Recently, the Supreme Court, in a case involving two appeals filed before the Delhi High Court under Article 134A read with Article 133(1)(a) of the Constitution of India, clarified that the conversion date of an awarded sum from USD to Indian Rupees should align with the original agreement date. 

Further, the Court underscored that since the agreement did not include provisions for payment in Indian Rupees, there was no necessity to establish a conversion date for US Dollars to Indian Rupees. The central issue revolved around determining the relevant date for converting the awarded sum from USD to Indian Rupees, considering the agreement dated June 29, 1982, and the Supreme Court's judgment of February 24, 2015

A two judge Bench of Justice Aniruddha Bose and Justice Vikram Nath held, “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.”

Back in 1982, the parties entered into an agreement for earthwork in Iraq, outlining payments in Iraqi Dinars and US Dollars. In 2002, an arbitration award was issued, denominated in Iraqi Dinars. Subsequently, disputes emerged concerning the conversion date for the awarded sum to Indian Rupees, and the High Court and the Supreme Court held differing viewpoints on this issue.

Later, in February 24, 2015, the Supreme Court reiterated that the conversion date should align with the terms of the original agreement. The Court emphasized that the High Court's adjustments to the conversion date and reduction of interest were unwarranted. The Supreme Court's ruling underscored that the arbitrator's instructions, in accordance with the original agreement, should take precedence.

The central matter before the Court was to establish the conversion date of US Dollars into Indian Rupees in accordance with the original agreement, taking into consideration the conclusive nature of the award and previous legal proceedings. It's noteworthy that both parties were in agreement regarding the contents of the agreement, the award, and the preceding legal processes.

Upon a careful examination of the agreement, the Court determined that the agreement did not include provisions for payment in Indian Rupees (INR); instead, it stipulated payments in Iraqi Dinars and US Dollars with a specific conversion rate. The arbitration award also specified payments in Iraqi Dinars and US Dollars, with the exception of the encashed bank guarantee amount of Rs. 20 lakhs, which was allowed for conversion to INR. The Court further stated, "In our considered view, after reviewing the provided material, there is no scope for the awarded sum to be paid in Indian currency, except for the amount of Rs. 20 lakhs with applicable interest upon encashment of the bank guarantee. Consequently, there is no basis for converting the awarded amount in Iraqi Dinars into Indian currency. The only permissible conversion is in US Dollars. Given this context, the question posed by the impugned judgment for this Court's consideration may not be applicable."

As a result, the Court concluded that there was no need to establish a specific conversion date for US Dollars into Indian Rupees. The payment should be executed in foreign currencies, specifically Iraqi Dinars and US Dollars, along with the accrued interest. While the parties have the option to negotiate INR conversion rates among themselves, the Court cannot intervene in the terms of the original agreement, the arbitration award, or the directives issued by the Supreme Court.

Cause Title: National Projects Construction Corporation Limited v. Royal Construction Company Private Ltd