubt, our government would not wish to say - that the Crown had thereby deprived itself of the right to rely on that immunity if an attempt were made to sue it in a foreign country. One must look in every case at the facts to reach a conclusion whether the Crown has intended to give up its immunity generally or only for limited and defined purposes." * 9. In the case of Royal Nepal Airlines Corpn. v. Monorama Meher Singh Legha 1966 AIR(Cal) 319 : 69 CWN 767) a Division Bench of the Calcutta High court held that Nepal Airlines Corporation having its office at Calcutta shall be deemed to be department of the Government of Nepal on the basis of the documents produced before the court and as such was entitled to claim immunity from the process of the Indian Court to exercise its jurisdiction in respect of the claim for damages which had been brought by the plaintiff of the said suit. But, at the same time, it must be impressed that any plea of immunity raised by a corporate undertaking of a foreign State, has to be examined on the basis of materials produced on behalf of such undertaking or corporation. The initial onus of establishing that such corporation or undertaking had right to immunity, must be discharged. If it satisfies the court that because of any constitutional provision, although such corporation has its separate legal entity, still it shall be deemed to be a department of the State for purpose of immunity, then only the onus will shift to the plaintiff to disprove any such claim 10. In the present case, the appellant had produced the Constitution of the German Democratic Republic, Article 12 whereof has been reproduced above, which provides that larger industrial enterprises, banks, insurance companies, nationally-owned farms, means of transport of the railways, ocean shipping and civil aviation, post and telecommunication installations are nationally-owned property, private ownership thereof is inadmissible. In view of the aforesaid Article 12 of the Constitution and the certificate granted by the Counsel General of the German Democratic Republic, the appellant shall be deemed to be a department of the Government of German Democratic republic11. Sub-section (2) of Section 86 of the Code says that such consent shall not be given unless it appears to the Central Government that the suit in question has been filed under the conditions mentioned in clauses (a) to (d) of sub-section (2) of Section 86. clause (b) of sub-section (2) provides that consent shall be given, in respect of a suit, which has been filed against a foreign State, if such foreign State by itself or another, trades within the local limits of the jurisdiction of the Court. When sub-section (2) provides that such consent shall be given by the Central Government in respect of cases covered by clause (b) of sub-section (2), then a person who is to sue in any court of competent jurisdiction, against any such foreign State or any company or corporation, which can be held to be a foreign state in respect of any breach of contract, is entitled to apply for consent of the Central Government and the Central Government is expected to consider the said request taking into consideration the facts and circumstances of that particular case. While considering the question of grant or refusal of such consent, the Central Government is expected to examine that question objectively. Once the Central Government is satisfied that a cause of action has accrued to the applicant against any foreign company or corporation, which shall be deemed to be foreign State, such consent should be given. The immunity and protection extended to the foreign State on the basis of International Law should not be stretched to a limit, so that a foreign company and corporation, trading within the local limit of the jurisdiction of the court concerned, may take a plea of Section 86, although prima facie it appears that such company or corporation is liable to be sued for any act or omission on their part or for any breach of the terms of the contract entered on their behalf. It is neither the purpose not the scope of Section 86 to protect such foreign traders, who have committed breach of the terms of the contract, causing loss and injury to the plaintiff. But, if it appears to the Central Government that, any attempt on the part of the plaintiff, to sue a foreign State, including any company or corporation, is just to harass or to drag them in a frivolous litigation, then certainly the Central Government shall be justified in rejecting any such application for consent, because such motivated action on the part of the plaintiff, may strain the relations of this country with the foreign State12. In the present case, the appellant having been held to be a foreign State within the meaning of Section 86 and the plaintiff-respondent not having obtained the consent of the Central Government, as required by Section 86, the suit filed on its behalf was not rightly entertained by the trial court. The question whether a suit should be entertained, cannot be deferred, till the stage of the final disposal of he suit, because that will serve neither the interest of the plaintiff nor of the defendant. The object of Section 86 is to save foreign States from being harassed by defending suits in which there are hardly any merits. If the foreign State is required to file written statement and to contest the said suit and only at the state of final disposal, a verdict is given whether in the facts and circumstances of the particular case, such foreign State is entitled to the protection of Section 86 of the Code, the very object and purpose of Section 86 shall be frustrated. The bar of Section 86 can be taken at the earliest opportunity and the court concerned is expected to examine the same

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. In the present case, the appellant had produced the Constitution of the German Democratic Republic, Article 12 whereof has been reproduced above, which provides that larger industrial enterprises, banks, insurance companies,farms, means of transport of the railways, ocean shipping and civil aviation, post and telecommunication installations areproperty, private ownership thereof is inadmissible. In view of the aforesaid Article 12 of the Constitution and the certificate granted by the Counsel General of the German Democratic Republic, the appellant shall be deemed to be a department of the Government of German Democratic republic11.(2) of Section 86 of the Code says that such consent shall not be given unless it appears to the Central Government that the suit in question has been filed under the conditions mentioned in clauses (a) to (d) of(2) of Section 86. clause (b) of(2) provides that consent shall be given, in respect of a suit, which has been filed against a foreign State, if such foreign State by itself or another, trades within the local limits of the jurisdiction of the Court. When(2) provides that such consent shall be given by the Central Government in respect of cases covered by clause (b) of(2), then a person who is to sue in any court of competent jurisdiction, against any such foreign State or any company or corporation, which can be held to be a foreign state in respect of any breach of contract, is entitled to apply for consent of the Central Government and the Central Government is expected to consider the said request taking into consideration the facts and circumstances of that particular case. While considering the question of grant or refusal of such consent, the Central Government is expected to examine that question objectively. Once the Central Government is satisfied that a cause of action has accrued to the applicant against any foreign company or corporation, which shall be deemed to be foreign State, such consent should be given. The immunity and protection extended to the foreign State on the basis of International Law should not be stretched to a limit, so that a foreign company and corporation, trading within the local limit of the jurisdiction of the court concerned, may take a plea of Section 86, although prima facie it appears that such company or corporation is liable to be sued for any act or omission on their part or for any breach of the terms of the contract entered on their behalf. It is neither the purpose not the scope of Section 86 to protect such foreign traders, who have committed breach of the terms of the contract, causing loss and injury to the plaintiff. But, if it appears to the Central Government that, any attempt on the part of the plaintiff, to sue a foreign State, including any company or corporation, is just to harass or to drag them in a frivolous litigation, then certainly the Central Government shall be justified in rejecting any such application for consent, because such motivated action on the part of the plaintiff, may strain the relations of this country with the foreign State12. In the present case, the appellant having been held to be a foreign State within the meaning of Section 86 and thenot having obtained the consent of the Central Government, as required by Section 86, the suit filed on its behalf was not rightly entertained by the trial court. The question whether a suit should be entertained, cannot be deferred, till the stage of the final disposal of he suit, because that will serve neither the interest of the plaintiff nor of the defendant. The object of Section 86 is to save foreign States from being harassed by defending suits in which there are hardly any merits. If the foreign State is required to file written statement and to contest the said suit and only at the state of final disposal, a verdict is given whether in the facts and circumstances of the particular case, such foreign State is entitled to the protection of Section 86 of the Code, the very object and purpose of Section 86 shall be frustrated. The bar of Section 86 can be taken at the earliest opportunity and the court concerned is expected to examine the same