A) ABSTRACT / HEADNOTE

This case analyzes the enforcement of an arbitral award expressed in foreign currency, focusing on two pivotal issues. First, determining the correct date for applying the foreign exchange rate to convert the awarded amount to Indian rupees. Second, deciding the applicable date for conversion when partial amounts are deposited in court during challenges to the award. The Supreme Court upheld the principle that the relevant date is when the award attains enforceability, i.e., the final dismissal of objections. This ruling aligned with precedents, emphasizing judicial consistency in such matters.

Keywords: Arbitration, Foreign Currency, Exchange Rate, Arbitral Award Enforcement, Arbitration Act.

B) CASE DETAILS

i) Judgment Cause Title: DLF Ltd. (Formerly Known as DLF Universal Ltd) and Anr. v. Koncar Generators and Motors Ltd.

ii) Case Number: Civil Appeal No. 7702 of 2019.

iii) Judgment Date: 08 August 2024.

iv) Court: Supreme Court of India.

v) Quorum: Justice Pamidighantam Sri Narasimha and Justice Aravind Kumar.

vi) Author: Justice Pamidighantam Sri Narasimha.

vii) Citation: [2024] 8 S.C.R. 291 : 2024 INSC 593.

viii) Legal Provisions Involved:

• Arbitration and Conciliation Act, 1996, Sections 34, 48, 49.
• Precedents and International Arbitration Standards.

ix) Judgments Overruled by the Case (if any): None explicitly overruled; however, clarified the applicability of Forasol v. ONGC and Renusagar v. General Electric.

x) Case Related to Which Law Subjects: Arbitration Law, International Commercial Arbitration.

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

This appeal originated from disputes between DLF Ltd., an Indian entity, and Koncar Generators, a Croatian company. The dispute arose under a supply agreement and culminated in an arbitral award favoring Koncar Generators. The award required payment in Euros. While DLF raised objections under Section 48 of the Arbitration Act, 1996, it deposited partial sums during proceedings. This led to controversies over the appropriate exchange rate conversion date for partial deposits and the final enforceable amount.

D) FACTS OF THE CASE

1. Dispute Origins: The Croatian company sought arbitration under ICC rules, claiming amounts due under the supply contract.

2. Arbitral Award: The arbitral tribunal awarded the respondent Euros 10,93,989 along with interest.

3. Proceedings in India:

   • DLF objected to the award under Section 48.
   • During these proceedings, it deposited Rs. 7.5 crores and later Rs. 50 lakhs with the court.

4. Judicial Outcomes:

   • The Trial Court dismissed DLF’s objections, allowing award enforcement.
   • The High Court dismissed DLF’s revision, and the objections attained finality on 01 July 2014.

5. Execution Disputes: Key disagreement revolved around the exchange rate applicable to partial deposits versus the final enforceable date.

E) LEGAL ISSUES RAISED

1. What is the correct date to determine the exchange rate for converting foreign awards to Indian rupees?
2. Should deposits made during proceedings follow the deposit date’s exchange rate or the date of final enforceability?

F) PETITIONER/APPELLANT’S ARGUMENTS

1. Relevance of Deposit Date: The appellant emphasized that amounts deposited (Rs. 7.5 crores and Rs. 50 lakhs) should be converted at their respective deposit dates’ exchange rates.
2. Consent-Based Deposit: It argued that the respondent consented to the deposit terms, precluding claims for conversion at a later date.
3. Judicial Precedents: The appellant cited Renusagar Power Co. Ltd. v. General Electric Co., asserting that early deposits discharge obligations and fix exchange rates.

G) RESPONDENT’S ARGUMENTS

1. Applicability of Finality: The respondent contended that the conversion date must align with the dismissal of objections under Section 48.
2. Delayed Benefit: Since funds were not withdrawn until after proceedings concluded, the respondent argued that early deposits should not determine exchange rates.
3. Public Policy: Ensuring proper compensation required using the exchange rate at the final enforceability date.

H) JUDGMENT

a. RATIO DECIDENDI

1. The enforceability of foreign arbitral awards under Indian law crystallizes upon the dismissal of objections under Section 48.
2. Deposits made before such dismissal do not determine final exchange rates unless explicitly stipulated otherwise.

b. OBITER DICTA

1. International arbitration standards often prioritize the finality principle, aligning with Forasol v. ONGC.
2. Indian public policy considerations ensure that award holders do not suffer due to exchange rate fluctuations caused by procedural delays.

c. GUIDELINES

1. The exchange rate for converting foreign arbitral awards to Indian rupees shall:
   • Be the rate at the date of final enforceability.
   • Adjust interim deposits made against such awards based on their deposit date rates.
2. Courts must balance procedural equity with contractual expectations to mitigate undue advantage from currency fluctuations.

I) REFERENCES

a. Important Cases Referred

1. Forasol v. ONGC (1984) Supp SCC 263.
2. Renusagar Power Co. Ltd. v. General Electric Co. (1994) Supp SCC 644.
3. United India Insurance Co. v. Kantika Colour Lab (2010) 6 SCC 449.

b. Important Statutes Referred

1. Arbitration and Conciliation Act, 1996.
2. International Commercial Arbitration Rules.