2024 INSC 593
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7702 OF 2019
DLF LTD. (FORMERLY KNOWN AS
DLF UNIVERSAL LTD) AND ANR. ...APPELLANT(S)
VERSUS
KONCAR GENERATORS AND MOTORS LTD. …RESPONDENT(S)
J U D G M E N T
PAMIDIGHANTAM SRI NARASIMHA, J.
1. The issue arising in the present appeal relates to enforcement
of an arbitral award expressed in foreign currency. In this context,
two questions arise for consideration. First, what is the correct and
appropriate date to determine the foreign exchange rate for
converting the award amount expressed in foreign currency to
Indian rupees. Second, what would be the date of such conversion,
when the award debtor deposits some amount before the court
during the pendency of proceedings challenging the award. Two
uncertainties have a direct bearing on the question to be answered,
the time lapse between the date of the award and its enforceability-
2
a local factor, and the ever-fluctuating exchange rates- a global
factor.
1.1 Taking into account these two factors and the statutory
provisions, coupled with the decisions of this Court, we have
formulated twin principles: First, following the principle in Forasol
v. Oil and Natural Gas Commission1, the date when the arbitral
award becomes enforceable shall be the date for conversion. Under
the Arbitration and Conciliation Act, 19962 this date is when the
objections against the award are dismissed, and award attains
finality. Second, in the event that the award amount or part of it is
deposited in court pending objections, enabling withdrawal by the
decree holder, that date of such deposit shall be the relevant date
for conversion as per the principle in Renusagar Power Co Ltd v.
General Electric Co3. Before we consider the submissions of the
counsels representing the parties, followed by our reasons and
decision, we will refer to the relevant facts of the case.
2. Facts: The relevant facts are that the appellants are Indian
companies and the respondent is a Croatian company. The parties
entered a contract for the design, engineering, manufacturing, and
1 1984 Supp SCC 263.
2 Hereinafter ‘the Act’.
3 1994 Supp (1) SCC 644.
3
supply of two generators by the respondent. Certain disputes arose
between them that were referred to arbitration before the
International Chamber of Commerce4, Paris. The three-member
arbitral tribunal passed its award dated 12.05.2004 in favour of
the respondent-claimant and held the appellants to be jointly and
severally liable to pay Euros 10,93,989, along with interest, as
follows:
i. Euros 9,60,308.41 with interest of 5% p.a. starting on
31.10.1999 until final repayment;
ii. Euros 18,411.40 for the storage and maintenance of the
goods with interest of 5% p.a. starting from the date of the
award;
iii. Euros 5,545.40 relating to lawyer expenses of the
claimant, euros 99,482.70 relating to arbitration fees paid
to the ICC, euros 3,389.57 as guaranty expenses relating
to the repayment of the appellants’ arbitration fee to the
ICC, euros 6,852 relating to the arbitration costs in Paris,
all these amounts with interest of 5% p.a. from the date of
the award.
4 Hereinafter “ICC”.
4
2.1 The respondent filed for execution of the award in 2004, while
the appellants filed a petition under Section 34 of the Act, which
was dismissed on 28.04.2010. In 2010, the appellants then filed
objections against the award under Section 48 of the Act and also
filed a Section 37 appeal against the Section 34 order. The High
Court dismissed the appeal by its order dated 15.10.2010, the
terms of which are important for our purpose and are hence
extracted:
“After arguing for some time learned counsel have reached
a consensus on the present appeal. It has been agreed by
learned counsel for the appellants that the appeal as well
as the application under Section 34 of the Arbitration and
Conciliation Act, 1996 would be dismissed as withdrawn. It
has been further agreed that the appellants would deposit
an amount of Rs.7.5 Crores before the Executing Court on
or before 08.11.2010.
It has been agreed by learned counsel for the respondent
that the application under Section 48 which has been filed
by the appellants would be decided on its own merits
without being influenced by any findings or observations in
the order on the application under Section 34 dated
28.04.2010. It has further been agreed by learned counsel
for the respondent that the amount of Rs. 7.5 Crores which
would be deposited by the appellants would be released to
it only consequent to furnishing a bank guarantee of a
scheduled bank of India in the amount of Rs. 7.5 Crores in
favour of the Executing Court and the said bank guarantee
would be kept alive during the proceedings under Section
48 and for a period of 60 days thereafter. The final order
thereon would obviously be passed by the Executing Court
after the conclusion of the proceedings under Section 48.”
2.2 In accordance with the above, the appellants deposited
Rs. 7.5 crores with the Executing Court on 22.10.2010.
5
2.3 The Trial Court dismissed the objections filed under
Section 48 by order dated 02.04.2011. The appellants filed a
revision, which the High Court admitted by order dated
03.06.2011. By this order, the High Court also stayed the
operation of the Trial Court order dismissing objections, subject to
the appellants depositing a further amount of Rs. 50 lakhs, in
addition to Rs. 7.5 crores, with the Executing Court. The Court
directed that the amount shall be disbursed to the successful party
on the final adjudication of this lis. It also rejected the respondent’s
prayer for deposit of the amount in euros. Pursuant to this order,
the appellants deposited Rs. 50 lakhs on 15.07.2011.
Subsequently, the revision came to be dismissed by the High Court
on 01.07.2014, by which the award attained finality as this order
was not challenged any further.
2.4 In the execution proceedings, the Trial Court by order dated
24.08.2016 permitted the respondent to withdraw the entire
deposit of Rs. 8 crores as per the direction of the High Court. On
10.10.2016, the respondent received Rs. 11,60,12,100, including
the interest that had accrued on the deposited amount.
2.5 The execution petition was allowed by the Trial Court by its
order dated 03.02.2017, wherein it was held that the relevant date
6
to convert the award amount expressed in euros to Indian rupees
(the foreign exchange rate) is 01.07.2014, i.e., the date on which
all the objections against the award were finally decided as it is
only on such date that the award is deemed to be a decree. The
Trial Court accepted the calculation as submitted by the
respondent.
2.6 The appellants filed a revision petition against this order,
which was dismissed by the High Court by order dated
26.02.20185, which is impugned herein. The High Court rejected
the appellant’s reliance on this Court’s decision in Forasol (supra)
to submit that the date of decree shall be deemed as the relevant
date for conversion and since the award dated 12.05.2004 is a
deemed decree under the Act, the exchange rate as on the date of
the award should be applied. The Court reasoned that this Court’s
judgment in Forasol (supra) was passed under the Arbitration Act,
1940 and hence, does not apply in the present case. Instead, the
High Court referred to the Delhi High Court’s decision in Progetto
Grano S.P.A. v. Shri Lal Mahal Limited6, against which this Court
dismissed the SLP7, where it was held that the relevant date for
5
In CR No. 1827 of 2017 (O&M), Punjab and Haryana High Court (hereinafter “impugned judgment”).
6 2014 SCC OnLine Del 3348.
7 SLP No. 27041/2014, order dated 21.11.2014.
7
conversion is when the objections filed under Section 48 are finally
decided. Further, the Court referred to Section 49 of the Act8 that
provides that the foreign arbitral award shall be deemed to be a
decree of the court when it is satisfied that it is enforceable under
Part II, Chapter I of the Act. It reasoned that such satisfaction
required under Section 49 is complete only when the objections
filed under Section 48 are finally decided, which was on
01.07.2014 in the present case (when the High Court dismissed
the revision). It also observed that the appellants delayed execution
of the award by initially filing under Section 34, despite such
application not being maintainable and then filing an appeal
against this order and subsequently withdrawing it. The appellants
cannot be permitted to benefit from the fluctuation in exchange
rates when the delay is attributable to them. Therefore, the
relevant date for conversion is 01.07.2014.
2.7 While issuing notice on the special leave petition filed by the
appellant on 10.09.20189, this Court confined the issue to
8 Section 49 of the Act reads:
“49. Enforcement of foreign awards.—Where the Court is satisfied that the foreign award is
enforceable under this Chapter, the award shall be deemed to be a decree of that Court.”
9 By order 10.09.2018, this Court ordered: “Issue notice, returnable within four weeks, limited to the conversion
rate that would be applicable on 15.10.2010 insofar as the deposit of Rs. 7.5 Crores is concerned. The same will
apply to the further deposit of Rs. 50,00,000/-.”
8
determining whether the foreign exchange rate as on 15.10.2010
would apply to the deposit of Rs. 8 crores.
3. Submissions: Learned senior counsel Mr. Pinaki Mishra
appeared on behalf of the appellants. Initially, he submitted that
01.07.2014 would not be the relevant date for conversion for the
entire amount and argued for using the exchange rate on
02.04.2011, when the Trial Court dismissed objections under
Section 48. However, he later restricted his submissions to the
exchange rate that applies when the amount of Rs. 8 crores was
deposited by the appellants on 22.10.2010 as per the order dated
15.10.2010. The crux of his argument is that the deposited
amount stands converted as on the date of its deposit, and this
amount then cannot be converted again as per the exchange rate
prevailing on 01.07.2014. He has submitted that the High Court
passed an order dated 15.10.2010 directing the appellants to
deposit Rs. 7.5 crores on the consent of both parties, and also
permitted the respondent to withdraw this amount on furnishing
a bank guarantee in Indian rupee for the entire amount, to which
the respondent had agreed at the time. He further submitted that
the appellants cannot be faulted for the respondent not
withdrawing the amount when it was deposited. In response to the
9
respondent’s contention regarding their inability to furnish a bank
guarantee of a scheduled Indian bank, he submitted that the
respondent had agreed to this condition when the order was
passed, and in any case, it could have applied for a modification
but did not do so. Since the respondent consented to the deposit
of Rs. 7.5 crores and it was also permitted to withdraw the same,
the amount stood converted as on the date of its deposit on
22.10.2010. The exchange rate on this date was 1 euro = Rs.
59.17. While the arbitral award along with interest was euros
16,73,469.07, the deposited amount of Rs. 7.5 crores gets
converted to euros 12,67,534.22 at that exchange rate, and the
balance of the award would be euros 4,05,934.85 that remained
pending as on this date. Subsequently, pursuant to the High
Court’s interim order dated 03.06.2011 in revision against the
Trial Court dismissing the objections petition, the appellant
deposited an additional amount of Rs. 50 lakhs on 15.07.2011. As
on this date, the amount of arbitral award including interest
pending payment was euros 4,17,278.78, i.e., after converting and
adjusting the earlier deposit against the award. Using the
prevailing exchange rate of 1 euro = Rs. 62.89 as on 15.07.2011,
the appellant’s deposit amounts to euros 79,503.90. Therefore, a
10
balance of euros 3,37,774.88, along with interest, remains pending
for which the exchange rate as on 01.07.2014 would apply.
3.1 Mr. Mishra concluded by submitting that the appellants
would be required to pay only Rs. 3.19 crores if their calculation is
accepted. On the other hand, if the impugned judgment is upheld,
they would be required to be pay more than double the amount,
i.e., Rs. 6.48 crores.
3.2 Mr. Abhay Mahajan, learned counsel, appearing for the
respondent submitted that the exchange rate on 01.07.2014 would
apply to the entire award amount. He submitted that the
respondent had not consented to the deposit of Rs. 7.5 crores and
that the High Court did not convert the amount but only directed
deposit of a lump sum amount. He relied on this Court’s decision
in P.S.L. Ramanathan Chettiar v. O.R.M.P.R.M. Ramanathan
Chettiar10 where it was held that the judgment debtor depositing a
sum in court during the pendency of the appeal does not pass the
title and vest the money with the decree-holder. The decree-holder
may withdraw the amount only on furnishing security, which
means that the payment is not in satisfaction of the decree.
Further, the judgment debtor can proceed against the security in
10 (1968) 3 SCR 367.
11
case he succeeds in the appeal. Rather, the purpose of the deposit
is to obtain a stay of execution and to put the money beyond the
reach of the parties pending the disposal of the appeal. On this
basis, Mr. Mahajan submitted that the deposit of Rs. 8 crores
during the pendency of the objections under Section 48 does not
pass the title of this amount to the respondent and such deposit
was not under the arbitral award as the award can be deemed to
be a decree only on 01.07.2014 when all the objections to the
award stood dismissed. Hence, this is the relevant date for
conversion.
3.3 As per the calculation sheet submitted by the respondent, the
exchange rate as on this date is 1 euro = Rs. 82.21 and this rate
must be used for converting the entire arbitral award and interest.
The amount of Rs. 11.6 crores withdrawn by the respondent on
10.10.2016 must first be appropriated towards interest and then
towards the principal sum. After adjusting this amount and after
accounting for interest, the respondent submits that it is entitled
to Rs. 6,57,62,057 from the appellants.
4. Analysis – Statutory Scheme: It is important to first set out
the statutory scheme for the enforcement of foreign arbitral awards
in India. Under the Act, Part II deals with the enforcement of
12
certain foreign arbitral awards. Chapter I deals with awards under
the New York Convention. Section 45 provides for the power of a
court to refer parties to arbitration.11 Section 46 provides that a
foreign award which is enforceable under this Chapter shall be
treated as binding for all purposes on the persons between whom
it is made.12 Section 47 provides for the evidentiary requirements
for enforcement of a foreign award.13 Section 48 sets out various
grounds on which the court may refuse the enforcement of a
foreign award.14 Section 49 provides that where the court is
11 Section 45 reads:
“45. Power of judicial authority to refer parties to arbitration.—Notwithstanding anything
contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when
seized of an action in a matter in respect of which the parties have made an agreement referred to
in section 44, shall, at the request of one of the parties or any person claiming through or under
him, refer the parties to arbitration, [unless it prima facie finds] that the said agreement is null and
void, inoperative or incapable of being performed.”
12 Section 46 reads:
“46. When foreign award binding.—Any foreign award which would be enforceable under this
Chapter shall be treated as binding for all purposes on the persons as between whom it was made,
and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in
any legal proceedings in India and any references in this Chapter to enforcing a foreign award shall
be construed as including references to relying on an award.”
13 Section 47 reads:
“47. Evidence.—(1) The party applying for the enforcement of a foreign award shall, at the time of
the application, produce before the court—
(a) the original award or a copy thereof, duly authenticated in the manner required by the law of
the country in which it was made;
(b) the original agreement for arbitration or a duly certified copy thereof; and
(c) such evidence as may be necessary to prove that the award is a foreign award.
(2) If the award or agreement to be produced under sub-section (1) is in a foreign language, the
party seeking to enforce the award shall produce a translation into English certified as correct by
a diplomatic or consular agent of the country to which that party belongs or certified as correct in
such other manner as may be sufficient according to the law in force in India.
[Explanation.—In this section and in the sections following in this Chapter, “Court” means the
High Court having original jurisdiction to decide the questions forming the subject-matter of the
arbitral award if the same had been the subject-matter of a suit on its original civil jurisdiction and
in other cases, in the High Court having jurisdiction to hear appeals from decrees of courts
subordinate to such High Court.]”
14 Section 48 reads:
“48. Conditions for enforcement of foreign awards.—(1) Enforcement of a foreign award may be
refused, at the request of the party against whom it is invoked, only if that party furnishes to the
court proof that—
13
satisfied that a foreign award is enforceable under this Chapter, it
shall be deemed to be a decree of that court. Section 50 provides
for appeal against certain orders, i.e., orders refusing to refer
parties to arbitration under Section 45 and orders refusing to
enforce a foreign award under Section 48.15 Finally, Section 5116 is
(a) the parties to the agreement referred to in section 44 were, under the law applicable to them,
under some incapacity, or the said agreement is not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law of the country where the award was
made; or
(b) the party against whom the award is invoked was not given proper notice of the appointment of
the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(c) the award deals with a difference not contemplated by or not falling within the terms of the
submission to arbitration, or it contains decisions on matters beyond the scope of the submission to
arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from
those not so submitted, that part of the award which contains decisions on matters submitted to
arbitration may be enforced; or
(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with
the agreement of the parties, or, failing such agreement, was not in accordance with the law of the
country where the arbitration took place; or
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a
competent authority of the country in which, or under the law of which, that award was made.
(2) Enforcement of an arbitral award may also be refused if the Court finds that—
(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of
India; or
(b) the enforcement of the award would be contrary to the public policy of India.
[Explanation 1.—For the avoidance of any doubt, it is clarified that an award is in conflict with the
public policy of India, only if,—
(i) the making of the award was induced or affected by fraud or corruption or was in violation of
section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice. ]
[Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention with
the fundamental policy of Indian law shall not entail a review on the merits of the dispute.]
(3) If an application for the setting aside or suspension of the award has been made to a competent
authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn
the decision on the enforcement of the award and may also, on the application of the party claiming
enforcement of the award, order the other party to give suitable security.”
15 Section 50 reads:
“50. Appealable orders.—(1) [Notwithstanding anything contained in any other law for the time
being in force, an appeal] shall lie from the order refusing to—
(a) refer the parties to arbitration under section 45;
(b) enforce a foreign award under section 48, to the court authorised by law to hear appeals from
such order.
(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in this
section shall affect or take away any right to appeal to the Supreme Court.”
16 Section 51 reads:
“51. Saving.—Nothing in this Chapter shall prejudice any rights which any person would have had
of enforcing in India of any award or of availing himself in India of any award if this Chapter had
not been enacted.”
14
a savings clause and Section 5217 provides that Chapter II of Part
II shall not apply to awards governed under this Chapter.
4.1 From the statutory scheme, it is clear that a foreign arbitral
award is binding between the parties when it is enforceable under
Part II, Chapter I of the Act (Section 46). The enforceability of the
award can be challenged under Section 48, and the order passed
on such an application can be appealed under Section 50 only if it
is allowed and the court refuses enforcement of the award.
Therefore, a foreign award can be enforced when the objections
against it are finally decided and dismissed. At this point, the
award is deemed to be a decree of the court as per Section 49.18
Unlike under the Arbitration Act, 1940, there is no requirement for
a separate decree by a court for making the award a rule of the
court.19
5. Case-law on Relevant Date for Conversion: Now, we will
discuss the case-law on the relevant date of conversion, both in
the context of arbitral awards and judgments where the decretal
amount is expressed in a foreign currency. The seminal case that
first decided this question was Forasol v. ONGC (supra). Forasol
17 Section 52 reads:
“52. Chapter II not to apply.—Chapter II of this Part shall not apply in relation to foreign awards
to which this Chapter applies.”
18 See Fuerst Day Lawson v. Jindal Exports Limited, (2001) 6 SCC 356, paras 30 and 31.
19 ibid.
15
was a French company that was awarded a tender for structural
drilling of oil for exploration by ONGC. Pursuant to certain
disputes that arose between the parties, the matter was referred to
arbitration and on 21.12.1974, an arbitral award was passed in
Forasol’s favour where the amount was expressed in French
francs. This award was made under the Arbitration Act, 1940. The
Court held that the award can be enforced either in foreign
currency or in Indian rupee. The principles for determining
conversion to Indian rupee are as follows:
5.1 Where the contract provides for a rate of exchange, the same
must be used to convert the amount in accordance with the
wording of the contractual clause. In this case, article IX-3.1 of the
contract provided for the exchange rate of FF 1.033 = Re. 1.000,
which the Court held as applying to only 20% of the fees and
charges computed in French francs based on contractual
interpretation.20 Further, the arbitral award provided for an
enhanced rate of conversion of FF 1.000 = Rs. 1.5178 as applicable
to payments in Indian rupee on or after 30.11.1966 as the Indian
rupee was depreciated at this time. The Court interpreted the
arbitral award and held this exchange rate to apply in place of what
20 Forasol (supra), para 16.
16
was provided in article IX-3.1 to the extent of payments made in
Indian rupee on and after 30.11.1966.21
5.2 For the remaining amount that still required to be converted
to Indian rupee for which no exchange rate was provided in the
contract or the arbitral award, the Court considered six possible
dates as the proper date for fixing the rate of exchange22:
i. the date when the amount became due and payable;
ii. the date of the commencement of the action;
iii. the date of the decree;
iv. the date when the court orders execution to issue;
v. the date when the decretal amount is paid or realised;
vi. and in cases where a decree is passed by the court in terms
of an arbitral award in foreign currency, the date of the
award.
5.3 After an extensive discussion of English jurisprudence on the
point, the Court noted the position of law in England at the time.
23
Briefly stated, the position is as follows: Both courts and
arbitrators in England have the jurisdiction to make a judgment/
award in foreign currency in certain circumstances. In the
21 ibid, paras 17-22.
22 ibid, paras 24-25.
23 ibid, para 39.
17
Jugoslavenska case24, the Court of Appeal held that in cases of
arbitral awards, the date of award is the relevant date for
determining the exchange rate. This was a departure from the
‘breach date rule’, i.e., the conversion must be as per the exchange
rate on the date when the debt was payable, which principle was
laid down by the House of Lords in the Havana case25.
Subsequently, in the Schorsch Meier case26 (this was not a case of
arbitration but a claim for payment of price of goods in a foreign
currency filed before English courts), the Court of Appeal held that
the date of conversion should be the date of payment, i.e., the date
on which the court authorises enforcement of the judgment in
terms of sterling. Finally, in the Miliangos case27, the House of
Lords also held that the date of conversion should be the date
when the court authorises enforcement of the judgment in terms
of sterling pound. While Jugoslavenska (supra) was not expressly
overruled by the House of Lords, its correctness was doubted.
5.4 The Court held that there is no bar on courts in India to pass
a decree for a sum expressed in foreign currency. However, for the
purpose of payment of such amount, the limitations and
24 Jugoslavenska Oseanska Plovidba v. Castle Investment Co. Inc., [1973] 3 All E.R. 498.
25 In re United Railways of the Havana and Regia Warehouses, Ltd.,[1959] 1 All E.R. 214 (CA).
26 Schorsch Meier GmbH v. Hennin, [1975] 1 All E.R. 152
27 Miliangos v. George Prank (Textiles) Ltd., 1976 AC 443.
18
restrictions under the Foreign Exchange Regulation Act, 1973
(that was in force at the time) must be considered. If permission is
not granted by the authorities to pay the decretal amount in
foreign currency, the amount would have to be converted to Indian
rupees for payment of an equivalent amount. The date of
conversion becomes relevant here, as the “court must select a date
which puts the plaintiff in the same position in which he would have
been had the defendant discharged his obligation when he ought to
have done, bearing in mind that the rate of exchange is not a
constant factor but fluctuates, and very often violently fluctuates,
from time to time.”
28 These are the guiding principles and
considerations for the Court to determine the relevant date, which
are apposite even today.
5.5 The Court then undertook a detailed examination of each of
the 6 dates that it set out earlier and held that the date of the
decree (the third option) is the most appropriate amongst them.
The Court adopted the approach of eliminating other possible
dates, on the following grounds:
i. The date when the amount becomes due and payable does
not have the same effect of putting the plaintiff in the same
28 Forasol (supra), para 40.
19
position that he would have been in if the defendant had
discharged his obligation. Due to the fluctuations in
exchange rate, using this date could result in the decreeholder only receiving a fraction of or a lot more than what
he is entitled to.
29
ii. The second date – when the action or suit commenced –
was rejected for the same reason as above, considering
that there is usually a large period of time between the
filing of the suit, the decree by the Trial Court, subsequent
appeals, revisions, and reviews, and the final decision.30
iii. The Court favourably discussed the third option, i.e., the
date of the decree or judgment. It held that the decree
crystallises the amount payable to the decree-holder. To
account for appeals and revisions, the date when the
action is finally disposed of and when the decree becomes
final and binding on both parties, after exhausting all
remedies, can be used. However, it observed that the only
objection to be considered against this date is that there is
29 ibid, para 41.
30 ibid, para 42.
20
a significant lapse of time between the decree and its
execution.31
iv. The Court rejected the fourth date, i.e., the date of court
order for execution, despite the same being used in English
law as per the decision in Miliangos (supra). It noted that
the process of execution in India is a lengthy one that may
require attachment of property, deciding third party claims
to such property, proclamation with particulars, and
auction sale. Moreover, multiple applications for execution
may be required if the initial attachment and sale does not
cover the decretal amount. Hence, it may lead to a
situation where there are multiple execution orders,
meaning multiple exchange rates would have to be
considered. Another difficulty is that the execution
application itself requires the amount to be expressed in
Indian currency.
32
v. The date of payment was also rejected as the proper date
due to practical and procedural difficulties of having to pay
court fees on a determined amount in Indian rupee; the
pecuniary limit of the jurisdiction of courts would depend
31 ibid, para 43.
32 ibid, paras 44-46.
21
on the amount claimed, which must again be in Indian
rupee; and execution is for a specific sum expressed in
Indian rupee. For these reasons, the Court held that the
conversion of the amount to the domestic currency cannot
be left to the date of payment as the legal procedures in
India require the amount to be determined in domestic
currency before that.33
vi. Among the remaining dates, the Court was of the opinion
that the date of the judgment/decree is the most
appropriate.34 It rejected the date of the arbitral award as
the proper date while observing that the Jugoslavenska
case (supra), where this date was used, was doubted even
by the House of Lords in Miliangos (supra). If the law laid
down in Miliangos (supra) were to be applied to arbitral
awards, the date of conversion would be when the court
grants leave under Section 26(1) of the Arbitration Act,
1950 (UK) to enforce such award in the same manner as a
judgment or to the same effect.35 Further, noting the
differences between the statutory scheme for enforcement
33 ibid, paras 47-52.
34 ibid, para 53.
35 ibid, paras 61-62.
22
of foreign arbitral awards in the UK and in India, it held
that the Jugoslavenska case (supra) will not apply in the
Indian context considering the procedure under Section 17
is different from the procedure under English law.
36
Section 17 of the Arbitration Act, 194037 required a
judgment and decree to give an award the status of a
decree, i.e., making it a rule of court, for the award to
become enforceable. On the other hand, English law38 did
not require a judgment to be passed in all cases and it was
sufficient for the court to grant leave to enforce the award
in the same manner as a judgment. In Indian law, it was
not the arbitral award but only the decree of the court that
could be enforced by an application for execution.39 Hence,
the Court found that rather than the date of the arbitral
award, the date of the judgment and decree under Section
17 is the most appropriate one to determine the conversion
36 ibid, paras 63-65.
37 Section 17 reads:
“17. Judgment in terms of award.—Where the Court sees no cause to remit the award or any of
the matters referred to arbitration for reconsideration or to set aside the award, the Court shall,
after the time for making an application to set aside the award has expired, or such application
having been made, after refusing it, proceed to pronounce judgment according to the award, and
upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree
except on the ground that it is in excess of, or not otherwise in accordance with, the award.”
38 See Section 26(1) of the Arbitration Act, 1950, which provides:
“26. Enforcement of award.—(1) An award on an arbitration agreement may, by leave of the High
Court or a Judge thereof, be enforced in the same manner as a judgment or order to the same effect,
and where leave is so given, judgment may be entered in terms of the award…”
39 Forasol (supra) paras 65-66.
23
rate as it was only then that the arbitral award became
enforceable.
6. The above extensive discussion on Forasol (supra) is
necessary to understand the principles set out by this Court to
determine the relevant date for conversion. The law laid down in
this case was subsequently affirmed by a 3-judge bench of this
Court in Renusagar Power Co. Ltd v. General Electric Co40 in
the context of the Foreign Awards (Recognition and Enforcement)
Act, 1961. A foreign arbitral award in favour of the respondentclaimant, which is an American company, was passed where the
amount was expressed in US dollars. The respondent then filed for
enforcement of this award before the Bombay High Court under
the Foreign Awards (Recognition and Enforcement) Act, 1961 as
the appellant was an Indian company. Both the single judge and
division bench of the High Court allowed the enforcement of the
award and dismissed Renusagar’s objections under Section 7 of
this Act. The matter was then appealed to this Court, which dealt
with several issues on objections to the enforceability of foreign
awards, including the scope of inquiry under Section 7 and the
meaning of ‘public policy’. The most relevant issues framed by the
40 Renusagar (supra), see paras 131-133.
24
Court, for our purpose, are which law would govern the rate of
exchange for conversion in proceedings for enforcement of a
foreign arbitral award and whether Forasol (supra) required
reconsideration. The Court held that the applicable law to
determine the proper date for conversion is the lex fori41, which
would be Indian law. After extensively discussing the principles
under English law as well as the reasoning in Forasol (supra), the
Court rejected the contention that Forasol (supra) required
reconsideration42.
7. The law laid down in Forasol (supra) has also been used in
other cases though they do not pertain to arbitration but involved
an issue of a debt expressed in foreign currency that required to
be converted to Indian rupee. United India Insurance Co. Ltd. v.
Kantika Colour Lab43 involved a consumer complaint for
payment of an insurance claim due to the damage of a printer in
transit. This Court did not cite Forasol (supra) but used the date
of its judgment as the proper date for conversion of the cost of the
printer that was expressed in Singaporean dollars. In Meenakshi
Saxena v. ECGC Limited44, again was a consumer complaint for
41 ibid, paras 107-108.
42 ibid, para 133.
43 (2010) 6 SCC 449.
44 (2018) 7 SCC 479.
25
payment under an insurance contract for loss suffered during
export of goods, the Court noted that the contract provided for a
date on which the exchange rate must be determined and followed
Forasol (supra) to hold that this is the proper date.
7.1 In certain other cases, the principle in Forasol (supra) has
been considered but not applied due to the peculiar facts of those
cases. For example, in cases of motor accident deaths where the
deceased was earning in foreign currency, the Court has refused
to use the date of the judgment as the proper date and has instead
used the date of filing the claim as the claims in these cases were
filed in Indian rupee and the Tribunal also decided the cases in
Indian rupee. Hence, it was held that the amount already stood
converted in the claim itself.45 Similarly, in Triveny Kodkany v.
Air India Limited46 involving claim for compensation due to the
death of an airline passenger, the Court considered Forasol (supra)
and Renusagar (supra) but did not apply them. It differentiated the
facts in those cases as in both of them, the award holders were
foreign companies. However, in this case, the claimants seeking
compensation were residing in India. Further, like in motor
45 See United India Insurance Co. Ltd v. Patricia Jean Mahajan, (2002) 6 SCC 281; Jiju Kuruvila v. Kunjujamma
Mohan, (2013) 9 SCC 166.
46 (2021) 19 SCC 214.
26
accident cases, it found that the claim for payment was itself in
Indian rupees and interest was also provided on such amount.
Hence, it found that the date of filing the complaint is the proper
date for conversion.
8. It is therefore clear from the above-referred analysis of
judicial determinations that the principle and law laid down in
Forasol (supra) has been widely considered and followed by this
Court in various types of matters. There is no impediment for us
to apply this decision to cases under the 1996 Act, even though it
was decided under the Arbitration Act, 1940. We therefore disagree
with the High Court that Forasol (supra) does not apply to cases
under the 1996 Act.
9. The Delhi High Court has also relied on Forasol (supra) in
several cases on the enforcement of domestic and foreign arbitral
awards where the amount is expressed in foreign currency:
9.1 In Fuerst Day Lawson v. Jindal Exports Ltd47, the High
Court relied on Forasol (supra) and analogised that the date on
which the objections to the enforcement of the award are finally
rejected and the foreign award becomes enforceable would be the
47 2012 SCC OnLine Del 5647.
27
date that it is deemed to be a decree under Section 49. Hence, this
would be the relevant conversion date.
9.2 This case was followed in Progetto (supra), where the
relevant date was held to be when this Court dismissed the SLP in
the objections petition. The award debtor herein had deposited the
entire amount only after the dismissal of the SLP by using the
exchange rate as on the date of deposit, which was higher than the
rate as on date of dismissal of SLP. Hence, the High Court while
deciding the execution petition directed refund of the excess
amount by using the date of this Court’s order as the relevant date.
In so far as the present appeal is concerned, we have already
mentioned that the respondent was permitted to withdraw 7.5
crores during the pendency of the proceedings.
9.3 Similarly, in Trammo AG v. MMTC Limited48, the date of
dismissal of review by this Court in the proceedings to set aside
the award was held to be the relevant date.
9.4 In Voith Hydro v. NTPC Limited49, the award debtor had
paid some part of the arbitral award amount during the pendency
of proceedings to set aside the award. It paid 75% of the amount
on 06.11.2018, against bank guarantees by the award holder, in
48 2019 SCC OnLine Del 7337.
49 2021 SCC OnLine Del 1325.
28
accordance with a Niti Aayog Circular. Subsequently, this Court
dismissed the SLP in the 22.09.2020. The High Court held that the
exchange rate as on 06.11.2018 would apply insofar as 75% of the
deposit is concerned as the claimant had received this partpayment and the exchange rate on 22.09.2020 was higher than on
06.11.2018. Relying on Forasol (supra), Renusagar (supra), and
Fuerst Day Lawson (supra), it held that the exchange rate on
22.09.2020 would apply to the remaining amount.
9.5 In Karamchand Thapar & Bros. (Coal Sales) Ltd. v.
MMTC Ltd.50, the date on which the arbitral award attained finality
(when the SLP in the Sections 34 and 37 proceedings was
dismissed) was determined as the relevant date for the exchange
rate. Here, the award debtor had deposited an amount subsequent
to the dismissal of the SLP at the exchange rate as on date of
deposit, which was higher than the exchange rate when the SLP
was dismissed. The High Court therefore also directed the award
holder to refund the excess amount paid by the award debtor. This
case does not involve deposit during the pendency of the
objections.
50 2022 SCC OnLine Del 949.
29
10. Applying the Principle in Forasol under the 1996 Act: The
reason that this Court in Forasol (supra) determined the date of
the decree under Section 17 of the 1940 Act as the proper date is
that it is only then that the arbitral award becomes enforceable.
However, as set out earlier, the statutory scheme under the 1996
Act does not require such a judgment or decree to be passed for a
foreign award to be enforceable. Rather, the enforceability of a
foreign award is automatic and deemed under Section 49 after the
objections against such an award under Section 48 are finally
decided and disposed of. At this point, the award is enforceable as
a decree of a court (Section 49). Hence, the date on which the
objections are finally decided and dismissed would be the proper
date for determining the exchange rate to convert an amount
expressed in foreign currency.
10.1 In the present case, this date is 01.07.2014 – when the
High Court dismissed the revision petition against the Trial Court
order dismissing the appellants’ objections. No further appeal was
preferred from this order and hence, it attained finality. While the
learned counsels have not contested this issue, it was necessary
for us to delve into the reason and principle behind selecting this
30
date and to settle the position of law on the applicability of Forasol
(supra) under the 1996 Act.
11. Conversion of Deposited Amounts: The primary contention by
the learned counsels was regarding the proper date to determine
the exchange rate to the extent of Rs. 8 crores that was deposited
in the court pursuant to certain orders. The learned counsels have
both referred to decisions by the Delhi High Court on this point.
Mr. Mishra heavily relied on Voith Hydro (supra), where the arbitral
award was partly paid against bank guarantees under a Niti Ayog
circular, before the objections were finally decided. The High Court
here held that the paid amount stood converted as on the date of
payment as it was received by the award-holder and the exchange
rate increased by the time the objections were finally decided. On
the other hand, Mr. Mahajan has relied on Karam Chand Thapar
(supra), where again a deposit of some part of the amount was
made, albeit after the final decision on objections. Here the High
Court held that the date on which the SLP in the objections was
dismissed would be the proper date.
11.1 In the present case, it is important to note the terms on
which the two deposits of Rs. 7.5 crores and Rs. 50 lakhs were
made. From the order of the High Court dated 15.10.2010, it is
31
clear that such order for deposit of Rs. 7.5 crores and for
furnishing a bank guarantee of an Indian bank for the release of
the deposit was made in accordance with the consent of the
parties. Mr. Mahajan’s submission that the respondent did not
consent to the deposit hence cannot be accepted. The further
deposit of Rs. 50 lakhs was made pursuant to an interim order of
the High Court dated 03.06.2011, which stayed the Trial Court
order dated 02.04.2011 and directed the deposit. However, unlike
the previous order, neither was this order passed on the consent
of the parties nor did it permit the respondent to withdraw the
money during the pendency of the proceedings. Rather, it directed
that the amount shall be deposited in a fixed deposit receipt and
shall be disbursed to the successful party on the final adjudication
of the objections.
11.2 We will first deal with the deposit of Rs. 7.5 crores.
Despite being permitted to withdraw this amount by furnishing a
bank guarantee, the respondent did not do so until 2016. Mr.
Mahajan contended that being a foreign company, it was unable
to obtain a bank guarantee from an Indian bank. However, the
order of 15.10.2010 clearly records the respondent’s consent to
this condition. Further, when it was unable to comply with the
32
same, it also did not apply for a modification or removal of the
condition. Hence, the respondent, in its own discretion, did not
withdraw Rs. 7.5 crores when it was deposited in 2010.
11.3 A similar situation arose in this Court’s decision in
Renusagar (supra) as well. This Court was deciding an appeal
against the dismissal of Renusagar’s objections under Section 7 of
the Foreign Awards Act, 1961. During the pendency of the appeal,
by order dated 21.02.1990, this Court stayed the operation of the
High Court order subject to deposit of one-half of the decretal
amount calculated as on date. General Electric was permitted to
withdraw the deposited amount by furnishing security by way of
bank guarantee for the sum to be withdrawn in excess of Rs. 4
crores. It also directed that 10% interest p.a. would be payable by
Renusagar on the balance of the decretal amount in case the
appeal is dismissed, and the same interest would be payable by
General Electric on the amount withdrawn by it if the appeal is
allowed. Pursuant to this order, Renusagar deposited Rs. 9.69
crores on 20.03.1990, which was withdrawn by the respondent on
furnishing necessary bank guarantee. In a subsequent order, this
Court directed a further deposit of Rs. 1 crore and bank guarantee
of Rs. 1.92 crores to be furnished by Renusagar. The deposit was
33
made on 03.12.1990, which was also withdrawn51. However,
General Electric contended that it was unable to use a large part
of this amount as it had not received permission from the Reserve
Bank of India to convert the same into US dollars due to the
pendency of the appeals.
11.4 After rejecting various submissions by the appellant
regarding the enforceability of the award, this Court decided the
question of the amount in Indian rupee that was to be paid. The
relevant portion on this point is extracted:
“141. As indicated earlier, in pursuance to the orders of this Court
dated February 21, 1990, Renusagar deposited a sum of Rs
9,69,26,590 on March 20, 1990 and a further amount of Rs
1,00,00,000 was deposited by Renusagar in pursuance to the order
dated November 6, 1990 on December 3, 1990. These amounts have
been withdrawn by General Electric. The question is how and at what
rate the said amount should be adjusted against the decretal amount.
It is not disputed that on the date when the said deposits were made
by Renusagar and were withdrawn by General Electric, rupee-dollar
exchange rate was Rs 17 per dollar. Shri Shanti Bhushan has,
however, submitted that although General Electric had withdrawn
the amount deposited by Renusagar, it was not able to use the same
because the Reserve Bank of India did not grant the permission to
General Electric to remit the amount by converting the same into U.S.
dollars on account of the pendency of these appeals in this Court…
Shri Shanti Bhushan has, therefore, submitted that the amounts
deposited by Renusagar should be converted from Indian rupees into
U.S. dollars at the exchange rate prevalent on the date of the
judgment of this Court and not on the basis of the rate of exchange
prevalent at the time of the said payments by Renusagar. We are
unable to agree with this submission. The convertibility into U.S.
dollars of money paid by Renusagar in Indian rupees is not the
condition for discharge of the decree and as laid down in Forasol
case the decree can be discharged by payment in Indian rupees and
it is for General Electric to obtain the necessary permission from the
Reserve Bank of India for such conversion of Indian rupees to U.S.
51 Renusagar (supra), para 18.
34
dollars and the transfer thereof to the United States. If General
Electric were finding a difficulty in such transfer on account of the
pendency of these appeals in this Court they could have moved this
Court and obtained necessary clarification in this regard. They did
not choose to do so. In these circumstances, the amount of Rs
10,69,26,590 which has been paid by Renusagar in pursuance to the
orders dated February 21, 1990 and November 6, 1990 has to be
converted into U.S. dollars on the basis of the rupee-dollar exchange
rate of Rs 17.00 per dollar prevalent at the time of such payment and
calculated on that basis the said amount comes to US $ 6,289,800.00.
142. The judgment of the High Court passing a decree in terms of the
award is, therefore, affirmed… The amount paid by Renusagar
during the pendency of these appeals will have to be adjusted against
the said decretal amount and the present liability of Renusagar under
this decision has to be determined accordingly. Calculating on this
basis the amount payable by Renusagar under the decree in terms of
U.S. dollars is:
Amount awarded by the Arbitral
Tribunal
: 12,215,622.14
Interest on US $ 2,716,914.72
(the total amount awarded under
item Nos. 1, 3 and 5) @ 8% per
annum from 1-4-1986 to 15-10-
1986 in terms of the award
: 117,733.00
12,333,355.14
Less: Amount paid by Renusagar
in pursuance of the orders dated
21-2-1990 and 6-11-1990 during
the pendency of the appeals in
this Court
6,289,800.00
6,043,555.14
143. In accordance with the decision in Forasol case the said amount
has to be converted into Indian rupees on the basis of the rupee-dollar
exchange rate prevailing at the time of this judgment. As per
information supplied by the Reserve Bank of India, the Rupee-Dollar
Exchange (Selling) Rate as on October 6, 1993 was Rs 31.53 per
dollar.”
35
11.5 From the above, it is clear that the Court adjusted the
amounts deposited during the pendency of the proceedings and
against security by converting them to US dollars as on the date of
their deposit. It applied the date of its own judgment only for
converting the remaining portion of the award in accordance with
Forasol’s (supra) ruling that the date of decree or judgment, after
exhausting all remedies, is the proper date. It rejected the
respondent’s argument regarding its inability to convert the
amount on the grounds that a decree in foreign currency can be
validly satisfied by payment in Indian rupee and the respondent
did not move the Court for necessary clarification.
12. The facts in this case are similar to Renusagar (supra) for an
analogy to be drawn. Here as well, the deposit was made during
the pendency of the proceedings under the objections petition. It
was permitted to be withdrawn against a bank guarantee of an
Indian bank. Here the respondent was entirely unable to withdraw
the amount, while the issue there was that it was only unable to
convert the amount to US dollars. However, in both cases, the
respondent failed to move the Court for necessary orders to be able
to receive and utilise the amount. In this case, there is the added
fact that the respondent consented to the deposit and the condition
36
requiring security. In light of these similarities, it is appropriate for
us to adopt the Court’s approach in Renusagar (supra).
13. We therefore hold that the deposit of Rs. 7.5 crores stands
converted as on the date of deposit (22.10.2010), when the rate of
exchange as submitted by the appellants is 1 euro = Rs. 59.17. We
also reject the submission by Mr. Mahajan that the respondent
was unable to furnish a bank guarantee of an Indian bank. This
argument is only to serve its own interest to be able to benefit from
a higher exchange rate but does not address the principle that
operates while enforcing a sum expressed in foreign currency.
14. It is important to appreciate the consequence and effect of
deposit during the pendency of proceedings to understand the
need to convert this amount on that date. Through a deposit, the
award debtor parts with the money on that date and provides the
benefit of that amount to the award holder. Provided that the
award holder is permitted to withdraw this amount, it can convert,
utilise, and benefit from the same at that point in time.
Considering that the deposited amount inures to the benefit of the
award holder, it would be inequitable and unjust to hold that the
amount does not stand converted on the date of its deposit.
37
15. A similar logic underscores the statutory provisions in Order
21, Rule 1 and Order 24 of the Code of Civil Procedure, 190852 to
determine whether interest will continue to operate on an amount
deposited before a court. It would be relevant for us to briefly
discuss the law on this point:
15.1 A constitution bench of this Court in Gurpreet Singh v.
Union of India53 extensively discussed the rules governing interest
calculation when the defendant/ judgment-debtor deposits some
part of the amount. Order 24 governs deposits at the pre-decretal
stage and Order 21, Rule 1 at the post-decretal stage.54 The
essence of these provisions is that on any amount deposited into
the court, interest shall cease to run from the date when the
depositor serves a notice to the plaintiff/decree-holder. Similarly,
when payment is tendered to the decree-holder outside the court,
interest ceases on such amount even if the payment is refused.55
15.2 Order 21, Rule 1 embodies a rule of prudence that once
the amount is tendered to the decree-holder by the judgmentdebtor, whether in the form of a court deposit or other forms of
52 Hereinafter “CPC”.
53 (2006) 8 SCC 457.
54 ibid, para 14.
55 ibid, paras 15, 25 and 26.
38
payment such as demand draft or cheque, the judgment-debtor
cannot be made liable to then pay interest on such amount.56
15.3 The rationale for this rule has been explained in Nepa
Limited v. Manoj Kumar Agrawal57 through a similar logic of the
decree-holder being able to benefit from the deposited amount. In
this case, the award-debtor deposited 50% of the awarded amount
before the executing court to obtain a stay on the execution
proceedings of the arbitral award during the pendency of appeal
under Section 37 of the 1996 Act. This amount was withdrawn by
the award holder, and the issue before this Court was whether
interest is payable on the deposited amount even after the date of
deposit. The Court held as follows:
“21. In the present case, the appellate court, on the appeal preferred
under Section 37 of the Act did grant stay, subject to the condition
that the appellant would deposit 50% of the amount. Rs. 7,78.280/-
was deposited by the appellant on 05.11.2001. The stay, therefore,
only operated for the balance amount. On the balance amount,
certainly, the appellant would be liable to pay interest @ the rate of
18% per annum till the date of actual payment. However, on Rs.
7,78,280/- paid, after adjusting/appropriating payment due on the
interest accrued, on the balance principal amount paid to the
respondent, interest would not be payable.
24. The respondent submits that the payment of Rs. 7,78,280/- being
conditional, the respondent would have been under an obligation to
refund the said amount in case the appellant had succeeded in the
appeal under Section 37 of the Act, 1996. This argument does not
impress, as in the event the appellant had succeeded in their appeal,
the entire amount paid would have been refundable. The undertaking
was not onerous, and was to operate only if the amount of Rs.
7,78,280/- was not refunded by the respondent. The respondent had
56 KL Suneja v. Dr Manjeet Kaur Monga, (2023) 6 SCC 722, para 36.
57 2022 SCC OnLine SC 1736.
39
obviously used and utilized the money. The appellant did not have
any right on the money paid to the respondent, who could use it in a
manner and way he wanted. There was no charge. Money is fungible
and would have gotten mixed up with the other amounts available
with the respondent. Right to restitution would not make the payment
conditional. Interest has been jurisprudentially defined as the price
paid for money borrowed, or retained, or not paid to the person to
whom it is due, generally expressed as a percentage of amount in one
year. It is in the nature of the compensation allowed by law or fixed
by parties, for use or forbearance or damage for its detention. In the
context of the present case, interest would be the compensation
payable by the appellant to the respondent, for the retention or
deprivation of use of money. Therefore, once the money was paid to
the respondent, interest as compensation for deprivation of use of
money will not arise.”
(emphasis supplied)
15.4 Therefore, the ability of the decree-holder to access and
use the money in a manner he deems fit was considered by this
Court while deciding the issue.
15.5 Here, the Court also differentiated P.S.L. Ramanathan
Chettiar (supra), which has also been relied on by the respondent
in the present matter, and another decision by this Court in Delhi
Development Authority v. Bhai Sardar Singh and Sons58. P.S.L.
Ramanathan Chettiar (supra) holds that a deposit is only a way to
obtain a stay on execution and does not pass title to the decreeholder, and hence, is not in satisfaction of a decree. The decreeholder in Delhi Development Authority (supra) was not permitted to
withdraw the deposited amount and hence, interest was calculated
on the same. The Court in Nepa Limited (supra) however held that
58 C.A. 3867 of 2010.
40
these cases do not apply in its facts as the respondent here was
permitted to withdraw the deposited sum and did so. Hence, the
Court instead relied on the ability of the respondent to use the
deposited money as it deems fit.
16. These cases demonstrate that once there is a deposit by the
award debtor and the award holder is permitted to withdraw the
same, even if such withdrawal is conditional and subject to the
final decision in the matter, the court must consider that the
award holder could access and benefit from such deposit. It is then
the burden of the award holder to furnish security, as required by
the court’s orders, to utilise the amount or to make an application
for modification of the condition if it is unable to fulfil the same.
17. In furtherance of the above, we therefore reiterate that the
deposit of Rs. 7.5 crores must be converted as on the date of such
deposit, i.e., 22.10.2010, when the rate of exchange as submitted
by the appellants was 1 euro = Rs. 59.17.
18. The second deposit of Rs. 50 lakhs pursuant to the High
Court order dated 03.06.2011 stands on a different footing from
the first deposit. This order did not permit the respondent to
withdraw this amount till the completion of the proceedings.
Hence, the amount cannot be converted as on the date of deposit
41
as the respondent could not have benefitted from the same. This
amount could be withdrawn only in 2016, pursuant to the
Executing Court’s order dated 24.08.2016. The respondent
withdrew the entire deposit of Rs. 8 crores, along with the interest
that accrued on this amount, on 10.10.2016.
19. From the above discussion on the first deposit, it is clear that
the exchange rate on 22.10.2010 would apply to that extent and
non-withdrawal by the respondent of Rs. 7.5 crores was in its own
discretion and inaction. However, since the order of 03.06.2011
permits withdrawal of Rs. 50 lakhs on the completion of the
proceedings, that would be the appropriate date for determining
the exchange rate. Here, the revision proceedings were complete
on 01.07.2014. Hence, it would be appropriate to apply the
exchange rate as on this date to convert the deposit of Rs. 50 lakhs.
20. Our conclusions from this judgment can be summarised as
follows:
i. The statutory scheme of the Act makes a foreign arbitral
award enforceable when the objections against it are finally
decided. Therefore, as per the Act and the principle in
Forasol (supra), the relevant date for determining the
42
conversion rate of foreign award expressed in foreign
currency is the date when the award becomes enforceable.
ii. When the award debtor deposits an amount before the
court during the pendency of objections and the award
holder is permitted to withdraw the same, even if against
the requirement of security, this deposited amount must
be converted as on the date of the deposit.
iii. After the conversion of the deposited amount, the same
must be adjusted against the remaining amount of
principal and interest pending under the arbitral award.
This remaining amount must be converted on the date
when the arbitral award becomes enforceable, i.e., when
the objections against it are finally decided.
21. As per these conclusions, the first deposit of Rs. 7.5 crores
must be converted as on the date of deposit being 22.10.2010. The
second deposit of Rs. 50 lakhs as well as the remaining amount
due under the award must be converted when the objections
proceedings attained finality on 01.07.2014. The Executing Court,
being the Additional District Judge cum Commercial Court, must
determine the amount payable by taking into account the
exchange rate as on 01.07.2014.
43
22. In light of the above, we partly allow the appeal, and set aside
the findings of the High Court in the impugned judgment to the
extent that Forasol (supra) does not apply under the 1996 Act and
that the exchange rate on 01.07.2014 must be used for converting
the entire arbitral award and interest.
23. Pending applications, if any, stand disposed of.
24. No order as to costs.
………………………………....J.
[PAMIDIGHANTAM SRI NARASIMHA]
………………………………....J.
[ARAVIND KUMAR]
NEW DELHI;
AUGUST 08, 2024.
