Civil Appeal Nos
628  629 of 1981
Appeals by Special Leave from the Judgment and Order dated the 21st December 1979 of the Delhi High Court in EFAOS No 5 of 1977
Shankar Ghosh and DN Gupta for the Appellant in CA
62881  for Respondent in CA
No 62981
B Dutta for the Respondent in CA
62881 and for appellants in CA
No 62981
The Judgment of the Court was delivered by 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 
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 dated 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
535 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 31
The operational fee standby fee and equipment charges payable to FORASOL have been specified in French Francs in Article IX 111
to IX 111
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 1033Re 1000 Under Article IX 32 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 transportation 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
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 11 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 upon 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 536 said contract set out such estimates invoicing rules and the mode of payment
Under Article X 33 Forasol was to indicate in each of it 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 411 provided for remittance by ONGC in French Francs immediately following the signing of the said contract of a sum of FF 73 43749 being the 19800th part ie 125 per cent of the total estimated amount of Forasol s operational and stadby fees and equipment charges cost of the materials to be provided by Forasol and transportation charges in respect of Forasol s rig equipment machinery and tools
Under Article X 412 subsequent to the above remittance ONGC was to remit to Forasol in French amount 15800th part ie 1875 per cent of the total estimated amount in respect of the said items mentioned above that is FF 11015623 on each 5th day of August and February the first of such payments to be made on August 5 1962 and the last on February 5 1965
Article X 42 provided for payment by ONGC to Forasol of the balance of the amount due to Forasol
Under Article X 421 on receipt of each of Forasol s invoices in respect of operational fees standby fees and equipment charges accepted by ONGC Forasol was to present to ONGC a set of 14 promissory notes payable to CNEP Paris of equal value totalling to 875 of the French Franc Portion of the amount for which each of the said invoices had been accepted by ONGC and maturing on the 5th day of August and of February the first such dates being August 5 1965 and the last being February 5 1972
Within fifteen days of the date of receipt of the said promissory notes ONGC was to return the said promissory notes to Forasol Paris duly signed and stamped
Article X 422 provided for payment of the said promissory notes
The said Article was as follows X 422
ONGC binds itself irrevocably to pay in French Francs the promissory notes given by it to Forasol
Forasol shall present the promissory notes to CNEP Paris for collecting payment on the dates of maturity ONGC shall place with CNEP Paris at least one day before each date of maturity adequate funds to cover the total value of the promissory notes maturing on that date
 537 Under Article X 43 ONGC undertook to pay to Forasol in French Francs simple interest at the rate of 5 per cent per annum and also a credit insurance charge at the rate of 108 per cent per annum
The other sub articles of Article X 43 provided for calculation of interest and insurance charges and for submission by Forasol every six months of invoices in respect thereof
Article X 432 inter alia provided that ONGC shall accept each invoice for the interest and insurance charge and shall remit the invoiced amount to Forasol in French Francs as early as possible but not later than two months after receipt of the invoice
 Provision was also made by the said Article X 432 for drawing of promissory notes payable at CNEP Paris maturing on each 5th day of August and of February the first of such dates being August 5 1965 and the last being August 5 1971
Under Article X 433 ONGC bound itself irrevocably to pay in French Francs the promissory notes for interest and insurance charge given by it to Forasol Article XI provided for payments to be made to Forasol in Indian rupees
Under Article XI11
the rupee payment part of the operational and standby fees equipment charges and transportation charges payable to Forasol under the said contract was estimated to be FF 1495216 and ONGC was to pay to Forasol as an advance 10 per cent of the said amount namely FF 149522 in Indian rupees using a conversion rate of FF 1033 equal to Rupee 1000
The balance amount in respect of the aforesaid item was to be paid by ONGC to Forasol in Indian rupees using a conversion rate of FF 1033 equal to Rupee 1000 in the manner set out in the other sub articles of Article XI
On account of the hostilities between Pakistan and India which broke out in September 1965 the work under the said contract could not be completed and the operations to be carried out there under had to be suspended
The period of the said contract was thereupon extended by a supplementary agreement being Addendum No 1 dated December 6 1965 by a period of six months with effect from the date on which the drilling operations in the Jaisalmer area were resumed at the expiry of the period of suspension
By another supplementary agreement being Addendum No 2 dated July 30 1966 the period of the said contract was further extended by a period of five months from the moment at which all the equipment of 538 Forasol then under repair at Jodhpur arrived after completion of the repairs at the new drill site where ONGC might like to have drilling operations to be started under the said Addendum No 2
Article 27 of the said Addendum No2 provided as follows 27
In case Forasol has to refund to ONGC an amount which cannot be adjusted or has not been adjusted against Forasol s invoices for the last two months of the five months period of this Addendum Forasol shall refund the amount in cash in the same currency in which ONGC had paid it earlier
 By another supplementary agreement being Addendum No 3 dated February 23 1967 the period of the contract was further extended till the completion of the drilling of Manhere Tibba Well No 1 and in case ONGC should decide to test the said well till the completion of such test or till April 181967
whichever was earlier
Article 25 of the said Addendum No 3 Provided as follows 25 In case Forasol has to refund to ONGC an amount which cannot be adjusted or has not been adjusted against Forasol s invoices for the period of extension stipulated in Article 12 above Forasol shall refund the amount in cash in the same currency in which ONGC had paid it earlier
 It may be mentioned that each of the said supplementary agreements provided that all the terms and conditions of the original contract which were not repugnant to the terms and conditions agreed to for such supplementary agreements were to continue to apply until the termination of the said contract
The extended period of the said contract expired on April 13 1967
In June 1966 during the extended period of the said contract the Indian rupee was devalued and consequently in the course of correspondence which took place between the parties Forasol made a claim for conversion of Indian rupees into French Francs at a rate higher than the rate specified in Article IX
3 of the said contract
539 It may also be mentioned that ONGC paid to the income tax authorities towards the income tax liabilities of Forasol three sums aggregating to Rs 1195304 as specified below 1 Rs 125304 on September 14 1967 2 Rs 470000 on February 14 1968 and 3 Rs 600000 on March 23 1968
During the period of extension covered by the said Addendum No 3 and after the expiry of that period disputes and differences arose between the parties
These were referred to arbitration as provided in the said contract
The parties appointed their respective arbitrators
The time for making the award was extended from time to time with the consent of the parties but as Forasol did not consent to any further extension the disputes were referred for arbitration to Mr N Rajagopala Iyyangar a retired judge of this Court being the Umpire appointed by the arbitrators
In the arbitration proceedings Forasol made claims against ONGC and ONGC made counter claims against Forasol
On March 8 1972 the Umpire entered upon the Reference and on December 21 1974 the Umpire made his award
To the said award an erratum was annexed by which a particular portion to the said award was deleted and substituted by a fresh portion to which we will revert later
For the present suffice it to say that by the said Erratum the Umpire awarded that from November 30 1966 the rupee portion should be converted at the rate of FF 1 000 equal to Rs 1517
80 instead of the rate of exchange of FF 1033 equal to Re 1000 provided in Article IX
31 of the said contract and that this enhanced rate of exchange would apply to both Forsal and ONGC
The said award was filed in the Delhi High Court and on May 71975 a decree in terms thereof was passed by that High Court with interest at the rate of 6 per cent per annum from the date of the decree till the date of payment of the net decretal amount
It is pertinent to note that neither party raised any objection to the said award or to the form in which the said decree was passed
After the said decree was drawn up Forasol filed in March 1976 an application for execution of the said decree being Execution No 77 of 1976
Under the said award certain amounts were directed by the Umpire to be paid to Forasol by ONGC in French 540 Francs and certain amounts in Indian rupees and the amounts payable by Forasol to ONGC were to be adjusted and set off against the amounts payable by ONGC to Forasol
In the said execution application the rupee credit in favour of Forasol was converted into French Francs at the rate of Rupee 1
5178 equal to FF 1000 being the enhanced rate of exchange specified in the said award
After deducting the amounts payable to ONGC the balance payable to Forasol was shown as FF 5 89 72751 being the equivalent of Rs 11 79 455 with interest on the principal sum upto the date of payment and the costs of execution
The mode of execution specified in the said execution application was attachment and sale of the movable properties belonging to ONGC and specified in an annexure to the said execution application
In its objections to the said execution application ONGC contended that the enhanced rate of exchange specified in the said award was only with respect to the interest payable to Forasol from November 30 1966 and that to the rest of the payments to be made under the said award the rate of exchange mentioned in Article IX 31 namely FF 1033 equal to Rupee 1000 was applicable and that this contract rate of exchange applied both to the French Franc part as also the Indian rupee part of the said contract
ONGC also raised certain other contentions
On the basis of these contentions it was submitted by ONGC that instead of any amount being due to Forasol a sum of Rs 64383144 was due by Forasol to ONGC
The learned Single Judge of the Delhi High Court who heard the said execution application rejected all the contentions of ONGC
He held that the contract rate of exchange applied only to the rupee part of the payment in respect of the items specified in Article IX 3 1 of the said contract and that in respect of such payments from November 30 1966 the enhanced rate of exchange provided in the said award was to apply but in respect of the other payments to be made to Forasol in French Francs the rate of exchange prevailing at the date of the decree namely FF 1000 equal to Rs 1938 would apply
The learned Single Judge directed that ONGC could satisfy the judgment debt by making payment in French Francs or if it so preferred by paying the equivalent of it in Indian rupees at the rate of exchange prevailing at the date of the decree and further ordered that if the decretal amount was not paid within two weeks attachment as prayed for should issue
Against the said judgment and order of the learned Single Judge ONGC filed an intra court appeal being EF A OS 5 of 1977
The Division Bench of the Delhi High Court which heard the said appeal upheld the contention of ONGC that the 541 enhanced rate of exchange specified in the said award applied only to the interest payable to Forasol and that with respect to the rupee amount due to ONGC and which was to be adjusted against French Francs payable to Forasol the contract rate of exchange applied
It further held that as the said award was in French Francs by reason of the provisions of the Foreign Exchange Regulation Act 1973 46 of 1973 before executing the said award the French Francs would have to be converted into Indian rupees at the rate of exchange prevailing on the date of the said award namely FF 1000 equal to Rupee 1831
The Division Bench negatived the other contentions raised by ONGC
It is against this judgment and order of the Division Bench of the Delhi High Court that the present cross appeals have been filed
So far as Forasol s appeal is concerned four points were urged on its behalf before us
These points were 1
The rate of exchange specified in Article IX 3 1 of the said contract namely FF 1033 equal to Rs 1000 was applicable only to 20 per cent of the payment to be made in Indian rupees by ONGC to Forasol
The Umpire by the said award fixed the rate of exchange at FF 1000 equal to Rs 15178 as from November 30 1966 in respect of such rupee payments only
The sum of Rs 101938039 being the balance amount of the sum of Rs 1195304 which remained payable to ONGC by Forasol in respect of the income tax paid by ONGC on behalf of Forasol after making adjustments against the claim of Forasol was to be adjusted as directed by the said award against Forasol s claim in French Francs on the respective dates of each payment of tax namely on September 14 1967 February 14 1968 and March 23 1968 and as all these payments were made after November 30 1966 and as under the said award the enhanced rate of exchange was directed to apply to 542 both parties the said sum of Rs 101938339 was to be adjusted against the French Franc claim of Forasol at the enhanced rate of FF 1000 equal to Rs 15178
So far as the payment to Forasol in French Francs was concerned neither the said contract nor the said award provided for conversion of French Francs into Indian rupees and the said decree having been passed in foreign currency in case ONGC did not or could not make payment in French Francs the rate of conversion of French Francs into Indian rupees could only be at the rate of exchange prevailing at the date of the said decree that is on May 7 1975 which was FF 1000 equal to Rs 1938
ONGC on the other hand submitted that the said contract provided a fixed rate of exchange of FF 1033 equal to Re 1000 for all amounts payable under the said contract whether in rupees or in French Francs and therefore that rate alone should be taken as the correct conversion ratio except with respect to interest on the amount in Franch Francs payable to Forasol in respect of which the Umpire had enhanced the rate of exchange to FF 1000 equal to Rs 15178
In the alternative it was submitted that the conversion rate should be the one prevailing at the date of the said award that is on December 21 1974 namely FF 1000 equal to Rs 1831
Thus there are four different rates of exchange which feature in this case namely Rate provided in the FF 1033  Rs 1000 said contract Rate fixed by the FF 1000  Rs 15178 Umpire Rate at the date of the FF 1000  Rs 1831 said award namely on December 21 1974 Rate at the date of FF 1000  Rs 1938 the decree namely on May 7 1975 543 We shall first examine the said contract to determine whether the rate of conversion mentioned in the said Article IX 31 applied only to 20 per cent of the amounts in French Francs payable by ONGC to Forasol in Indian rupees in respect of Forasol s operational fee standby fee and equipment charges as contended by Forasol or whether it applied to all payments to be made under the said contract whether in rupees or in French Francs as contended by ONGC
In doing so a cardinal fact must be borne in mind namely that it was a contract entered into between a foreign party and a Government of India undertaking and that under the said contract the foreign party had agreed to carry out structural drilling in relation to the exploration for oil discovery of oil being of vital importance to the national interests of India
From the nature of things the foreign party would not desire payment for the services to be rendered and the equipment to be supplied by it in a currency with which it had no connection and of the continuous stability of which it could not be certain
The foreign party would therefore naturally desire and bargain for payment in the currency of its own country namely in French currency
The more so as under the Credit Agreement entered into between the Government of France and the Government of India the Government of France had agreed that credit should be given by French suppliers to Indian buyers by accepting payment on deferred basis for the import of plant machinery equipment and materials and execution of certain projects including oil exploration and accordingly under Article X 11
of the said contract the French party Forasol had agreed to accept on deferred basis payment of the amounts due to it in French Francs
We have earlier referred to the relevant Articles of the said contract as also extracted some of them in order to emphasize that though under the said Article IX 31 Forasol had agreed to accept 20 per cent of its operational fee standby fee and equipment charges in Indian Rupees it wanted that the remaining 80 per cent of these fees and charges as also the other amounts which were payable to it under the said contract should be paid to it in French Francs only and should not be made dependent upon the stability of the Indian rupee in the international monetary market
To recapitulate the invoicing rules provided that in each of its invoices Forasol should indicate separately the amount payable to it in French Francs and the amount payable to it in Indian rupees and that so far as the French Franc part was concerned an initial payment was to be made immediately upon the signing of the said contract and the balance was to be paid by remittances in French Francs
Such remittances were to be made by Forasol presenting 544 to ONGC a set of promissory notes payable in Paris and under Article X 4 22 of the said contract ONGC irrevocably bound itself to pay in French Francs the promissory notes given by it to Forasol Similar provisions were made in the said contract for payment of interest and insurance charges to Forasol
If Forasol were to indicate separately in its invoices the payment to be made to it in French Francs and in Indian rupees and if the payment of such French Francs was to be made in Paris in French Francs the question of providing for a rate of exchange in the said contract for converting French Francs into Indian rupee cannot arise
Such conversion rate could only be in respect of the amounts payable to Forasol in Indian rupees
It is pertinent to note that under Article IX 31 the amount of fees and charges payable to Forasol were to be computed in French Francs and thereafter 80 per cent thereof was to be paid in French Francs and the remaining in Indian rupees
Even with respect to such twenty per cent Forasol did not want to be dependent upon a possible fluctuation in the exchange rate of rupee and therefore the 20 per cent part of the amount computed in French Francs was covenanted to be converted at a fixed rate provided in the said Article IX 31
This is made abundantly clear by the express terms of the said Article IX 31 when it states that 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 1033Re 1000
 It is thus only the 20 per cent of the said fees and charges computed in French Francs in Forasol s invoices but payable in Indian rupees which was to be converted at the aforesaid rate of exchange specified in the said contract
This interpretation receives further support from Article 22 of Addendum No 2 and Article 25 of Addendum No 3 extracted above under which amounts refundable by Forasol to ONGC were to be refunded in the same currency in which ONGC had paid them earlier
The contention of ONGC that the fixed rate of conversion provided in Article IX 31 applied to all payments to be made under the said contract to Forasol must therefore be rejected
What next falls to be considered is whether the enhanced rate of exchange specified by the Umpire in the said award applied only to the amount payable by way of interest to Forasol as contended by ONGC
This contention was rejected by the learned Single judge but found favour with the Division Bench of the Delhi High Court
It is necessary to set out some further facts in order to decide this point During the course of the hearing before the Umpire ONGC had 545 filed a statement showing the adjustment of the amount of French Francs due to Forasol against the amount of income tax paid by ONGC on behalf of Forasol
It was however erroneously assumed by the Umpire that the said statement was an agreed one
After the Umpire had drafted his award he handed over a copy of it to the parties in order that they might point out to him any incorrect statements or mistakes of a clerical or similar nature so that he could correct the same before the award was made and published
Accordingly both the parties appeared before the Umpire and agreed that there were certain errors in the draft award and requested the Umpire to correct these errors before he made and Published his award
The Umpire thereupon corrected the errors jointly pointed out to him by appending an Erratum to the said award
In the said Erratum the Umpire pointed out that the aforesaid statement was not an agreed one and he directed that certain portions of the award should be deleted and substituted by fresh paragraphs set out in the said Erratum
In the said Erratum the Umpire first pointed out certain errors of calculation and in the mentioning of figures which had been occurred
He then proceeded to state Incidentally it was pointed out that the statement on pages 145 6 and in the penultimate and last two paragraphs on page 149 regarding the document filed before me as regards the adjustment of FF claims due to Forasol against the income tax paid by ONGC was not an agreed statement but a statement prepared by ON GC on their own to which Forasl had not consented As a result of this the question of adjustment of the income tax paid against FF claims as set out in the last para on page 149 and in the first two paragraphs on page 150 would be deleted and in their place the Award would state that the amounts of income tax paid by ONGC shall be adjusted against the FF claims due to Forasol on the date when each amount was paid in the manner set out earlier in the Award  To achieve this purpose the paragraphs on pages 149 and 150 beginning with the words In the calculation of the interest on the several invoices  and ending with I have already dealt with the conversion rate and there is no need to go into it again  on page 150 shall be deleted and a new paragraph inserted which will read as follows 546 X X X X X  as a result the aggregate figure of interest payable to Forasol by ONGC upto 30 6 1974 would be FF 129129006
From this a small adjustment has to be made when these are adjusted the amount due for interest by ONGC to Forasol would be FF 128818535  This figure of FF 129129006 has been calculated on the basis of conversion rate of FF 1033 to a rupee or FF 1033 for every Rs 1000  which was the rate of exchange agreed to between thee parties under Article XI
111 of the Agreement
Messrs Forasol have put forward before me a claim for enhanced rate of interest and their claim is that this should be Rs 15178 for every FF or Rs 151780 for every FF 1000 I find that there is considerable correspondence in the course of which they have made a claim that after devaluation of the rupee there should be a change in the rate of exchange Though there is no specific letter in the file agreeing to the enhancement I find that in the later invoices demand has been made subject to the claim for enhanced rate of exchange
In view of this I consider that from 30111966 Rupee portion should be Converted at FF 1  Rs 15178 or FF 100 Rs 151780
Of course this rate of exchange would apply to both the parties Farasol and the ONGC  As stated earlier this has been worked out only upto 3061974 and in accordance with the directions contained in this award interest shall be calculated on the principal amount right upto 21121974 on the entire amount of principal and the entire sum of principal and interest would thereafter carry interest at 6 per annum as stated in the other portion of the award The emphasis has been supplied by us Article XI 11 of the said contract referred to in the said Erratum provided as follow XI 111 On the basis of the figures arrived at in Articles IX 21 and IX 22 above and in accordance with the condition laid down in Article IX 31 above the total 547 of FORASOL s operational and standby fees equipment charges and transportation charges payable in Indian Rupees under this contract is estimated to be FF 1495 216 Following signature of this contract ONGC shall pay to FORASOL as an advance 10ac of this amount ie FF 149522 in Indian Rupees using a conversion rate of FF 1033  Rs 1000
 In order to reach the conclusion which it did the Division Bench of the Delhi High Court relied upon that portion of the said Erratum where the Umpire has stated that Forasol has put forward before him a claim for enhanced rate of interest overlooking the other portions of the said Erratum particularly the portion emphasized by us in the above extract as also the fact that by the said Erratum certain portions of the said award were deleted and substituted by fresh paragraphs
On a perusal of the above extract from the said Erratum it is obvious that the claim made by Forasol was not for an enhanced rate of interest but for an enhanced rate of exchange by reason of the devaluation of the rupee
This is made clear by the rest of the very same sentence in the said Erratum in which this claim made by Forasol was referred to namely and their claim is that this should be Rs 15178 for every FF or Rs 15178 for every FF 1000 If the claim of Forasol was for an enhanced rate of interest the claim would have been that interest should be payable to it not at the contract rate of five per cent per annum but at a higher rate and not that a higher rate of exchange should be provided
The very next sentence which also we have emphasized clarifies that in the correspondence which took place between the parties Forasol had made a claim that after devaluation of the rupee there should be a change in the rate of exchange
Obviously this change would be with respect to the rupee payment to be made to Forasol
The very direction of the Umpire in this behalf makes it clear that he was not dealing only with the rate of interest for by the said direction which too we have emphasized in the above extract the Umpire awarded that from November 30 1966 Rupee portion should be converted at FF 1  Rs 15178 or FF 1000  Rs 15178 and he further awarded that this rate of exchange would apply to both the parties Forasol and the ONGC The question of the enhanced rate of exchange applying to both the parties would not arise if the enhanced rate of exchange was with respect only to the interest payable to Forasol
548 We are fortified in the conclusion we have reached by the fact that so far as the adjustment of claim of ONGC with respect to income tax paid by it was concerned the Umpire by the said Erratum expressly deleted from the said award the portion in which such adjustment was made at the contract rate of FF 1033 equal to Re 1000 and substituted it by fresh paragraphs
Under the said Erratum these amounts were directed to be adjusted from November 30 1966 at the enhanced rate of exchange provided in the said Erratum as all these amounts were paid by ONGC after the said date
Another fact which fortifies this conclusion is that by the last paragraph of the portion of the said Erratum extracted above in addition to an enhanced rate of exchange the Umpire has also awarded a higher rate of interest namely six per cent on the entire sum of principal and interest from December 22 1974
The Division Bench of the Delhi High Court was the in error in holding that the enhanced rate of exchange specified in the said award applied only to the amount of interest payable to Forasol
For the reasons stated above we find that this enhanced rate of exchange applied to the payments in Indian rupees under Article IX 31 of the said contract to be made by ONGC to Forasol from and after November 301966
The question which now remains to be considered in Forasol s appeal is the date to be selected by the Court for converting into Indian rupees the French Franc part of the said award in respect of which no rate of exchange has been fixed either by the said contract or the said award
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
These dates are 1 the date when the amount become due and payable 2 the date of the commencement of the action 549 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 case before us is one in which a decree in terms of such an award has been passed by the court
The said award directed certain payments to be made in a foreign currency namely French Francs and did not specify the rate of exchange at which the French Francs were to be converted into Indian rupees and the decree which was passed by the Delhi High Court was in terms of the said award simpliciter without fixing any date for conversion of the French Francs into Indian rupees
As mentioned earlier neither party filed any objection to the said award or to the passing of the said decree in the terms in which it was passed
The question whether an arbitrator or umpire can make an award in a foreign currency is therefore not directly in issue before us nor the question whether a court can simpliciter pass a decree in terms of such an award without specifying the rate of exchange at which the foreign currency amount will have to be converted into Indian rupees
Though at the first blush these questions do not appear to arise for our determination they are inextricably linked with the question which we have to decide and we will therefore have to address ourselves to them in due course
The question which one out of the dates mentioned above is the proper date to be selected by the court does not appear to have been decided in this country and no authority of any Indian court on this point has been brought to our notice
The question however has formed the subject matter of decisions in England and both the learned Single Judge as also the Division Bench of the Delhi High Court have referred to the decision of the House of Lords in Miliangos vs George Frank Textiles Ltd1 and other English cases
They have however reached differing conclusions the learned Single Judge holding that the conversion of French Francs into Indian 550 rupees should be made at the rate of exchange prevailing on the date of the said decree and the Division Bench holding that such conversion should be at the rate of exchange prevailing at the date of the said award
It will be convenient therefore to turn now to the English decisions on the point to ascertain whether we can find some guidance from them in arriving at our conclusion
The judicial view on this point in England has undergone a radical change and it will not be out of place to ascertain the earlier view which the courts in England took and the view which now prevails with them and to take a brief survey of how this change in view came about
In Tomkinson and another vs first Pennsylvania Banking  Trust Co1 better known as the Havana case on appeal from the decision of the Court of Appeal sub nom In re United Railways of Havana and Regla Warehouses Ltd2 after reviewing the earlier authorities the House of Lords held that an English court cannot give judgment for payment of an amount in foreign currency and that for the purposes of litigation in England a debt expressed in a foreign currency must be converted into sterling with reference to the rate of exchange prevailing on the date when the debt was payable
Lord Denning who was then a member of the House of Lords delivered a concurring judgment in which he pointed out that the origin of this rule was that sterling was for a long time regarded as a stable currency the constant unit of value by which in the eye of the law everything else was measured and that so long as sterling was regarded as stable while other currencies fluctuated justice was best done by taking the rate of exchange at the date of the breach the creditor being entitled to be put into as good a position as if the debtor had done his duty and paid the debt on the due date and the creditor was only truly put into such a position if the debt was converted into sterling at that date
At the same time Lord Denning also posed a question whether the rule was still to be applied when sterling had lost the value which it once had by reason of the devaluation of the pound
He however came to the conclusion that though such a rule was apt to produce an injustice to a foreign creditor who was owed money in the currency of his own country if he chose to sue in English courts instead of his own he must put up with the consequences
The rule affirmed in the Havana case is known as the breach date rule
551 The next decision which requires to be noticed is that of the Court of Appeal in Jugoslavenska Oceanska Plovibdo vs Castle Investment Co Inc1 As this authority was relied upon by the Division Bench of the Delhi High Court in order to arrive at its decision on this part of the case and as it formed the sheet anchor of the submission made on behalf of ONGC that the proper date of conversion should be the date of the award it is necessary to examine what was decided in this case in some detail
In that case the plaintiffs were awarded a sum expressed in United States dollars in an arbitration held in London
The defendants having failed to pay the sum awarded the plaintiffs sought leave of the court under section 26 of the Arbitration Act 1950 of England to enforce the award
In support of their application the plaintiffs filed an affidavit showing the rate of exchange prevailing at the date of the award and the amount of the award in pound sterling and claimed the amount due under the award on the said basis
The questions which fell for determination were whether an award expressed in a currency other than sterling was valid and lawful and if so whether it was enforceable under the said section 26
The Master dismissed the application and the order of dismissal was affirmed by Kerr J
On appeal the court of Appeal held that the award was valid and leave should be granted to enforce it On the question whether English arbitrators have jurisdiction to make an award for payment in a foreign currency the Court held that in a proper case they could do so and that in the case before them since the money of account and the money of payment under the charter party out of which the disputes between the parties arose were expressed in United States dollars the arbitrators were entitled to make their award in the same currency
It was further held that leave should be granted to enforce an award expressed in a foreign currency provided the applicant had filed an affidavit showing the rate of exchange prevailing at the date of the award and giving the amount of the award converted into sterling
When that case fell to be decided Lord Denning was a member of the Court of Appeal having accepted appointment as Master of the Rolls
In the course of his judgment in that case Lord Denning MR said at pages 501 2 The reason why some people have thought that an award by English arbitrators must be in sterling is because they have regarded it as equivalent to a judgment by an 552 English judge which must be in sterling
But there is this difference
When commercial men are in dispute and go to arbitration they wish to have the dispute resolved
They want a decision one way or the other
Once given they abide by it The losing party pays up
There is rarely any need to call in the sheriff or his officer to enforce the award
So it is perfectly fair as between them for the arbitrator to make his award in the currency which is appropriate to their dealings
But when a plaintiff goes to a court of law it is as often as not because the defendant cannot pay or will not pay The plaintiff wants to get judgment against him and if need be levy execution on his effects
This is so much in the mind of the courts that they have ruled that they will give judgment only in sterling
That is the one currency which is known to the court and to the sheriffs and their officers
I venture to suggest that this view of the courts should be open for reconsideration
If the money payable under a contract is payable in a foreign currency it ought to be possible for an English court to order specific performance of it in that foreign currency and then let the exchange be made into sterling when it comes to be enforced
I know that this is not yet the law
There is high authority against it see Re United Railways of Havana and Regla Workhouses Ltd But the House of Lords have since then held that specific performance can be ordered of a contract to make a money payment see Beswlck vs Beswick1 This may point the way to a relaxation of the old rule and enable the courts in proper circumstances to order payment into a foreign currency such as is suggested by Dr Mann in his book2 At any rate there is no reason why the rule about judgments of the courts should be extended to awards by arbitrators I think we should hold that arbitrators have jurisdiction to make an award in a foreign currency whenever that is the proper currency in which payments under the contract should be made
553 The next question is the manner of enforcing such an award
It would no doubt be possible to bring an action on the award and seek a judgment from the courts in sterling
In that case the rate of exchange would be taken at the date of the award
But another way is to seek the leave of the court under section 26 of the Arbitration Act 1950 which says An award on an arbitration agreement may by leave of the High Court or a judge thereof be enforced in the same manner as a judgment or order to the same effect and where leave is so given judgment may be entered in terms of the award
If the words to the same effect  are read as meaning in the same terms  there would be some difficulty in applying this section to an award in a foreign currency But I do not think they mean in the same terms They only mean that the judgment or order must have the same effect 
If the sum awarded is converted into sterling at the rate of exchange at the date of the award it does have the same effect
The proper course is for the applicant to file an affidavit showing the rate of exchange at the date of the award and giving also the amount of the award converted into sterling
Then leave will be given to enforce payment of that sum The emphasis has been supplied by us It may be mentioned that the defendants did not appear at any stage of the proceedings and were not represented and there was no appeal to the House of Lords from this judgment
Whether we should accept the decision in the Jugoslavenska case as laying down the correct rule to be applied so far as courts in this country are concerned is a matter which we will discuss after completing our survey of English authorities
The question again arose before the Court of Appeal in Schorsch Meier GmbH vs Hennin
That was not a case of an arbitration but it was an action by a German company against an 554 English firm in an English court for the price of goods in German deutschmarks in which currency the contract stipulated that payment of the price should be made
The action was commenced by the plaintiffs in the West London County Court for the sum of DM 375603 being the amount of the price of goods sold and delivered
Under the contract the money of account and the money of payment were both German deutschmarks
At the time when the sum had become due the rate of exchange was  1 equal to DM 830
At that rate the sterling equivalent of DM 375603 was  452 sterling
Some time later sterling was devalued
As a result  1 sterling was only worth DM 585 and consequently the value of  452 had fallen to DM 2664
If the rule in the Havana case applied the plaintiffs would have got judgment for  452 which would have meant only a sum of DM 2664
whereas if they were able to claim and get judgment in deutschmarks the sterling equivalent of DM 375603 would be  641
In other words by getting judgment in sterling the plaintiffs would lose one third of the money due to them whereas by getting it in deutschmarks they would recover the full amount
The plaintiffs declined to give any evidence with reference to the rate of exchange but asked for judgment only in deutschmarks as the Federal Republic of Germany was a member of the European Economic Community They did so by relying upon article 106 of the Treaty of Rome which by section 21 of the European Communities Act 1972 had been made part of the law of England
The County Court judge held that the said article 106 had no bearing on the rule of common law and that he could give judgment only in sterling and accordingly dismissed the action
The plaintiffs filed an appeal
In this case too the defendant did not appear and was not represented before the Court of Appeal
The appeal was allowed
With reference to the English law on the subject apart from the Treaty of Rome Lord Denning MR the afther referring to the rule in the Havana case held that the reasons for the rule had ceased to exist and therefore the court was at liberty to discard the rule itself on the principle cessante ratione legis cessat ipsa lex He further said at pages 156 7 Only last year we refused to apply the rule to arbitrations
We held that English arbitrators have jurisdiction to make their awards in a foreign currency when that currency of the contract see jugoslavenska Oceanska plovibda vs Castle Investment Co Inc The time has now come when we should say that when the currency of a contract is a foreign currency that is to say when 555 the money of account and the money of payment is a foreign currency the English courts have power to give judgment in that foreign currency they can make an order in the form It is adjudged this day that the defendant do pay to the plaintiff  so much in foreign currency being the currency of the contract  or the sterling equivalent at the time of payment 
If the defendant does not honour the judgment the plaintiff can apply for leave to enforce it
He should file an affidavit showing the rate of exchange at the date of the application and give the amount of the debt converted into sterling at that date
Then leave will be given to enforce payment of that sum
The emphasis has been supplied by us So far as the Treaty of Rome was concerned the Court held that the purpose of the said article 106 was to ensure that the creditor in one member State should receive payment for his goods in his own currency if it was the currency of the contract without any impediment or restriction by reason of changes in the rate of exchange
With respect to the form of the judgment Lord Denning with whom Foster J concurred held that he would adjudge that the debtor do pay to the plaintiff DM 375603 or the sterling equivalent at the time of payment meaning thereby as Lord Wilberforce pointed out in the Miliangos case at page 468 the date when the court authorizes enforcement of the judgment in terms of sterling
Lawton LJ the third member of the court on the other hand was of the opinion that the judgment should be in the from in which the plaintiffs had asked for it namely in deutschmarks and the plaintiffs must be left to extricate themselves from the intricacies of the law relating to execution and exchange control
There was no appeal to the House of Lords against this judgment of the Court of Appeal
We now come to the case of Miliangos vs George Frank Textiles Ltd How that case reached the House of Lords makes interesting reading by itself
Prior to the judgment being delivered in the Schorsch Meier case Miliangos a Swiss brought an action against George Frank Textiles Ltd an English company claiming the sum of Swiss Francs 415 52245 due to him for the price of polyester yarn sold and dilivered to the English company under a written contract
The claim of the Swiss plaintiff was based upon invoices sent to the English company and accepted by that company 556 and alternatively on two bills of exchange drawn in Switzerland by the plaintiff and accepted by the defendants but which had been dishonoured on presentation on their respective due dates
This alternative claim was for the amounts of the said bills of exchange namely Swiss Francs 27361945 and Swiss Francs 27394 respectively and the cost of protesting the bills and interest
The plaintiff apparently had been advised about the position in English law and had accordingly claimed judgment in sterling as at the breach date
The defendants claimed that the plaintiff had committed a breach of contract inasmuch as a part of the yarn dilivered to them was unifit for the purpose and filed a counter claim for damages
Thereafter the plaintiff filed a second suit on another contract in which the claim was on the same alternative counts
Both the actions were consolidated and set down for hearing but before they reached hearing by their letter dated November 22 1974 the defendants abandoned their defence and counter claim and stated that they would submit to judgment
Four days later on November 26 1974 the Court of Appeal delivered judgment in the Schorsch Meirer case
Thereupon the plaintiff amended the statement of claim in the first action and claimed the amount due in Swiss Francs as an alternative to the claim in sterling
Bristow J held that the Schorsch Meirer case so far as it related to countries which were not members of the European Economic Community was obiter and had been decided per incuriam in that only one party had been represented and all the relevant authorities had not been cited
He further held that the decision in that case was inconsistent with what the House of Lords had held in the Havana case and accordingly he gave judgment for the sum claimed in sterling
The plaintiff went in appeal Miliangos vs George Frank Textiles Ltd
The Court of Appeal held that the Schorsch Meier case was not decided per incuriam and was binding upon the trial court and gave judgment for the plaintiff in Swiss Francs
The English company went in appeal to the House of Lords
We are not concerned with what was said in that case with respect to whether the Schorsch Meier case was decided per incuriam or not and whether an English court could depart from the rule in the Havana case
Suffice it to say that the House of Lords by a majority Lords Simon of Glaisdale dissenting held that it was legitimate for the House of the Lords to depart from the breach date conversion rule and recognize that an English court was entitled to give judgment for a sum of money expressed in a foreign 557 currency in the case of obligations of a money character to pay foreign currency under a contract the proper law of which was that of a foreign country and when the money of account was that of that country or possibly of some country other than the United Kingdom
The House of Lords further held that the instability which had overtaken the pound sterling and other major currencies since its earlier decision in the Havana case as well as the procedures evolved in consequence thereof by the English courts and by arbitrators in the City of London to secure payment of foreign currency debts in foreign currency justified departure from that decision in terms of the Practice Statement Judicial Precedent under which the House affirmed its power to depart from a previous decision when it appeared right to do so recognizing that too rigid an adherence to precedent might lead to injustice in a particular case and unduly restrict the development of the law since a new and more satisfactory rule could be stated to enable the courts to keep step with commercial needs and would not involve undue practical and procedural difficulties
We are concerned here with what was said in that case with respect to the date to be taken for converting foreign currency into English currency
Lord Wilberforce held at pages 468 9 that the claim should be made specifically for the foreign currency and to this might be added the alternative or the sterling equivalent at the date of  and that as regards the conversion date to be inserted in the claim or in the judgment of the court though the date of judgment was a workable date he would favour the date of payment meaning thereby the date when the court authorizes enforcement of the judgment in terms of sterling because in some cases particularly where there was an appeal the date of judgment might impose upon the creditor a considerable currency risk Lord Wilberforce further observed at page 469 In the case of arbitration there may be a minor discrepancy if the practice which is apparently adopted see the Jugoslavenska case  305 remains as it is but I can see no reason why if desired that practice should not be adjusted so as to enable conversion to be made as at the date when leave to enforce in sterling is given The emphasis has been supplied by us 558 Lord Cross of Chelsea pointed out at pages 497 8 that it would be absurd to have one rule with regard to arbitrations on debts expressed in a foreign currency and another with regard to actions on similar debts and that in a case where the defendant failed to deliver foreign currency for the payment of which the judgment was given the date for its conversion into sterling should be the date when the plaintiff was given leave to levy execution for a sum expressed in sterling
Lord Edmund Davies referring to the Jugoslavenska case said at page 501 that being governed by section 26 and sub section 1 of section 36 which deals with enforcement of foreign awards of the Arbitration Act 1950 the award of American dollars in that case of necessity had to be converted into sterling at the rate of exchange prevailing on the date when the award was made and that but for that fact the most just rate would be that prevailing when the award was being enforced for the plaintiff had been kept out of his money until then and there was no reason why this latter rate should not be the one adopted when judgments expressed in a foreign currency are being enforced
According to Lord Edmund Davies Miliangos should have been given judgment mutatis mutandis in the form approved of by Lord Denning MR in Schorsch Meier case namely that it is this day adjudged that the defendant do pay to the plaintiff 41614420 Swiss francs or the sterling equivalent at the time of payment which would mean as pointed out by Lord
Wilbeforce at page 368 the date when the court authorizes enforcement of the judgment in terms of sterling Lord Fracer of Tullybelton opined at page 502 that to take the date of the commencement of the action might result in consequences as unjust as taking the breach date because between the commencement of an action a period of a year or more might easily elapse allowing for appeals before payment was made and that the date of judgment would be better but there seemed no reason why the latest practicable date namely the date when the court authorizes the enforcement of the judgment should not be taken
Lord Simon of Glaisdale held in his dissenting judgment that there was no reason for departing from the rule laid down in the Havana case and that this should only be done by Parliament on executive or expert advice
With reference to the Jugoslavenska case Lord Simon observed at page 489 If the sterling judgment rule and the breach date rule were to be reconsidered by a properly qualified body no doubt the Jugoslavenska case would come within its purview
 559 The principle laid down by the House of Lords in the Miliangos case was extended by it to include a claim based on damages for torts and for breaches of contract in its decision in Owners of MV Eleftherotria vs The Owners of MV Despina R The Despina R and Services Europe Atlantique Sud Seas of Paris vs Stockholms Rederiahtiebolag Svea of Stockholm better known as The Despina R in two appeals heard one after the other and disposed of by a common judgment
The first appeal arose out of a collision between two Greek ships the Despina R and the Eleftherotria in which the latter was damaged
The Eleftherotria was owned by a Liberian company which had its head office in Piracus
The managing agents had their principal place of business in New York and the bank account used for moneys received and payments made on behalf of the owners was a US dollar account in New York
An agreement was reached under the terms of which the owners of the Despina R were to pay to the owners of the Eleftherotria 85 per cent or the loss and damage suffered as a result of the collision
The expenses of repair had been incurred in various currencies
The question whether the damages were to be paid in sterling or some other currency was referred to the Admiralty judge
Brandon J held that he had jurisdiction to award damages in a foreign currency but that he was bound by authority to award them in the currency of expenditure
The Court of Appeal dismissing an appeal by the owners of the Despina R and allowing a cross appeal held that here was jurisdiction to award damages in tort in sterling or in a foreign currency and that in the circumstances of the case the appropriate currency was the plaintiffs  currency rather than the currency of the expenditure
The second appeal was in respect of a cargo of onions shipped to Brazil by the French charterers of a Swedish owned motor vessel the Folias
The cargo arrived damaged and the cargo receivers  claim for damages was settled by the charterers in Brazilian cruzeiros which they purchased with French Francs their normal business currency
The hire under the charter party was payable in US dollars and the proper law of the contract was English law
In arbitration proceedings the owners admitted their liability to the charterers but contended that payment should be made in cruzeiros
By then the 560 value of the cruzeiro against the French Francs was half what it had been when the charterers had paid the cargo receivers
The arbitrators made their award in French Francs On a special case stated Robert Goff J held that the award should have been made in cruzeiros as being the currency of the loss
On appeal by the charterers the Court of Appeal restored the award of the arbitrators
The owners of the Despina R as also the Swedish ship owners went in appeal to the House of Lords
Both the appeals were dismissed
The House held that in a claim based on tort it was fairer to give judgment in the currency in which the loss was sustained than in the sterling equivalent at the date of the breach or loss that the principles to be applied in ascertaining the currency of the loss were those of restitution in integrum and reasonable foreseeability and therefore where a plaintiff proved that he conducted his business in a specific currency and it was reasonably foreseeable that he would the that currency to purchase the necessary currency to meet the immediate and direct expenditure caused by the defendant s tort then judgment should be expressed in the plaintiff s currency and accordingly the Court of Appeal had properly varied the order from a judgment expressed in the currencies of expenditure to the currency of the business conducted on behalf of the owners of the Eleftherotria namely US dollars
The following passage from the opinion of Lord Wilberforce at pages 696 7 is instructive I do not think that there can now be any doubt that given the ability of an English court and of arbitrators sitting in this country to give judgment or make an award in a foreign currency to give a judgment in the currency in which the loss was sustained produces a juster result than one which fixes the plaintiff with a sum in sterling taken at the date of the breach or of the loss
 It was further held that where the terms of a contract governed by English law did not expressly or by implication show that the parties had intended that payments arising from a breach of contract were to be paid in the currency of account or other named currency the court should give judgment in the currency that best expressed the party s loss that although the appeal in the second case concerned a charterparty which expressly stated that certain contractual payments should be made in US dollars the terms of the charterparty did not show that payment for damage arising out of a breach of contract 561 was to be made in that currency that arising from the owners breach the charterers had used French Francs to purchase the necessary cruzeiros to settle the receivers  claim and in those circumstances the Court of Appeal had correctly affirmed the arbitrators  decision that the currency that best expressed the charterers  loss was the currency of their business namely French Francs
With respect to the arbitrators jurisdiction to make an award in a foreign currency Lord Wilberforce said at pages 702 3 In my opinion a decision in what currency the loss was borne or felt can be expressed as equivalent to finding which currency sum appropriately or justly reflects the recoverable loss
This is essentially a matter for arbitrators to determine
A rule that arbitrators may make their award in the currency best suited to achieve an appropriate and just result should be a flexible rule in which account must be taken of the circumstances in which the loss arose in which the loss was converted into a money sum and in which it was felt by the plaintiff
In some cases the immediate loss  currency may be appropriate in others the currency in which it was borne by the plaintiff
There will be still others in which the appropriate currency is the currency of the contract
Awards of arbitrators based upon their appreciation of the circumstances in which the foreign currency came to be provided should not be set aside for as such they involve no error of law
 It will also be useful to refer at this stage to certain Practice Directions given following upon the Miliangos case with respect to claims and judgments in foreign currency and enforcement of such judgments
The Miliangos case was decided on November 51975 and the Practice Directions in question were issued by the Senior Master of the Supreme Court of judicature Queen s Bench Division on December 181975 with the concurrence of the Chief Chancery Master acting on the authority of the Vice Chancellor so far as they applied to the practice in the Chancery Division and of the Senior Registrar of the Family Division
so far as they applied to the practice in that Division
As pointed out in Halsbury s Laws of England 4th 562 ed vol
37 para
12 practice directions provide directions as to matters of practice and procedure for the assistance and guidance of litigants in the conduct of their proceedings and in the administration of civil justice generally and although they lack the force of law they are of enormous value to the courts to practitioners and to all who are involved in the civil judicial process
Under the Practice Directions dated December 181975 mentioned above before a writ of summons is issued in which the plaintiff makes a claim for a debt or a liquidated demand expressed in a foreign currency the writ must be endorsed with a certificate signed by or on behalf of the solicitor of the plaintiff or by the plaintiff if he is acting in person certifying the rate current in London for the purchase of the unit of the foreign currency claimed at the close of business on the date next or most nearly preceding the date of the issue of the writ and stating whether at that rate of exchange the debt or liquidated demand claimed in the writ amounts to  or exceeds  650 as the case may be This certificate is required for the purpose of ascertaining the proper amount of the costs to be endorsed on the writ
The judgment which would be entered in respect of such a claim would show that it has been adjudged that the defendant do pay the plaintiff the sum in foreign currency for which the court has ordered judgment to be entered or its sterling equivalent at the time of payment
Where a defendant desires to pay into court a sum of money in satisfaction of the claim in foreign currency he may do so subject to the requirements of the Exchange Control Act 1947
Where however a plaintiff desires to enforce a judgment expressed in a foreign currency by the issue of the writ of fieri facias the praecipe for the issue of the writ must first be endorsed and signed by or on behalf of the solicitor of the plaintiff or by the plaintiff if he is acting in person with a certificate certifying the rate of exchange current in London for the purpose of the unit of the foreign currency in which the judgment is expressed at the close of the business on the date nearest or most nearly preceding the date of the issue of the writ and mentioning what the amount in pound sterling at that rate would be
The amount so certified will then be entered in the writ of fifa
A similar certificate is required where the plaintiff desires to enforce a judgment debt expressed in a foreign currency by adopting garnishee proceedings or other modes of execution
The above survey shows the position in English law to be as follows 563 1 Until recently the rule that was firmly established was that an English court could give judgment only in English currency and that for the purposes of litigation in England to recover a debt expressed in a foreign currency such debt had to be converted into sterling with reference to the rate of exchange prevailing on the date when the debt was payable
This rule was affirmed by the House of Lords in the Havana case
2 The reason for this rule was that sterling was regarded as a stable currency and a constant unit of value and that by taking the rate of exchange at the date of the breach the creditor was being put into as good a position as if the debtor had done his duty and paid the debt on the due date
3 After sterling ceased to be a stable currency and became subject to fluctuations in the international monetary market a new line of thinking began to emerge particularly in commercial arbitrations where foreign currencies were involved and the arbitrators in the City of London started making awards expressed in foreign currency
4 This new trend found judicial recognition in the Jugoslavenska case in which the Court of Appeal held that arbitrators in England had jurisdiction to make an award in a foreign currency in a case in which the money payable under a contract is payable in a foreign currency
The Court of Appeal further held that section 26 now section 261 of the English Arbitration Act 1950 should be construed having regard to section 361 of that Act which deals with enforcement of foreign awards and that the words to the same effect in the expression an award may be enforced in the same manner as a judgment or order to the same effect in section 261 did not mean a judgment or order in the same terms but meant a judgment or order having the same effect this would be achieved if the sum awarded were 564 converted into sterling at the rate of exchange prevailing on the date of the award and that leave to enforce an award expressed in a foreign currency should be given by the court provided the applicant had filed an affidavit showing the rate of exchange as at the date of the award and giving the amount of the award converted into sterling
5 In the Jugoslavenska case the Court of Appeal took the date of the award as the date of conversion by reason of the interpretation placed by it upon the words to the same effect in section 261 of the Arbitration Act 1950 because an award could for the purpose of enforcement have the same effect as a judgment in an action on the award only if the date of the award were taken as the date of conversion as by reason of the decision in the Havana case which was then the law in such an action the date of conversion would have to be the due date of payment which the debt being crystallized by the award would be the date of the award and the judgment therefore in such an action would have to be given on that basis
6 The development in law was carried yet one step further in the Schorsch Meier case where in an action for the price of goods the plaintiff being a member of the European Economic Community the Court of Appeal held that the court could give judgment to the creditor in a foreign currency if that was the currency of the contract that is to say if the money of account and the money of payment is foreign currency
The court also held that the date of conversion should be the date of payment meaning thereby as Lord Wilberforce pointed out in the Miliangos case at page 468 the date when the court authorizes enforcement of the judgment in terms of sterling
7 The Schorsch Meier case was not decided purely upon Article 106 of the Treaty of Rome which by section 21 of the European Communities Act 1972 had 565 been made part of the law of England but it was also decided upon the general principle that the reasons for the rule in the Havana case having ceased to exist the court was at liberty to discard the rule itself
Thus what the Schorsch Meier case decided was directly contrary to the decision of the House of Lords in the Havana case
8 Both the Jugoslavenska case and the Schorsch Meier case were decided without the other side being represented
From this it does not follow that the judgments delivered in those cases were not folly considered judgments
The leading judgment in each of these two cases was that Lord Denning MR who at the date when the Havana case was decided was a member of the House of Lords
In his concurring opinion in the Havana case he had already expressed a doubt and posed a query whether the breach date rule should continue to be applied when sterling had lost the value it once had by reason of the devaluation of the pound
9 The question again fell for consideration by the House of Lords in the Miliangos case
In that case the House of Lords departed from the rule in the Havana case namely the breach date conversion rule and recognized that an English court could give judgment in a foreign currency in a case where under a contract the money was to be paid in that currency if the proper law of the contract was that of a foreign country and the money of account was of that country
So far as the date of conversion was concerned all the Law Lords except Lord Simon of Glaisdale were of the opinion that it should be the date when the court authorizes the enforcement of the judgment in terms of sterling
10 Though the Jugoslavenska case was not expressly overruled in the Miliangos case in all the opinions delivered in that case except in the opinion of Lord Frasser of Tullybelton where no reference is made to that case it was doubted whether in the future the 566 rule in the Jugoslavenska case should or would hold the field
Lord Wilberforce opined that he saw no reason why if desired the practice adopted in that case should not be adjusted so as to enable coversion to be made at the date when leave to enforce the award in sterling is given
Lord Cross of Chelsea thought it absurd that there should be one rule for arbitrations with respect to debts expressed in a foreign currency and another rule with respect to actions on similar debts
Lord Edmund Davis said that in the Jugoslvenska case the rate of exchange prevailing on the date of the award had to be adopted by the court because of the provisions of sections 26 and 361 of the English Arbitration Act and that but for such provisions the most just rate would be that prevailing when the award was being enforced
Even Lord Simon of Glaisdale in his dissenting opinion expressed the view that if Parliament were to reconsider the sterling judgment rule and the breach date rule the rule in the Jugoslavenska case would come within the purview of such reconsideration
11 The principle laid down in the Millangos case was extended by the House of Lords in the case of The Despina R to actions in tort and for damages for breach of contract on the ground that it was fairer to give judgment in the currency in which the loss was sustained than in its sterling equivalent at the date of the breach or loss the principles to be applied in ascertaining the currency of the loss being those of restitutio in integrum and reasonable foreseeability of the plaintiff using a particular foreign currency to purchase the necessary currency to meet the immediate and direct expenditure caused by the defendant s tort or breach of contract
It was further held that in the case of arbitrations it was for the arbitrators to determine in what currency the loss was borne or felt and that the rule that arbitrators may make their award in the currency best suited to achieve an appropriate and just result should be a flexible rule in which regard should be had to the 567 circumstances in which the loss arose in which the loss was converted into a money sum and in which it was felt by the plaintiff
12 So far as practice and procedure is concerned under the Practice Directions dated December 18 1975 for the purpose of ascertaining the proper amount of the costs to be endorsed on the writ of summons the plaintiff s solicitor or the plaintiff if he is acting in person is to certify the rate of exchange current in London at the close of the business on the date next or most nearly preceding the date of the issue of the writ and to mention the sterling equivalent at the rate of the sum in foreign currency claimed in the action
The judgment is to be entered for the sum in foreign currency adjudged by the court to be payable by the defendant to the plaintiff or its sterling equivalent at the time of payment
None the less if a judgment is to be enforced by execution the application for execution is to state the rate of exchange current in London on the date nearest or most nearly preceding the date when the application is made
We have spent some time in ascertaining the English law on the subject by reason of the absence of any authority of any Indian court on this point and because the learned Single Judge has based his decision on the Miliangos case while the Division Bench of the Delhi High Court has based its on the Jugoslavenska case
Further the English decisions referred to by us are of courts of a country from which we have derived our jurisprudence and a large part of our laws and in which the judgments were dilivered by judges held in high repute
Undoubtedly none of these decisions are binding upon this Court but they are authorities of high persuasive value to which we may legitimately turn for assistance
Whether the rule laid down in any of these cases can be applied by our courts must however be judged in the context of our own law and legal procedure and the practical realities of litigation in our country
When a foreigner has to receive a sum of money which should justly be payable to him in a foreign currency and because of the default of the paying party seeks to recover its payment through the court the first question which arises is whether a court in India would have 568 jurisdiction to pass a decree for a sum expressed in a foreign currency
Though on principle there is no reason why a court should not be able to do so no court can pass a decree directing a defendant to do an impossible or an illegal act and in view of the provisions of our Foreign Exchange Regulation Act 1973 and the restrictions contained therein on making payments in a foreign currency if a decree were to be passed Simpliciter for a sum expressed in a foreign currency it would be to direct the defendant to do an act which would be in violation of the Foreign Exchange Regulation Act 1973
Such a decree can therefore only be passed by making the payment in foreign currency subject to the permission of the foreign exchange authorities being granted
If however the authorities do not grant permission for payment of the judgment debt in foreign currency it would not be possible for the defendant to make such payment resulting in the decree becoming infructuous and the plaintiff getting nothing under it
The view of Lawton LJ in the Schorsch Meier case that the plaintiff should be given judgment in the form in which he asked for it and must be left to extricate himself from the intricacies of the law relating to execution and exchange control does not commend itself to us for it does not appear to us to be conducive to the ends of justice
The court must therefore provide for the eventuality of the foreign exchange authorities not granting the requisite permission or even if such permission is given the defendant not paying the decretal debt or not wanting to discharge the decree by making payment in foreign currency or in Indian rupees
This can only he done by the decree providing in the alternative for payment of a sum of money in Indian rupees which will be equivalent to the sum decreed in foreign currency
It is but just that a man who is in law entitled to receive a sum of money in a foreign currency should either receive it in such currency or should receive its equivalent in Indian rupees
It is here that the question of the date which the court should select for converting foreign currency into Indian rupees arises
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
With these considerations in mind we will now examine the feasibility of the several dates set out by us at the beginning of our discussion on this point
The first of the five dates listed earlier by us namely the date when the amount became due and payable does not have the effect 569 of putting the plaintiff in the same position in which he would have been had the defendant discharged his obligation when he should have done because between that date and the date when the suit is decreed the rate of exchange may have fluctuated to the plaintiff s prejudice resulting in the amount decreed in rupees representing only a fraction of what he was entitled to receive
Equally the possibility of the plaintiff getting more than what he had bargained for in case the rate of exchange had fluctuated in his favour cannot be ruled out
To select as the English courts had done earlier the date when the amount became due or the breach date as the English courts have termed it is thus to expose the parties to the unforeseeable changes in the international monetary market
The selection of the breach date cannot therefore be said to be just fair or equitable because in a case where the rate of exchange has gone against the plaintiff the defendant escapes by paying a lesser sum than what he was bound to and thus is the gainer by his default while in the converse case where the rate of exchange has gone against the defendant the defendant would be subjected to a much greater burden than what he should be
The second of the dates mentioned above namely the date of the commencement of the action or suit is equally subject to the same criticism
This date was rejected in the Miliangos case because according to Lord Wilberforce at page 469 it placed the creditor too severely at the mercy of the debtor s obstructive defences or the law s delay In that case Lord Fraser of Tullybelton pointed out at page 502 that if the date of the commencement of the action were to be taken for conversion a period of a year or more might easily elapse
allowing for appeals before payment was made
 In our country it is the misfortune of litigants that by reason of ever increasing volume of litigation overcrowded court dockets and undermanned courts suits are often not disposed of for an unconscionably long time and if we take into account the time that would be spent in appeals further appeals and revision and review applications which may be filed the longevity of the litigation is doubled if not tripled so that none can with any certainty predict even a probable date for its termination
The selection of the date of the filing of the suit would therefore leave the parties in as uncertain and precarious a position as the selection of the date when the amount became payable or the breach date
570 We will now consider the feasibility of selecting the third date namely the date of the decree
A decree crystallizes the amount payable by the defendant to the plaintiff and it is the decree which entitles the judgment creditor to recover the judgment debt through the processes of law
An objection which can however be taken to selecting this date is that the decree of the trial court is not the final decree for there may be appeals or other proceedings against it in superior courts and by the time the matter is finally determined the rate of exchange prevailing on that date may be nowhere near that which prevailed at the date of the decree of the trial court
To select the date of the decree of the trial court as the conversion date would therefore be to adopt as unrealistic a standard as the breach date
This difficulty is however easily overcome by selecting the date when the action is finally disposed of in the sense that the decree becomes final and binding between the parties after all remedies against it are exhausted
This can be achieved by the court which hears the appeal providing that the date of its decree or other proceeding in which the decree is challenged would be the date for conversion of the foreign currency sum into Indian rupees in cases where the decree has not been executed in the meantime
The real objection to selecting this date however is that a money decree and the payment by the judgment debtor of the judgment debt under it are two vastly different matters widely separated by successive execution applications and objections thereto unless the judgment debtor chooses to pay up the judgment debt of his own accord which is generally not the case
In the vast majority of cases a money decree is required to be enforced by execution
Would the proper date of conversion then be the date when the court orders execution to issue  This date appears to have found favour with all the Law Lords who decided the Miliongos case except Lord Simon of Glaisdale
We however find the selection of this date equally beset with difficulties
Execution of a decree is not a simple matter
In execution of a money decree first the judgment debtor s property has to be attached
Pending attachment a third party at times set up by the judgment debtor may prefer a claim to the attached property
Such claim will have to be investigated and determined by the executing court
Even where no claim is preferred the attached property cannot be brought to sale immediately
A proclamation giving the prescribed particulars has to be first made
Even after such proclamation the property cannot be put up for sale until after the expiry of the period prescribed by O 21 r 68 of 571 the Code of Civil Procedure 1908 V of 1908 unless it is subject to speedy and natural decay or when the expense of keeping it in custody is likely to exceed its value
Even after the sale has taken place the judgment debtor may further hold up the receipt of the sale proceeds by the decree holder by raising objection to the conduct of the sale
Even otherwise at times a fresh auction sale may have to be held if the auction purchaser commits default in paying the balance of the purchase price
A considerable time would thus elapse between the date when the court orders execution to issue and the date of the receipt of the sale proceeds by the decree holder
This passage of time would as much expose the decree holder to the hazards of fluctuations in the rate of exchange as selection of any of the three dates we have discussed above
Yet another difficulty in selecting the date when the court orders execution to issue is that at times the judgment debt is not recovered in full when the attached property is sold in execution
This necessitates a second application in execution for attaching other properties of the judgment debtor and even the sale of these properties may not cover the deficit thus necessitating yet another execution application
They would lead to an anomalous position for the court would have to fix the rate of exchange for the entire decretal debt at the time of granting the first application for execution and then if the rate of exchange has varied in the meantime to fix a different rate of exchange for the unrealized balance of the decretal amount at the time of granting the second application for execution and equally so with respect to successive applications for execution
Thus with respect to portions of the same decretal debt different rates of exchange would come to be fixed at different times
A further difficulty in selecting the date of granting an execution application is that execution can only issue for a sum expressed in Indian currency
What is being is executed is the decree and the sum for which execution is to issue in a money decree must therefore be for the particular sum specified in the decree that is the judgment debt
It cannot be for a sum which would be determined and fixed by the executing court at the time of granting the execution application for under o21 r 112 g of the Code of Civil Procedure 1908 an application for execution has to state the amount with interest if any due upon the decree
The above difficulties would rule out the taking of the date when the court grants an application for execution as the date of 572 conversion and would make inapplicable to our courts the rule laid down in the Miliangos case
As regards the selection by the court of the date of payment as the proper date of conversion that was the date taken in the Schorsch Meier case but as Lord Wilberforce pointed out at page 468 in the Miliangos case this only means the date when the court authorizes enforcement of the judgment in terms of sterling
As we have seen in England according to the Practice Directions dated December 18 1975 the form of the judgment to be entered requires the defendant to pay the sterling equivalent of the foreign currency sum adjudged at the time of payment
This would be the most logical date and one which does justice to a plaintiff who has come to court to recover a sum of money payable to him in a foreign currency
If the principle to be applied is that the plaintiff should be put in the same position in which he would have been had the defendant discharged his obligation on the due date then that principle is best served by the court taking the date of payment as the date of conversion
In adopting this date we however find ourselves faced with three practical and procedural difficulties namely payment of court fees the pecuniary limit of the jurisdiction of courts and execution
So far as court fees are concerned we have a Central Act namely the Court fees Act 1870 VII of 1870 which applies either with or without amendments to those States and Union Territories which have not repealed and replaced it by their own legislation
The States and Union Territories which have their own legislation on the subject are Andhra Pradesh Gujarat Himachal Pradesh Jammu and Kashmir Karnataka Kerala Maharashtra Pondicherry Rajasthan Tamil Nadu and West Bengal
Under all Court fees Acts no plaint can be filed in any court without payment of court fees
The plaintiff therefore has to value his claim in the suit and pay the court fees thereon computed in the manner provided in the relevant Court fees Act
So far as money suits are concerned the court fees payable are ad valorem court fees according to the amount claimed which may or may not be subject to a ceiling depending upon which Court fees Act applies
A suit for a sum of money expressed in a foreign currency is also a money suit and the plaintiff in such a suit will have to pay court fees according to the amount claimed
As however a court in India cannot as we have pointed out above pass a decree simpliciter for payment of a sum in a foreign currency in such a suit the plaintiff will have to make an alternative 573 claim in his plaint for the rupee equivalent of the foreign currency sum claimed
He will therefore have to pay court fees on the amount of the rupee equivalent
Such rupee equivalent as at the date of the institution of the suit can only be at the rate of exchange prevailing on that date
If therefore a plaintiff were to make the alternative claim on the basis of the rupee equivalent at the time of payment the value of the suit for the purposes of court fees would be incapable of computation for it would not be possible to say what the rate of exchange on that date would be
It may be argued on the analogy of a suit for accounts or for partition or for administration or for winding up and accounts of a partnership that the plaintiff can put a tentative valuation in his plaint computed according to the rate of exchange prevailing on the date of the institution of the suit and give an undertaking to pay the deficit court fees if at the time of payment of the amount decreed the rate of exchange has fluctuated in his favour so that the amount realized in rupee equivalent is more than the amount mentioned in the plaint
There is however a basic difference between a money suit and a suit for accounts a partition suit an administration suit or a partnership suit
In these types of suits a preliminary decree is passed to ascertain the amount due to the plaintiff and when such amount is ascertained a final decree for the ascertained sum is passed
In a money suit however there can be only one decree
It is therefore neither permissible in law nor feasible for the plaintiff in a suit in which his claim is for a sum of money in a foreign currency to give an undertaking to make good the deficiency in court fees when he receives payment
In fact a part or even the whole of the judgment debt may not be recovered at all
Even in the other types of suits mentioned above it is not when the ascertained amount is received by the plaintiff that the deficit court fees are to be paid by him
They are to be paid when the amount due to the plaintiff is ascertained
In the type of suits we are concerned with in these appeals the plaintiff can at the highest give an undertaking to pay the deficit if any in the court fees if at the time when the judgment is given and the decree passed the rupee equivalent is more than at the date of the suit by reason of the fluctuation in the rate of exchange but it would not be permissible for him to give such an undertaking for any date subsequent to the date of the passing of the decree
An additional difficulty would be that it is the court in which a suit is instituted which has to ensure at the time of the institution of the suit that the proper court fees have been paid
The deficit court fees therefore cannot be calculated and the balance 574 thereof recovered by the executing court
These difficulties would rule out both the date when the court orders execution to issue and the date of payment of the decretal debt to be taken as the date of conversion
These difficulties do not arise in England
Under the English law the Lord Chancellor has power with the consent of at least three Judges of the Supreme Court of Judicature and the concurrence of the Treasury to fix fees to be taken in the High Court and the Court of Appeal see Halsbury s Laws of England 4th ed vol
10 para
In the exercise of this power Supreme Court Fees Orders have been made from time to time
The order currently in force is the Supreme Court Fees Order 1980 section I 1980 No 821 under which the fee payable in the case of a writ endorsed with a claim for a liquidated sum not exceeding  2000 is  35 and in any other case it is  40 civil proceedings in England being commenced by issuing a writ
Thus in England a fixed court fee is payable the amount thereof varying dependant only upon whether it is an action for a liquidated sum not exceeding  2000 or not
In England therefore as the court fees payable are not ad valorem court fees in an action to recover a sum of money expressed in a foreign currency it would be immaterial for the purposes of court fees whether the plaintiff claims in the alternative the sterling equivalent of that amount as at the date of the judgment or as at the date when the court gives leave to enforce the judgment or as at the date of payment because in any of these cases the court fees payable by the plaintiff will not vary except where by reason of the fluctuation in the rate of exchange the amount adjudged or the amount for which leave to enforce the judgment is given or the amount paid exceeds  2000 in a case where less than that has been claimed in the action
It should be noted that English practice also recognizes the difficulty which would be encountered in issuing execution for a sum in sterling to be determined at the date of payment or realization and accordingly the Practice Directions dated December 18 1975 require that where a plaintiff desires to enforce a judgment he must mention in the application made for that purpose the sterling equivalent of the foreign currency sum adjudged calculated at the rate of exchange prevailing on the date nearest or most nearly preceding the date of the application for execution and the writ of execution would then issue for such sterling equivalent
So far as the limit of pecuniary jurisdiction of courts is concerned under section 15 of the Code of Civil Procedure 1908 every 575 suit is to be instituted in the court of the lowest grade competent to try it
We have in India a large number of courts of various grades with different pecuniary limits of jurisdiction
In money suits it is the amount claimed in the suit which will determine the particular court in which the suit is to be instituted This determination cannot be done with reference to a foreign currency
It can only be done with reference to Indian currency
This is an additional reason why thy plaintiff must in his plaint give the rupee equivalent of the foreign currency sum claimed by him in the suit by converting it into Indian rupees at the rate of exchange prevailing at the date of the institution of the suit
The difficulty with respect to execution which would arise if the court were to select the date of payment as the date of conversion is that execution must issue for a specific sum expressed in Indian currency due upon the decree
 It cannot issue for a sum which would become ascertainable only when realized or paid as would be the case were execution to issue for the rupee equivalent at the time of payment in rupees of a foreign currency sum
Further as pointed our earlier execution can issue only with respect to the amount due upon the decree
For the above reasons it is not possible for us to accept the date of payment or realization of the decretal debt as the proper date for the rate of conversion
This then leaves us with only there dates from which to make our selection namely the date when the amount became payable the date of the filing of the suit and the date of the judgment that is the date of passing the decree
It would be fairer to both the parties for the court to take the latest of these dates namely the date of passing the decree that is the date of the judgment
The learned Single Judge of the Delhi High Court also reached the same conclusion
He however did so relying upon the Miliangos case under an erroneous belief that when in that case it was held that the proper date should be the date when the judgment becomes enforceable what was meant was the date when the judgment was given that is when the decree was passed
The learned Single Judge was in error in so reading the judgment of the House of Lords
when the majority in the Miliangos case spoke of the date when the court gives leave to enforce the judgment what they were 576 referring to was not the date of the judgment but the date on which the court gives leave to execute the judgment
In Halsbury s Laws of England 4th ed vol
17 para 401 the word execution  is defined as follow The word execution  in its widest sense signifies the enforcement of or giving effect to the judgments or orders of courts of justice
In a narrower sense it means the enforcement of those judgments or orders by a public officer under the writs of fieri facias possession delivery sequestration fieri facias de bonis ecclesiasticis etc The emphasis has been supplied by us This definition also appeared in the Third Edition of Halsbury s Laws of England and was cited with approval by Hewson J in The Zafiro John Carllon  Co Ltd vs Owners of SS Zafiro1 The most usual method of enforcement of a money judgment in England is by writ of fieri facial commonly called fifa
see Halsbury s Laws of England 4th ed vo 17 para 462
In certain cases a writ of execution to enforce a judgment or order cannot issue without leave of the court
It is unnecessary to go into the details of the procedure relating to execution in England for what we have stated above is sufficient to show that what the majority in the Miliangos case meant by the date when the court gives leave to enforce the judgment or the date when the court authorizes enforcement of the judgment was the date when the court gives leave to execute the judgment
Does the fact that the decree sought to be executed is one passed in terms of an award which directs payment of a sum of money in a foreign currency make any difference to the date of conversion to be selected by the court  According to the Division Bench of the Delhi High Court it does because relying upon the Jugoslavenska case it held that in such a case the proper date for conversion of the foreign currency sum awarded would be the date of the award in as much as there was no difference between the relevant provisions of the English Arbitration Act 1950 14 Geo 6 c27 and our X of 1940 particularly section 261 of the English Act and section 17 of our Act
For reasons which we will presently set out the Division Bench of the Delhi High Court erred in reaching this conclusion
577 We have set out earlier the facts of the Jugoslavenska case and have extracted the relevant passage from the judgment of Lord Denning MR To recapitulate in the Jugoslavenska case the plaintiffs had been awarded a sum expressed in United States dollars in an arbitration held in London and had sought leave of the court under section 26 now section 261 of the Arbitration Act 1950 to enforce that award
In support of this application the plaintiffs had filed an affidavit showing the rate of exchange as at the date of the award and the equivalent in pound sterling at that rate of the amount awarded to him and had claimed to enforce the amount awarded on that basis
Two questions therefore fell for the court s determination
They were thus put by Roskill LJ in his judgment in that case at page 504 The first is whether an arbitrator or umpire sitting in England or Wales can lawfully make an award in a currency other then sterling
The second is whether if such an award can be so lawfully made it is enforceable under section 26
To understand the decision of the Court of Appeal so far as concerns the first question we must bear in mind the then prevailing state of the law in England and so far as concerns the second question the provisions of the English law relating to enforcement of awards
At that time the old rule affirmed by the House of Lords in the Havana case was the law
Under it an English court could give judgment only in English currency and in an action in England to recover a debt expressed in a forcing currency such debt had to be converted in to sterling at the rate of exchange prevailing on the date when the debt was payable
So far as the provisions of English law relating to enforcement of an award are concerned the mode would depend whether or not it was a foreign award as defined in section 35 of the Arbitration Act 1950 which definition is mutatis mutandis the same as the definition of foreign award given in section 2 of our VI of 1937
Sub section 1 of section 36 of the English Act provides for enforcement of foreign awards
That section is in the following terms 36
Effect of foreign awards 1 A foreign awards shall subject to the provisions of this Part of this Act be enforceable in England 578 either by action or in the same manner as the award of an arbitrator is enforceable by virtue of section twenty six of this Act
2 Any foreign award which would be enforceable under this Part of this Act shall be treated as binding for all purposes on the persons as between whom it was made and may accordingly be relied on by any of those persons by way of defence set off or otherwise in any legal proceedings in England and any references in this Part of this Act to enforcing a foreign award shall be construed as including references to relying on an award
 Though section 36 is headed Effect of foreign awards  it will be seen that sub section 1 of that section deals with enforcement of foreign awards while only sub section 2 deals with the effect of foreign awards
Thus under section 36 1 there are two alternative modes provided for enforcing a foreign award in England namely 1 by action at law on the award and 2 by leave of the court in the same manner as the award of an arbitrator made in England is enforceable under section 26
Since according to the law then prevailing an English court could only give judgment in sterling and required a debt expressed in a foreign currency to be converted into English currency at the rate of exchange prevailing on the date when the debt was payable in an action on a foreign award the plaintiff would have to make his claim in English currency in respect of the sum of money awarded to him in a foreign currency
In such an action the debt in respect of which the plaintiff would be seeking judgment would be the sum of money payable to him under the award which had by virtue of the award become payable to him on the date of the award
He would therefore have to convert the foreign currency sum awarded to him into English currency at the rate of exchange prevailing on the date of the award
Before we deal with the second mode of enforcing a foreign award provided in section 361 it will be convenient to reproduce here the provisions of section 26 of the English Arbitration Act which are as follows 26
Enforcement of award 1 An award on an arbitration agreement may by leave of the High Court or a judge thereof be enforced in 579 the same manner as a judgment or order to the same effect and where leave is so given judgment may be entered in terms of the award
2 If a the amount sought to be recovered does not exceed the current limit on jurisdiction in section 40 of the County Courts Act 1959 and b a county court so orders it shall be recoverable by execution issued from the county court or otherwise as is payable under an order of that court and shall not be enforceable under sub section 1 above
3 An application to the High Court under this section shall preclude an application to a county court and an application to a county court under this section shall preclude an application to the High Court
 Originally section 26 consisted only of sub section 1
Subsection 2 and 3 were inserted in section 26 and the original section renumbered as sub section 1 by section 172 of the Administration of Justice Act 1977
The new sub sections 2 and 3 are immaterial for our purpose for it was the old section 26 now section 261
which formed the basis of the decision in the Jugoslavenska case
Kerr J from whose judgment the appeal in the Jugoslavenska ease was carried to the Court of Appeal had before deciding the matter made enquiries of the Central Office of the High Court as to the practice in dealing with applications under section 361
Roskill LJ in his judgment in the Court of Appeal has referred to this and has thus set out at page 507 the information which Kerr J had received He was told that the practice on applications under that section is that the sum awarded in the foreign currency in question is converted into sterling at the rate prevailing at the date of the award and that in the absence of any other objection an order is then made giving leave to enforce the foreign award in the same manner as a judgment for that resulting sterling sum The emphasis has been supplied by us 580 The award in the Jugoslavenska case was not a foreign award within the meaning of section 35 of the English Act for it was made in England though the sum awarded there under was expressed in a foreign currency namely United States dollars
In English law an application to enforce an award under section 261 is only one of the modes of enforcing an award which is not a foreign award
Where such an application is granted it is not necessary that judgment must be entered in terms of the award
Lord Denning MR in the course of his judgment in the Jugoslavenska case pointed out at page 502 that in most cases it would be unnecessary to enter judgment for once leave was given the award could be enforced by the ordinary means of execution but it might be necessary to enter judgment in order to issue a bankruptcy notice and the latter words of section 26 enabled judgment to be so entered
Roskil LJ also pointed out at page 507 that under section 261 there are two different steps which must be taken
First the obtaining of leave to enforce the award in the same manner as a judgment and secondly and independently when leave is so given the entering of judgment in the terms of the award
Section 261 is not exhaustive of the modes in which an award which is not a foreign award can be enforced
Such an award can also be enforced by bringing an action on it in which case as pointed out earlier if the sum awarded were expressed in a foreign currency the judgment would have to be sought in sterling for which purpose the rate of exchange would be taken as at the date of the award
In the Jugoslavenska case the court held that an arbitrator or umpire in England had jurisdiction to make an award for a sum of money expressed in a foreign currency when that particular currency was the appropriate currency in which to express it
The difficulty which faced the court was the manner of enforcing such an award by reason of the decision in the Havana case under which an English court could give judgment only in sterling
This difficulty was resolved by the court by referring to section 361 and holding that it would be unreasonable that an award in a foreign currency made aboard could be enforced by an application under section 261 while the same award if made in England could not be so enforced
It was for this reason that the court interpreted the words to the same effect occurring in section 261 as meaning having the same effect and not as meaning in the same terms because as Lord Denning MR pointed out if it were to be so interpreted there would be some difficulty in applying the section to an award in a foreign currency but if the words were interpreted to mean that the judgment 581 or order must have the same effect it would follow that if the sum awarded were converted into sterling at the rate of exchange as at the date of the award it would have the same effect as a judgment or order in an action on the award
We may point out that Cairns LJ however felt some doubt whether the sum awarded must be converted into sterling before leave to enforce the award was given but he did not dissent because both Lord Denning MR and Roskill LJ considered that it should be so converted
As emphasized by us earlier in the Jugoslavenska case the date of the award was taken as the date of conversion because in an action on such an award the due date for payment of the debt would be the date of the award
We have seen that in the Miliangos case though the Jugoslavenska case was not expressly over ruled none of the Law Lords who had occasion to refer to it were happy with what had been held there Lord Wilberforce opining that there was no reason why if desired the practice should not be adjusted so as to enable conversion to be made at the date when leave to enforce the award in sterling is given Lord Cross of Chelsea thinking it absurd that there should be one rule for arbitrations with respect to foreign currency debts and another with respect to actions on similar debts Lord Edmund Davies expressing his view that no basic distinction could be drawn for the purposes of a conversion date between judgments and awards and even Lord Simon of Glaisdale in his dissenting judgment stating his belief that if Parliament were to reconsider the sterling judgment rule and the breach date rule the Jugaslavenska case would come within the purview of such reconsecration
In view of these observations and the fact that the Havana case is no longer the law in view of the decision in the Miliangos case it is highly doubtful whether today in England if the matter were carried higher it would be decided in the same way
In view of the Miliangos case it cannot be said today that in an action on an award the foreign currency sum directed to be paid under the award must be converted at the date of the award when it was payable
It would have to be converted at the date when the court gives leave to enforce the judgment
On principle there can be no difference between an action on an award and a case where instead of filing an action the plaintiff files an application under section 261 for leave to enforce the award
If in an action on the award the proper date of conversion would be the date when the court gives leave to enforce the judgment where an application under section 261 is filed the proper date of conversion should also be the same for then alone can the award when leave is given be enforced in the same manner as a judgment or order to the same effect
582 We find that the Division Bench of the Delhi High Court has not correctly appreciated the ratio of the decision in the Jugoslavenska case nor the reasoning upon which that decision was based
We also find that the Division Bench of the Delhi High Court has committed an error in equating section 261 of the English Arbitration Act with section 17 of our Arbitration Act
The reason for this error is that the Division Bench of the Delhi High Court has proceeded upon a wrong assumption that the procedural scheme of the English Arbitration Act is the same as that of our Arbitration Act
In this connection the Division Bench has referred to section 22 of the English Act under which the court has power from time to time to remit the matters referred or any of them for reconsideration of the arbitrator or umpire and section 231 of the English Act under which the court has power to remove any arbitrator or umpire for misconduct
These sections correspond to sections 16 and 11 our Act We fail to see what relevance either of these sections had to the question in issue
Before we proceed further to discuss this aspect of the case it will be convenient to set out section 17 of our 
That section provides as follows 17
Judgment in terms of award
Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award the Court shall after the time for making an application to set aside the award has expired or such application having been made after refusing it proceed to pronounce judgment according to the award and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of or not otherwise in accordance with the award
 What seems to have impressed the Division Bench of the Delhi High Court is the fact that in England the court is not bound to grant leave to enforce the award but can when such an application is made on objection being raised by the respondent either remit the award or set it aside and that the same can also be done by a court in India when an award has been filed in court
We find that in adopting this line of approach the Division Bench has overlooked the basic differences between the English procedure and the procedure under our Act
The provisions for enforcing an award under the 583 English Act and under our Act are different
Under the English Act if it is sought to enforce an award by making an application under section 261 such application has to be made under O 73 r 3 of the Rules of the Supreme Court 1965 by an originating summons
There is no time limit provided for taking out such a summons
There is however a time limit provided for making an application to the court to remit an award under section 22 or to set aside an award under section 232 under O 73 r 51 of the Rules of the Supreme Court 1965 the period of limitation being 21 days after the award has been made and published to the parties
An application for leave to enforce the award under section 261 can however be made even before the expiry of the time for moving to set aside the award
In such a case however it can be resisted upon the ground that a motion to set aside the award to be made
It is opined in Russel on Arbitration 20th ed
page 375 that in such a case the party resisting the application would be required to show upon affidavit a substantial case for contesting the validity of the award as well as to swear to his intention of doing so
Under section 17 of our Act an application for a judgment according to the award can only be made after the time for making an application to set aside the award has expired or if such application has been made only after it is refused
Under the English Act the court is not bound to grant leave to enforce the award
In doubtful cases it would ordinarily leave the party to pursue his remedy by filing an action on the award
The court may also give leave to enforce the award only upon terms
An instance of this is the case of ED  F Man vs Societe Annonyme Triaolitaine Des Usines De Raffinage De Sucre1 where the applicant who had throughout admitted that he owed a certain sum on a cross claim which was not a subject matter of the reference was awarded a larger sum which made no reference to the cross claim was given leave to enforce the whole award as a judgment on an undertaking given by him to accept the difference between the two sums in satisfaction of the award and the extinction of the cross claim
Further in answer to an application for leave under section 261 the respondent may set up the defence that the award is a nullity or is wholly or in part ultra vires or is bad on the face of it
If however his objection to the award is that arbitrator has misconducted himself or that the award was improperly procured his proper course would be to move to set the award aside and if necessary to have the 584 application to enforce the award adjourned in the meantime see Halsbury s Laws of England 4th ed vol 2 para 630
None of these contentions are available to a respondent where an application for a judgment according to the award is made under section 17 of our 
They can only be raised by way of an application to set aside or remit the award after the award has been filed in court and notice thereof issued to the parties under section 14 of the 
The period of limitation for such an application is prescribed by Article 119b of the XXXVI of 1963
If the period of limitation expires without any such application being made the court on application made to it for that purpose must proceed to pronounce judgment according to the award whereupon a decree has to follow
Section 17 expressly provides that in such a case the Court shall  proceed to pronounce judgment according to the award and upon the judgment so pronounced a decree shall follow
The only ground upon which such a decree can be challenged in appeal is that it is in excess of or not otherwise in accordance with the award
The court before which an application for judgment in terms of the award is made has therefore no discretion in the matter except possibly in a case where the award is on the face of it patently illegal or violative of a provision of the law
Under section 261 of the English Act when leave is given to enforce the award it is not necessary that judgment should be entered in terms of the award for the purpose of enforcing the award by execution
Under our  before an award can be enforced a judgment has to be pronounced according to the award a decree has thereupon to follow and it is that decree which alone can be enforced by an application for execution made under O 21 r 11 of the Code of Civil Procedure 1908
It is pertinent to note that the judgment which the court pronounces under section 17 is to be according to the award
Where the award directs a certain sum of money to be paid and the court in a case where it has not modified or corrected the award under section 15 pronounces judgment for a different sum the judgment cannot be said to be according to the award
In the same way where an award directs payment of a sum of money in a foreign currency and the court while pronouncing judgment provides for its rupee equivalent at the rate of exchange prevailing on the date of the award the court will not be pronouncing judgment according to the award if in the meantime the rate of exchange has varied because at the date of the judgment the foreign currency equivalent of the 585 amount in rupees provided in the judgment would be different from the foreign currency sum directed to be paid by the award
The judgment therefore can only be said to be according to the award if it directs payment of the rupee equivalent at the rate of exchange prevailing on the date of pronouncing the judgment which date is the same as the date of the passing of the decree
For this purpose the applicant must satisfy the court either on affidavit or otherwise as to the rate of exchange prevailing on the date of the judgment or on the date nearest or most nearly preceding the date of the judgment
Under section 17 of our  judgment is to be pronounced according to the award
The marginal note to the section speaks of judgment in terms of award
Under section 261 of the English Act once leave is given an award becomes enforceable in the same manner as a judgment or order to the same effect
The words to the same effect were interpreted in the jugoslavenska case not as meaning in the same terms but as meaning having the same effect that is as having the same effect as a judgment or order given in an action brought on the award
Granting leave under section 261 of the English Act and pronouncing judgment according to the award and passing a decree under section 17 of our Act therefore mean different things and have different results
A judgment according to the award under section 17 our Act will speak only from the date of the judgment which will not be the case under section 261 for while in the first case what will be enforceable by the processes of law namely execution will be the decree passed in terms of the award in the second case it will be the award itself unless the applicant desires to have judgment entered in terms of the award which he is not required to do as pointed out above
On behalf of ONGC reliance was placed upon the decision of this Court in Satish Kumar and others vs Surinder Kumar and others1 On the strength of this decision it was submitted that an award was not a mere waste paper until a decree in terms of the award has been passed but an award created rights and liabilities and therefore since the award in the instant case provided that a certain sum should be paid in a foreign currency to Forasol it spoke from the date when it was made and published and the rate of conversion could therefore only be the date of the said award
We are unable to see how the above decision in any way bears out this proposition or lends support 586 to it In that case an award made on a reference to arbitration by the parties without the intervention of the court was filed in court under section 14 of the 
In an application made under section 30 to set aside the award one of the objections taken was that the award required registration as it affected immovable property worth more than Rs100 in value and as the award was not registered it was not admissible in evidence
This contention was upheld
It was in this context that this Court observed at page 249 that an award has some legal force and is not a mere waste paper
If the award in question is not a mere waste paper but has some legal effect it plainly purports to or affects property within the meaning of section 17 1 b of the Registration Act
The question before the Court in that case was whether a decree in terms of an unregistered award could be passed by the court in a case where under the XVI of 1908 the registration of the award was compulsory
This question is very different from the one which we are called upon to decide
It was also submitted on behalf of ONGC that an award unless it is set aside by the court is a final adjudication of the rights and liabilities of the parties in respect of the matters referred to arbitration and therefore Forasol could not claim to convert the French Franc part of the said award into Indian rupees at the rate of exchange prevailing on the date of the decree but can only do so at the rate of exchange prevailing on the date of the award
We find this submission wholly untenable
Undoubtedly the said award not having been set aside or modified by the court is final and binding on the parties and in respect of the matters referred to arbitration Forasol cannot claim any amount from ONGC other than that awarded by the Umpire
Forasol is however not making any such claim
It is claiming only the sum in French Francs which it has become entitled to receive from ONGC under the said award
All that Forasol wants is that ONGC should pay to it the sum of FF
58972751 due to it under the said award or its rupee equivalent as at the date when the court pronounced judgment according to the said award and passed the decree in terms thereof
This is a very different thing from making a claim de hors the said award
The claim made by Forasol is actually one under the said award for if the sum awarded to it in French Francs was not paid or could not be paid by ONGC Forasol would be entitled to receive its rupee equivalent
On the decree being passed in terms of the said award the said award became merged in the said decree and the sum of FF58972751 payable to Forasol under 587 the said award became a judgment debt payable to Forasol under the said decree and as pointed out above at the time of passing the decree the court would have to direct payment of the rupee equivalent of this foreign currency debt only at the rate of exchange prevailing on the date of the decree
For the reasons set out above we are of the opinion that the rule in the jugoslavenska case cannot be applied to this country and the fact that a decree is in terms of an award for a sum of money expressed in a foreign currency makes no difference to the date to be taken by the court for converting into Indian currency the foreign currency sum directed to be paid under the award and that such date should also be the date of the decree
It would be convenient if we now set out the practice which according to us ought to be followed in suits in which a sum of money expressed in a foreign currency can legitimately be claimed by the plaintiff and decreed by the court
It is unnecessary for us to categorize the cases in which such a claim can be made and decreed
They have been sufficiently indicated in the English decisions referred to by us above
Such instances can however never be exhausted because the law cannot afford to be static but must constantly develop and progress as the society to which it applies changes its complexion and old ideologies and concepts are discarded and replaced by new
Suffice it to say that the case with which we are concerned was one which fell in this category
In such a suit the plaintiff who has not received the amount due to him in a foreign currency and therefore desires to seek the assistance of the court to recover that amount has two courses open to him
He can either claim the amount due to him in Indian currency or in the foreign currency in which it was payable
If he chooses the first alternative he can only sue for that amount as converted into Indian rupees and his prayer in the plaint can only be for a sum in Indian currency
For this purpose the plaintiff would have to convert the foreign currency amount due to him into Indian rupees
He can do so either at the rate of exchange prevailing on the date when the amount became payable for he was entitled to receive the amount on that date or at his option at the rate of exchange prevailing on the date of the filing of the suit because that is the date on which he is seeking the assistance of the court for recovering the amount due to him
In either event the valuation of the suit for the purposes of court fees and the pecuniary limit of the jurisdiction 588 of the court will be the amount in Indian currency claimed in the suit
The plaintiff may however choose the second course open to him and claim in foreign currency the amount due to him
In such a suit the proper prayer for the plaintiff to make in his plaint would be for a decree that the defendant do pay to him the foreign currency sum claimed in the plaint subject to the permission of the concerned authorities under the Foreign Exchange Regulation Act 1973 being granted and that in the event of the foreign exchange authorities not granting the requisite permission or the defendant not wanting to make payment in foreign currency even though such permission has been granted or the defendant not making payment in foreign currency or in Indian rupees whether such permission has been granted or not the defendant do pay to the plaintiff the rupee equivalent of the foreign currency sum claimed at the rate of exchange prevailing on the date of the judgment
For the purposes of court fees and jurisdiction the plaintiff should however value his claim in the suit by converting the foreign currency sum claimed by him into Indian rupees at the rate of exchange prevailing on the date of the filing of the suit or the date nearest or most nearly preceding such date stating in his plaint what such rate of exchange is
He should further give an undertaking in the plaint that he would make good the deficiency in the court fees if any if at the date of the judgment at the rate of exchange then prevailing the rupee equivalent of the foreign currency sum decreed is higher than that mentioned in the plaint for the purposes of court fees and jurisdiction
At the hearing of such a suit before passing the decree the court should call upon the plaintiff to prove the rate of exchange prevailing on the date of the judgment or on the date nearest or most nearly preceding the date of the judgment
If necessary after delivering judgment on all other issues the court may stand over the rest of the judgment and the passing of the decree and adjourn the matter to enable the plaintiff to prove such rate of exchange
The decree to be passed by the court should be one which orders the defendant to pay to the plaintiff the foreign currency sum adjudged by the court subject to the requisite permission of the concerned authorities under the Foreign Exchange Regulation Act 1973 being granted and in the event of the Foreign Exchange authorities not granting the requisite permission or the defendant not wanting to make payment in foreign currency even though such permission has been granted or the defendant not making payment in foreign currency or in Indian rupees whether such permission has been granted or not the equivalent of such foreign currency sum converted into 589 Indian rupees at the rate of exchange proved before the court as aforesaid
In the event of the decree being challenged in appeal or other proceedings and such appeal or other proceedings being decided in whole or in part in favour of the plaintiff the appellate court or the court hearing the application in the other proceedings challenging the decree should follow the same procedure as the trial court for the purpose of ascertaining the rate of exchange prevailing on the date of its appellate decree or of its order on such application or on the date nearest or most nearly preceding the date of such decree or order
If such rate of exchange is different from the rate in the decree which has been challenged the court should make the necessary modification with respect to the rate of exchange by its appellate decree or final order
In all such cases execution can only issue for the rupee equivalent specified in the decree appellate decree or final order as the case may be
These questions of course would not arise if pending appeal or other proceedings adopted by the defendant the decree has been executed or the money thereunder received by the plaintiff
Turning now to arbitrations on principle there can be and should be no difference between an award made by arbitrators or an umpire and a decree of a court
In the type of cases we are concerned with here just as the courts have power to make a decree for a sum of money expressed in a foreign currency subject to the limitations and conditions we have set out above the arbitrators or umpire have the power to make an award for a sum of money expressed in a foreign currency
The arbitrators or umpire should however provide in the award for the rate of exchange at which the sum awarded in a foreign currency should be converted in the events mentioned above
This may be done by the arbitrators or umpire taking either the rate of exchange prevailing on the date of the award or the date nearest or most nearly preceding the date of the award or by directing that the rate of exchange at which conversion is to be made would be the date when the court pronounces judgment according to the award and passes the decree in terms thereof or the date nearest or most nearly preceding the date of the judgment as the court may determine
If the arbitrators or umpire omit to provide for the rate of conversion this would not by itself be sufficient to invalidate the award
The court may either remit the award under section 16 of the arbitration Act 1940 for the purpose of fixing the date of conversion or may do so itself taking the date of conversion as the date of its judgment or the date nearest or most nearly preceding it 590 following the procedure outlined above for the purpose of proof of the rate of exchange prevailing on such date
If however the person liable under such an award desires to make payment of the sum in foreign currency awarded by the arbitrators or umpire without the award being made a rule of the court he would be at liberty to do so after obtaining the requisite permission of the concerned authorities under the Foreign Exchange Regulation Act 1973
In the case of the said award which had led to these appeals before us the party entitled to receive the money Forasol was a foreign party
Under the said contract the currency of account was a foreign currency and so was the currency of payment except for a portion thereof
Forasol was therefore entitled on payment not being made to it by ONGC to receive in French Francs the amounts which became payable to it in that currency
The Umpire was therefore justified in providing that the amounts payable under the said award to Forasol in French Francs should be paid in French currency
The Umpire has however neither provided that such payment would be subject to the permission of the foreign exchange authorities being obtained nor specified the conversion rate to be applied in the eventualities which we have set out above
That however does not make any difference because neither party has objected to the said award on this ground
On the contrary both parties have accepted the said award as binding and conclusive
As mentioned above this omission on the part of the Umpire could have been corrected by the Delhi High Court when it came to pronounce judgment according to the said award and pass the said decree in terms thereof
The decree passed in terms of the said award however does not specify either the rupee equivalent of the amount in French Francs payable to Forasol or the rate of exchange at which the conversion of such amount into Indian rupees should be made
To that extent the decree passed in terms of the said award by the Delhi High Court was not a proper decree
Both the parties have however accepted the said decree and have not challenged it on this ground in any proceedings
In any event the aforesaid mistake in the said decree was one which could have been got corrected by an application for review or by an application under section 152 or in any event under section 151 of the Code of Civil Procedure 1908
The decree has now become final and binding upon the parties
Both the parties have accepted the said decree and the said decree cannot therefore be said to be invalid on the ground of the above omission to specify either the rupee equivalent of the French Franc 591 portion of the said award or the rate of exchange at which such French Franc portion was to be converted into its rupee equivalent
For the reasons set out above we hold that the learned Single Judge rightly took the date of the decree as the date of conversion
In his order on the said execution application he has however given a direction that ONGC could satisfy the judgment debt by making payment in French Francs or if they so preferred by paying the equivalent sum in rupees at the rate of exchange prevailing on the date of the decree
He was in error in not qualifying this direction by making the option given to ONGC to make payment in French Francs subject to the permission of the concerned authorities under the Foreign Exchange Regulation Act 1973
To this extent the order passed by the learned Single Judge requires to be modified
Turning now to the appeal filed by ONGC it was stated in the Special Leave Petition filed by ONGC that it had two claims against Forasol the first with respect to what was termed as tax differential and the second with respect to interest on the amounts payable by Forasol to ONGC
Both these claims were negatived by the learned Single Judge
It was expressly stated in paragraph 19 of the Special Leave Petition of ONGC that except for the aforesaid two claims the judgment and order of the Division Bench of the Delhi High Court should be affirmed
ONGC s claim for tax differential was based on Article IV 12 of the said contract under which Forasol was to pay income tax surcharge on income tax and all other taxes which might be assessed and levied by the income tax authorities in India on the income of Forasol under the said contract as well as on the income of Forasol s personnel from the work performed by them under the said contract
Under the proviso to the said Article if subsequent to the date of the said contract the tax rates in India were changed so as to be higher than what they were at the date of the signing of the said contract ONGC was to pay the difference to Forasol and if the tax rates became lower Forasol was to pay the difference to ONGC
This proviso was not to be applicable in respect of the taxes payable by Forasol on the income of its personnel
The learned Single Judge has pointed out in his judgment that the claim in respect of tax differential did not survive in as much as by the said award the amounts paid by ONGC as tax on behalf of Forasol were adjusted and given credit for
ONGC did not challenge this finding in the appeal filed by it 592 in the Delhi High Court
None the less ONGC sought to reagitate this point in its Special Leave Petition
At the hearing of this appeal learned Counsel for ONGC stated that he was not pressing this point
In the written submission filed on behalf of ONGC after the hearing of both these appeals was concluded ONGC has however once again sought to raise this point
The point not having been urged in the intra court appeal in the Delhi High Court and also having been given up at the hearing of these appeals before this Court ONGC cannot be permitted subsequently to agitate this point in the written submissions filed on its behalf
In any event in our opinion the learned Single Judge was right in rejecting this claim of ONGC
So far as ONGC s claim for interest is concerned it has been negatived both by the learned Single Judge and the Division Bench of the Delhi High Court
We find no substance in this claim
The relevant provision of the said award which deals with payment of interest is as follows Under the contract there is no right to interest to either party except on French Francs
If the amount paid by ONGC to the credit of Forasol in regard to Income Tax and the several items of allowance and disallowance under this award are worked out and it is found that there is an amount payable to ONGC in French Francs that would carry interest but if the amount is in rupees then no interest could be allowed until the date of the award
 The amounts on which interest is claimed by ONGC were payable by Forasol in rupees and not in French Francs
Therefore by the express terms of the said award there is no right in ONGC to claim any interest on these amounts and this claim for interest was rightly negatived
In the result we allow Civil Appeal No 628 of 1981 filed by Forasol and set aside the order passed by the Division Bench of the Delhi High Court in the appeal filed by the oil and Natural Gas Commission namely EFA OS 5 of 1977 and we restore and confirm the order passed and directions given by the learned Single Judge of the Delhi High Court in the Execution Application filed by Forasol namely Execution No 77 of 1976 with this modification that if the Oil and Natural Gas Commission wants to pay in French 593 Francs the amount due by it under the said decree it will be at liberty to do so after obtaining the requisite permission of the concerned authorities under the Foreign Exchange Regulation Act 1973
We dismiss Civil Appeal No 629 of 1981 filed by the Oil and Natural Gas Commission
The Oil and Natural Gas Commission will pay to Forasol the costs of both the Appeals in this Court as also of the Appeal EFA OS 5 of 1977 in the Delhi High Court
HSK CA No 62881 allowed and CA No 62981 dismissed


Summary:
Forasol a French Company having its principal office in Paris France entered into a contract on February 17 1964 with Oil and Natural Gas Commission ONGC a Government of India undertaking for carrying out structural drilling in relation to the exploration for oil in India
Article IX 3 of the contract provided that the amount payable to Forasol on account of operational fee standby fee and equipment charges shall be computed in French Francs and ONGC shall pay 80 of that amount in French Francs in Paris France and the remaining 20 in Indian rupees using a fixed conversion rate of FF 1033Re 1000
Art IX 32 provided that certain other charges eg insurance freight etc incurred 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
Article X 2 X 3 and X 4 of the contract set out estimates of the payments to be made to Forasol in French Francs the invoicing rules and the rate of payment
Under article X 33 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 contract
article XI provided for payments to be made to Forasol in Indian rupees
The contract which was initially for a period of one year was extended twice and Addendum Nos 1 2  3 were added to the Contract
During the extended period of the contract the Indian rupee was devalued in June 1966 and consequently Forasol made a claim for conversion of Indian rupees into French 527 Francs at a rate higher than the rate specified in article IX 3
The disputes and differences which arose between the parties were referred to arbitration
The Umpire who made the award directed certain payments to be made in French Francs but did not specify the rate of exchange at which the French Francs were to be converted into Indian rupees
The award further directed that from November 30 1966 the rupee portion should be converted at the higher rate of FF 1000 equal to rupees 151780
The award was filed in the Delhi High Court and the High Court passed a decree in terms of the award simpliciter without fixing any date for conversion of the French Francs into Indian rupees with interest at the rate of 6 per annum from the date of the decree till the date of payment Neither party raised any objection to the said award or to the form in which the said decree was passed
Forasol filed an application in the High Court for execution of the decree
ONGC contended that the enhanced rate of exchange specified in the award was applicable only with respect to the interest payable to Forasol from November 30 1966 and that to the rest of the payments to be made under the award either in French Francs or in Indian rupee the contract rate of exchange was applicable
A single Judge of the High Court held that the contract rate of exchange applied only to the rupee part of the payment in respect of the items specified in article IX 31 and that in respect of the other payments to be made to Forasol in French Francs the rate of exchange prevailing at the date of the decree would apply
In appeal a Division Bench of the High Court held that the enhanced rate of exchange specified in the award applied only to the interest payable to Forasol and that with respect to the rupee amount the contract rate of exchange applied
It further held that as the award was in French Francs by reasons of the provisions of the Foreign Exchange Regulation Act 1973 before executing the award the French Francs would have to be converted into Indian rupees at the rate of exchange prevailing on the date of the said award
This judgment and order of the Division Bench was challenged in these cross appeals
The questions which arose for consideration were 1 Whether the rate of conversion mentioned in the contract applied to all the payments to be made under the contract whether in Indian rupees or in French Francs or only to 20 per cent of the amount in French Francs payable by ONGC to Forasol in Indian rupees in respect of Forasol s operational fee standby fee and equipment charges 2 whether the enhanced rate of exchange specified in the award was applicable to all the payments in Indian rupees under article IX 31 of the contract to be made by ONGC to Forasol or only to the interest on the amount in French Francs payable to Forasol by ONGC and 3 which was the proper date to be selected for converting into Indian rupees the French Francs part of the award in respect of which no rate of exchange had been fixed either by the contract or by the award  Two further questions which were inextricably linked with question No 3 above were 1 whether an arbitrator or umpire can make an award in a foreign currency and 2 whether a court can simpliciter pass a decree in terms of such an award without specifying the rate of exchange at which the foreign currency amount will have to be converted into Indian rupees
Allowing the appeal of Forasol and dismissing that of ONGC 528  HELD 1
Under article IX 31 of the contract Forasol had agreed to accept 20 per cent of its operational fee standby fee and equipment charges in Indian rupees but wanted that the remaining 80 per cent of these fees and charges as also the other amounts which were payable to it under the contract should be paid to it in French Francs only
If Forasol were to indicate separately in its invoices the payment to be made to it in French Francs and in Indian rupees and if the payment of such Francs was to be made in Paris France in French Francs the question of providing for a rate of exchange in the said contract for converting French Francs into Indian rupees cannot arise
Such conversion rate could only be in respect of the amount payable to Forasol in Indian rupees
It is thus only the 20 per cent of the said fees and charges computed in French in Forasol s invoices but payable in Indian rupees which was to be converted at the rate of exchange specified in the contract
This interpretation receives further support from article 22 of Addendum No 2 and article 25 of Addendum No 3 under which amounts refundable by Forasol to ONGC were to be refunded in the same currency in which ONGC had paid them earlier
544 C F 2
The Division Bench of the High Court was in error in holding that the enhanced rate of exchange specified in the award applied only to the amount of interest payable to Forasol
The enhanced rate of exchange applied to the payments in Indian rupees under article IX 31 of the contract to be made by ONGC to Forasol from and after November 30 1966
548 D E 3
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
These dates are 1 the date when the amount became due and payable 2 the date of 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 had 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
548G 549B The question which one out of the dates mentioned above is the proper date to be selected by the Court does not appear to have been decided in this country
The question however has formed the subject matter of decisions in England
The English decisions are of Courts of a country from which we have derived our jurisprudence and a large part of our laws and in which the judgments were delivered by judges held in high repute
Undoubtedly none 529 of these decisions are binding upon this Court but they are authorities of high pursuasive value to which we may legitimately turn for assistance
Whether the rule laid down in any of these cases can be applied by our Courts must however be judged in the context of our own laws and legal procedure and the practical realities of litigation in our country
549G 568G Miliangos vs George Frank Textiles Ltd  Tomkinson and Anr
vs First Pennsylvania Banking  Trust Co   Sub nom in re United Railways of Havana and Regla Warehouses Ltd   Jugoslavenska Oceanska Plovibda vs Castle Investment Co Inc Beswick v Beswick    Dr Mann The legal Aspect of Money 3rd Edn 1971 p 363 Schorsch Meier Gmb H vs Hennin  Miliangos vs George Frank Textiles Ltd  Practice Statement Judicial Precedent 1966 1 WLR 1234 Owners of MV Eleftherotria vs The owners of MV Despina R The Dispina R and Services Europe Atlantique Sud Seas of Paris vs Stockholms
Redriaktiebolag Svea of Stockholm  Practice directions   The Zafuo John Carllom  Co Ltd vs Owners of SS Zafiro LR 1960 p 1 at 14 1959 2 All FR 537 at 544 ED  F Man vs Socite Annonyme Tripolitiane Das Usines De Raffinage De Sucre 1970 2 Lyod s LRep 416 and Russel on Arbitration 20th edn
page 375 referred to
When a foreigner has to receive a sum of money which should justly be payable to him in a foreign currency and because of the default of the paying party seeks to recover its payment through the court the first question which arises is whether a court in India would have jurisdiction to pass a decree for a sum expressed in a foreign currency
Though on principle there is no reason why a court should not be able to do so no court can pass a decree directing a defendant to do an impossible or an illegal act and in view of the provisions of our Foreign Exchange Regulation Act 1973 and the restrictions contained therein on making payments in a foreign currency if a decree were to be passed simpliciter for a sum expressed in a foreign currency it would be to direct the defendant to do an act which would be in violation of the Foreign Exchange Regulation Act 1973
Such a decree can therefore only be passed by making the payment in foreign currency subject to the permission of the foreign exchange authorities being granted
If however the authorities do not grant permission for payment of the judgment debt in foreign currency it would not be possible for the defendant to make such payment resulting in the decree becoming infrutuous and the plaintiff getting nothing under it
The court must therefore provide for the eventuality of the foreign exchange authorities not granting the requisite permission or even if such permission is given the defendant not paying the decretal debt or not wanting to discharge the decree by making payment in foreign currency or in Indian rupees
This can only be done by the decree providing in the alternative for payment of a sum of money in Indian rupees which will be equivalent to the sum decreed in foreign currency
It is but just that a man who is in law entitled to receive a sum of money in a foreign currency should either receive it in such currency or should receive its equivalent in Indian rupees
It is here that the question 530 of the date which the court should select for converting foreign currency into Indian rupees arise
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
The date when the amount became due and payable does not have the effect of putting the plaintiff in the same position in which he would have been had the defendant discharged his obligation when he should have done because between that date and the date when the suit is decreed the rate of exchange may have fluctuated to the plaintiff s prejudice resulting in the amount decreed in rupees representing only a fraction of what he was entitled to receive
Equally the possibility of the plaintiff getting more than what he had bargained for in case the rate of exchange had fluctuated in his favour cannot be ruled out
To select the date when the amount became due or the breach date as the English courts have termed it is thus to expose the parties to the unforesecable changes in the international monetary market
The selection of the breach date cannot therefore be said to be just fair or equitable
568H 569D The date of the commencement of the action or suit is equally subject to the same criticism
The selection of the date of the filing of the suit would therefore leave the parties in as uncertain and precarious a position as the selection of the date when the amount became payable or the breach date
569 E H To select the date of the decree as the conversion date would be to adopt as unrealistic a standard as the breach date because a money decree and the payment by the judgment debtor of the judgment debt under it are two vastly different matters widely separated by successive execution applications and objections thereto unless the judgment debtor chooses to pay up the judgment debt of his own accord which is generally not the case
In the vast majority of cases a money decree is required to be enforced by execution
570 A E The selection of the date when the court orders execution to issue is equally beset with difficulties
570 G In selecting the date of payment as the proper date of conversion there are three practical and procedural difficulties namely payment of court fees the pecuniary limit of the jurisdiction of courts and execution
572 B E This then leaves the court with only three dates from which to make the selection namely the date when the amount became payable the date of the filing of the suit and the date of the judgment that is the date of passing the decree
It would be fairer to both the parties for the court to take the latest of these dates namely the date of passing the decree that is the date of the judgment
Under section 17 of the Arbitration Act 1949 the judgment which the court pronounces is to be according to the award
Where the award directs a certain sum of money to be paid and the court in a case where it has not modified or corrected the award under section 15 pronounces judgment for a different sum the judgment cannot be said to be according to the award
In the same way where an award directs payment of a sum of money in foreign currency and the court while pronouncing judgment provides for its rupee equivalent at the rate of exchange prevailing on the date of the award the court will not be pronouncing judgment according to the award if in the meantime the rate of exchange has varied because at the date of the judgment the foreign currency equivalent of the amount in rupees provided in the judgment would be different from the foreign currency sum directed to be paid by the award
The judgment therefore can only be said to be according to the award if it directs payment of the rupee equivalent at the rate of exchange prevailing on the date of pronouncing the judgment which date is the same as the date of the passing of the decree
584G 585B 6
The Division Bench of the High Court has committed an error in equating section 26 1 of the English Arbitration Act with section 17 of our Arbitration Act
The reason for this error is that the Division Bench has proceeded upon a wrong assumption that the procedural scheme of the English Arbitration Act is the same as that of our Arbitration Act
The provisions for enforcing an award under the English Act and under our Act are different
Granting leave under section 26 of the English Act and pronouncing judgment according to the award and passing a decree under section 17 of our Act mean different things and have different results
A judgment according to the award under s 17 of our Act will speak only from the date of the judgment which will not be the case under section 26 1 of the English Act for while in the first case what will be enforceable by the processes by law namely execution will be the decree passed in terms of the award in the second case it will be the award itself unless the applicant desires to have judgment entered in terms of the award
585C 585E Satish Kumar and ors
vs Surinder Kumar and ors
  distinguished
The practice which ought to be followed in suits in which a sum of money expressed in a foreign currency can legitimately be claimed by the plaintiff and decreed by the court is as follows
In such a suit the plaintiff who has not received the amount due to him in a foreign currency and therefore desires to seek the assistance of the court to recover that amount has two courses open to him
He can either claim the amount due to him in Indian currency or in the foreign currency in which it was payable
If he chooses the first alternative he can only sue for that amount as converted into Indian rupees and his prayer in the plaint can only be for a sum in Indian currency
For this purpose the plaintiff would have to convert the foreign currency amount due to him into Indian rupees
He can do so either at the rate of exchange prevailing on the date when the amount became payable for he was entitled to receive the amount on that date or at his option at the rate of exchange prevailing on the date of the filling of the suit because that is the 532 date on which he is seeking the assistance of the court for recovering the amount due to him
In either event the valuation of the suit for the purposes of court fees and the pecuniary limit of the jurisdiction of the court will be the amount in Indian currency claimed in the suit
The plaintiff may however choose the second course open to him and claim in foreign currency the amount due to him
In such a suit the proper prayer for the plaintiff to make in his plaint would be for a decree that the defendant do pay to him the foreign currency sum claimed in the plaint subject to the permission of the concerned authorities under the Foreign Exchange Regulation Act 1973 being granted and that in the event of the foreign exchange authorities not granting the requisite permission or the defendant not wanting to make payment in foreign currency even though such permission has been granted or the defendant not making payment in foreign currency or in Indian rupees whether such permission has been granted or not the defendant do pay to the plaintiff the rupee equivalent of the foreign currency sum claimed at the rate of exchange prevailing on the date of the judgment
For the purposes of court fees and jurisdiction the plaintiff should however value his claim in the suit by converting the foreign currency sum claimed by him into Indian rupees at the rate of exchange prevailing on the date of the filing of the suit or the date nearest or most nearly preceding such date stating in his plaint what such rate of exchange is
He should further give an undertaking in the plaint that he would make good the deficiency in the court fees if any if at the date of the judgment at the rate of exchange then prevailing the rupee equivalent of the foreign currency sum decreed is higher than that mentioned in the plaint for the purposes of court fees and jurisdiction
At the hearing of such a suit before passing the decree the court should call upon the plaintiff to prove the rate of exchange prevailing on the date of the judgment or on the date nearest or most nearly preceding the date of the judgment
If necessary after delivering judgment on all other issues the court may stand over the rest of the judgment and the passing of the decree and adjourn the matter to enable the plaintiff to prove such rate of exchange
The decree to be passed by the court should be one which orders the defendant to pay to the plaintiff the foreign currency sum adjudged by the court subject to the requisite permission of the concerned authorities under the Foreign Exchange Regulation Act 1973 being granted and in the event of the Foreign Exchange authorities not granting the requisite permission or the defendant not wanting to make payment in foreign currency even though such permission has been granted or the defendant not making payment in foreign currency or in Indian rupees whether such permission has been granted or not the equivalent of such foreign currency sum converted into Indian rupees at the rate of exchange proved before the court as aforesaid
In the event of the decree being challenged in appeal or other proceedings and such appeal or other proceedings being decided in whole or in part in favour of the plaintiff the appellate court or the court hearing the application in the other proceedings challenging the decree should follow the same procedure as the trial court for the purpose of ascertaining the rate of exchange prevailing on the date of its appellate decree or of its order on such application or on the date nearest or most nearly preceding the date of such decree or order
If such rate of exchange is different from the rate in the decree which has been challenged the court should make the necessary modification with respect to the rate of exchange by its appellate decree or final 533 order
In all such cases execution can only issue for the rupee equivalent specified in the decree appellate decree or final order as the case may be
These questions of course would not arise if pending appeal or other proceedings adopted by the defendant the decree has been executed or the money thereunder received by the plaintiff
587D 589C 8
Just as the courts have power to make a decree for a sum of money expressed in a foreign currency subject to the limitations and conditions set out above the arbitrators or umpire have the power to make an award for a sum of money expressed in a foreign currency
The arbitrators or umpire should however provide in the award for the rate of exchange at which the sum awarded in a foreign currency should be converted in the events mentioned above
This may be done by the arbitrators or umpire taking either the rate of exchange prevailing on the date of the award or the date nearest or most nearly preceding the date of the award or by directing that the rate of exchange at which conversion is to be made would be the date when the court pronounces a judgment according to the award and passes the decree in terms thereof or the date nearest or most nearly preceding the date of the judgment as the court may determine
If the arbitrators or umpire omit to provide for the rate of conversion this would not by itself be sufficient to invalidate the award
The court may either remit the award under section 16 of the  for the purpose of fixing the date of conversion or may do so itself taking the date of conversion as the date of its judgment or the date nearest or most nearly preceding it following the procedure outlined above for the purpose of proof of the rate of exchange prevailing on such date
If however the person liable under such an award desires to make payment of the sum in foreign currency awarded by the arbitrators or umpire without the award being made a rule of the court he would be at liberty to do so after obtaining the requisite permission of the concerned authorities under the Foreign Exchange Regulation Act 1973 9 In the instant case the party entitled to receive the money Forasol was a foreign party
Under the said contract the currency of account was a foreign currency and so was the currency of payment except for a portion thereof
Forasol was therefore entitled on payment not being made to it by ONGC to receive in French Francs the amounts which became payable to it in that currency
The Umpire was therefore justified in providing that the amounts payable under the said award to Forasol in French Francs should be paid in French currency
The Umpire has however neither provided that such payment would be subject to the permission of the foreign exchange authorities being obtained nor specified the conversion rate to be applied in the eventualities set out above
That however does not make any difference because neither party has objected to the said award on this ground
On the contrary both parties have accepted the said award as binding and conclusive As mentioned above this omission on the part of the Umpire could have been corrected by the High Court when it came to pronounce judgment according to the said award and pass the said decree in terms thereof
The decree passed in terms of the said award however does not specify either the rupee equivalent of the amount in French Franch payable to Forasol or the rate of exchange at which the conversion of such amount into Indian rupees should be made
To that extent the decree passed in terms of the said award by the High Court was not 534 a proper decree
Both the parties have however accepted the said decree and have not challenged it on this ground in any proceedings
In any event the aforesaid mistake in the said decree was one which could have been got corrected by an application for review or by an application under section 152 or in any event under section 151 of the Code of Civil Procedure 1908
The decree has now become final and binding upon the parties
Both the parties have accepted the said decree and the said decree cannot therefore be said to be invalid on the ground of the above omission to specify either the rupees equivalent of the French Franc portion of the said award or the rate of exchange at which such French Franc portion was to be converted into its rupee equivalent
For these reasons we hold that the learned Single Judge rightly took the date of the decree as the date of conversion
590C 591B