DLF Ltd. (Formerly Known As Dlf Universal Ltd.) And Anr.; (Appellant) v/s Koncar Generators And Motors Ltd.; (Respondent)

Facts Of The Case

• DLF Ltd. is an Indian Company and Koncar Generators and Motors Ltd. is a Croatian Company. They both entered a contract. The contract was created for design, engineering, manufacturing, and supply of two generators to the appellant by the respondent.
  
  
• Certain disputes arose between them, and they both agreed to refer the case before the International Chamber of Commerce, Paris. The arbitral tribunal, which was composed of three members, passed the award in favour of the respondent on 12.05.2004. The appellants were held liable to pay Euro 10,93,989 along with the interest.
  
  
• The aThe amount calculated that is Euro 10,93,989 is as follows:
  • Euros 9,60,308.41 as the sum related to the contract along with 5% interest per annum from 31.10.1999 to the final date of repayment of the amount.
    
    
  • Euros 18,411.40 for keeping and maintenance of the goods along with 5% interest per annum from the date of the award.
    
    
  • Euros 5,545.40 for lawyer expenses of the respondent, euros 99,482.70 for fees paid to the International Chamber of Commerce related to arbitration, euros 3,389.57 as guarantee expenditure paid to the International Chamber of Commerce for assuring the payment of the fees by the appellant, euros 6,852 for all the costs incurred in Paris in relation to the arbitration process, all this along with 5% interest rate per annum from the date of the award.
    
    
• The respondent wanted execution of the award and filed for the same in 2004. On the other hand, the appellant under "Section 34 of The Arbitration and Conciliation Act, 1996" filed a petition in the Trial Court.
  
  
• The Trial court dismissed the appellant's petition on 28.04.2010. Again, the appellants filed an appeal under "Section 37 of The Arbitration and Conciliation Act, 1996" in the High Court against Section 34 order by the Trial Court and also under "Section 48 of The Arbitration and Conciliation Act, 1996" objections against the appeal were filed in the Trial Court. The appeal was dismissed by the High Court on 15.10.2010 and ordered the appellant to deposit an amount of Rs. 7.5 Crores before the Trial Court on or before 08.11.2010. The appellant deposited the amount of Rs. 7.5 Crore on 22.10.2010 before the Trial Court, this amount could be taken by the respondent after producing a bank guarantee of Scheduled Bank of India. For the objections that were filed before the Trial Court, the Trail Court dismissed the objections on 02.04.2011.
  
  
• The appellant then filed a revision before the High Court against the decision of the Trial Court. The revision was admitted by the High Court. The High Court then ordered the appellant to deposit a further amount of Rs. 50 Lakhs before the Trial Court, which would be kept by the court and will be disbursed to the winner party when the dispute will finally get resolved. The appellant, as per the orders, deposited an amount of Rs. 50 Lakhs on 15.07.2011. Finally, the revision was dismissed on 01.07.2014 by the High Court, and the award attained finality.
  
  
• On 24.08.2016, the Trial Court permitted the respondent to withdraw the amount of Rs. 8 Crores. On 10.10.2016, the respondent instead of Rs. 8 Crores got Rs. 11,60,12,100 because of the interest accrued on the amount of Rs. 8 Crores.
  
  
• On 03.02.2017, the execution petition was filed by the respondent in which they recommended 01.07.2014 as the date for deciding the foreign exchange rate as this was the date on which the award attained finality. The Trial Court looked into the suggestion and accepted it.
  
  
• The appellant, against this order of the Trial Court, filed an appeal and recommended 12.05.2004 as the date for deciding the foreign exchange rate based on the court's decision in Forasol v. Oil and Natural Gas Commission[2] where the date on which the award attained decree was considered for deciding the foreign exchange rate, but the appeal was dismissed by the High Court because the given case was decided under the Arbitration Act, 1940[3] and hence, cannot be applied in this case which now comes under the Arbitration and Conciliation Act, 1996.
  
  
• The appellant then filed a special leave petition on 10.09.2018 before the Supreme Court of India and now confined its issue to whether the foreign exchange rate as on 15.10.2010 would be considered to be applied on the deposit of Rs. 8 Crores.
  
  

Court: This case was decided in the Supreme Court of India.
Judgement Date: 8th August 2024
Citation: 2024 INSC 593
Name of Judges: Hon'ble Mr. Justice Pamidighantam Sri Narasimha
Hon'ble Mr. Justice Aravind Kumar
Bench: Division bench
Number of Opinion:
Single as unanimous opinion was given.
Appellant's Advocate: Mr. Pinaki Mishra
Respondent's Advocate: Mr. Abhay Mahajan

Types Of Opinion
Unanimous Opinion:
Yes, applicable.
JUDGES- Hon'ble Mr. Justice Pamidighantam Sri Narasimha and Hon'ble Mr. Justice Aravind Kumar gave unanimous opinion.
Hon'ble Mr. Justice Pamidighantam Sri Narasimha gave the judgement.
Leading Majority Opinion:
No, not applicable.
Separate but Concurring Opinion:
No, not applicable.
Dissenting opinion:
No, not applicable.

Material Fact

Material facts of the case are as follows:

• DLF Ltd., an Indian company and Koncar Generators and Motors Ltd., a Croatian company. They both got into a contract in which certain dispute arose between them and they both agreed to refer it to International Chamber of Commerce, Paris.
• The arbitral award was passed in favour of the respondents on 12.05.2004 and the appellants were held liable to pay Euro 10,93,989.
• The respondents filed for execution of the award in 2004 whereas the appellant filed a petition under "Section 34 of The Arbitration and Conciliation Act, 1996", which was dismissed by the Trial Court.
• The appellant filed an appeal against the Trial Court order in the High Court under "Section 37 of The Arbitration and Conciliation Act, 1996" and also filed objections in the Trial Court under "Section 48 of The Arbitration and Conciliation Act, 1996".
• The appeal was dismissed by the High Court and the appellant was ordered to deposit Rs. 7.5 Crore, which the respondent could take after fulfilling certain conditions. As per the orders, the appellant deposited the amount on 15.10.2010.
• The objections that were filed before the Trial Court were dismissed and the appellant then filed for revision before the High Court. The High Court admitted the revision and ordered the appellant to make a further deposit of Rs. 50 Lakhs, which would be given to the party whosoever wins.
• The High Court dismissed the revision filed by the appellant and the award attained finality on 01.07.2014.
• The respondent suggested 01.07.2014 as the date for deciding the conversion rate which was accepted by the Trial Court. The appellant filed appeal against this and recommended 12.05.2004 as the date for deciding the conversion rate, which was dismissed.
• The appellant then filed a Special Leave Petition in the Supreme Court of India and the issue was confined to whether the conversion rate as on 15.10.2010 would be applied on the amount of Rs. 8 Crores or not.

Generalisation Of The Material Fact

• A contract was signed between an Indian and a foreign company; some dispute arose between them and they referred it to dispute resolution body and the award was decided in the favour of the foreign company.
  
  
• The execution of the award got delayed due to filing of various petitions and appeals by the Indian company.
  
  
• During the proceedings of the petitions and appeals, the appellant was ordered to deposit some amount before the court, which if the respondent want could withdraw after fulfilling some conditions as told by the court. The appellant deposited the money as per the orders.
  
  
• After some years, the award attained finality and the Indian company was held liable. The date on which the award attained finality was accepted for deciding the conversion rate from Indian currency to foreign currency by the court.
  
  
• The Indian company filed an appeal against the order and suggested the date on which the dispute was resolved by the dispute resolution body as for deciding the conversion rate but this was rejected by the court.
  
  
• The Indian company then filed a Special Leave Petition in the higher Court to decide the conversion rate for the amount that it deposited during the proceedings.
  
  

Questions Before The Court

• What should be the date for deciding the foreign exchange rate when the amount is to be converted from Indian currency to foreign currency?
  
  
• What should be the date for deciding the foreign exchange rate if some of the amount was deposited before the award attained finality?

Arguments

Arguments advanced on behalf of the Appellant:

• The Learned Senior Counsel initially argued that the conversion rate of 01.07.2014 should not be applied on the entire amount and the exchange rate on 02.04.2011, when the objections filed under "Section 48 of The Arbitration and Conciliation Act, 1996" were dismissed, should be used.
  
  
• The Senior Counsel later restricted his argument to the foreign exchange rate to be applied on the amount of Rs. 8 Crore that were deposited while the proceedings were going on. He argued that the exchange rate of the date on which the amount was deposited in the court should be applied as the amount stands converted on that date i.e. 22.10.2010.
  
  
• The Learned Counsel argued that since it was on the High Court's order that the appellant deposited the amount and for the same the consent was given by the respondent and the respondent was also permitted to withdraw the amount after providing the bank guarantee of Scheduled Bank of India, therefore the exchange rate on 22.10.2010 and 15.07.2011 should be applied on the deposit of Rs.7.5 Crore and Rs. 50 Lakhs respectively.
  
  He also argued that for the respondent not being able to withdraw the amount due to his own mistake, the appellant cannot be faulted. He said that the rest amount or the leftover amount can be converted by using the exchange rate as on 01.07.2014.
  
  
• The Senior Counsel after doing all the calculations, concluded that the appellant is liable to pay only Rs.3.19 Crore after including all the interests, if the court goes as per the calculations done by them.
  
  

Arguments advanced on behalf of the Respondent:

• The Learned Counsel argued that on the entire amount, the exchange rate on 01.07.2014 should be used. He said that the argument put by the appellant's side that the respondent has consented before the deposit of the amount of Rs. 7.5 Crores was made, is false.
  
  The Counsel then referred to the court's decision in P.S.L. Ramanathan Chettiar v O.R.M.P.R.M. Ramanathan Chettiar and argued that the deposit of the amount during the proceedings of the court does not mean that the money is now of the respondent because there is a probability that if the appellant wins the case, then the money would be taken back from them. Hence, the award amount can be said to be a decree only on 01.07.2014 and not on 12,05,2004. Hence, this date should be considered as the correct date for deciding the foreign exchange rate of the whole amount.
  
  
• The Learned Counsel then submitted the calculation sheet before the court and applied the conversion rate of 1 Euro=Rs. 82.21 and concluded that the respondent is entitled to Rs. 6,57,62,057 as the balance and the calculations done by the appellants are wrong.

Arguments advanced by the Intervener:
There was no intervener nor amicus curiae in this case.

Concrete Judgement
The Supreme Court partly allowed and partly dismissed the appeal as instead of allowing the whole amount that was deposited while the proceedings were going on i.e. Rs. 8 Crores, it only allowed the amount that was deposited formerly that is 7.5 Crores to be applied the rate of the date of deposit and not the latter one that is 50 Lakhs because the respondent was not able to withdraw the latter amount. Hence, in this way the appeal was neither dismissed nor accepted as a whole.

Ratio Decedendi

• In the case of deciding the foreign exchange rate in relation to the arbitral award where there is a huge difference between the date of filing the case and the date of the award attaining finality, the date on which the award attained finality will be considered for deciding the foreign exchange rate as the delay can be attributable to the person who has to make the payment and hence, he cannot benefit from the delay made by him.
  
  
• In the case where some of the amount is deposited before the court while the proceedings were taking place and the other person is allowed to take that amount after fulfilling some condition, then the foreign exchange rate of the date on which the amount was deposited before the court will be considered for deciding the foreign exchange rate. It doesn't matter whether the other person took the money or not as it was his own discretion.
  
  
• In the case where some of the amount is deposited before the court while the proceedings were taking place and the other person is not allowed to take that amount and it will remain with the court and will be given to the person whosoever wins, then in that case, the date on which the award attained finality will be considered for deciding the foreign exchange rate of the amount that was deposited before the court. Since the other person cannot take the money that was deposited, the exchange rate of that date cannot be applied.

End Notes:

1. Arbitration and Conciliation Act 1996
2. Forasol v Oil and Natural Gas Commission (1984) Supp SCC 263
3. Arbitration Act 1940
4. P.S.L. Ramanathan Chettiar v O.R.M.P.R.M. Ramanathan [1968] AIR 1047

Award Winning Article Is Written By: Mr.Shubh Agarwal

Authentication No: DE435070143505-15-1224