Case: Forasol Vs. Oil &amp; Natural Gas Commission (And Vice Versa)

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 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.35. 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.36. ONGCs claim for tax differential was based on article IV-1.2 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 Forasols personnel for 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 inasmuch 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 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 having been not 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 ONGCs 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. "37. 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.38.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]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 Indian 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, 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 become 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 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 benow 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 beclaim for tax differential was based on article IV-1.2 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 Forasols personnel for 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 inasmuch 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 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 having been not 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 ONGCs 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 followsUnder 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.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.