AI Drafter 
TaxTMI 
TaxTMI 
1983 (10) TMI 234
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....aid contract, ONGC engaged Forasol to carry out structural drilling in relation to the exploration for oil in the Jaisalmer area of the State of Rajasthan on the terms and conditions contained in the said contract. The said contract was for a period of one year commencing from the date of the start of the drilling work. The said contract also gave an option to ONGC to extend the period by one more year. Article IX-3 of the said contract dealt with the currency of payment. It provided as follows: "IX-3.1. The operational fee, standby fee and equipment charges payable to FORASOL have been specified in French Francs in Article IX-1.1.1. to IX- 1.1.1. above. The amount payable to FORASOL on account of aforesaid fees and charges shall be computed in French Francs ONGC shall pay 80% of the aforesaid amount in French Francs and the remaining 20% in Indian Rupees using a fixed conversion rate of FF. 1.033=Re. 1.000." Under Article IX-3.2 the cost as well as the insurance, packing, forwarding and clearing charges in respect of the materials provided by Forasol and the freight, insurance, packing, forwarding and clearing charges for transportation from a sea port or airport in France t....
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....that is FF 110,156.23 on each 5th day of August and February, the first of such payments to be made on August 5, 1962 and the last on February 5, 1965. Article X-4.2 provided for payment by ONGC to Forasol of the balance of the amount due to Forasol. Under Article X-4.2.1, on receipt of each of Forasol's invoices in respect of operational fees, standby fees and equipment charges accepted by ONGC, Forasol was to present to ONGC a set of 14 promissory notes payable to CNEP (Paris) of equal value totalling to 87.5% of the French Franc Portion of the amount for which each of the said invoices had been accepted by ONGC and maturing on the 5th day of August and of February, the first such dates being August 5, 1965 and the last being February 5, 1972. Within fifteen days of the date of receipt of the said promissory notes, ONGC was to return the said promissory notes to Forasol (Paris) duly signed and stamped. Article X-4.2.2 provided for payment of the said promissory notes. The said Article was as follows: "X-4.2.2. ONGC binds itself, irrevocably, to pay in French Francs the promissory notes given by it to Forasol. Forasol shall present the promissory notes to CNEP (Paris) for colle....
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....rations in the Jaisalmer area were resumed at the expiry of the period of suspension. By another supplementary agreement being Addendum No. 2 dated July 30, 1966, the period of the said contract was further extended by a period of five months from the moment at which all the equipment of Forasol then under repair at Jodhpur arrived, after completion of the repairs at the new drill-site, where ONGC might like to have drilling operations to be started under the said Addendum No. 2. Article 2.7 of the said Addendum No.2 provided as follows: "2.7. In case Forasol has to refund to ONGC an amount which cannot be adjusted or has not been adjusted against Forasol's invoices for the last two months of the five months period of this Addendum, Forasol shall refund the amount in cash in the same currency in which ONGC had paid it earlier." By another supplementary agreement being Addendum No. 3 dated February 23, 1967, the period of the contract was further extended till the completion of the drilling of Manhere Tibba Well No. 1 and in case ONGC should decide to test the said well till the completion of such test or till April 18.....
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....portion to which we will revert later. For the present, suffice it to say that by the said Erratum the Umpire awarded that from November 30, 1966 the rupee portion should be converted at the rate of FF 1, 000 equal to Rs. 1,517. 80 instead of the rate of exchange of FF 1,033 equal to Re. 1,000 provided in Article IX. 3.1 of the said contract and that this enhanced rate of exchange would apply to both Forsal and ONGC. The said award was filed in the Delhi High Court and on May 7,1975, a decree in terms thereof was passed by that High Court with interest at the rate of 6 per cent per annum from the date of the decree till the date of payment of the net decretal amount. It is pertinent to note that neither party raised any objection to the said award or to the form in which the said decree was passed. After the said decree was drawn up, Forasol filed in March 1976 an application for execution of the said decree being Execution No. 77 of 1976. Under the said award certain amounts were directed by the Umpire to be paid to Forasol by ONGC in French Francs and certain amounts in Indian rupees, and the amounts payable by Forasol to ONGC were to be adjusted and set off against the amo....
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....der of the learned Single Judge ONGC filed an intra-court appeal being E.F. A. (OS) 5 of 1977. The Division Bench of the Delhi High Court, which heard the said appeal, upheld the contention of ONGC that the enhanced rate of exchange specified in the said award applied only to the interest payable to Forasol and that with respect to the rupee amount due to ONGC and which was to be adjusted against French Francs payable to Forasol, the contract rate of exchange applied. It further held that as the said award was in French Francs, by reason of the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), before executing the said award the French Francs would have to be converted into Indian rupees at the rate of exchange prevailing on the date of the said award, namely, FF 1.000 equal to Rupee 1.831. The Division Bench negatived the other contentions raised by ONGC. It is against this judgment and order of the Division Bench of the Delhi High Court that the present cross appeals have been filed. So far as Forasol's appeal is concerned, four points were urged on its behalf before us. These points were: 1. The rate of exchange specified in Article IX-3. 1 of the said ....
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....ixed by the Umpire FF 1.000 = Rs. 1.5178 Rate at the date of the said award namely on December 21, 1974 FF 1.000 = Rs. 1.831 Rate at the date of namely, on May 7, 1975 FF 1.000 = Rs. 1.938 the decree We shall first examine the said contract to determine whether the rate of conversion mentioned in the said Article IX-3.1 applied only to 20 per cent of the amounts in French Francs payable by ONGC to Forasol in Indian rupees in respect of Forasol's operational fee, standby fee and equipment charges as contended by Forasol or whether it applied to all payments to be made under the said contract, whether in rupees or in French Francs, as contended by ONGC. In doing so, a cardinal fact must be borne in mind, namely, that it was a contract entered into between a foreign party and a Government of India undertaking and that under the said contract the foreign party had agreed to carry out structural drilling in relation to the exploration for oil, discovery of oil being of vital importance to the national interests of India. From the nature of things, the foreign party would not desire payment for the services to be rendered and the equipment to be suppl....
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....of exchange in the said contract for converting French Francs into Indian rupee cannot arise. Such conversion rate could only be in respect of the amounts payable to Forasol in Indian rupees. It is pertinent to note that under Article IX-3.1 the amount of fees and charges payable to Forasol were to be computed in French Francs and thereafter 80 per cent thereof was to be paid in French Francs and the remaining in Indian rupees. Even with respect to such twenty per cent Forasol did not want to be dependent upon a possible fluctuation in the exchange rate of rupee and, therefore, the 20 per cent part of the amount computed in French Francs was covenanted to be converted at a fixed rate provided in the said Article IX-3.1. This is made abundantly clear by the express terms of the said Article IX-3.1 when it states that "ONGC shall pay 80% of the aforesaid amount in French Francs and the remaining 20% in Indian Rupees using a fixed conversion rate of FF 1.033=Re. 1.000." It is thus only the 20 per cent of the said fees and charges computed in French Francs in Forasol's invoices but payable in Indian rupees which was to be converted at the aforesaid rate of exchange specified in the sai....
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.... ONGC was not an agreed statement, but a statement prepared by O.N, G.C. on their own to which Forasl had not consented, As a result of this, the question of adjustment of the income-tax paid against FF claims, as set out in the last para on page 149 and in the first two paragraphs on page 150 would be deleted and in their place the Award would state that 'the amounts of income-tax paid by ONGC shall be adjusted against the FF claims due to Forasol on the date when each amount was paid in the manner set out earlier in the Award.' "To achieve this purpose the paragraphs on pages 149 and 150 beginning with the words 'In the calculation of the interest on the several invoices' and ending with 'I have already dealt with the conversion rate and there is no need to go into it again' on page 150 shall be deleted and a new paragraph inserted, which will read as follows: X X X X X '...as a result the aggregate figure of interest payable to Forasol by O.N.G.C. upto 30-6-1974 would be FF 12,91,290,06. From this a small adjustment has to be made...when these are adjusted the amount due for interest by O.....
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....has put forward before him a claim for "enhanced rate of interest", overlooking the other portions of the said Erratum, particularly the portion emphasized by us in the above extract as also the fact that by the said Erratum certain portions of the said award were deleted and substituted by fresh paragraphs. On a perusal of the above extract from the said Erratum, it is obvious that the claim made by Forasol was not for an enhanced rate of interest but for an enhanced rate of exchange by reason of the devaluation of the rupee. This is made clear by the rest of the very same sentence in the said Erratum in which this claim made by Forasol was referred to, namely, "and their claim is that this should be Rs. 1.5178 for every FF or Rs. 1.5178 for every FF 1,000," If the claim of Forasol was for an enhanced rate of interest, the claim would have been that interest should be payable to it not at the contract rate of five per cent per annum but at a higher rate and not that a higher rate of exchange should be provided. The very next sentence which also we have emphasized clarifies that in the correspondence which took place between the parties, Forasol had made a claim that after devaluat....
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....er an amount payable in a foreign currency, five dates compete for selection by the Court as the proper date for fixing the rate of exchange at which the foreign currency amount has to be converted into the currency of the country in which the action has been commenced and decided. These dates are: (1) the date when the amount become due and payable; (2) the date of the commencement of the action; (3) the date of the decree; (4) the date when the court orders execution to issue; and (5) the date when the decretal amount is paid or realized. In a case where a decree has been passed by the court in terms of an award made in a foreign currency a sixth date also enters the competition, namely, the date of the award. The case before us is one in which a decree in terms of such an award has been passed by the court. The said award directed certain payments to be made in a foreign currency, namely, French Francs, and did not specify the rate of exchange at which the French Francs were to be converted into Indian rupees and the decree which was passed by the Delhi High Court was in terms of the said award simpliciter without fixing any date for conversion of the Fre....
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....nnot give judgment for payment of an amount in foreign currency, and that for the purposes of litigation in England a debt expressed in a foreign currency must be converted into sterling with reference to the rate of exchange prevailing on the date when the debt was payable. Lord Denning, who was then a member of the House of Lords, delivered a concurring judgment in which he pointed out that the origin of this rule was that sterling was for a long time regarded as a stable currency, the constant unit of value by which, in the eye of the law, everything else was measured, and that so long as sterling was regarded as stable while other currencies fluctuated, justice was best done by taking the rate of exchange at the date of the breach; the creditor being entitled to be put into as good a position as if the debtor had done his duty and paid the debt on the due date and the creditor was only truly put into such a position if the debt was converted into sterling at that date. At the same time Lord Denning also posed a question whether the rule was still to be applied when sterling had lost the value which it once had by reason of the devaluation of the pound. He however, came to the c....
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....amount of the award converted into sterling. When that case fell to be decided Lord Denning was a member of the Court of Appeal, having accepted appointment as Master of the Rolls. In the course of his judgment in that case, Lord Denning M.R. said (at pages 501-2): "The reason why some people have thought that an award by English arbitrators must be in sterling is because they have regarded it as equivalent to a judgment by an English judge which must be in sterling. But there is this difference. When commercial men are in dispute and go to arbitration, they wish to have the dispute resolved. They want a decision one way or the other. Once given, they abide by it, The losing party pays up. There is rarely any need to call in the sheriff or his officer to enforce the award. So it is perfectly fair, as between them, for the arbitrator to make his award in the currency which is appropriate to their dealings. But, when a plaintiff goes to a court of law, it is, as often as not, because the defendant cannot pay or will not pay, The plaintiff wants to get judgment against him and, if need be, levy execution on his effects. This is so mu....
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..... If the sum awarded is converted into sterling at the rate of exchange at the date of the award, it does have the same effect. The proper course is for the applicant to file an affidavit showing the rate of exchange at the date of the award and giving also the amount of the award converted into sterling. Then leave will be given to enforce payment of that sum," (The emphasis has been supplied by us.) It may be mentioned that the defendants did not appear at any stage of the proceedings and were not represented and there was no appeal to the House of Lords from this judgment. Whether we should accept the decision in the Jugoslavenska case as laying down the correct rule to be applied so far as courts in this country are concerned is a matter which we will discuss after completing our survey of English authorities. The question again arose before the Court of Appeal in Schorsch Meier G.m.b.H. v. Hennin. That was not a case of an arbitration but it was an action by a German company against an English firm in an English court for the price of goods in German deutschmarks in which currency the contract stipulated that payment of the price should be made. The action was comm....
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....has now come when we should say that when the currency of a contract is a foreign currency- that is to say, when the money of account and the money of payment is a foreign currency-the English courts have power to give judgment in that foreign currency, they can make an order in the form: 'It is adjudged this day that the defendant do pay to the plaintiff' so much in foreign currency (being the currency of the contract)' or the sterling equivalent at the time of payment'. If the defendant does not honour the judgment, the plaintiff can apply for leave to enforce it. He should file an affidavit showing the rate of exchange at the date of the application and give the amount of the debt converted into sterling at that date. Then leave will be given to enforce payment of that sum. (The emphasis has been supplied by us.) So far as the Treaty of Rome was concerned, the Court held that the purpose of the said article 106 was to ensure that the creditor in one member State should receive payment for his goods in his own currency if it was the currency of the contract without any impediment or restriction by reason of changes in the rate of exchange. With respect to the form of the ju....
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....would submit to judgment. Four days later, on November 26, 1974, the Court of Appeal delivered judgment in the Schorsch Meirer case. Thereupon the plaintiff amended the statement of claim in the first action and claimed the amount due in Swiss Francs as an alternative to the claim in sterling. Bristow J. held that the Schorsch Meirer case so far as it related to countries which were not members of the European Economic Community was obiter and had been decided per incuriam in that only one party had been represented and all the relevant authorities had not been cited. He further held that the decision in that case was inconsistent with what the House of Lords had held in the Havana case and accordingly he gave judgment for the sum claimed in sterling. The plaintiff went in appeal (Miliangos v. George Frank (Textiles) Ltd. The Court of Appeal held that the Schorsch Meier case was not decided per incuriam and was binding upon the trial court and gave judgment for the plaintiff in Swiss Francs. The English company went in appeal to the House of Lords. We are not concerned with what was said in that case with respect to whether the Schorsch Meier case was decided per incuriam or not an....
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....a minor discrepancy, if the practice which is apparently adopted (see the Jugoslavenska case (1974) Q.B. 292, 305) remains as it is, but I can see no reason why, if desired, that practice should not be adjusted so as to enable conversion to be made as at the date when leave to enforce in sterling is given." (The emphasis has been supplied by us.) Lord Cross of Chelsea pointed out (at pages 497-8) that it would be absurd to have one rule with regard to arbitrations on debts expressed in a foreign currency and another with regard to actions on similar debts and that in a case where the defendant failed to deliver foreign currency for the payment of which the judgment was given, the date for its conversion into sterling should be the date when the plaintiff was given leave to levy execution for a sum expressed in sterling. Lord Edmund-Davies, referring to the Jugoslavenska case, said (at page 501) that being governed by section 26 and sub-section (1) of section 36 (which deals with enforcement of foreign awards) of the Arbitration Act, 1950, the award of American dollars in that case of necessity had to be converted into sterling at the rate of exchange prevailing on the date wh....
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....d the Eleftherotria in which the latter was damaged. The Eleftherotria was owned by a Liberian company which had its head office in Piracus. The managing agents had their principal place of business in New York and the bank account used for moneys received and payments made on behalf of the owners was a U.S. dollar account in New York. An agreement was reached under the terms of which the owners of the Despina R were to pay to the owners of the Eleftherotria 85 per cent or the loss and damage suffered as a result of the collision. The expenses of repair had been incurred in various currencies. The question whether the damages were to be paid in sterling or some other currency was referred to the Admiralty judge. Brandon J. held that he had jurisdiction to award damages in a foreign currency, but that he was bound by authority to award them in the currency of expenditure. The Court of Appeal, dismissing an appeal by the owners of the Despina R and allowing a cross appeal, held that here was jurisdiction to award damages in tort in sterling or in a foreign currency, and that, in the circumstances of the case, the appropriate currency was the plaintiffs' currency rather than the curre....
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....s sustained produces a juster result than one which fixes the plaintiff with a sum in sterling taken at the date of the breach or of the loss." It was further held that where the terms of a contract governed by English law did not expressly or by implication show that the parties had intended that payments arising from a breach of contract were to be paid in the currency of account or other named currency, the court should give judgment in the currency that best expressed the party's loss; that, although the appeal in the second case concerned a charterparty which expressly stated that certain contractual payments should be made in U.S. dollars, the terms of the charterparty did not show that payment for damage arising out of a breach of contract was to be made in that currency; that, arising from the owners, breach the charterers had used French Francs to purchase the necessary cruzeiros to settle the receivers' claim and, in those circumstances, the Court of Appeal had correctly affirmed the arbitrators' decision that the currency that best expressed the charterers' loss was the currency of their business, namely, French Francs. With respect to the arbitrators jurisdiction to ....
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....e writ must be endorsed with a certificate signed by or on behalf of the solicitor of the plaintiff or by the plaintiff, if he is acting in person, certifying the rate current in London for the purchase of the unit of the foreign currency claimed at the close of business on the date next or most nearly preceding the date of the issue of the writ and stating whether at that rate of exchange the debt or liquidated demand claimed in the writ amounts to "$.. or exceeds $ 650 (as the case may be)", This certificate is required for the purpose of ascertaining the proper amount of the costs to be endorsed on the writ. The judgment which would be entered in respect of such a claim would show that it has been adjudged that the defendant do pay the plaintiff the sum in foreign currency for which the court has ordered judgment to be entered or its sterling equivalent at the time of payment. Where a defendant desires to pay into court a sum of money in satisfaction of the claim in foreign currency he may do so subject to the requirements of the Exchange Control Act, 1947. Where, however, a plaintiff desires to enforce a judgment expressed in a foreign currency by the issue of the writ of fieri....
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.... regard to section 36(1) of that Act, which deals with enforcement of foreign awards, and that the words "to the same effect" in the expression "an award...may.. be enforced in the same manner as a judgment or order to the same effect" in section 26(1) did not mean a judgment or order "in the same terms" but meant a judgment or order having "the same effect" this would be achieved if the sum awarded were converted into sterling at the rate of exchange prevailing on the date of the award, and that leave to enforce an award expressed in a foreign currency should be given by the court provided the applicant had filed an affidavit showing the rate of exchange as at the date of the award and giving the amount of the award converted into sterling. (5) In the Jugoslavenska case, the Court of Appeal took the date of the award as the date of conversion by reason of the interpretation placed by it upon the words "to the same effect" in section 26(1) of the Arbitration Act, 1950, because an award could for the purpose of enforcement have the same effect as a judgment in an action on the award only if the date of the award were taken as the date of conversion as, by reason of the decision i....
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.... a contract the money was to be paid in that currency if the proper law of the contract was that of a foreign country and the money of account was of that country. So far as the date of conversion was concerned, all the Law Lords, except Lord Simon of Glaisdale, were of the opinion that it should be the date when the court authorizes the enforcement of the judgment in terms of sterling. (10) Though the Jugoslavenska case was not expressly overruled in the Miliangos case, in all the opinions delivered in that case except in the opinion of Lord Frasser of Tullybelton where no reference is made to that case, it was doubted whether in the future the rule in the Jugoslavenska case should or would hold the field. Lord Wilberforce opined that he saw no reason why, if desired, the practice adopted in that case should not be adjusted so as to enable coversion to be made at the date when leave to enforce the award in sterling is given. Lord Cross of Chelsea thought it absurd that there should be one rule for arbitrations with respect to debts expressed in a foreign currency and another rule with respect to actions on similar debts. Lord Edmund-Davis said that in the Jugoslvenska case the ....
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....f a judgment is to be enforced by execution, the application for execution is to state the rate of exchange current in London on the date nearest or most nearly preceding the date when the application is made. We have spent some time in ascertaining the English law on the subject by reason of the absence of any authority of any Indian court on this point and because the learned Single Judge has based his decision on the Miliangos case while the Division Bench of the Delhi High Court has based its on the Jugoslavenska case. Further, the English decisions referred to by us are of courts of a country from which we have derived our jurisprudence and a large part of our laws and in which the judgments were dilivered by judges held in high repute. Undoubtedly, none of these decisions are binding upon this Court but they are authorities of high persuasive value to which we may legitimately turn for assistance. Whether the rule laid down in any of these cases can be applied by our courts must, however, be judged in the context of our own law and legal procedure and the practical realities of litigation in our country. When a foreigner has to receive a sum of money which should justly be....
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....t 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. With these considerations in mind, we will now examine the feasibility of the several dates set out by us at the beginning of our discussion on this point. The first of the five dates listed earlier by us, namely, the date when the amount became due and payable, does not have the effect of putting the plaintiff in the same position in which he would have been had the defendant discharged his obligation when he should have done because between that date and the date when the suit is decreed the rate of exchange may have fluctuated to the plaintiff's prejudice, resulting in the amount decreed in rupees representing only a fraction of what he was entitled to receive. Equally, the possibility of the plaintiff getting more than what he had bargained for in case the rate of exchange had fluctuated in his favour cannot be ruled out. To select, as the English courts had done earlier, the date w....
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....other proceedings against it in superior courts and by the time the matter is finally determined, the rate of exchange prevailing on that date may be nowhere near that which prevailed at the date of the decree of the trial court. To select the date of the decree of the trial court as the conversion date would, therefore, be to adopt as unrealistic a standard as the 'breach date". This difficulty is, however, easily overcome by selecting the date when the action is finally disposed of, in the sense that the decree becomes final and binding between the parties after all remedies against it are exhausted. This can be achieved by the court which hears the appeal providing that the date of its decree or other proceeding in which the decree is challenged would be the date for conversion of the foreign currency sum into Indian rupees in cases where the decree has not been executed in the meantime. The real objection to selecting this date, however, is that a money decree and the payment by the judgment debtor of the judgment debt under it are two vastly different matters widely separated by successive execution applications and objections thereto unless the judgment-debtor chooses to pay ....
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....ition for the court would have to fix the rate of exchange for the entire decretal debt at the time of granting the first application for execution and then, if the rate of exchange has varied in the meantime, to fix a different rate of exchange for the unrealized balance of the decretal amount at the time of granting the second application for execution, and equally so with respect to successive applications for execution. Thus, with respect to portions of the same decretal debt different rates of exchange would come to be fixed at different times. A further difficulty in selecting the date of granting an execution application is that execution can only issue for a sum expressed in Indian currency. What is being is executed is the decree and the sum for which execution is to issue in a money decree must, therefore, be for the particular sum specified in the decree, that is, the judgment debt. It cannot be for a sum which would be determined and fixed by the executing court at the time of granting the execution application, for under o.21 r. 11(2) (g) of the Code of Civil Procedure, 1908, an application for execution has to state "the amount with interest (if any) due upon the d....
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....uit for a sum of money expressed in a foreign currency is also a money suit and the plaintiff in such a suit will have to pay court-fees according to the amount claimed. As, however, a court in India cannot, as we have pointed out above, pass a decree simpliciter for payment of a sum in a foreign currency in such a suit, the plaintiff will have to make an alternative claim in his plaint for the rupee equivalent of the foreign currency sum claimed. He will, therefore, have to pay court- fees on the amount of the rupee equivalent. Such rupee equivalent as at the date of the institution of the suit can only be at the rate of exchange prevailing on that date. If, therefore, a plaintiff were to make the alternative claim on the basis of the rupee equivalent at the time of payment, the value of the suit for the purposes of court-fees would be incapable of computation for it would not be possible to say what the rate of exchange on that date would be. It may be argued on the analogy of a suit for accounts or for partition or for administration or for winding up and accounts of a partnership that the plaintiff can put a tentative valuation in his plaint computed according to the rate of ex....
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....e concurrence of the Treasury, to fix fees to be taken in the High Court and the Court of Appeal (see Halsbury's Laws of England, 4th ed., vol. 10, para. 908). In the exercise of this power, Supreme Court Fees Orders have been made from time to time. The order currently in force is the Supreme Court Fees Order, 1980 (S. I. 1980 No. 821), under which the fee payable in the case of a writ endorsed with a claim for a liquidated sum not exceeding & 2,000 is & 35 and in any other case it is & 40, civil proceedings in England being commenced by issuing a writ. Thus, in England, a fixed court-fee is payable, the amount thereof varying dependant only upon whether it is an action for a liquidated sum not exceeding & 2,000 or not. In England, therefore, as the court-fees payable are not ad valorem court-fees in an action to recover a sum of money expressed in a foreign currency, it would be immaterial for the purposes of court- fees whether the plaintiff claims in the alternative the sterling equivalent of that amount as at the date of the judgment or as at the date when the court gives leave to enforce the judgment or as at the date of payment because in any of these cases, the court-fees p....
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....date of payment or realization of the decretal debt as the proper date for the rate of conversion. This then leaves us with only there dates from which to make our selection, namely, the date when the amount became payable, the date of the filing of the suit and the date of the judgment, that is, the date of passing the decree. It would be fairer to both the parties for the court to take the latest of these dates, namely, the date of passing the decree, that is, the date of the judgment. The learned Single Judge of the Delhi High Court also reached the same conclusion. He, however, did so relying upon the Miliangos case under an erroneous belief that when in that case it was held that the proper date should be the date when the judgment becomes enforceable what was meant was the date when the judgment was given, that is, when the decree was passed. The learned Single Judge was in error in so reading the judgment of the House of Lords. when the majority in the Miliangos case spoke of the date when the court gives leave to enforce the judgment what they were referring to was not the date of the judgment but the date on which the court gives leave to execute the judgment. In Halsbu....
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....apitulate, in the Jugoslavenska case, the plaintiffs had been awarded a sum expressed in United States dollars in an arbitration held in London and had sought leave of the court under section 26, now section 26(1), of the Arbitration Act, 1950, to enforce that award. In support of this application, the plaintiffs had filed an affidavit showing the rate of exchange as at the date of the award and the equivalent in pound sterling at that rate of the amount awarded to him and had claimed to enforce the amount awarded on that basis. Two questions, therefore, fell for the court's determination. They were thus put by Roskill L.J. in his judgment in that case (at page 504): "The first is whether an arbitrator or umpire sitting in England or Wales can lawfully make an award in a currency other then sterling. The second is whether if such an award can be so lawfully made, it is enforceable under s. 26. To understand the decision of the Court of Appeal so far as concerns the first question, we must bear in mind the then prevailing state of the law in England and so far as concerns the second question the provisions of the English law rel....
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....ign award the plaintiff would have to make his claim in English currency in respect of the sum of money awarded to him in a foreign currency. In such an action the debt in respect of which the plaintiff would be seeking judgment would be the sum of money payable to him under the award which had by virtue of the award become payable to him on the date of the award. He would, therefore, have to convert the foreign currency sum awarded to him into English currency at the rate of exchange prevailing on the date of the award. Before we deal with the second mode of enforcing a foreign award provided in section 36(1), it will be convenient to reproduce here the provisions of section 26 of the English Arbitration Act which are as follows: "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. (2) If- (a) the amount sought to be recovered does not exceed the current limit on jurisdiction in section 40 of the County Courts Act, 1959, and (b) a county court so order....
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....r once leave was given, the award could be enforced by the ordinary means of execution, but it might be necessary to enter judgment in order to issue a bankruptcy notice and the latter words of section 26 enabled judgment to be so entered. Roskil L.J. also pointed out (at page 507) that under section 26(1) there are two different steps which must be taken. First, the obtaining of leave to enforce the award in the same manner as a judgment, and secondly and independently, when leave is so given, the entering of judgment in the terms of the award. Section 26(1) is not exhaustive of the modes in which an award, which is not a foreign award, can be enforced. Such an award can also be enforced by bringing an action on it in which case, as pointed out earlier, if the sum awarded were expressed in a foreign currency, the judgment would have to be sought in sterling for which purpose the rate of exchange would be taken as at the date of the award. In the Jugoslavenska case the court held that an arbitrator or umpire in England had jurisdiction to make an award for a sum of money expressed in a foreign currency when that particular currency was the appropriate currency in which to express i....
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....ting judgment stating his belief that if Parliament were to reconsider the sterling judgment rule and the breach date rule, the Jugaslavenska case would come within the purview of such reconsecration. In view of these observations and the fact that the Havana case is no longer the law in view of the decision in the Miliangos case, it is highly doubtful whether today in England if the matter were carried higher, it would be decided in the same way. In view of the Miliangos case it cannot be said today that in an action on an award the foreign currency sum directed to be paid under the award must be converted at the date of the award when it was payable. It would have to be converted at the date when the court gives leave to enforce the judgment. On principle there can be no difference between an action on an award and a case where instead of filing an action the plaintiff files an application under section 26(1) for leave to enforce the award. If in an action on the award the proper date of conversion would be the date when the court gives leave to enforce the judgment, where an application under section 26(1) is filed the proper date of conversion should also be the same, for then ....
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....d in court. We find that in adopting this line of approach the Division Bench has overlooked the basic differences between the English procedure and the procedure under our Act. The provisions for enforcing an award under the English Act and under our Act are different. Under the English Act, if it is sought to enforce an award by making an application under section 26(1), such application has to be made under O. 73 r. 3 of the Rules of the Supreme Court, 1965, by an originating summons. There is no time-limit provided for taking out such a summons. There is, however, a time-limit provided for making an application to the court to remit an award under section 22 or to set aside an award under section 23(2), under O. 73 r. 5(1) of the Rules of the Supreme Court, 1965, the period of limitation being 21 days after the award has been made and published to the parties. An application for leave to enforce the award under section 26(1) can, however, be made even before the expiry of the time for moving to set aside the award. In such a case, however, it can be resisted upon the ground that a motion to set aside the award to be made. It is opined in Russel on Arbitration, 20th ed. page 375....
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.... it for that purpose, must proceed to "pronounce judgment according to the award" whereupon a decree has to follow. Section 17 expressly provides that in such a case "the Court shall ... proceed to pronounce judgment according to the award and upon the judgment so pronounced a decree shall follow". The only ground upon which such a decree can be challenged in appeal is that "it is in excess of, or not otherwise in accordance with the award". The court before which an application for judgment in terms of the award is made, has, therefore, no discretion in the matter except possibly in a case where the award is on the face of it patently illegal or violative of a provision of the law. Under section 26(1) of the English Act, when leave is given to enforce the award, it is not necessary that judgment should be entered in terms of the award for the purpose of enforcing the award by execution. Under our Arbitration Act, before an award can be enforced, a judgment has to be pronounced according to the award, a decree has thereupon to follow and it is that decree which alone can be enforced by an application for execution made under O. 21 r. 11 of the Code of Civil Procedure, 1908. It is p....
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.... processes of law, namely, execution, will be the decree passed in terms of the award, in the second case it will be the award itself, unless the applicant desires to have judgment entered in terms of the award which he is not required to do as pointed out above. On behalf of ONGC reliance was placed upon the decision of this Court in Satish Kumar and others v. Surinder Kumar and others.(1) On the strength of this decision it was submitted that an award was not a mere waste paper until a decree in terms of the award has been passed but an award created rights and liabilities and, therefore, since the award in the instant case provided that a certain sum should be paid in a foreign currency to Forasol, it spoke from the date when it was made and published and the rate of conversion could, therefore, only be the date of the said award. We are unable to see how the above decision in any way bears out this proposition or lends support to it In that case, an award, made on a reference to arbitration by the parties without the intervention of the court, was filed in court under section 14 of the Arbitration Act, 1940. In an application made under section 30 to set aside the award, one....
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....e merged in the said decree and the sum of FF,5,89,727.51 payable to Forasol under the said award became a judgment debt payable to Forasol under the said decree and, as pointed out above, at the time of passing the decree the court would have to direct payment of the rupee equivalent of this foreign currency debt only at the rate of exchange prevailing on the date of the decree. For the reasons set out above, we are of the opinion that the rule in the jugoslavenska case cannot be applied to this country and the fact that a decree is in terms of an award for a sum of money expressed in a foreign currency makes no difference to the date to be taken by the court for converting into Indian currency the foreign currency sum directed to be paid under the award and that such date should also be the date of the decree. It would be convenient if we now set out the practice, which according to us, ought to be followed in suits in which a sum of money expressed in a foreign currency can legitimately be claimed by the plaintiff and decreed by the court. It is unnecessary for us to categorize the cases in which such a claim can be made and decreed. They have been sufficiently indicated i....
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....at the rate of exchange prevailing on the date of the judgment. For the purposes of court-fees and jurisdiction the plaintiff should, however, value his claim in the suit by converting the foreign currency sum claimed by him into Indian rupees at the rate of exchange prevailing on the date of the filing of the suit or the date nearest or most nearly preceding such date, stating in his plaint what such rate of exchange is. He should further give an undertaking in the plaint that he would make good the deficiency in the court-fees, if any, if at the date of the judgment, at the rate of exchange then prevailing, the rupee equivalent of the foreign currency sum decreed is higher than that mentioned in the plaint for the purposes of court-fees and jurisdiction. At the hearing of such a suit, before passing the decree, the court should call upon the plaintiff to prove the rate of exchange prevailing on the date of the judgment or on the date nearest or most nearly preceding the date of the judgment. If necessary, after delivering judgment on all other issues, the court may stand over the rest of the judgment and the passing of the decree and adjourn the matter to enable the plaintiff to ....
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....vide in the award for the rate of exchange at which the sum awarded in a foreign currency should be converted in the events mentioned above. This may be done by the arbitrators or umpire taking either the rate of exchange prevailing on the date of the award or the date nearest or most nearly preceding the date of the award or by directing that the rate of exchange at which conversion is to be made would be the date when the court pronounces judgment according to the award and passes the decree in terms thereof or the date nearest or most nearly preceding the date of the judgment as the court may determine. If the arbitrators or umpire omit to provide for the rate of conversion, this would not by itself be sufficient to invalidate the award. The court may either remit the award under section 16 of the arbitration Act, 1940, for the purpose of fixing the date of conversion or may do so itself taking the date of conversion as the date of its judgment or the date nearest or most nearly preceding it, following the procedure outlined above for the purpose of proof of the rate of exchange prevailing on such date. If however, the person liable under such an award desires to make payment of....
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.... to be invalid on the ground of the above omission to specify either the rupee equivalent of the French Franc portion of the said award or the rate of exchange at which such French Franc portion was to be converted into its rupee equivalent. For the reasons set out above, we hold that the learned Single Judge rightly took the date of the decree as the date of conversion. In his order on the said execution application he has, however, given a direction that ONGC could satisfy the judgment debt by making payment in French Francs or if they so preferred, by paying the equivalent sum in rupees at the rate of exchange prevailing on the date of the decree. He was in error in not qualifying this direction by making the option given to ONGC to make payment in French Francs subject to the permission of the concerned authorities under the Foreign Exchange Regulation Act, 1973. To this extent, the order passed by the learned Single Judge requires to be modified. Turning now to the appeal filed by ONGC, it was stated in the Special Leave Petition filed by ONGC that it had two claims against Forasol, the first with respect to what was termed as "tax differential" and the second with respe....