TMI Blog2013 (2) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... esource base. The contractual and commercial obligations which they assume are governed by the discipline of the law. In their commercial and business operations such corporate entities cannot claim an immunity to civil actions. Qatar Airways carries on commercial airline operations. It brings and takes passengers and cargo to and from India. It operates offices, engages employees, solicits business and carries on activities of a commercial airline here, as abroad. The claim is founded on a purely contractual and commercial dealing between the Appellant and the Respondent. The Appellant is not a foreign State within the meaning of sub- Section (1) of Section 86. It has a distinct legal personality of its own which finds recognition in the contractual relationships into which it enters. Those contractual relationships occasioned by its business activities in India would be subject to the jurisdiction of a competent court in this country. For these reasons, the learned Single Judge was not in any error in holding that the suit was maintainable. The Union Government has been correct in its assertion that the question of permission of the Union Government did not arise and, as urge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of air transportation. 5. To carry out all permissible air services such as air survey, photography and the like. 6. To participate with other entities, corporations and companies wherever such participation realises profits to the company. 7. To purchase, sell, mortgage, hire lands and buildings to achieve the objects of the company. 8. To establish and manage hotels, clubs and restaurants in and outside the State of Qatar. 9. To establish and manage duty free shopping. 10. To carry out landing, technical and commercial services as well as aircraft catering in principal or on behalf of any third party. 11. To establish and manage tourist offices and to carry out media and advertisement works. 12. To manage and operate airports. According to the Appellant, the Company is owned and controlled by the State of Qatar and by its ruling family. On this basis it has been asserted that the Appellant "is a foreign state within the meaning of Section 86 of the Code of Civil Procedure" and the suit instituted in the original jurisdiction of this Court is not maintainable in the absence of permission by the Central Government. 3. The Respondent had by a communication of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation enacted by the Parliament subsequently, namely, the Carriage by Air Act, 1982 and the Consumer Protection Act, 1986. In the absence of the field being governed by special legislation of the kind involved in the Ethiopian Airlines case, the provisions of Section 86 would continue to apply and consequently in the absence of permission the suit would not be maintainable. 7. On the other hand, it has been urged on behalf of the Union Government by the Additional Solicitor General that:- (i) Qatar Airways operates as a corporate entity in the commercial sphere and to such a body, the provisions of Section 86 of the CPC are not attracted; (ii) The judgment of the Supreme Court in Ethiopian Airlines cannot be read as being restricted only to a situation where special legislation was enacted by Parliament. On the contrary, after considering the ambit of the doctrine of sovereign impunity, the Supreme Court held that the principle that a commercial airline is not entitled to sovereign immunity is consonant with the growing body of international law principles and the principles of law accepted in other jurisdictions including the United Kingdom; (iii) A company incorpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any such member of the staff of the foreign State or the staff or retinue of the Ambassador or Envoy of a foreign State or of the High Commissioner of a Commonwealth country as the Central Government may, by general or special order, specify in this behalf, as they apply in relation to a foreign State; (5) The following persons shall not be arrested under this Code, namely:-- (a) any Ruler of a foreign State; (b) any Ambassador or Envoy of a foreign State; (c) any High Commissioner of a Commonwealth country; (d) any such member of the staff of the foreign State or the staff of retinue of the Ruler, Ambassador or Envoy of a foreign State or of the High Commissioner of a Commonwealth country, as the Central Government may, by general or special order specify in this behalf. (6) Where a request is made to the Central Government for the grant of any consent referred to in sub-section (1), the Central Government shall, before refusing to accede to the request in whole or in part, give to the person making the request a reasonable opportunity of being heard. 10. Section 84 empowers a foreign State to sue in any competent Court provided the object of the suit is to enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ield 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 may 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 s. 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 s. 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 the Code of Civil Procedure. In substance, s. 86 (1) is not merely procedural; it is in a sense a counter-part of s. 84. Wherea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, trading, within the local limits 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 nor 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 State. (emphasis supplied) The reference to a company or corporation which is deemed to be a foreign state are clearly intended to refer to a situation where, as in that case, the entity in question is a department of a foreign state. An entity which is a depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssal Commission in respect of a claim arising out of a consignment which was booked on Ethiopian Airlines for delivery in Tanzania. The State Commission held that the complaint was not maintainable. In Appeal, the National Consumer Disputes Redressal Commission held that Section 86 of the CPC was not applicable to a proceeding under the Consumer Protection Act, 1986. The National Commission held that the provisions of the CPC were applicable to proceedings under the Consumer Protection Act, 1986 only for limited purposes. The Supreme Court came to the conclusion that the Consumer Protection Act, 1986 and the Carriage by Air Act, 1972, being more recent statutes of a special nature, Section 86 of the CPC which constitutes an older and more general statute would be inapplicable. Consequently, the consent of the Union Government was not required to subject Ethiopian Airlines to a suit in an Indian Court. But, significantly, the judgment of the Supreme Court does not rest only upon the inapplicability of the provisions of Section 86 to proceedings which were governed under a later and more special enactment. The Supreme Court held that it was consonant both with the principles emerging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to rights which they posses and which would otherwise be susceptible to enforcement." As the court stated, the principle of restrictive immunity is "manifestly better in accord with practical good sense and with justice." 72. On careful analysis of the American, English and Indian cases, it is abundantly clear that the Appellant Ethiopian Airlines must be held accountable for the contractual and commercial activities and obligations that it undertakes in India. The rationale for this broader principle is again enunciated in the following observations: In the modern era, where there is close interconnection between different countries as far as trade, commerce and business are concerned, the principle of sovereign immunity can no longer be absolute in the way that it much earlier was. Countries who participate in trade, commerce and business with different countries ought to be subjected to normal rules of the market. If State owned entities would be able to operate with impunity, the rule of law would be degraded and international trade, commerce and business will come to a grinding halt. Therefore, we have no hesitation in coming to the conclusion that the Appellant cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal entity of its own is so firmly rooted in our notions derived from common law that it is hardly necessary to deal with it elaborately; and so, prima facie, the income derived by the appellant from its trading activity cannot be claimed by the State which is one of the shareholders of the corporation. ...... 19. In this connection, we may usefully refer to the observations made by Lord Denning in Tamlin v. Hanna for: "In the eye of the law," said Lord Denning, "the corporation is its own master and is answerable as fully as any other person or corporation. It is not the Crown and has none of the immunities or privileges of the Crown. Its servants are not civil servants, and its property is not Crown property. It is as much bound by Acts of Parliament as any other subject of the king. It is, of course, a public authority and its purposes, no doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government." These observations tend to show that a trading activity carried on by the corporation is not a trading activity carried on by the State departmentally, nor is it a trading activity carried on by a State through i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the discipline of the law. In their commercial and business operations such corporate entities cannot claim an immunity to civil actions. Qatar Airways carries on commercial airline operations. It brings and takes passengers and cargo to and from India. It operates offices, engages employees, solicits business and carries on activities of a commercial airline here, as abroad. 18. The rationale for the emerging principle of law was recognised in the judgment of the Court of Appeal in the United Kingdom in Trendtex Trading Corporation Ltd. v. Central Bank of Nigeria (1997) 1 All ER 881 in the following dictum : It is perhaps right to consider first whether the narrower principle is in better conformity with contemporary international relationships than the doctrine of absolute immunity. It seems undeniable that it is. So long as sovereign institutions confined themselves to what may in general terms be described as the basic functions of government a total personal or individual immunity from suit was unobjectionable since the area in which it operated had its own inherent limits. The comity of nations was aided by such a doctrine confined as it was, broadly speaking, to act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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