Deepak Wadhwa vs Aeroflot

Issue: The question raised in this case is whether the principles of International Law as
transformed from time to time about sovereign immunity apply in India in face of the provisions
contained in Section 86 of the Code of Civil Procedure, 1908.

Facts: Mr. Deepak Wadhwa, plaintiff/decree-holder obtained from this Court an ex-parte decree
for the recovery of Rs. 4,32,066 with costs against Aeroflot (Soyiet Airlines). He took out on
July 22, 1981 the execution of the decree and prayed for the issue of warrants of attachment of
the amount lying in the current account No. 30/84011 with State Bank of India, Main Branch,
Parliament Street, New Delhi in the name of Aeroflot and then calling the amount for payment to
the decree-holder. A show cause notice was issued to the judgment-debtor who filed an
application, being E.A. 174181, for declaring that the suit instituted by the decree-holder was
incompetent, invalid and untenable and the decree is non-est. inexecutable and a nullity. The plea
is that Aeroflot (Soviet Airlines) is a General Department of International Air Services of the
U.S.S.R.; that it is a Governmental organisation of the Union of Soviet Socialist Republics and
all its belongings are the property of the U.S.S.R.; that it is a foreign State within the meaning of
the expression as used in Section 86 of the Code of Civil Procedure, 1908 (for short called the
Code); that it could not be sued except with the consent of the Central Government certified in
writing by a Secretary to that Government as provided in sub-section (1) of Section 86 and that
the requisite consent has not been obtained. Similarly no' decree can be executed against the
property of a foreign State except with the consent of the Central Government by a Secretary to
that Government, as provided in sub-section (3) of Section 86.

Defense of the decree-holder is three-fold.

1. Firstly, he says that the petition under Section 86 of the Code is not maintainable since
the suit filed by the plaintiff is under a special procedure prescribed under the Carriage by
Air Act, 1972. The provisions of the aforesaid convention have been embodied in the
Schedules to the Act and have the force of law in India in relation to any carriage by air
to which these rules apply irrespective of the nationality of the aircraft performing the
carriage. Since U.S.S.R. is a party to the convention of Warsa, accordingly, the

provisions of the Act are applicable to the facts of the present case as the suit is under a
special enactment and not under an ordinary law. The provisions of Section 7(1) of the
Act will prevail over Section 86(1) of the Code.
2. Secondly, it is denied that Aeroflot (Soviet Airlines) is a General Department of
International Air Services of the Union of the Soviet Socialist Republics. It is denied that
the same is a Governmental Organisation of the Union of Soviet Socialist Republics.
Even if it is found that the Airlines Aeroflot is wholly owned by the Government of
U.S.S.R., the submission is that as a carrier as distinct from the Government off U.S.S.R.,
it is placed on the same footing as Air India/Air France/other carriers which are operating
in India. doctrine of sovereign immunity is not applicable to the ordinary commercial
transactions.
3. He contends that the extent of sovereign immunity differ in its application from nation to
nation and even there has been transformation in i't from time to time. Some countries
granted absolute immunity while other granted Limited immunity. The State has entered
into commercial activities. This transformation in the function of a, sovereign State has
modified the rule of the international law relating to absolute immunity. Most of the
countries have replaced it by a doctrine of restrictive immunity. This doctrine gives
immunity to acts of a Governmental nature, described in Latin as jure imperil, but no
immunity to acts of a commercial nature, jure gestionis.

Judgment:

1. I will trace the development of doctrine in India. The question of sovereign, immunity
came to be considered in India in the early last century primarily whether the Rulers,
Chiefs and Princes had a status rendering them exempt from the jurisdiction of the
Courts. Certain Rulers were held to be sovereign or semi- sovereign and immunity was
granted even though they were acting, in their capacity of traders carrying on business in
British territory. There is a circular order dated March 4, 1836 of the old Sadar Diwani
Adalat of Bengal which declared that "civil claims against independent chiefs, whether
by their subjects or by others, cannot be taken cognizance of by the Courts". This was not
altered by the first Civil Procedure Code of the year 1859.

2. Evidence has been led by affidavits and a certificate under the seal of the Embassy of the
Union of Soviet Socialist Republics in India has also been filed to the effect that Aeroflot
'Soviet Airlines' is the governmental organisation and all its belongings including aircraft
are the property of the Union of Soviet Socialist Republics. Article 6 of the Constitution
(Fundamental Law) of the Union of Soviet Socialist Republics as amended. It provides,
inter alia, that air transport are State property, that is, belong to the whole people.
Aeroflot thus, is an alter ego or organ of the Government.
3. The provisions of Section 6 of the Code are imperative and a decree passed by a Court
without requisite certificate of consent would be a nullity. (See "Gaekwar Baroda State
Railway V. Hafiz Habib -ul-Haq and others", Air 1938 P.C. 165).
4.

In the absence of the consent of the Central Government as prescribed by sub-section (1)
of Section 6 of the Code. the suit could not have been entertained at .all. It would be a
case of total absence of competence and hence the decree by the Court would be nullity.

5. The doctrine of sovereign immunity is that a sovereign State should not be sued or could
not be impleaded in the Courts of another sovereign State against its will. The doctrine
grants immunity to a foreign Government or its Department of State or anybody which
can be regarded as an alter ego or organ of the Government. Every sovereign State
respects the independence of every other sovereign State and as a consequence declines
to exercise by means of any of its' Courts jurisdiction over the person of any sovereign or
over the public property of any State.
6. Campania Naviera Vascongada V. Steamship Cristina and all persons claiming an
interest therein". 1938(1) A17. E.R. 719 in the classic re-statement of the doctrine said
"THAT the Courts of a country will not implead a foreign sovereign, that is, they will not
by their process make him against his will a party to legal proceedings, whether the
proceedings involve process against his person or seek to recover from him specific
property or damages".
7. Section 433 of 1877 Code or Section 86 of 1908 Code did not prevent absolutely the suits
against foreign Government or a trading Corporation which is an organ of a foreign

Government Those suits were made conditional on the consent to be given on the
satisfaction of the specified conditions. The trading or commercial activity of the
sovereign is one of the conditions on the satisfaction of which the consent to sue can be
given.
8. In the interpretation of Statutes, the Court always presumes that the legislature inserted
every part thereof for a purpose and the legislative intention is that every part of the
statute should have effect. Every word in the statute is required to be given a meaning.
Adoption of the construction as suggested by the counsel for the decree-holder would
leave without effect clause (b) of sub-section (2) of Section 86. A statute ought to be
construed in a manner that, if it can be prevented, no clause, sentence or word shall be
superfluous of insignificant. This can only be if the relevant provisions of the Code are
only looked into for consideration of the claims of sovereign immunity.
9. The transformed principles of International Law after the enactment of the Code, have no
application in India, unless the legislature amends the statutory provisions.
10. The objection that the special form off procedure prescribed by the Carriage by Air Act,
1972 would prevail over the one prescribed by Section 86 of the Code is not seriously
pressed by the counsel for the decree-holder. There is no provision in the matter of
sovereign immunity contained in the Act. The Code deals with procedural matters that is
the matters relating to the machinery for the enforcement of substantive rights. These
substantive rights may be contractual of flowing from the statutory provisions, including
the Act. The Act allows suits to be filed in a civil Court relating 'to the matters under it,
but the procedure to be followed in such suit will be governed by the provisions' of the
Code.