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DLF Ltd. (formerly known as DLF Universal Ltd.) and Anr. vs. Koncar Generators and Motors Ltd.

Not available · 2024 INSC 593Decided 8 Aug 2024
Not available
Justice Pamidighantam Sri Narasimha · Justice Aravind Kumar

Background

DLF Ltd. and a Croatian company, Koncar Generators and Motors Ltd., had a contract for design and supply of generators that went to international arbitration in Paris, resulting in a 2004 award of roughly Euros 10.9 lakh plus interest in Koncar's favour. While DLF's objections to the award were pending in Indian courts, DLF deposited amounts (Rs. 7.5 crore in 2010 and Rs. 50 lakh in 2011) with the court, and a dispute arose over which date's euro-to-rupee exchange rate should be used to convert the foreign-currency award into Indian rupees for enforcement.

Decision Breakdown

The Supreme Court held that under the Arbitration and Conciliation Act, 1996, a foreign award becomes enforceable, and its currency should be converted, on the date the objections against it are finally decided, following the principle in Forasol v. ONGC. However, where the award-debtor deposits money in court during the pendency of objections and the award-holder is permitted to withdraw it, that deposited portion must instead be converted at the exchange rate prevailing on the date of deposit (per Renusagar Power Co. v. General Electric), since the award-holder could have accessed and benefited from it then. Applying this, the Court held the first deposit (Rs. 7.5 crore, withdrawable in 2010) converts at the 2010 rate, while the second deposit (not withdrawable until proceedings concluded) and the remaining award amount convert at the rate prevailing when the objections finally attained finality in 2014.

Lesson Learnt

When a foreign-currency arbitral award is being enforced in India, the exchange rate used to convert it into rupees is not fixed at a single point: money the paying party actually makes available for withdrawal is converted at that deposit date, while any remaining award amount is converted only once the legal challenges to the award are finally resolved.

Official source (sci.gov.in)View Judgment (PDF)

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