Foreign-owned commercial airline not treated as a foreign State under Section 86 CPC; civil suit proceeds without prior consent.

Section 86 CPC applies only when the defendant is a foreign State or its legal equivalent, and not merely a foreign-owned corporation with a separate legal personality. A commercial airline engaged in trading and contractual activity in India cannot claim sovereign immunity for ordinary business transactions, even if its shares are wholly held or controlled by a foreign government. Prior consent of the Central Government is therefore not required for a suit founded on a commercial contract against such an entity, and the civil suit is maintainable.

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Issues: Whether a foreign airline company, carrying on commercial activities in India, is a "foreign State" so as to attract the requirement of prior consent of the Central Government under Section 86 of the Code of Civil Procedure, 1908; whether a suit founded on a commercial contract against such entity is maintainable without such consent.

Analysis: Section 86 operates where a foreign State is sued, and is the counterpart of Section 84, which recognises the right of a foreign State to sue in respect of private rights. The provision must be read in light of the doctrine of sovereign immunity as modified by Indian law and later explained by the Supreme Court. The earlier authorities concerned situations where the defendant was in truth a foreign State or a department of a foreign State. A corporate entity, however, has a distinct legal personality separate from its shareholders, even if its share capital is wholly owned or controlled by a foreign government. The later Supreme Court authority on commercial airlines also recognises that entities engaged in commercial activity are not entitled to claim sovereign immunity in respect of such transactions, and that restrictive immunity does not extend to ordinary trading and contractual dealings.

Conclusion: The airline company was not a foreign State within the meaning of Section 86, and prior consent of the Central Government was not required. The suit was maintainable.

Final Conclusion: The decision affirms that a foreign-owned corporate entity engaged in commercial operations in India cannot invoke Section 86 CPC merely because its shares are held by a foreign State, and ordinary contractual disputes against it may proceed before the civil court.

Ratio Decidendi: Section 86 CPC applies only where the defendant is a foreign State or its equivalent in law, not to a separate corporate entity carrying on commercial business, and sovereign immunity does not extend to ordinary commercial transactions of such an entity.

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