Foreign-currency award enforcement, TDS deductions, and bank guarantee costs turned on payment tenor and lawful adjustment limits.

Foreign-currency award amounts were to be converted by reference to the relevant enforcement date, because no binding agreement fixed an earlier exchange-rate cut-off and the without-prejudice payments did not amount to final discharge of the award. TDS could not generally be deducted from sums paid in satisfaction of an award unless authorised by law, although limited credit was allowed for the amount actually absorbed against tax liability. Charges for extending bank guarantees were not reimbursable, as the later guarantees were voluntarily furnished and the enforcement mechanism did not provide for such costs.

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Issues: (i) whether the foreign-currency component of the award was to be converted at the exchange rate agreed by the parties or at the relevant date for enforcement; (ii) whether tax deduction at source could be deducted from amounts paid in discharge of the award and credited as satisfaction of the decree; (iii) whether the decree holder was entitled to reimbursement of charges incurred for extending bank guarantees.

Issue (i): whether the foreign-currency component of the award was to be converted at the exchange rate agreed by the parties or at the relevant date for enforcement.

Analysis: The claimed arrangement fixing 15.09.2017 as the cut-off date was not borne out by the record. Payments made under the Niti Aayog mechanism were ad hoc, without prejudice, and were not payments in final discharge of the arbitral award. For enforcement of an award expressed in foreign currency, the relevant exchange rate is linked to the date when the challenge to the award is finally rejected. The Court also accepted the decree holder's concession that the earlier part-payment could be dealt with separately for exchange-rate purposes.

Conclusion: The parties had no binding agreement fixing 15.09.2017 as the exchange-rate date, and the foreign-currency component had to be computed by reference to the relevant enforcement dates determined by the Court.

Issue (ii): whether tax deduction at source could be deducted from amounts paid in discharge of the award and credited as satisfaction of the decree.

Analysis: Once an award merges into a judgment debt, it must be satisfied according to its tenor, and deductions are permissible only if supported by law. Amounts paid in discharge of the award, including ad hoc payments under the Niti Aayog mechanism, did not justify TDS deduction merely because the money was remitted in Indian currency. However, the decree holder's conduct at the material time justified limited credit for portions of the TDS actually absorbed against its tax liability, while the balance could not be treated as satisfaction of the award and was left to be recovered by the judgment debtor from the tax authorities.

Conclusion: TDS could not generally be deducted as a discharge of the award, though NTPC was entitled to limited credit for the quantified amount directed by the Court, with the balance left open for refund proceedings.

Issue (iii): whether the decree holder was entitled to reimbursement of charges incurred for extending bank guarantees.

Analysis: The advance bank guarantees were kept alive because NTPC's challenge to the award was pending, and the challenge could not be said to be insubstantial. The later guarantees furnished to avail the benefit of the Niti Aayog mechanism were voluntarily furnished, and that mechanism did not provide for reimbursement of guarantee charges. On these facts, no basis was made out for directing payment of such costs.

Conclusion: The claim for bank guarantee charges was rejected.

Final Conclusion: The application succeeded only to the extent of the exchange-rate determination and limited TDS credit, while the claim for bank guarantee charges failed, and the amount payable by NTPC was directed to be recomputed accordingly.

Ratio Decidendi: An award or decree debt must be executed according to its tenor, and tax deductions or similar adjustments are not permissible unless authorised by law; payments made under a without-prejudice enforcement mechanism do not, by themselves, alter the enforcement date or create a right to reimbursement of voluntary bank guarantee costs.

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