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SUPREME COURT OF INDIA
D.P. MADON AND SABYASACHI MUKHARJI, JJ.
Forasol, Appellant
Versus
Oil and Natural Gas Commission, Respondent.
Civil Appeal No. 628 with 629 of 1981
Decided on 25-10-1983.
WITH
Oil and Natural Gas Commission, Appellant
Versus
Forasol, Respondent.
-in an action to recover an amount payable in a foreign currency, five dates compete for selection by the Court as the proper date for fixing the rate of exchange at which foreign currency amount has to be converted into the currency of the country in which action has been commenced and decided. These dates are:
(1) the date when the amount becomes due and payable;
(2) the date of the commencement of the action:
(3) the date of the decree;
(4) the date when the Court orders execution to issue; and
(5) the date when the decretal amount is paid or realized.
In a case where a decree has been passed by the Court in terms of an award made in a foreign currency a sixth date also enters the competition, namely the date of the award. The Court must select a date which puts the plaintiff in the same position in which he would have been had the defendant discharged his obligation when he ought to have done, bearing in mind that the rate of exchange is not a constant factor but fluctuates, and very often violently fluctuates, from time to time. It would be fairer to both the parties for the Court to take the date of passing the decree, that is, the date of the judgment, as the proper date for fixing the rate of exchange at which the foreign currency amount should be converted
-in an action to recover an amount payable in a foreign currency, five dates compete for selection by the Court as the proper date for fixing the rate of exchange at which the foreign currency amount has to be converted into the currency of the country in which the action has been commenced and decided. Such dates are:
(1) the date when the amount becomes due and payable;
(2) the date of the commencement of the action;
(3) the date of the decree;
(4) the date when the Court orders execution to issue; and
(5) The date when the decretal amount is paid or realised.
In a case where a decree has been passed by the Court in terms of an award made in a foreign currency, a sixth date also enters the competition, namely, the date of the award - Farasol v. Oil and Natural Gas Commission, AIR 1984 SC 241. The Court must select a date which puts the plaintiff in the same position in which he would have been had the defendant discharged his obligation when he ought to have done, bearing in mind that the rate of exchange is not a constant factor but fluctuates, and very often violently fluctuates, from time to time.
JUDGMENT
MADON, J.:—These cross appeals by special leave arise out of execution proceedings adopted by Forasol, a French Company, having its principal office in Paris, France against the Oil and Natural Gas Commission, a statutory body incorporated under the Oil and Natural Gas Commission Act, 1959 (Act XLIII of 1959), hereinafter for the sake of brevity referred to as ONGC.
2. On July 30, 1962 the Government of India invited global tenders for structural drilling for exploration of oil in the Jaisalmer area of the State of Rajasthan. The tender of Forasol was accepted by the Government of India and in pursuance thereof a contract date February 17, 1964, headed "Structural Drilling Contract", was entered into between ONGC and Forasol. Under the said contract, ONGC engaged Forasol to carry out structural drilling in relation to the exploration for oil in the Jaisalmer area of the State of Rajasthan on the terms and conditions contained in the said contract. The said contract was for a period of one year commencing from the date of the start of the drilling work. The said contract also gave an option to ONGC to extend the period by one more year. Article IX-3 of the said contract dealt with the currency of payment. It. provided as follows:
"IX-3.1. The operational fee, standby fee and equipment charges payable to FORASOL have been specified in French Francs in Articles IX-1.1.1 to IX-1.1.10 above. The amount payable to FORASOL on account of aforesaid fees and charges shall be computed in French Francs. ONGC shall pay 80 of the aforesaid amount in French Francs and the remaining. 20 in Indian Rupees using a fixed conversion rate of FF. 1.033 Re=. 1.000."
Under Article IX-3.2 the cost as well as the insurance, packing, forwarding and clearing charges in respect of the materials provided by Forasol and the freight, insurance, packing, forwarding and clearing charges for transporation from a sea port or air port in France to India and back to a sea port in France or outside France if Forasol so chose, in respect of the rig, equipment, machinery tools and other materials provided by Forasol were to be reimbursed to Forasol by ONGC in Indian rupees, if the expenditure was initially incurred by Forasol in Indian rupees, otherwise in French Francs.
3. Under a Credit Agreement arrived at between the Government of India and the Government of France, the Government of France had, agreed to provide credit facilities to a limited extent to the Government of India for the import of plant, machinery, equipment and materials and for execution of certain projects including oil exploration. Under the said Credit Agreement, credit was to be given by the French suppliers to the Indian buyers in the form of acceptance of payments on deferred basis upon the conditions laid down in the letters dated February 5, 1962, exchanged between the Governments of India and France. Consequently, in respect of the said contract, Forasol had agreed under Article X-1.1 thereof to accept payment of its fees, costs and charges payable in French Francs on deferred basis under the overall conditions of the said letters exchanged, between the two Governments and Forasol and ONGC had agreed opon the estimates of the payments to be made to Forasol in French Francs under the said contract, the invoicing rules and the mode of payment. Articles X-2, X-3 and X-4 of the said contract set out such estimates, invoicing rules and the mode of payment. Under Article X-3.3, Forasol was to indicate in each of its invoices the amount payable to it in French Francs and the amount payable to it in Indian rupees under the said contract. So far as the mode of deferred payment of French Francs was concerned, Article X-4.1-1 provided for remittance by ONGC in French Francs immediately following the signing of the said contract of a sum of FF 73,437.49, being the 10/800th part (i.e. 1.25 percent) of the total estimated amount of Forasols operational and standby fees and equipment charges, cost
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