No Distinction Between Decree Or Awards Where Amounts Are In Foreign Currencies For Purposes Of Enforcement Of Arbitral Award: Delhi High Court

The Delhi High Court has observed that for the purposes of enforcement of arbitral award, no distinction can be made between decree or awards where amounts are decreed or awarded in foreign currencies on the basis of the nationality of the disputing parties.

Justice Vibhu Bakhru was dealing with a plea filed by a Decree Holder under sec. 36 of the Arbitration and Conciliation Act, 1996 seeking to enforce an Arbitral Award dated 07.01.2017.

The issue before the Court was regarding the rate of conversion of foreign exchange to be applied for determining the amount required to satisfy the Arbitral Award to the extent of the amount awarded in foreign currency (US Dollars).

The petitioner claimed that the rate of conversion was to be determined with reference to the date on which the respondent Judgment Debtor's Special Leave Petition (SLP) was dismissed by the Supreme Court and the Arbitral Award became final.

The respondent, on the other hand, argued that the rate of conversion was to be reckoned in reference to the date when the demand for the same was made by the petitioner for the first time.

The petitioner was engaged in the business of stevedoring and handling, cleaning and forwarding, transportation and escorting etc. MMTC was a Public Sector Undertaking.

National Thermal Power Corporation Ltd., a public sector undertaking, had placed an order with MMTC for import of coal and supply to its various power stations in the country. Accordingly, MMTC had entered into an Agreement dated 01.06.2005 with the petitioner, whereby the petitioner was engaged as a stevedoring and handling contractor for handling imported coal from foreign vessels at the port of discharge (Paradip Port) and, for its transportation to NTPC Ltd's Thermal Power Station, for the period June, 2005 to May, 2006.

Disputes arose between the parties in connection with the said contract. The same were referred to arbitration under the aegis of the Indian Council for Arbitration. The Arbitral Tribunal comprised of three former High Court Judges. The arbitral proceedings culminated in the Arbitral Award dated 07.01.2017, which is sought to be enforced in the petition.

The Court noted that it is a trite law that in execution proceedings, the Court is not required to go behind the decree and that the decree must be accepted on its own terms and shall be enforced.

It said that there is no room to revisit contentious issues, which have attained finality, at this stage.

In the present case, the Court noted that the Agreement between the parties did not contain any provision regarding conversion of the foreign currency component in Indian rupees.

"Thus, the Arbitral Award must be enforced on its own terms. However, the Arbitral Award does not indicate the conversion rate for computing the Indian currency equivalent to the amounts awarded in US Dollars," the Court said.

The Court found it difficult to accept that an Executing Court would determine the exchange rate to be used for enforcing decrees based on whether both the parties are Indian entities or not.

"It is not necessary that the commercial transactions between Indian parties be confined to Indian territories alone. There may be transactions which may entail exposure in foreign currency. For the purposes of enforcement, no distinction can be made between decree/awards where amounts are decreed/awarded in foreign currencies on the basis of the nationality of the disputing parties," the Court observed.

Accordingly, the Court said that the exchange rate to be applied for computing the amount due and payable under the awarded amount was the exchange rate as prevailing on 29.04.2019, being the date on which MMTC's SLP was dismissed by the Supreme Court and the Arbitral Award attained finality.

"It is not disputed that the exchange rate on that date for one USD was ₹70.1445 which was less than the exchange rate as on 07.05.2019 (the date on which MMTC had made the deposit). The petitioner would be entitled to the remaining amount – amount awarded in US$ computed at ₹ 35.045 (₹70.1445 less ₹45.10). The remaining amount is required to be refunded to MMTC," the Court said.

Accordingly, the plea was disposed of.

Title: M/S KARAM CHAND THAPAR & BROS. (COAL SALES) LTD. v. MMTC LTD.

Citation: 2022 LiveLaw (Del) 274

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