9911796707
TMI Blog1970 (10) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... to two contracts in writing with the first 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 sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi. The first is a statement made by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s immunity under International Law as well as under Section 86 of the Code of Civil Procedure and requests 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d about the appointment of Mr. Herbert Fischer as their Consul General at New Delhi. It further states that the Government of 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. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon is taken to be in the nature of 'new facts' the same do not disclose any clear recognition of the 2nd defendant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the order has been made on a Notice of Motion. In our opinion, the mere fact that an order has been made on a Notice 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgments and interpretation put on the word "judgment" by the Calcutta High Court has consistently been followed in this High Court upto now. Some other High Courts have, however, put a different 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vergent views of the different High Courts as to the interpretation of the word "judgment" were pointed out in that case before the Supreme Court, but after referring to some of them the Supreme Court has rested content by deciding the particular case which 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 dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revoke the leave granted under Clause 12 of the Letters Patent was a "judgment" and the ratio was that it was appealable as it affected the jurisdiction of the court. Similar was the position in the case of R. N. Airline Corpn. v. Manorama AIR1966Cal319 . It was an appeal against an order of a Single Judge 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 defenda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that even the claim for absolute immunity under International Law can be tried only at the hearing of the suit as there is no procedure in India permitting it to be tried otherwise. He pointed out that in England a specific procedure is provided for under O. 22, R. 8, of the Supreme Court Rules as applicable in 1970, the corresponding 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 defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court and a host of others are made by way of Notices of Motion. Justice requires that the 2nd defendant should be allowed to apply for an early determination of its claim for immunity in order to avoid the necessity of defending the claims made in the suit as mentioned earlier. In our opinion, therefore, the only procedure by which the 2nd defendant could 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 powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntan Government (1924) AC 797. Moreover, it was held in that case that it was the settled practice of the Courts in England to take judicial notice of the status of any foreign Government and for that purpose, in any case of uncertainty, to seek information from a Secretary of State; and the information so received was conclusive. In his Speech Viscount Cave observed :- "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 tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d granted recognition de jure or de facto to the German Democratic Republic or its Government and if yes, when. A contention having been urged before the House of Lords held that recognition was a matter which the Court of its own motion was bound to consider and that therefore the information so received could be relied upon. The point for determination, shortly stated, 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 certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd defendant has made a claim to immunity. It is a well-known fact that the same foreign Government may be recognised by a second Government and may not be recognised by a third Government. Therefore, the point which we have to consider is not whether the British Government recognised the second defendant as a Sovereign State, but whether the Government of our country 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 stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial activities which are not confined only to their own territories but extend beyond their territories. Modern writers on International Law have expressed their own opinions as to whether the doctrine of immunity available to a foreign Sovereign State should be made available in respect of such transactions which are purely of a commercial nature. The point about making exception 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India has recognised the second defendant as a Sovereign State, as it is not for the Court to pronounce any opinion on the point except on the information made available to the Court by the Government of India. Firstly, reliance has been placed on the said Statements made by three Prime Ministers of India, and India has had only three Prime Ministers since India attained independence. We refer only to the material words. Pandit Jawaharlal Nehru 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 ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt unless that Government has expressly waived its immunity. This last statement is really a consequence which should normally follow from the recognition of the second defendant by the Government of India and it is a conclusion which normally it is for the court to reach. The only utility of this last portion, however, is that it confirms that what the Government of India intended to convey by their certificate was that the Government of India has accorded 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 jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and the property belonging to the Ruler individually. We are, therefore, satisfied that Section 86(1) applies to cases where suits are brought against Rulers of Foreign States and that foreign States fall within its scope whatever be their form of Government. We have already indicated that whenever a suit is intended to be brought by or against the Ruler of a foreign State, it has to be in the name of the State and that is how the present suit has, in fact, been 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enjoyed by independent sovereigns and their ambassadors in the Courts in England in accordance with the principles of International Law. The word used is "modified". It signifies that the doctrine of immunity applies in India but only with the modification as made by Section 86. We do not read this judgment to mean or imply that Section 86 wholly supplants the relevant doctrine under International Law. The word "modified" shows that the principles of International Law 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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