Once There Is No Contract Between Parties Of Making Payment In Indian Currency, There Would Be No Question Of Determining Date Of Conversion: SC
The Supreme Court established that the date of conversion of the awarded sum from USD to Indian Rupees should be as per the original agreement date. The Court emphasized that the absence of a provision for payment in Indian Rupees in the agreement meant there was no need to determine a conversion date for US Dollars to Indian Rupees. The case involved two appeals filed under Article 134A read with Article 133(1)(a) of the Constitution of India before the High Court of Delhi. The central question was that in terms of the agreement dated June 29, 1982 between the parties and in light of the judgment dated February 24, 2015 of the Supreme Court of India, what should be the relevant date for conversion of the awarded sum from USD to Indian rupees.
A two judge Bench of Justice Aniruddha Bose and Justice Vikram Nath held, “We do not find any mention of payment being made in the Indian Currency i.e. INR from the agreement. Once there is no contract between the parties of making payment in Indian Currency INR, then, there would be no question of determining or finding out any date of conversion.”
The parties entered into an agreement in 1982 for earth work in Iraq, specifying payments in Iraqi Dinars and US Dollars. An arbitration award was given in 2002 in Iraqi Dinars. Disputes arose regarding the conversion date of the awarded sum to Indian Rupees. The High Court and the Supreme Court had different opinions on this matter.
The Supreme Court, in its judgment dated February 24, 2015, had clarified that the date of conversion should be as per the original agreement. The Court emphasized that the High Court's alteration of the conversion date and reduction of interest were not justified. The Supreme Court's decision made it clear that the arbitrator's directions, in line with the original agreement, should prevail.
Senior Advocate Dhruv Mehta appeared for the parties.
The issue before the Court was to determine the date of conversion of US Dollars into Indian Rupees as per the original agreement, given the finality of the award and previous legal proceedings. Both parties have agreed on the contents of the agreement, the award, and the preceding legal processes.
Upon examining the agreement, the Court found that there was no provision for payment in Indian Rupees (INR), only in Iraqi Dinars and US Dollars, with a specified conversion rate. The award also specified payment in Iraqi Dinars and US Dollars and did not permit conversion to INR, except for the encashed bank guarantee amount of Rs. 20 lakhs. The Court added, “In our considered view, perusal of the above material does not permit payment of the awarded amount in Indian currency except the amount of Rs. 20 lacs with admissible interest against the encashment of bank guarantee. As a necessary corollary, there would be no question of the amount awarded in Iraqi Dinars to be converted in Indian currency. The only conversion permissible was in US Dollars. In the above back drop, the question referred by the impugned judgment to be answered by this Court may not arise at all.”
Therefore, the Court said there is no requirement to determine a conversion date for US Dollars to Indian Rupees. The payment must be made in foreign currency (Iraqi Dinars and US Dollars) along with computed interest. The parties can agree on INR conversion rates, but the Court cannot interfere with the terms of the agreement, award, or the Supreme Court's directions.
Both appeals were disposed of, allowing RCCPL to continue with execution proceedings as per the law.
Cause Title: National Projects Construction Corporation Limited v. Royal Construction Company Private Ltd., [2023INSC899]