Full Judgment Text
2023INSC899
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1991 OF 2019
NATIONAL PROJECTS
CONSTRUCTION CORPORATION
LIMITED …APPELLANT
VERSUS
ROYAL CONSTRUCTION
COMPANY PRIVATE LTD. …RESPONDENT
WITH
CIVIL APPEAL NO.2528 OF 2019
ROYAL CONSTRUCTION
COMPANY PVT. LTD. …APPELLANT
VERSUS
NATIONAL PROJECTS
CONSTRUCTION CORPORATION
LIMITED …RESPONDENT
Signature Not Verified
Digitally signed by
Neetu Khajuria
Date: 2023.10.10
18:27:56 IST
Reason:
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 1 of 15
J U D G M E N T
VIKRAM NATH, J.
1. These two appeals have been filed under Article
134A read with Article 133(1)(a) of the
Constitution of India by the rival parties before
the High Court of Delhi in EFA (OS) No.19 of
2017. The High Court, by the impugned order,
certified that the case involved the following
substantial question of law of general importance
which required a decision by this Court.
th
“In terms of the agreement dated 29 June 1982
between the parties and in light of the judgment
th
dated 24 February 2015 of the Supreme Court
of India in Civil Appeal Nos. 2543-44/2015, what
should be the relevant date for conversion of the
awarded sum from USD to Indian rupees?”
2. Relevant facts necessary for adjudication of the
issue are as follows:
2.1. An agreement was executed between the
parties to carry out earth work in Iraq by the
1
Royal Construction Company Private Limited
given by the National Projects Construction
1
RCCPL
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 2 of 15
2
Corporation Limited . According to the
contract, Clauses 31 and 32 of the agreement
along with their sub-paragraphs relate to
payments and advances, the same are
reproduced hereunder:
“31. PAYMENTS AND ADVANCES:
All amounts and schedule of prices as mentioned
3
in the Agreement documents are in Iraqi Dinars
and represent the· total lump sum amount
payable to the Associate for various components
of works. For the purpose of payment, the
schedule of prices shall be used, and payment
released against all monthly account bills
submitted by the Associate after due
verifications.
32. PAYMENT OF WORK IN PROGRESS
32.1. The NPCC may pay initial advance in the form
of purchase of air tickets for workers and staff of the
Associate from Delhi to Iraq.
2. The NPCC shall give advance, towards the
construction of residential accommodation including
field office, store at the site of work, towards cost of
transport vehicles (1 mini - bus, 1 land Rover and
Jeep, 2 Mobile lighting units garage tools and
equipment).
3. Help required for setting up of camp and for initial
running of equipment will be extended to by the Chief
Project Manager to the extent he deems necessary in
the interest of work.
The above advances shall be recovered from the “on
account bills” after 10% of the work is completed and
before 90% of the work is complete. The recovery will
be in the same currency as NPCC has spent for the
2
NPCCL
3
ID
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 3 of 15
advance. The recovery shall be made on the pro-rata
basis.
Payment of work in progress:
32.2 The monthly running account bills for the
quantity of work executed by the Associate shall be
presented to the Chief Project Manager, NPCG before
the 10th of every month. The-Associate shall be paid
the net amount due after all deductions towards
advances, retention money and recoveries towards
cost of materials and other services. The payment
shall normally be made within 15 days of such
presentation of the bill. All monthly payment shall be
treated as advance payments only. The running
payment shall be made in the from of 65% in U.5$
and 35% in I.D. The rate of exchange for the purpose
of calculations will be 1 ID = 3.37778 U.S. Dollar and
this rate of exchange shall be operative throughout
the period as contract.
32.3 Payment Adjustment:
Any due payment under the Agreement to be made
by the Associate or to him contrary to the work
completed shall be added or deducted from the
payment certificate issued by the Contractor.
The - Contractor may adjust any payment certificate,
if necessary, with respect to other previous payment
certificates. The Associate shall have no right to
claim; thereto for compensation.
32.4 Deduction from payment due to the Associates:
All payments due by the Associate to the Contractor
under this Agreement shall be deducted from any
other payments due to the Associate, and if the event
of no such dues, the Contractor shall recover the
same against the performance bond furnished by the
Associate. The Associate must, thereafter
immediately replenish such recoveries. All
deductions shall be made irrespective of any
apportion from the Associate and without any court
action, but under advice to the Associate.
32.5 Retention money: Retention money shall be
done by the Contractor at the rate of 10% of the gross
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value of each R.A. Bills subject to a total deduction of
5% of the contract value.
32.6 Currency:
Payments against monthly account bill’s shall be
made to the Associate by the NPCC in Iraqi Dinars
and US Dollars.
i) 35 % Iraqi Dinars
ii) 55 % US Dollars
32.7 Payments not to be deemed as the
Acknowledgements:
Payments made to the Associate shall not be deemed
as the acknowledgement on the part of the
contractor, of acceptance of work and any part
thereof and/or of materials and workmanship etc.
32.8 Exchange Rate:
For the purpose of conversion of Iraqi Dinars to
US Dollars, the exchange rate of 1 Iraqi Dinars
equivalent to 3.37778 US Dollars shall be
applicable.
32.9 Refund of Retention Money after Maintenance
Period:
Necessary or desirable and for that purpose, shall
have power to order the Associate to do and -the
Associate shall do any or all of the following: -
a) Increase or decrease the quantity of any work’
included in the Agreement
b) Quit any such work.
c) Change the -character or quality or kind of
any such work.
d) Change levels, lines, positions and dimensions of
any part of the works and
e) Execute additional work of any kind necessary for
the completion of the works and no such variation
shall in any way vitiate or invalidate the Agreement.
The value (if any) of all such variations shall be taken
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 5 of 15
into account in ascertaining the amount of the
Agreement Price and its completion time.”
2.2. Sometime in the year 1988, the parties invoked
the arbitration clause. The arbitrator gave an
award dated 10.08.2002. Award was given in
the currency of Iraq i.e., Iraqi Dinars.
Following is the operative portion of the
award:
“After setting off the allowed counter claims of
the respondent against the allowed claims of the
claimant, I thus make the award as follows: -
(a) The respondent shall pay ID 223777.14
(two lakh twenty-three thousand seven
hundred seventy-seven and point one four) to
the claimant along with 12% interest p.a.
from date of commencement of arbitration
proceedings i.e. 26.9.1988 to the date of
payment.
b) The respondent shall also pay to the claimant
a sum of Rs.20,00,000/- (Rupees twenty lakh)
along 12% interest p.a. from the date of
encashment of Bank Guarantee upto the date of
payment.
c) The amount payable in ID shall be
convertible into US dollars as per the original
agreement dated 29.6.1982. Further, all
payments of settlement in foreign exchange
shall be made as per original agreement and
Government rules.
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 6 of 15
d) There shall be no order as to cost and the
parties are left to bear their own costs.
Award made and pronounced at New Delhi on
10th August, 2002.”
2.3. Aggrieved by the said award, objections were
filed under section 34 of the Arbitration and
4
Conciliation Act, 1996 by the NPCCL which
were dismissed on 26.05.2008. Further, the
appeal filed under section 37 of the 1996 Act
was disposed of, vide judgment dated
19.05.2014 wherein the Division Bench of the
Delhi High Court firstly, reduced the rate of
interest from 12 % p.a. to 6% p.a. and
secondly, fixed the date of further conversion
of US dollars into Indian Rupees as the date
of the award i.e. 10.08.2002. A Review filed by
the appellant was also dismissed by the
Division Bench on 19.09.2014.
2.4. Aggrieved by the same, the NPCCL preferred a
Special Leave Petition before this Court. This
Court vide order dated 24.02.2015 after
granting leave, allowed the appeal, set aside
both the orders of the Division Bench i.e.
4
The 1996 Act
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 7 of 15
19.05.2014 and 19.09.2014. This Court
further held that whatever directions have
been given in the award by the learned
Arbitrator would govern the field. This Court
had further held that the date of conversion
would be as per the original agreement dated
26.09.1982, as the learned Arbitrator had
already in clear terms said so. It further was
of the view that the midway approach of the
Division Bench by reducing the rate of interest
was also not justified. It would be beneficial to
reproduce the last two paragraphs of the
judgment of this Court:
“The issue that arises for consideration is
whether the High Court should have fixed the
date of conversion contrary to the agreement and
contrary to the award which is in consonance
with the agreement and further reduced the rate
of interest. In our considered opinion, when the·
learned arbitrator had already, in clear terms,
stated the date of conversion would be as per the
original agreement dated 29.06.1982, the same
could not have been changed. That apart, we do
not see any justification to change the rate of
interest as has been determined by the learned
arbitrator. It needs no special emphasis to state
that while dealing with an appeal from an order
rejecting an application under Section 34 and
the principles relating to arbitration. The High
Court would not have passed such an order
terming it as “mid-way approach”.
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 8 of 15
In view of the aforesaid, we allow the appeals and
set aside both the orders passed by the High
Court. Needless to emphasize, whatever the
directions given in the award by the learned
arbitrator shall govern the field. The amount that
has been deposited before this Court in
pursuance of the order dated 08.12.2014 be
refunded to the appellant. There shall be no
order as to costs.”
2.5. After the judgment of this Court, the
respondent RCCPL initiated execution
proceedings. The learned Single Judge
decided the same vide order dated 26.05.2017
and directed for payment to be made in Indian
Rupees and the date of conversion from US
Dollars to Indian Rupees to be the date of
agreement i.e. 26.09.1982. The respondent
RCCPL preferred an appeal before the Division
Bench. By the impugned order dated
17.12.2019, the Division Bench had allowed
the appeal, set aside the order passed by the
Single Judge and had referred the question of
law to this Court. That is how the present
appeals are before us, one filed by NPCCL and
other by RCCPL.
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 9 of 15
3. The counsel for the parties have not raised any
issue with regard to contents of the agreement or
the award or the proceedings undertaken till the
impugned order by the Division Bench had been
passed referring the question under Article 134A
of the Constitution. The agreement is thus
binding on the parties. The award has attained
finality and the orders passed in the multiple
rounds of the litigations are also not in issue.
Thus, we have to proceed on the basis of the
material on record and answer the question
requiring this Court to determine the date of
conversion of US Dollars into Indian Rupees.
4. We have gone through the contents of the
agreement, the award and the order passed by
this Court on 24.02.2015 allowing the appeal of
the NPCCL and issuing directions.
5. This Court in the judgment dated 24.02.2015,
relevant part of which is already extracted above,
clarified the following:
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 10 of 15
i) The date of conversion would be as per the
original agreement dated 29.06.1982.
ii) The change of rate of interest by the Division
Bench by reducing it from 12 percent to 6
percent terming it as midway approach was
not sustainable as it was beyond the scope of
section 37 of the 1996 Act.
iii) The directions given by the learned arbitrator
in the award will govern the field.
6. It is very clear from the above that we have to fall
back upon the terms of the agreement for the
purposes of deciding the question regarding the
date of conversion.
7. In the entire agreement, the relevant paragraphs
dealing with the payments and advances and the
payments of work in progress is laid down in
paragraphs 31 and 32 and its sub-paragraphs.
Paragraph 32.6 of the agreement states that
payments against monthly account bills shall be
made in Iraqi Dinars and US Dollars out of which
35 percent would be in Iraqi Dinars and 65
percent would be in US Dollars. Further,
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 11 of 15
paragraph 32.8 defines the exchange rate for the
purposes of conversion of Iraqi Dinars to US
Dollars and the exchange rate being 01 Iraqi
Dinar equivalent to 3.37778 US Dollars.
8. We do not find any mention of payment being
made in the Indian Currency i.e. INR from the
agreement. Once there is no contract between the
parties of making payment in Indian Currency
INR, then, there would be no question of
determining or finding out any date of
conversion.
9. Next, we need to examine the award and
directions issued therein whether the award
contained any stipulation of making the payment
in Indian currency. The operative portion of the
award contains three directions:
a) The present appellant NPCCL shall pay Iraqi
Dinars of 2,23,777.14 to the respondent RCCPL
along with the interest at the rate of 12 percent
per annum from the date of commencement of
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 12 of 15
arbitration proceedings i.e. 26.09.1988 to the
date of payment.
b) The second direction was that NPCCL to pay Rs.
Twenty Lakhs to the RCCPL along with the
interest of 12 percent per annum from the date
of encashment of Bank Guarantee upto the date
of payment.
c) The third direction was that the amount payable
in Iraqi Dinars shall be convertible into US
Dollars as per the original agreement dated
29.06.1982 and further all payments of
settlements in foreign exchange shall be made
as per the original agreement and Government
Rules.
10. The agreement had stipulated that the Iraqi
Dinar would be convertible to US Dollars at the
following rate i.e. 1 Iraqi Dinar = 3.37778 US
Dollars. The award does not permit or grant the
liberty to the appellant to make the amount
payable in Iraqi Dinars to be converted into
Indian Currency (INR).
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 13 of 15
11. Apart from the amount of Bank Guarantee which
had been encashed by the NPCCL of Rs.20
Lakhs, the other amount awarded is in Iraqi
Dinars only.
12. The first question to be considered is whether the
agreement, award or the judgment of this Court
dated 24.02.2015 provided for payment of the
awarded amount in Indian currency. In our
considered view, perusal of the above material
does not permit payment of the awarded amount
in Indian currency except the amount of Rs. 20
lacs with admissible interest against the
encashment of bank guarantee. As a necessary
corollary, there would be no question of the
amount awarded in Iraqi Dinars to be converted
in Indian currency. The only conversion
permissible was in US Dollars. In the above back
drop, the question referred by the impugned
judgment to be answered by this Court may not
arise at all.
13. In the above fact situation, there is no occasion
or requirement for determining or fixing any date
CIVIL APPEAL NO.001991 OF 2019 ETC. Page 14 of 15
for conversion of the US Dollars into Indian
Currency (INR). The payment has to be made in
the foreign currency only along with computed
interest. It would be open for the parties to pay
and the other parties claiming to accept the
Indian currency either at the current rate or at
the agreed rate but this Court cannot meddle
with the terms of the agreement or the award or
the directions contained in the judgment of this
Court dated 24.02.2015.
14. The question is accordingly answered. Both the
appeals stand disposed of as directed above. The
RCCPL would be at liberty to continue with its
execution proceedings in accordance with law.
15. Pending applications, if any, stand disposed of.
…………………………….J.
(ANIRUDDHA BOSE)
…………………………….J.
(VIKRAM NATH)
NEW DELHI
OCTOBER 10, 2023
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