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Informist, Thursday, Aug 8, 2024

 

NEW DELHI – The Supreme Court today held that the relevant date to determine the conversion rate of foreign awards expressed in foreign currency should be when that arbitral award becomes enforceable--that is when objections against it are finally decided. The court said that when an award debtor deposits an amount before the pendency of objections and the award holder is permitted to withdraw the same, this deposited amount must be converted as on the date of the deposit. 

 

The court said that 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, the court added.

 

The case has its genesis from a contract between an DLF Ltd and Koncar Generators and Motors Ltd, a Croatian company. The parties entered into a contract for design, engineering, manufacturing, and supply of two generators by Koncar. Certain disputes arose between the two parties that were referred to arbitration before the International Chamber of Commerce, Paris. The arbitral tribunal passed its award in 2004 in favour of Koncar and held DLF to be jointly and severally liable to pay 1.09 mln euros along with interest. 

 

Thereafter, Koncar filed for execution of the award in 2004, while DLF challenged the award, which was dismissed on Apr 28, 2010. Consequently, DLF filed objections against the award in the trial court and filed an appeal against rejection of its arbitration petition in the high court. On Oct 15, 2010, the high court dismissed DLF's plea and asked the company to deposit 75 mln rupees before the executing court on or before Nov 8, 2011.

 

On Apr 2, 2011, the trial court dismissed the objections filed by DLF, following which it moved the high court. On Jun 3, 2011, the high court stayed the trial court's order subject to DLF depositing a further amount of 5 mln rupees in addition to 75 mln rupees with the executing court. It said that the amount will be disbursed to the successful party on the final adjudication of the issue. On Jul 1, 2014, the high court dismissed DLF's plea by which the award achieved finality.

 

In the execution proceedings, the trial court allowed Koncar to withdraw the entire deposit of 80 mln rupees as per the high court's order. In 2017, the trial court also allowed the execution proceedings, wherein it was held that the relevant date to convert the award amount expressed in euros to Indian rupees is Jul 1, 2014, the date on which all objections against the award were finally decided. Challenging this, DLF moved the high court, which dismissed the case in 2018. Consequently, the case moved the apex court. The petitioner said 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 Jul 1, 2014.

 

"As per these conclusions, the first deposit of Rs 7.5 crores (75 mln rupees) must be converted as on the date of deposit being Oct 22, 2010. The second deposit of Rs 50 lakhs (5 mln rupees) as well as the remaining amount due under the award must be converted when the objections proceedings attained finality on Jul 1, 2014)," the top court said today.  End

 

Today, the shares of DLF Ltd ended 1.5% lower at 832.60 rupees on the National Stock Exchange.  

 

Reported by Surya Tripathi

Edited by Vandana Hingorani

 

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