The relevant date for converting a foreign arbitral award to Indian rupees is when objections are finally decided, while deposits made during proceedings are converted at the date of deposit.

JUDGMENT

PAMIDIGHANTAM SRI NARASIMHA, J.

1. The issue arising in the present appeal relates to enforcement of an arbitral award expressed in foreign currency. In this context, two questions arise for consideration. First, what is the correct and appropriate date to determine the foreign exchange rate for converting the award amount expressed in foreign currency to Indian rupees. Second, what would be the date of such conversion, when the award debtor deposits some amount before the court during the pendency of proceedings challenging the award. Two uncertainties have a direct bearing on the question to be answered, the time lapse between the date of the award and its enforceability-a local factor, and the ever-fluctuating exchange rates- a global factor.

1.1 Taking into account these two factors and the statutory provisions, coupled with the decisions of this Court, we have formulated twin principles: First, following the principle in Forasol v. Oil and Natural Gas Commission¹ 1984 Supp SCC 263, the date when the arbitral award becomes enforceable shall be the date for conversion. Under the Arbitration and Conciliation Act, 1996² [Hereinafter ‘the Act’] this date is when the objections against the award are dismissed, and award attains finality. Second, in the event that the award amount or part of it is deposited in court pending objections, enabling withdrawal by the decree holder, that date of such deposit shall be the relevant date for conversion as per the principle in Renusagar Power Co Ltd v. General Electric Co³ 1994 Supp (1) SCC 644. Before we consider the submissions of the counsels representing the parties, followed by our reasons and decision, we will refer to the relevant facts of the case.

2. Facts: The relevant facts are that the appellants are Indian companies and the respondent is a Croatian company. The parties entered a contract for the design, engineering, manufacturing, and supply of two generators by the respondent. Certain disputes arose between them that were referred to arbitration before the International Chamber of Commerce⁴ [Hereinafter “ICC”.], Paris. The three-member arbitral tribunal passed its award dated 12.05.2004 in favour of the respondent-claimant and held the appellants to be jointly and severally liable to pay Euros 10,93,989, along with interest, as follows:

i. Euros 9,60,308.41 with interest of 5% p.a. starting on 31.10.1999 until final repayment;

ii. Euros 18,411.40 for the storage and maintenance of the goods with interest of 5% p.a. starting from the date of the award;

iii. Euros 5,545.40 relating to lawyer expenses of the claimant, euros 99,482.70 relating to arbitration fees paid to the ICC, euros 3,389.57 as guaranty expenses relating to the repayment of the appellants’ arbitration fee to the ICC, euros 6,852 relating to the arbitration costs in Paris, all these amounts with interest of 5% p.a. from the date of the award.

2.1 The respondent filed for execution of the award in 2004, while the appellants filed a petition under Section 34 of the Act, which was dismissed on 28.04.2010. In 2010, the appellants then filed objections against the award under Section 48 of the Act and also filed a Section 37 appeal against the Section 34 order. The High Court dismissed the appeal by its order dated 15.10.2010, the terms of which are important for our purpose and are hence extracted:

“After arguing for some time learned counsel have reached a consensus on the present appeal. It has been agreed by learned counsel for the appellants that the appeal as well as the application under Section 34 of the Arbitration and Conciliation Act, 1996 would be dismissed as withdrawn. It has been further agreed that the appellants would deposit an amount of Rs.7.5 Crores before the Executing Court on or before 08.11.2010.

It has been agreed by learned counsel for the respondent that the application under Section 48 which has been filed by the appellants would be decided on its own merits without being influenced