Dismissing an appeal in Qatar Airways v Shapoorji Pallonji & Co, a division bench of Bombay High Court recently held that “a corporate entity which carries on business or trade in India does not fall within the protection of the doctrine of sovereign immunity as embodied in section 86 of the CPC [Code of Civil Procedure, 1908]”.
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Qatar Airways had questioned the maintainability of a suit by Shapoorji Pallonji & Co, a major real estate developer, for recovery of money it was owed, as the permission of the government of India had not been obtained before the suit was filed. The airline argued that this was necessary as it is owned and controlled by the state of Qatar and by its ruling family, and as such it is a “foreign state” within the meaning of section 86(1) of the CPC. However, a March 2012 ruling by a single judge of Bombay High Court had held that the suit was maintainable.
The two-judge division bench held that the contractual relationships resulting from the business activities in India of Qatar Airways were subject to the jurisdiction of a competent court in India as “it has a distinct legal personality of its own which finds recognition in the contractual relationships into which it enters”.
Shapoorji Pallonji had told the court that the Legal and Treaties Division of the External Affairs Ministry had examined the matter and clarified that Qatar Airlines does not fall within the purview of section 86 and thus “the question of the grant of permission did not arise”.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
