TaxTMI 
TaxTMI 
1993 (11) TMI 245
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....uired by Section 86 of the Code of Civil Procedure (hereinafter referred to as "the Code"). The same plea was taken even on behalf of the carrier, which also belongs to and is owned by the German Democratic Republic. In support of the stand and in order to attract the bar of Section 86 of the Code, the appellant produced the certificate dated September 18, 1981 granted by the Consul-General of the German Democratic Republic at Bombay saying: "VEB Deutfracht Seereederei Rostock, abbreviated as 'D.S.R.' commonly known as D.S.R. Lines constitutes a department of the Government of the German Democratic Republic exercising the rights of a legal entity." The Constitution of the German Democratic Republic was also produced. Reference was made to Article 12 of the said Constitution which says: "Mineral resources, mines, power stations, barrages and large bodies of water, the natural resources of the continental shelf, the larger industrial enterprises, banks and insurance companies nationally'-owned farms, traffic routes, the means of transport of the railways, ocean shipping and civil aviation, post and telecommunication installations, are nationally-owned property....
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....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. On a plain reading of different sub-sections of Section 86, it is apparent that no foreign State may be sued in any court in India, except with the consent of the Central Government which has to be certified in writing by the Secretary to that Government. In view of the provisions aforesaid, before any action is launched or a suit is filed against a foreign State, person concerned has to make a request to the Central Government for grant of the necessary consent as required by sub-section (1) of Section 86 and the Central Government has to accede to the said request or refuse the same after taking into consideration all the facts and circumstances of the case. In a sense it amounts to a bar on the power of court itself which is entitled to try all suits of civil nature in view of Section 9 of the Code. But, Section 9 itself recognises the limitation on such courts to try any suit the cognizance whereof is either expressly or impliedly barred. As such whe....
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.... liability of foreign States to be sued is twofold. The first limitation is that such a suit cannot be instituted except with the consent of the Central Government certified in writing by a Secretary to that Government. This requirement shows the anxiety of the Legislature to save foreign States from frivolous or unjustified 1 (1966) 1 SCR 319: AIR 1966 SC 230 claims. The second limitation is that the Central Government shall not give consent unless it appears to the Central Government that the case falls under one or the other of clauses (a) to (d) of Section 86(2)." 8. It is true that Government Corporations have been incorporated to undertake the activities, which at one time were directly part of the activities of the foreign State. A question may arise whether the immunity provided by Section 86 of the Code can be extended to even such Government Undertakings which have their own legal entity. At one time, in view of their corporate and juristic personality, such Government Corporations were held not to be part of a State having their own independent existence. But, this aspect was reexamined by the English Court as well as this Court. In the case of Baccus S.R.L. v. Servic....
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.... 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 Republic. 11. 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....