GERMAN DEMOCRATIC REPUBLIC Vs. DYNAMIC INDUSTRIAL UNDERTAKING LTD

JUDGEMENT

(1.) This is an appeal against the Order of Vimadalal, J. dt. 18th September 1970 passed by him on the Notice of Motion dated 14th August 1970 dismissing the Notice of Motion.

(2.) The suit in which the Notice of Motion was taken out was filed on 5th June 1969. The plaintiffs are a company carrying on business in Fertilizers. There are three defendants to the suit. It is stated in the plaint that the first defendant is a body corporate controlled by and/or is a department of the second defendant. The second defendant is the German Democratic Republic. The third defendant is a Bank and is not directly concerned in the Notice of Motion. The plaintiffs entered into 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 Rs. 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 second defendant filed an appearance in the suit specifically stating therein that it was under protest. Thereafter the second defendant filed its written statement. It is stated in the first paragraph of the written statement that the second defendant has filed the written statement under protest and without prejudice to the rights and the contention of the second defendant that this Court had no jurisdiction to try or entertain or dispose of the suit against the second defendant for the reasons therein stated. The reasons stated are that the second defendant is a Sovereign Independent State and that all Sovereign States are subject to International Law and enjoy immunity according to the general principles of International Law. It is further stated in the written statement that for many years the Government of India has treated the second defendant as a Sovereign Independent State and has continued to do so and that since the year 1954 there have been several Trade Agreements between the Government of India and the Government of the second defendant. It is further stated that in order to look after certain commercial interests of the Government of India in the second defendant it was agreed that if and when a Trade Representative is appointed he will enjoy the same rights and privileges that are accorded to the Trade Representation of the second defendant in India and that in pursuance of that agreement a Trade Representation of the second defendant was set up in India and that it continues to enjoy diplomatic privileges of cypher and mail bag, as also certain other privileges. Later in the written statement, in its paragraphs 10 and 11, it is stated that the suit having been filed without prior consent of the Government of India as contemplated under Section 86 of the Code of Civil Procedure, the suit against the second defendant is liable to be dismissed. After taking such preliminary objections and after again specifically stating that in the event of the Court holding that the second defendant was not immune from the process of this Court, the written statement contains averments on the facts and submissions contained in the plaint. In support of its claim for immunity under International Law, the Written Statement relies upon certain Statements made by three Prime Ministers of India, being Pandit Jawaharlal Nehru, Lal Bahadur Shastri and Mrs. Indira Gandhi. 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.