{"id":75183,"date":"1993-10-07T00:00:00","date_gmt":"1993-10-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/renusagar-power-co-ltd-vs-general-electric-co-on-7-october-1993"},"modified":"2016-01-12T15:58:11","modified_gmt":"2016-01-12T10:28:11","slug":"renusagar-power-co-ltd-vs-general-electric-co-on-7-october-1993","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/renusagar-power-co-ltd-vs-general-electric-co-on-7-october-1993","title":{"rendered":"Renusagar Power Co. Ltd vs General Electric Co on 7 October, 1993"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Renusagar Power Co. Ltd vs General Electric Co on 7 October, 1993<\/div>\n
Equivalent citations: 1994 AIR 860, \t\t 1994 SCC Supl. (1) 644<\/div>\n
Author: S Agrawal<\/div>\n
Bench: Agrawal, S.C. (J)<\/div>\n
           PETITIONER:\nRENUSAGAR  POWER CO. LTD.\n\n\tVs.\n\nRESPONDENT:\nGENERAL ELECTRIC CO.\n\nDATE OF JUDGMENT07\/10\/1993\n\nBENCH:\nAGRAWAL, S.C. (J)\nBENCH:\nAGRAWAL, S.C. (J)\nVENKATACHALLIAH, M.N.(CJ)\nANAND, A.S. (J)\n\nCITATION:\n 1994 AIR  860\t\t  1994 SCC  Supl.  (1) 644\n JT 1993  Supl.\t   211\t  1993 SCALE  (4)44\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n
     The Judgment of the Court was delivered by
\n     S.C. AGRAWAL, J.- The decision in these appeals  would,
\nwe  hope, mark the culmination of the protracted  litigation
\narising\t out of a contract entered into\t by the\t parties  on
\nAugust\t24,  1964 for the supply and erection of  a  thermal
\npower plant at Renukoot in District Mirzapur, U.P.\n<\/p>\n
     2.\t Renusagar Power Co. Ltd. (for\tshort  ‘Renusagar’),
\nthe  appellant\tin  C.A. Nos. 71 and 71-A of  1990  and\t the
\nrespondent   in\t C.A.  No.  370\t of  1992,  is\t a   company
\nincorporated under the Indian Companies Act, 1956 engaged in
\nthe production and sale of electric power. General  Electric
\nCompany\t (for short ‘General Electric’), respondent in\tC.A.
\nNos. 71 and 71-A and appellant in C.A. No. 370 of 1992, is a
\ncompany incorporated under the laws of the State of New York
\nin  United States of America and is engaged in the  business
\nof manufacturing, selling and servicing electrical  products
\nand  various ancillary activities. After  negotiations,\t the
\nparties\t  arrived  at  an  arrangement\twhereunder   General
\nElectric was to supply to Renusagar the equipment and  power
\nservices for setting up a thermal power plant to be known as
\n‘Renusagar  Power Station’ at Renukoot and, on November\t 27,
\n1963, Renusagar moved the Government of
\n654<\/span>
\nIndia  for  its approval.  By its letter  dated\t January  2,
\n1964,  the  Government\tof India gave its  approval  to\t the
\nproposals  and thereafter a formal contract was executed  by
\nthe  parties on August 24, 1964.  Under the  said  contract,
\nGeneral Electric undertook to supply equipment and  services
\nfor  a\tplant having a capacity of 135,800  K.W.  The  total
\nprice  for  the electrical and mechanical  equipment,  spare
\nparts,\t freight  forwarding  services,\t plant\tdesign\t and
\nconsulting services was US $ 13,195,000.  The contract price
\nfor all electrical and mechanical equipment and spare  parts
\nwas  FAS vessel, U.S.A. port so selected by seller  (Article\n<\/p>\n
11).  All items of the equipment were to be delivered  along
\nwith  vessel at New York not later than 15 months  from\t the
\ncontract  effective date (which was December 31,  1964)\t and
\nthe  erection  of the plant was to be  completed  within  30
\nmonths from the contract effective date (Article IV-A 1). 10
\nper cent of the total contract basic price (US $  1,319,500)
\nwas  to be paid either in cash or by Letter of Credit.\t The
\nbalance\t 90  per cent of the price (US\t$  11,875,500)\tplus
\ninterest  at the rate of 6 1\/2 per cent per annum  from\t the
\n16th to the 30th month of the contract effective date (US  $
\n900,558.75)  totalling US $ 12,776,058.75 was to be paid  in
\n16 equal six monthly instalments commencing from the date of
\nthe  expiry of 30 months from the contract  effective  date,
\nand the last instalment was payable on the date of expiry of
\n120  months from the contract effective date (Article  III).
\nSince the contract effective date was December 31, 1964\t the
\nfirst instalment was payable on June 30, 1967 and the  last,
\ni.e., 16th instalment was payable on December 31, 1974.\t  In
\nthe  contract,\tit was also provided  that  Renusagar  would
\nexecute\t unconditional negotiable promissory notes  in\tfour
\nseries\t(A-B-C-D) in respect of the 16 instalments  [Article
\n111-A\t3(a)]\tand  that  the\tnotes  shall   be   prepared
\nsubstantially  in the form shown in the attached  Ext.\t ‘B’
\nentitled  “Promissory Note” and shall bear interest, at\t the
\nrate  of  6  1\/2  per cent  per\t annum\ton  the\t outstanding
\nprincipal  balance commencing from 30 months after  contract
\neffective  date [Article III-A 3(c)].  A provision was\talso
\nmade that the payment of the full amount of each note  shall
\nbe unconditionally guaranteed by the United Commercial\tBank
\nor  other  mutually acceptable bank. [Article  III-A  3(e)].
\nThe contract contained an arbitration clause which  provides
\nthat  any  disagreement\t arising out of or  related  to\t the
\ncontract which the parties are unable to resolve by  sincere
\nnegotiation shall be finally settled in accordance with\t the
\nArbitration  Rules of the International Chamber of  Commerce
\n(for short ‘ICC’).  Each party would appoint one  arbitrator
\nand  the  Court of Arbitration of the ICC  would  appoint  a
\nthird  arbitrator (Article XVII).  It was also\tagreed\tthat
\nthe rights and obligations of the parties under the Contract
\nshall  be governed in all respects by the laws of the  State
\nof New York, USA (Article XIX-A).\n<\/p>\n
3.   It\t was,  also,  provided\tthat  if  General   Electric
\nreceived an exemption from the Government of India from\t the
\npayment\t of income tax levied by the Government of India  on
\ninterest  payments made by Renusagar then the interest\trate
\non  that  series of promissory notes as\t exempted  shall  be
\nreduced\t from  6  1\/2  per cent to  6  per  cent  per  annum
\ncommencing on the date such exemption is made effective\t and
\nthe  notes  so\taffected  shall be  replaced  by  new  notes
\n[Article  III-A 3(b)].\tIn the contract it was\tstated\tthat
\nGeneral Electric intended to apply to the Central Government
\nof  India  for\texemption from income tax  on  the  interest
\n(including  capitalised interest and interest  thereon)\t and
\nRenusagar undertook to assist General Electric in expediting
\nthe application of General
\n655<\/span>
\nElectric for exemption.\t It was also agreed that should\t the
\napplication  of\t General Electric be  denied  Renusagar\t may
\nwithhold the Indian income tax applicable to any payments of
\ninterest, but Renusagar was to furnish General Electric with
\nreceipts  on all withheld amounts paid to the Government  of
\nIndia. [Article XIV-B].\n<\/p>\n
4.   By its orders dated September 3, 1965 and June 7,\t1967
\nthe  Government of India gave their approval  under  Section
\n10(15)(iv)(c)  of  the\tIncome Tax Act,\t 1961  to  the\tloan
\nobtained  by  Renusagar from General  Electric\tand  thereby
\nexempted the interest paid on the said loan from payment  of
\nincome\ttax.  The said exemption was, however, withdrawn  by
\nthe  order  of the Government of India dated  September\t 11,
\n1969  whereby the orders granting exemption  were  cancelled
\nretrospectively and General Electric was held liable to\t pay
\nIndian income tax on the interest payable @ 6.5 per cent per
\nannum.\n<\/p>\n
5.   Renusagar filed a writ petition (C.W. No. 179 of  1970)
\nbefore\tDelhi  High Court on February 24,  1970\t wherein  it
\nchallenged the above order of the Government of India  dated
\nSeptember 11, 1969 relating to cancellation or revocation of
\nthe  tax  exemption.  In the said writ petition,  the  Delhi
\nHigh  Court on February 24, 1970 passed an ad interim  order
\nrestraining  the Government of India and its  officers\tfrom
\nenforcing or implementing the said order dated September 11,
\n1969.\tThe said order was continued by order dated May\t 18,
\n1970 subject to Renusagar furnishing security for Rs 4 lakhs
\nto the satisfaction of Commissioner of Income Tax,  Lucknow.
\nRenusagar furnished the necessary security and as a  result,
\nthe  operation\tof the order dated September  11,  1969\t was
\nsuspended.  Renusagar, however, did not remit the amount  of
\ninterest  calculated  @\t 6 per cent  per  annum\t payable  to
\nGeneral\t Electric in terms of the contract.  Renusagar\tonly
\nremitted 27 per cent of the amount of interest calculated  @
\n6 1\/2 per cent per annum and it did not deposit the  balance
\namount of 73 per cent by way of tax with the Government\t but
\nretained  the  same  with  themselves.\t It,  however,\tsent
\nletters\t to  General Electric to the effect  that  they\t had
\ndeducted  the said amount towards tax and had  retained\t the
\nsame  with  itself.   Originally General  Electric  was\t not
\nimpleaded  as a party in the writ petition before the  Delhi
\nHigh  Court and it got itself impleaded as a  respondent  in
\nthe writ petition by moving an application dated October 28,
\n1977.  The writ petition was decided by the Delhi High Court
\nby  its\t judgment dated November 17, 1980 whereby  the\twrit
\npetition was allowed and the order dated September 11,\t1969
\nwas  set aside.\t As a result the exemption from the  payment
\nof  income  tax\t on the interest payable  by  Renusagar\t was
\nrestored  and  the liability of Renusagar for  interest\t was
\nreduced from 6 1\/2 per cent to 6 per cent.  On June 3, 1981,
\nRenusagar moved the Reserve Bank of India for permission  to
\nremit the balance amount of regular interest calculated @  6
\nper  cent per annum to General Electric and on\tFebruary  3,
\n1982,  the Income Tax Officer, Bombay issued  “No  Objection
\nCertificate”  for repatriating the balance regular  interest
\namount of US $ 2.130 million.  The said amount was, however,
\nnot remitted by Renusagar to General Electric.\n<\/p>\n
6.   It appears that there was some delay on the part of the
\nGeneral\t Electric in adhering to the time schedule  for\t the
\nsupply\tof  equipment and keeping the same in  view  General
\nElectric  by  their letter dated January 5, 1967  agreed  to
\ndefer  the payment of the first instalment payable  on\tJune
\n30,  1967  by six months and suggested that  the  promissory
\nnotes shall be recast into 15 notes instead of 16
\n656<\/span>
\nwhich  would  commence on the 36th month from  the  contract
\neffective date and capitalised interest shall be  calculated
\nfor  20\t months instead of 14 months and the  said  interest
\nwould  then be reduced by a sum of 132,500 US $. By  another
\nletter\tdated  October 4, 1967, General Electric  agreed  to
\nrecast\tthe note structure to provide for 14 notes with\t the
\nfirst note becoming due on June 30, 1968 instead of December
\n31,  1967 and the capitalised interest was to be  calculated
\nfor  20 months instead of 14 months and it would be  reduced
\nto 132,500 US $. It appears that during the course of supply
\nof equipment and erection of the plant, some disputes  arose
\nbetween\t the  parties  and  Renusagar  made  certain  claims
\nagainst\t General  Electric some of which  were\taccepted  by
\nGeneral Electric and a settlement was arrived at on December
\n10, 1968 whereunder General Electric agreed that the payment
\nof  the\t instalments due on December 30, 1968 and  June\t 30,
\n1969  with  accrued interest would be deferred\tfor  payment
\nwith  the result that there would be no payment on  December
\n31,  1968 and June 30, 1969 both of interest  and  principal
\nand that the interest accrued up to December 31, 1968 and to
\naccrue\tup to June 30, 1969 on the outstanding\tbalance\t due
\nwould be calculated at the rate provided for in the contract
\nand  capitalised  and  that  the  entire  sum,\tnamely,\t the
\nprincipal and interest to be so capitalised would be  recast
\nin 13 notes, the first of which would be payable on December
\n31, 1969 and the last on December 31, 1975.  As a result  of
\nthese  discussions and settlement, instalments Nos. 1, 2,  4
\nand  5\twere  not  paid\t by  Renusagar\ton  the\t due  dates.
\nRenusagar moved the Government of India for approval of\t the
\nrevised schedules regarding the payments of the\t instalments
\nto  General  Electric.\tThe said request of  Renusagar\twas,
\nhowever,  not  accepted by the Government of  India  and  by
\ntheir  letter dated August 1, 1969, the Government of  India
\nexpressed their inability to agree to the revised  proposals
\nfor  repayment\tin  view  of the  larger  outgo\t of  foreign
\nexchange  (by  way of interest) which was  not\tcontemplated
\nwhen  the  loan was approved  originally.   Renusagar  were,
\ntherefore, asked to take necessary action to effect payments
\nof the past instalments immediately.  The request for review
\nof the said decision was rejected by the Government of India
\nby their letter dated August 4, 1969.  The first  instalment
\nwhich  was  payable  on June 30,  1967\tunder  the  original
\ncontract was paid by Renusagar in instalments by July  1970,
\nthe second instalment which was payable on December 31, 1967
\nwas  paid  in  instalments  by\tDecember  1971,\t the  fourth
\ninstalment  which was payable on December 31, 1968 was\tpaid
\nin  instalments\t by December 1973 and the  fifth  instalment
\nwhich  was payable on June 30, 1969 was paid in\t instalments
\nby February 1976.\n<\/p>\n
7.   On\t March 1, 1982, General Electric served a notice  on
\nRenusagar indicating its intention to arbitrate pursuant  to
\nclause\tXVII  of the Contract.\tOn March  2,  1982,  General
\nElectric  made a request to the Court of Arbitration of\t ICC
\nfor arbitration of the disputes between General Electric and
\nRenusagar.  ICC, after taking cognizance of the said request
\nfor  arbitration  made\tby  General  Electric,\tcalled\tupon
\nRenusagar  to nominate their arbitrator, file its reply\t and
\nremit  certain\tsums  towards  administrative  expenses\t and
\narbitration  fees.  Renusagar raised an objection  that\t the
\nclaims\tof General Electric did not fall within the  purview
\nof  arbitration\t clause in the Contract and  challenged\t the
\narbitrability  of the claims.  The Arbitration Court of\t ICC
\naccepted  that\tthere was a prima facie dispute\t within\t the
\nagreement and appointed Rt.  Hon.  Peter Thomes, Q.C. MP  as
\nChairman of the Arbitral Tribunal and confirmed the
\n657<\/span>
\n appointment  of  Prof.\t  Boris\t 1.  Bittker  as  arbitrator
\nnominated by General Electric and Dr\tR.K.\tDixit\t  as
\narbitrator nominated by Renusagar.\n<\/p>\n
8.   On June 11, 1982, Renusagar filed a suit (Suit No.\t 832
\nof 1982) in the Bombay\t High  Court, on its original  side,
\nagainst\t General Electric and the ICC seeking a\t declaration
\nthat  the  claims  referred to the  arbitration\t of  ICC  by
\nGeneral\t Electric  were\t beyond the  purview  and  scope  of
\nArticle XVII of the Contract dated August 24, 1964 and\tthat
\nGeneral\t Electric  was\tnot entitled to refer  the  same  to
\narbitration  with  consequential  prayers  for\t injunctions
\nrestraining the ICC and General Electric to proceed  further
\nwith  the  reference  and  restraining\tICC  from  requiring
\nRenusagar   to\tmake  any  deposit  towards   administrative
\nexpenses  and  arbitration fees.  Renusagar obtained  an  ex
\nparte ad interim relief in the said suit.  General  Electric
\nfiled Arbitration Petition No. 96 of 1982 under Section 3 of
\nthe  Foreign Awards (Recognition and Enforcement) Act,\t1961
\n(hereinafter  referred\tto  as\t‘the  Foreign  Awards  Act’)
\nseeking\t stay  of Suit No. 832 of 1982 and  all\t proceedings
\ntherein\t with a prayer for vacating the ad interim ex  parte
\nreliefs\t obtained by Renusagar in the said suit.   Both\t the
\nmatters,  namely,  stay petition of General  Electric  under
\nSection\t 3 of the Foreign Awards Act and Renusagar’s  notice
\nof  motion for confirmation of ad interim relief were  heard
\ntogether  and disposed of by a learned Single Judge  of\t the
\nBombay High Court by a common judgment and order dated April
\n20,  1983 whereby the prayer for stay of the suit  filed  by
\nGeneral\t Electric under Section 3 of the Foreign Awards\t Act
\nwas allowed and all proceedings in the said suit were stayed
\nand all the interim reliefs which were granted earlier by ad
\ninterim order were vacated.  C.A. Nos. 404-405 of 1983 filed
\nby Renusagar against the said judgment of the learned Single
\nJudge  were dismissed by a Division Bench of the High  Court
\nby  judgment dated October 21, 1983.  The appeals  filed  by
\nRenusagar  against the said decision of the High Court\twere
\ndismissed by this Court on August 16, 1984. (See : Renusagar
\nPower  Co.  Ltd.  v. General  Electric\tCo.<\/a>   1\t hereinafter
\nreferred  to as ‘Renusagar Case 1’.) In the said case,\tthis
\nCourt (Tulzapurkar and Pathak, JJ.) has held that the  three
\nclaims referred by General Electric to the ICC do ‘arise out
\nof’  and  are ‘related to the contract’\t and  squarely\tfall
\nwithin\tthe  widely-worded arbitration clause  contained  in
\nArticle XVII of the Contract.\n<\/p>\n
9.   On\t August 19, 1982, General Electric filed a  suit  in
\nthe  Calcutta High Court against United Commercial  Bank  to
\nenforce\t the  bank guarantee given by the said Bank  at\t the
\ninstance  of  Renusagar.   As a counter to  the\t said  suit,
\nRenusagar,  on November 25, 1982, filed a suit (No.  127  of
\n1982)  in the Court of Civil Judge, Mirzapur,  U.P.  praying
\nfor  a\tdeclaration  that  the\tguarantee  given  by  United
\nCommercial  Bank  for  and  on\tbehalf\tof  Renusagar  stood
\ndischarged and had become ineffective and unenforceable\t and
\nfor  a mandatory injunction directing and  ordering  General
\nElectric  to settle the claim of Renusagar regarding 75\t MVA
\nTransformers  and to satisfy the settlement validly  arrived
\nat  of the claim of Renusagar as mentioned in the plaint  of
\nthe said suit.\tGeneral Electric filed an application in the
\nMirzapur  Court\t whereby  it was prayed that  the  suit\t was
\nliable to be stayed under Section 10 and\/or Section 151\t CPC
\nin  respect of the first relief and under Section 3  of\t the
\nForeign\t Awards Act in respect of the second relief  claimed
\nby Renusagar in the plaint.  The said
\n1  (1 984) 4 SCC 679 : (1985) 1 SCR 432
\n658<\/span>
\napplication  was  rejected by Mirzapur Court  and  thereupon
\nGeneral\t Electric filed a petition under Article 227 of\t the
\nConstitution  before the Allahabad High Court  for  quashing
\nthe  proceedings  in  the  suit.   The\tsaid  petition\twas,
\nhowever, dismissed by the High Court by order dated April 4,
\n1985.\tThereupon  General Electric filed Civil\t Appeal\t No.
\n2319  of 1986 in this Court which was allowed by this  Court
\n(Chinnappa  Reddy  and Jagannatha Shetty, JJ.)\tby  judgment
\ndated  August 11, 1987 reported as General Electric  Co.  v.
\nRenusagar  Power Co.2<\/a> hereinafter referred to as  ‘Renusagar
\nCase II’.  As a result of the said judgment, the proceedings
\nin  Suit  No.  127  of 1982 in the  court  of  Civil  Judge,
\nMirzapur  were stayed under Section 3 of the Foreign  Awards
\nAct.\n<\/p>\n
10.  We\t may  now  revert to  the  arbitration\tproceedings.
\nAfter the decision of the learned Single Judge of the Bombay
\nHigh  Court staying further proceedings in Suit No.  832  of
\n1992 and vacating the interim order passed in the said suit,
\nRenusagar  entered into the arbitration proceedings on\tJune
\n9, 1983 under protest and without prejudice to its claim  on
\narbitrability  and  gave  answer to the\t claims\t of  General
\nElectric and also made counter-claims.\tOn February 7 and 8,
\n1984  both  the parties met with the  Arbitral\tTribunal  in
\nParis  and  agreed to sign the Terms  of  Reference,  though
\nRenusagar  did\tso  under  protest  and\t without  prejudice.
\nCertain\t amendments were subsequently made in the  Terms  of
\nReference.  In the said Terms of Reference the issues to  be
\ndetermined  were defined in clauses (a) to (cc) of para\t 22.
\nIssues\tin  clauses (a) to (f) of para 22 of  the  Terms  of
\nReference  were determined by an interim award\ton  December
\n11,  1984 wherein the Arbitral Tribunal found  that  General
\nElectric and Renusagar were parties to a valid agreement  to
\narbitrate  all\tdisputes  between them\tarising\t out  of  or
\nrelated to the 1964 Contract and that the issues referred to
\nthe Arbitral Tribunal, apart from two minor exceptions which
\nwere reserved for determination, were such arbitral disputes
\nand   that  the\t Arbitral  Tribunal  had   jurisdiction\t  to
\nadjudicate  on them.  The Arbitral Tribunal also  held\tthat
\nthe applicable law was that of the State of New York, U.S.A.\n<\/p>\n
11.  After the decision of this Court in Renusagar Case\t II,
\nboth  the parties appeared before the Arbitral\tTribunal  in
\nParis  for  a  hearing which lasted  for  ten  days  between
\nFebruary  25 and March 8, 1985.\t Each party was\t represented
\nby  counsel and legal and other advisers and issues  (g)  to\n<\/p>\n
(p)  of\t para 22 of the Terms of Reference were\t argued\t and
\nsubmitted  for\tconsideration  by both\tthe  sides  and\t the
\nhearing\t was  adjourned to a later date\t for  more  detailed
\nconsideration  to be given to the remaining issues  and\t for
\nfurther written submissions to be made by both parties.\t The
\nnext  hearing was fixed to be in London to begin on  October
\n1, 1985 and both parties were summoned to appear before\t the
\nArbitral   Tribunal.   Khaitan\t&  Partners,   lawyers\t for
\nRenusagar sent a letter dated July 24, 1985 to the  Arbitral
\nTribunal, wherein they stated that an Indian Civil Court had
\nseisin\tof the whole of the subject-matter of the  reference
\nin  this arbitration and submitted that in  consequence\t the
\nArbitral  Tribunal  and ICC had become functus\tofficio\t and
\nthat  no further proceedings in this arbitration  should  be
\ntaken  by  the Arbitral Tribunal.  The\tsaid  submission  by
\nRenusagar was disputed by General Electric and the  Arbitral
\nTribunal  informed  the\t parties that the  matter  would  be
\nconsidered  as a preliminary issue at the scheduled  meeting
\nin London on October 1, 1985.  The scheduled meeting took
\n2 (1987)4SCC137:(1987)3SCR858
\n659<\/span>
\nplace  in  London  on October 1,  1985.\t  General  Electric,
\nrepresented  by\t counsel and advisers, appeared\t before\t the
\nArbitral  Tribunal  but\t Renusagar failed  to  appear.\t The
\nArbitral  Tribunal  considered the  written  submissions  of
\nRenusagar  on the issue of the jurisdiction of the  Arbitral
\nTribunal and heard the arguments of General Electric and  by
\nmajority (Dr Dixit dissenting), the Arbitral Tribunal  ruled
\nthat  their jurisdiction remained and that  the\t arbitration
\nshould proceed in the absence of Renusagar.  It appears that
\nbefore\tthe meeting on October 1, 1985, each Arbitrator\t had
\nreceived   from\t the  parties  during  the  course  of\t the
\narbitration   a\t  total\t of  33\t bound\tvolumes\t  of   typed
\nsubmissions,   exhibits\t and  legal  authorities,   (General
\nElectric  having  presented  19 and  Renusagar\t14)  and  in
\naddition  each party had put before the Arbitral Tribunal  a
\nlarge  number  of papers.  On October 2, 3 and 4,  1985\t the
\nArbitral  Tribunal considered the said documents as well  as
\nthe  written submissions of Renusagar on issues (q) to\t(bb)
\nof the Terms of Reference and heard the arguments of counsel
\nfor  General Electric in reply.\t The Arbitral Tribunal\talso
\nconsidered  the submissions of Renusagar on the validity  of
\nthe claim of entitlement of General Electric to ‘dollar\t for
\ndollar’\t foreign tax credit at the relevant period  in\tthis
\naction\tand also heard General Electric on the\tquestion  of
\ncosts.\tThereafter, the Arbitral Tribunal by a majority\t (Dr
\nDixit dissenting) made the award on September 16, 1986.\n<\/p>\n
12.  The Arbitral Tribunal upheld the claim of GEC for US  $
\n2,130,785.52 towards regular interest which was withheld  by
\nRenusagar.   It\t was not disputed by Renusagar that  it\t had
\nretained the said amount.  The issue was whether by doing so
\nRenusagar acted wrongfully.  The Arbitral Tribunal has found
\nthat  the  said withholding or retention of  the  amount  of
\ninterest by Renusagar was wrongful since the failure on\t the
\npart  of Renusagar to pay the taxes over to the\t Indian\t tax
\nauthorities  rendered it impossible for General Electric  to
\nget the U.S. foreign tax credit to which it would  otherwise
\nhave  been  entitled for the amount withheld.  It  was\talso
\nheld that nothing in the 1964 contract authorises nonpayment
\nof  either the interest or the withheld taxes  for  tactical
\nreasons arising out of litigation brought by Renusagar.\t The
\nArbitral Tribunal rejected the contention of Renusagar\tthat
\nthe  claim  in\trespect of regular interest  was  barred  by
\nlimitation  and\t held  that the\t applications  submitted  by
\nRenusagar  to  Reserve\tBank of India on June  3,  1981\t and
\nAugust\t29, 1981 for permission to remit the said amount  to
\nGeneral\t Electric  amount to acknowledgement.  It  was\talso
\nheld  that the said sum had to be computed in  U.S.  dollars
\nregardless  of\tvariation  in  dollar-rupee  exchange\trate
\nprevailing  from  time\tto  time.   As\tregards\t claim\t for
\ncompensatory damages on the said amount of regular interest,
\nwhich  was  withheld by Renusagar,  the\t Arbitral  Tribunal,
\nafter  referring  to the decisions of New York\tCourts,\t has
\nheld  that  an arbitrator’s paramount responsibility  is  to
\nreach  an equitable result and that it is a basic  principle
\nof damages for breach of contract applicable throughout\t the
\nU.S. (including New York) that a party to a contract who  is
\ninjured\t by its breach is entitled to compensation  for\t the
\ninjury\tsustained  and is entitled to be placed\t insofar  as
\nthis can be done by money in the same position he would have
\noccupied  if the contract had been performed.  The  Arbitral
\nTribunal  found that General Electric would  have  benefited
\nfrom  ‘dollar for dollar’ from the foreign tax credits\tthat
\nit  could  have\t claimed had  Renusagar\t paid  the  disputed
\namounts\t over  to the Indian tax  authorities  and  supplied
\nGeneral Electric with the appropriate tax certificate.\t The
\nArbitral  Tribunal, therefore, awarded compensatory  damages
\nand computed the same by applying
\n660<\/span>
\nthe average prime rate to the amounts withheld and  observed
\nthat although General Electric was entitled to interest from
\nthe due dates of the various notes but the interest that had
\nbeen  claimed by General Electric in the Terms of  Reference
\nwas  computed  from the later dates set out  in\t a  detailed
\ncomputation  supplied  to the Arbitral\tTribunal  and  since
\nGeneral\t Electric  had\taccepted these later  dates  in\t its
\nsubmission,  the  Arbitral  Tribunal  awarded\tcompensatory
\ndamages\t computed by applying the average prime rate to\t the
\namounts\t withheld  commencing with the dates listed  in\t the
\nstatement  and compounded annually commencing with the\tlast
\nday  of\t the calendar year for each  amount.   The  Arbitral
\nTribunal   rejected  the  contention  urged  on\t behalf\t  of
\nRenusagar  that\t award of interest on  regular\tinterest  as
\ncompensatory  damages  would violate public  policy  of\t the
\nState  of New York against ‘interest on interest’.   Relying
\nupon the decision of the New York Court of Claims in City of
\nNew  York v. State of New York3 the Arbitral  Tribunal\theld
\nthat  interest on interest is not against public  policy  in
\nthe State of New York.\tThe Arbitral Tribunal also  rejected
\nthe contention of Renusagar that it would violate New York’s
\npublic\tpolicy\tto award compound interest  as\tcompensatory
\ndamages and, after referring to the various decisions of the
\ncourts\tin the State of New York, the Arbitral Tribunal\t has
\nheld that compounding of interest is equally appropriate  in
\nactions\t of an equitable nature and in the circumstances  of
\nthis  case  compounding of interest would  not\tviolate\t the
\npublic policy of the State of New York.\t In this context the
\nArbitral  Tribunal  has\t pointed  out  that  they  were\t not
\nconcerned with a contract to pay compound interest but\twith
\nthe propriety of compounding interest in fashioning a remedy
\nfor  a breach of contract in order to put the injured  party
\nin the same economic position it would have occupied if\t the
\ncontract had been duly performed.  As regards the claim\t for
\ndelinquent  interest  on  late\tpayment\t of  instalments  by
\nRenusagar,  the\t Arbitral Tribunal held that  Renusagar\t was
\nliable\tto  pay\t such  delinquent  interest.   The  Arbitral
\nTribunal  found\t that  under the  1964\tContract  the  notes
\nevidencing  the obligation of Renusagar to pay the  purchase
\nprice ‘shall bear interest, at the rate of 6.5 per cent\t per
\nannum on the outstanding principal balance’, subject to\t the
\nagreed reduction to 6 per cent commencing with the date when
\ntax  exemption, if granted, is made effective and  that\t the
\nrescheduling  negotiations on which Renusagar  relied  never
\nresulted in an effective agreement and there was no evidence
\nof  a waiver by General Electric of its right to be paid  on
\nthe original due dates when the rescheduling plan  collapsed
\nand  further that Renusagar had acknowledged in telex  dated
\nMarch  25,  1976 that they were liable for interest  on\t the
\ndelayed\t payment  of the principal.  The  Arbitral  Tribunal
\nalso  rejected\tthe  contention that the  claim\t of  General
\nElectric  in  this  regard  was barred\tby  the\t statute  of
\nlimitation.    Taking  into  account   the   acknowledgement
\ncontained  in the telex dated March 25, 1976,  the  Arbitral
\nTribunal  deducted a sum of US $ 316,610 from the amount  of
\nUS  $ 783,686.20 computed as interest @ 6 per cent and\theld
\nthat  General  Electric was entitled to net amount of  US  $
\n467,076.20  by\tway of delinquent  interest.   The  Arbitral
\nTribunal   rejected  the  contention  urged  on\t behalf\t  of
\nRenusagar that even if period of limitation is computed from
\ntelex  of March 25, 1976 the claim was barred by  limitation
\nin view of the four-year limitation prescribed by Section 2-
\n275(1) of New York’s version of the Uniform Commercial\tCode
\nwhich  came into force with effect from September 27,  1964.
\nThe Arbitral
\n3 408 NYS 2d 702, 707 (1978)
\n661<\/span>
\nTribunal held that the said provision was not applicable  to
\nthe  present  case  and that it is governed  by\t the  6-year
\nperiod of limitation that was prescribed in the State of New
\nYork  prior to the commencement of the said provision.\t The
\nArbitral  Tribunal  further held that General  Electric\t was
\nentitled to compensatory damages on the aforesaid amount  of
\ndelinquent interest in the same manner as damages were to be
\ncomputed  on  the unpaid amount of  regular  interest.\t The
\nArbitral Tribunal also upheld the claim of General  Electric
\nfor  US $ 119,053.31 towards purchase price of\tspare  parts
\nand  further  held  that the said claim was  not  barred  by
\nlimitation  in view of the acknowledgement by  Renusagar  in
\nthe telex dated March 25, 1976.\t The Arbitral Tribunal\talso
\nheld  that compensatory damages were payable on\t account  of
\nRenusagar’s  failure  to  pay for spare parts  in  the\tsame
\nmanner\tas damages for failure of Renusagar to\tpay  regular
\ninterest.    With  regard  to  the  counter-claim  made\t  by
\nRenusagar,  the Arbitral Tribunal had earlier  rejected\t the
\npurported withdrawal of the said counter-claim in respect of
\nitems  2  to 8 by Renusagar and after considering  the\tsaid
\ncounter-claim on merits, the Arbitral Tribunal rejected\t the
\nsame  in  respect of all the eight items.  In  view  of\t the
\nrejection  of  counter-claim  of  Renusagar,  the   Arbitral
\nTribunal rejected the claim made by General Electric by\t way
\nof reply to the claim of Renusagar.  In the matter of costs,
\nthe Arbitral Tribunal held that Renusagar must pay the costs
\nof  arbitration\t and  apart from the  amount  which  General
\nElectric was required to pay towards administrative expenses
\nand  arbitration  fees,\t the  Arbitral\tTribunal  held\tthat
\nRenusagar  must also pay the normal legal costs incurred  by
\nGeneral\t  Electric.   The  Arbitral  Tribunal  awarded\t the
\nfollowing amounts against various heads of claims:\n<\/p>\n
1. Regular interest wrongfully withheld\t  US  $2,130,785.52\n<\/p>\n
2. Compensatory damages up to March 31,\t  US  $6,347,748.50
\n 1986  on the above regular interest
\ncontinuing at the annual rate of 8 per
\n  cent on the said regular interest until payment.\n<\/p>\n
3.   Delinquent interest on late payments of US $467,076.20
\nprincipal\n<\/p>\n
4.Compensatory damages up to
\n March 31, 1986\t\t\t\t    US $1,324,357.75
\non the above delinquent interest continuing
\n at the annual rate of 8 per cent on the said
\ndelinquent interest until payment\n<\/p>\n
5.   Spare parts\t\t\t    US $ 119,053.00\n<\/p>\n
6. Compensatory damages up to March 31, 1986 US\t $276,702.17
\non the above spare parts continuing at the
\nannual rate of 8 per cent on the said
\nsum for the spare parts until payment.\n<\/p>\n
7.   Towards costs of General Electric\t  Us $1,549,899.00
\nTotal\t\t\t\t\t US $12,215,622.14
\nThe  Arbitral  Tribunal has awarded interest at\t the  annual
\nrate of 8 per cent on items 1, 3 and 5.\n<\/p>\n
13.  On\t October  15,  1986,  General  Electric\t  instituted
\nproceedings  for  enforcement of the award of  the  Arbitral
\nTribunal  by filing Arbitration Petition 7 No. 159  of\t1986
\nunder Section 5 of the Foreign Awards Act in the Bombay High
\nConn.\tOn  October 17, 1986, Renusagar\t instituted  a\tsuit
\n(Suit  No.  265\t of  1986) in  the  Court  of  Civil  Judge,
\nMirzapur, seeking a declaration that the
\n662<\/span>
\naward  made by the Arbitral Tribunal was a nullity  and\t for
\nrestraining General Electric by a perpetual injunction\tfrom
\ndenying\t Renusagar’s rights and taking any action  affecting
\nRenusagar’s rights in any manner whatsoever on the basis  of
\nthe said award.\t General Electric filed a Transfer  Petition
\n(No. 388 of 1986) in this Court seeking transfer of the suit
\nfiled  by  Renusagar in the Mirzapur Court to  the  original
\nside of the Bombay High Court.\tBy order dated September 10,
\n1987,  this  Court stayed further proceedings  in  the\tsuit
\nfiled by Renusagar in the Mirzapur Court and the stay was to
\nremain\tin  operation during the pendency  of  the  petition
\nfiled  by General Electric for enforcement of the award.  by
\nGeneral\t Electric in the Bombay High Court and\tsubmitted  :\n<\/p>\n
(i)  the  award\t could not be filed as\tit  did\t not  become
\nbinding on the parties in the country in which the award was
\nmade  as prescribed under Section 7(1)(a)(v) of the  Foreign
\nAwards Act and Rule 801(c) of the Rules framed by the Bombay
\nHigh  Court  under the Foreign Awards Act; (ii)\t the  Bombay
\nHigh  Court  did not have the  territorial  jurisdiction  to
\nentertain  the petition of General Electric under Section  5
\nof the Act; (iii) General Electric had failed to comply with
\nthe mandatory requirement of Section 8(1)(a) of the  Foreign
\nAwards Act and Rule 801(a) of the Rules framed by the Bombay
\nHigh Court under the Foreign Awards Act inasmuch as  neither
\nthe original award nor a copy thereof duly authenticated  as
\nrequired  by the law of the country had been produced  along
\nwith  the application; (iv) the award sought to be  enforced
\nwas  a nullity and should be ignored as the arbitrators\t had
\nbecome\tfunctus officio in view of institution of  Suit\t No.
\n127  of\t 1982  by Renusagar in the  Court  of  Civil  Judge,
\nMirzapur and refusal by the Mirzapur Court to stay the\tsuit
\nunder  Section\t3 of the Foreign Awards Act; (v)  the  award
\ncould not be enforced in view of Section 7(1)(b)(ii) of\t the
\nForeign\t Awards Act because its enforcement was contrary  to
\npublic\tpolicy;\t (vi)  the claim for  regular  interest\t was
\nbarred\tby  limitation;\t (vii)\tthe  claim  for\t  delinquent
\ninterest  had  been  wrongly accepted  by  the\tarbitrators;\n<\/p>\n
(viii)\tthe  award of interest on interest  or\tcompensatory
\ndamages\t in  lieu  of  interest\t on  regular  interest\t and
\ndelinquent  interest and the award of compound\tinterest  is
\ncontrary  to  public policy; (ix) the  compensatory  damages
\nwere excessive and unusual; (x) the Chairman of the Arbitral
\nTribunal was biased against Renusagar; and (xi) the costs of
\narbitration were unconscionable and excessive.\n<\/p>\n
15.  The  learned Single Judge (Pendse, J.)  has  considered
\nall  the aforesaid objections raised on behalf of  Renusagar
\nin  his very comprehensive judgment dated October  21,\t1988
\nwherein\t after\trejecting the said objections, he  has\theld
\nthat  the award is enforceable under the provisions  of\t the
\nForeign\t Awards Act and on that basis a decree in  terms  of
\nthe award was drawn.\n<\/p>\n
16.  Renusagar\tfiled  an appeal (Appeal No.  680  of  1989)
\nunder  clause  15 of the Letters Patent of the\tBombay\tHigh
\nCourt against the said judgment of the learned Single  Judge
\nwhich  was disposed of by a Division Bench of the said\tHigh
\nCourt  (C.  Mookerjee, C.J. and Mrs Sujata Manohar,  J.)  by
\njudgment dated October 12, 1989.  The learned Judges of\t the
\nHigh Court held that the said appeal was not maintainable in
\nview of Section 6(2) of the Foreign Awards Act.\t The learned
\nJudges,\t however,  examined the matter on merits  and  found
\nthat there was no substance in the appeal.  In this  context
\nthe  learned Judges have dealt with the objection about\t the
\narbitrators having become functus officio on
\n663<\/span>
\n account  of  the  pendency  of\t the  civil  suit  filed  by
\nRenusagar in the Mirzapur Court; the award being contrary to
\npublic\tpolicy; the award being not binding; the failure  to
\nfile   the   authenticated  copy  of  the  award   and\t the
\njurisdiction  of  the  Bombay High Court  to  entertain\t the
\npetition  and  they have rejected the contentions  urged  by
\nRenusagar  in  respect of the said  objections.\t  Since\t the
\nlearned Single Judge had not specified the rate of  exchange
\nfor  conversion\t of the decretal amount\t expressed  in\tU.S.
\ndollars to Indian rupees, the learned Judges have dealt with
\nthe said question and taking into consideration the decision
\nof  this Court in Forasol v. ONGC4 they have  directed\tthat
\nthe  date of conversion of decretal amount which is in\tU.S.
\ndollars\t to  Indian rupees shall be the date  on  which\t the
\nlearned\t Single\t Judge completed  pronouncing  of  judgment,
\ni.e., October 21, 1988 and that opening the rate of exchange
\nshall be the selling rate of U.S. dollars as ascertained  by
\nthe State Bank of India.  The learned Judges have granted  a
\ncertificate  for  appeal to this Court under  Article  134-A
\nread  with Article 133 of the Constitution since  they\tfelt
\nthat  the  case\t involves substantial questions\t of  law  of
\ngeneral importance which need to be decided by this Court.\n<\/p>\n
17.  Civil Appeal No. 71 of 1990 has been filed by Renusagar
\non the basis of the said certificate against the judgment of
\nthe  Division  Bench of High Court dated October  12,  1989.
\nRenusagar  has\talso  filed Civil Appeal No.  71-A  of\t1990
\nagainst\t the  judgment\tof the learned\tSingle\tJudge  dated
\nOctober 21, 1988 after obtaining the special leave to appeal
\nfrom  this Court.  General Electric has filed  Civil  Appeal
\nNo.  379 of 1992 against the judgment of the Division  Bench
\nof High Court dated October 12, 1989 after obtaining special
\nleave  to appeal.  The said appeal of General  Electric\t has
\nbeen filed by way of abundant caution and is confined to the
\ndirections  given  by the Division Bench of  High  Court  in
\nparas  117  to 119 of the judgment with regard\tto  rate  of
\nexchange  for  conversion of the decretal amount  from\tU.S.
\ndollars to Indian rupees.  According to General Electric the
\nsaid  rate of exchange should have been the rate  prevailing
\non the date of payment.\n<\/p>\n
18.  During  the  pendency of these appeals this  Court,  by
\nOrder dated February 21, 1990 on I.A. No. 1 of 1990 in Civil
\nAppeal No. 71 of 1990, stayed the operation of the  judgment
\nand  decree under appeal subject to Renusagar depositing  in
\nthe  original  side  of\t the Bombay  High  Court,  the\tsums
\nequivalent to one-half of the decretal amount calculated  as
\non  date and furnishing security to the satisfaction of\t the
\nHigh  Court  in\t respect of the\t decretal  amount.   General
\nElectric   was\tpermitted  to  withdraw\t the  deposit\tupon
\nfurnishment of security by way of bank guarantee for the sum
\nto  be\twithdrawn  in excess of Rupees four  crores  to\t the
\nsatisfaction  of the High Court.  In the said order  it\t was
\nalso directed that interest @ 10 per cent per annum would be
\npayable\t by Renusagar on the balance of the decretal  amount
\nin   the   event   of  its  failing  in\t  the\tappeal\t and
\ncorrespondingly\t General  Electric would be  liable  to\t pay
\ninterest  at the same rate on amount withdrawn by it in\t the
\nevent of the appeal succeeding.\t In pursuance of this order,
\nRenusagar deposited, a sum of Rs 9,69,26,590.00 on March 20,
\n1990  which was withdrawn by GEC after furnishing  necessary
\nbank guarantee.\t By another order dated November 6, 1990  on
\nI.A.  No.  3 of 1990 in Civil Appeal No. 71  of\t 1990,\tthis
\nCourt directed Renusagar to deposit a further sum of Rs 1
\n4  1984 Supp SCC 263 :(1984) 1 SCR 526
\n664<\/span>
\ncrore  and to furnish a bank guarantee for Rs  1.92  crores.
\nIn  pursuance  of the said order,  Renusagar  deposited,  on
\nDecember 3, 1990, a sum of Rs 1 crore which amount has\talso
\nbeen withdrawn by General Electric.  Thus, a total sum of Rs
\n10,69,26,590.00 has been deposited by Renusagar and the same
\nhas been withdrawn by General Electric.\n<\/p>\n
19.  Shri  K.K. Venugopal, learned Senior Counsel  appearing
\nfor  Renusagar,\t and  Shri Shanti  Bhushan,  learned  Senior
\nCounsel appearing for General Electric, have made  elaborate
\nsubmissions  before  us.   The oral  submissions  have\tbeen
\nsupplemented by written submissions.\n<\/p>\n
20.  During  the course of his submissions,  Shri  Venugopal
\ndid  not pursue some of the objections that were  raised  by
\nRenusagar  before the High Court.  But at the same  time  he
\nhas  raised certain objections which were not raised  before
\nthe  High  Court.   Shri  Venugopal  has  not  disputed\t the
\nliability  of Renusagar for US $ 2,130,785.52 awarded  under
\nitem  No. 1 towards regular interest withheld  by  Renusagar
\nand  US $ 119,053.00 awarded under item No. 5 towards  price
\nof  spare  parts.   The submissions of\tShri  Venugopal\t are
\nconfined  to  the award of compensatory damages\t under\titem
\nNos.  2, 4 and 6, delinquent interest under item No.  3\t and
\ncosts  under item No. 7. The submissions of  Shri  Venugopal
\nbroadly\t fall  under two heads : (i) enforceability  of\t the
\naward;\tand (ii) the rate of exchange for conversion of\t the
\ndecretal amount from U.S. dollars to Indian rupees.\n<\/p>\n
21.  Before  we proceed to examine the submissions  made  by
\nlearned counsel,    we\tconsider  it  necessary\t to  briefly
\nrefer to the background in which the Foreign Awards Act\t was
\nenacted\t  because   it\t would\thave  a\t  bearing   on\t the
\ninterpretation of the provisions of the said Act.\n<\/p>\n
22.  Arbitration  is  a well-recognised mode  for  resolving
\ndisputes  arising out of commercial transactions.   This  is
\nequally\t true  for  international  commercial  transactions.
\nWith  the  growth  of international commerce  there  was  an
\nincrease in disputes arising out of such transactions  being
\nadjudicated through arbitration.  One of the problems  faced
\nin such arbitrations related to recognition and\t enforcement
\nof  an arbitral award made in one country by the  courts  of
\nother  countries.   This difficulty has been  sought  to  be
\nremoved\t through  various  international  conventions.\t The
\nfirst such international convention was the Geneva  Protocol
\nof  1923 which was drawn up on the initiative of  ICC  under
\nthe auspices of the League of Nations.\tThe Geneva  Protocol
\nhad  two  objectives, first, it sought to  make\t arbitration
\nagreements,   and   arbitration\t  clauses   in\t particular,
\nenforceable  internationally;  and secondly,  it  sought  to
\nensure\tthat  awards  made  pursuant  to  such\t arbitration
\nagreements  would be enforced in the territory of the  State
\nin  which they were made.  The Geneva Protocol of  1923\t was
\nfollowed  by  the Geneva Convention of 1927 which  was\talso
\ndrawn  up under the auspices of the League of Nations.\t The
\npurpose\t of  this Convention was to widen the scope  of\t the
\nGeneva\tProtocol  of  1923  by\tproviding  recognition\t and
\nenforcement  of\t protocol  awards within  the  territory  of
\ncontracting States, (not merely the State in which the award
\nwas  made).  (See : Alen Redfern and Martin  Hunter:  Law  &
\nPractice  of International Commercial Arbitration, 2nd\tEdn.
\npp.  61-62).  India was a signatory to the Protocol of\t1923
\nand the Convention of 1927.  With a view to implementing the
\nobligations   undertaken   under  the  said   Protocol\t and
\nConvention,  the  Arbitration (Protocol &  Convention)\tAct,
\n1937 was enacted.  A number of problems were encountered
\n665<\/span>
\nin  the operation of the aforesaid Geneva treaties  inasmuch
\nas  there  were limitations in relation to  their  field  of
\napplication and under the Geneva Convention of 1927, a party
\nseeking\t enforcement had to prove the  conditions  necessary
\nfor  enforcement  and in order to show that the\t awards\t had
\nbecome\tfinal in its country of origin the successful  party
\nwas  often  obliged to seek a declaration in  the  countries
\nwhere  the  arbitration took place to the  effect  that\t the
\naward  was  enforceable in that country before it  could  go
\nahead  and enforce the award in the courts of the  place  of
\nenforcement.  ICC, in 1953, promoted a new treaty to  govern
\ninternational commercial arbitration.  The proposals of\t ICC
\nwere  taken  up by the United Nations  Economic\t and  Social
\nCouncil and it led to the adoption of the Convention on\t the
\nRecognition  and Enforcement of Foreign Arbitral  Awards  at
\nNew  York,  1958 (hereinafter referred to as ‘the  New\tYork
\nConvention’).  The New York Convention is an improvement  on
\nthe Geneva Convention of 1927 in the sense that it  provides
\nfor  a\tmuch more simple and effective method  of  obtaining
\nrecognition  and enforcement of foreign arbitral awards\t and
\nit replaces Geneva Convention of 1927 as between the  States
\nwhich  are  parties to both the Conventions.  The  New\tYork
\nConvention  also gives much wider effect to the validity  of
\narbitration  agreements\t than does the\tGeneva\tProtocol  of
\n1923. [See : Alan Redfern and Martin Hunter, Law &  Practice
\nof  International Commercial Arbitration, (1 991)  2nd\tEdn.
\npp. 62-63.]\n<\/p>\n
     23.  India was a party to the New York Convention.\t The
\nForeign\t Awards Act has been enacted to give effect  to\t the
\nNew York Convention and for purposes connected therewith. In
\nthe  Statement\tof Objects and Reasons, reference  has\tbeen
\nmade  to the defects in the Geneva Convention of 1927  which
\n“hampered   the\t speedy\t settlement  of\t  disputes   through
\narbitration  and  hence no longer met  the  requirements  of
\ninternational  trade” and which led to the adoption  of\t the
\nNew  York  Convention.\tSection 2 of  the  Act\tdefines\t the
\nexpression  ‘foreign award’. Section 3 makes  provision\t for
\nstay of proceedings in respect of matters to be referred  to
\narbitration. Section 4 deals with effect of foreign  awards.
\nSub-section  (1) of Section 4 provides that a foreign  award
\nshall, subject to the provisions of this Act, be enforceable
\nin India as if it were an award made on a matter referred to
\narbitration  in India. Sub-section (2) prescribes  that\t any
\nforeign\t award\twhich would be enforceable  under  this\t Act
\nshall be treated as binding for all purposes on the  persons
\nas  between whom it was made and may be relied on by any  of
\nthose persons by way of defence, setoff or otherwise in\t any
\nlegal  proceedings in India. Section 5 makes  provision\t for
\nfiling of foreign awards in Court. In sub-section (1) it  is
\nlaid down that any person interested in a foreign award\t may
\napply  to  any court having jurisdiction over  the  subject-
\nmatter\tof the award that the award be filed in Court.\tSub-
\nsection\t (2) requires that such an application shall  be  in
\nwriting\t and  shall  be numbered and registered\t as  a\tsuit
\nbetween the applicant as plaintiff and the other parties  as
\ndefendants.  Sub-section  (3)  requires the  court  to\tgive
\nnotice\tto  the parties to the arbitration  other  than\t the
\napplicant  requiring  them  to\tshow  cause  within  a\ttime
\nspecified why the award should not be filed. Section 6 deals
\nwith  enforcement  of foreign awards. Sub-section  (1)\tlays
\ndown  that  where the Court is satisfied  that\tthe  foreign
\naward  is enforceable under the Act, the Court\tshall  order
\nthe  award  to\tbe  filed and  shall  proceed  to  pronounce
\njudgment  according to the award. Sub-section  (2)  provides
\nthat upon the judgment so pronounced a decree shall  follow,
\nno appeal shall lie from such decree except
\n666<\/span>
\ninsofar\t as the decree is in excess of or not in  accordance
\nwith  the  award.   Section 7 contains\tthe  conditions\t for
\nenforcement   of   foreign   awards   and   prescribes\t the
\ncircumstances  under  which  foreign  awards  will  not\t  be
\nenforced.  Section 8 requires the production of the original
\naward  or  a  duly authenticated copy  thereof\tas  well  as
\noriginal agreement for arbitration or a duly certified\tcopy
\nthereof\t and  the production of evidence to prove  that\t the
\naward  is  a foreign award.  Section 9 is  a  saving  clause
\nwhich  excludes\t the  applicability of the  Act\t to  matters
\nspecified  therein.  Section 10 provides for repeal  of\t the
\nArbitration (Protocol and Convention) Act, 1937, in relation
\nto  foreign  awards to which the Act  applies.\t Section  11
\nprovides  for rule-making power of the High Court.  The\t New
\nYork  Convention  is appended as a schedule to\tthe  Foreign
\nAwards Act.\n<\/p>\n
24.  In\t the present case, we are concerned with  conditions
\nof  enforcement\t laid down in Section 7, which\tprovides  as
\nfollows:\n<\/p>\n
\t      “7.   Conditions\tfor enforcement\t of  foreign
\n\t      awards.-\t(1)  A\tforeign\t award\tmay  not  be
\n\t      enforced under this Act-<\/p>\n
\t      (a)   if\tthe party against whom it is  sought
\n\t      to  enforce  the\taward proves  to  the  court
\n\t      dealing with the case that-<\/p><\/blockquote>\n
\t      (i)   the parties to the agreement were  under
\n\t      the   law\t applicable  to\t them,\tunder\tsome
\n\t      incapacity, or the said agreement is not valid
\n\t      under  the  law  to  which  the  parties\thave
\n\t      subjected\t  it,  or  failing  any\t  indication
\n\t      thereon,\tunder the law of the  country  where
\n\t      the award was made; or\n<\/p>\n
\t      (ii)  that  party was not given proper  notice
\n\t      of the appointment of the arbitrator or of the
\n\t      arbitration   proceedings\t or  was   otherwise
\n\t      unable to present his case; or\n<\/p>\n
\t      (iii) the\t award\tdeals  with  questions\t not
\n\t      referred\tor  contains  decisions\t on  matters
\n\t      beyond  the scope of the\tagreement:  Provided
\n\t      that if the decisions on matters submitted  to
\n\t      arbitration  can be separated from  those\t not
\n\t      submitted,  that\tpart  of  the  award   which
\n\t\t\t    contains  decisions\t on  matters  submitted\t t
\no
\n\t      arbitration may be enforced; or\n<\/p>\n
\t      (iv)  the\t  composition\tof   the    arbitral
\n\t      authority or the arbitral procedure was not in
\n\t      accordance  with the agreement of the  parties
\n\t      or   failing  such  agreement,  was   not\t  in
\n\t      accordance  with the law of the country  where
\n\t      the arbitration took place; or\n<\/p>\n
\t      (v)   the award has not yet become binding  on
\n\t      the parties or has been set aside or suspended
\n\t      by  a  competent authority of the\t country  in
\n\t      which,  or under the law of which, that  award
\n\t      was made; or\n<\/p>\n
\t      (b)   if\tthe Court dealing with the  case  is
\n\t      satisfied that-\n<\/p>\n
\t      (i)   the subject-matter of the difference  is
\n\t      not capable of settlement by arbitration under
\n\t      the law in India; or\n<\/p>\n
\t      (ii)  the\t enforcement  of the award  will  be
\n\t      contrary to public policy;\n<\/p>\n
\t      (2)   If\tthe  Court before  which  a  foreign
\n\t      award is sought to be relied upon is satisfied
\n\t      that  an application for the setting aside  or
\n\t      suspension  of  the award has been made  to  a
\n\t      competent authority referred to in  sub-clause\n<\/p>\n
\t      (v)  of  clause (a) of  sub-section  (1),\t the
\n\t      Court may, if it deems proper, adjourn
\n\t      667<\/span>
\n\t      the  decision on the enforcement of the  award
\n\t      and may also, on the application of the  party
\n\t      claiming\tenforcement of the award, order\t the
\n\t      other party to furnish suitable security.”\n<\/p>\n
 25.   The objection of Renusagar against enforceability  of
\nthe award is based on (i) Section 7(1)(a)(ii) of the Foreign
\nAwards\tAct,  on  the ground that Renusagar  was  unable  to
\npresent\t its  case;  and (ii)  Section\t7(1)(b)(ii)  of\t the
\nForeign\t Awards Act, on the ground that the  enforcement  of
\nthe award would be against public policy.\n<\/p>\n
26.  In support of his submission that Renusagar was  unable
\nto present its case, Shri Venugopal has urged that after the
\nMirzapur  Court had refused to stay the civil suit filed  by
\nRenusagar  on the application submitted by General  Electric
\nunder  Section 3 of the Foreign Awards Act on July 9,  1985,
\nRenusagar  had\traised a preliminary  objection\t before\t the
\nArbitral Tribunal that it had become functus officio and  on
\nthe  said  objection  raised  by  Renusagar,  the   Arbitral
\nTribunal  had issued a further notice on September  2,\t1985
\nstating that the effect of the rejection of the\t application
\nunder  Section\t3  of  the  Foreign  Awards  Act  would\t  be
\nconsidered  as a preliminary issue at the scheduled  meeting
\nof  the\t Arbitral Tribunal fixed for October 1,\t 1985.\t The
\nsubmission  of\tShri  Venugopal is that\t Renusagar  was\t not
\ninformed  by the Arbitral Tribunal that if the\tdecision  of
\nthe  Arbitral  Tribunal on the objection that  the  Arbitral
\nTribunal  had  become  functus officio were  to\t go  against
\nRenusagar, the Arbitral Tribunal would straight away proceed
\nto hear the case on merits without informing Renusagar about
\nits  decision and that if Renusagar had been put on  notice,
\nit  would have been able to decide whether to  proceed\twith
\nthe  merits  or\t not and that the  action  of  the  Arbitral
\nTribunal  in  going into the merits of the  dispute  without
\nnotice\tto Renusagar was a gross, blatant  and\tunpardonable
\nviolation   of\tprinciples  of\tnatural\t justice   and\t the
\nelementary tenets of fair play inasmuch as on account of the
\nsaid  procedure adopted by the Arbitral Tribunal,  Renusagar
\nwas  deprived  of an opportunity to meet and deal  with\t the
\nentirety of claims of General Electric.\n<\/p>\n
27.  As\t regards bar to the enforcement of the\taward  under
\nSection\t  7(1)(b)(ii)  of  the\tForeign\t Awards\t Act,\tShri
\nVenugopal  has argued that : (i) under Section\t7(1)(b)(ii),
\nenforcement  of the award could be refused by the courts  in
\nIndia  not only on the ground that the award is against\t the
\npublic\tpolicy\tof  India but also that it  is\tagainst\t the
\npublic policy of the State of New York; (ii) the  expression
\n“public policy” in Section 7(1)(b)(ii) of the Act has to  be
\nconstrued  in a liberal sense and not narrowly and it  would
\ninclude within its ambit disregard of the provisions of\t the
\nForeign Exchange Regulation Act, 1973 (hereinafter  referred
\nas  FERA) and would also cover unjust enrichment;  (iii)  it
\nwould  be contrary to the public policy of India as well  as
\nof  the State of New York to award interest on interest\t and
\ncompounding it further and to award damages on damages; (iv)
\nunder the contract, interest was payable only up to the date
\nof  maturity  of each promissory note and  no  interest\t was
\npayable\t for the period subsequent to the said date and\t the
\nonly  remedy available to General Electric in the  event  of
\ndefault\t in payment of an instalment on the due date was  to
\nenforce\t the bank guarantee or to recall all the  promissory
\nnotes; (v) under the original approval dated January 2, 1964
\ngiven  by the Government of India the total amount  of\tloan
\nwas to be repaid in sixteen semi-annual instalments  between
\n30  and 120 months from contract effective date and  payment
\nof interest was specifically
\n668<\/span>
\nrestricted  for\t the  period from 16th\tto  30th  month\t and
\nthereafter  upon capitalisation from the 30th month  to\t the
\n120th  month  and  no  interest\t was  payable  without\tFERA
\nsanction  after\t due  date  of\teach  instalment;  (vi)\t  no
\nliability  for interest for delayed payment  of\t instalments
\nwould accrue in respect of the period from June 30, 1967  to
\nAugust 1, 1969 while the application for approval under FERA
\nwas pending before the Government of India; (vii) after\t the
\nrefusal\t by  the  Government to give  its  approval  to\t the
\nrescheduling of the instalments the award of interest was in
\nbreach of the prohibition contained in FERA and was contrary
\nto   public   policy  of  India;   (viii)   while   awarding
\ncompensatory  damages under item Nos. 2 and 4  the  Arbitral
\nTribunal  has failed to deduct 46 per cent U.S. tax  payable
\nby  General Electric on the amount of regular  interest\t and
\ndelinquent  interest and compensatory damages could only  be
\nawarded\t on the amount receivable by General Electric  after
\ndeducting  the\tsaid  tax and this has\tresulted  in  unjust
\nenrichment   which  is\tcontrary  to  public  policy;\t(ix)
\ncompensatory damages have been awarded by way of interest on
\ninterest  and that too by compounding the rate\tof  interest
\nwhich  is contrary to public policy of India and  New  York;\n<\/p>\n
(x)  compensatory  damages awarded  on\tdelinquent  interest
\nunder  item No. 4 constitutes award of damages upon  damages
\nwhich  is contrary to public policy of India; (xi) award  of
\ncompensatory damages on regular interest under item No. 2 in
\nrespect\t of  the period from 1970 to 1980 when\tthe  interim
\norder  passed by the Delhi High Court in the  writ  petition
\nwas  operative was impermissible and against public  policy;\n<\/p>\n
(xii)  the  amount awarded as costs  is\t unconscionable\t and
\nconstitutes  unjust enrichment inasmuch as it  includes\t the
\namount\twhich  was admitted as part of the  legal  fees\t and
\nexpenses for proceedings in India and which was found to  be
\ninadmissible  by the Arbitral Tribunal and the\tsame  amount
\nwas  transposed into cost of the arbitration on the  pretext
\nthat the material collected for litigation in India was also
\nused  in the arbitration proceedings; and (xiii)  there\t has
\nbeen violation of principles of natural justice inasmuch  as
\nthe vouchers of costs regarding legal fees and expenses were
\nnever  shown or given to Renusagar nor were  its  objections
\nheard in this regard.\n<\/p>\n
28.  With  regard to rate of exchange for conversion of\t the
\ndecretal  amount  in  U.S. dollars  to\tIndian\trupees,\t the
\nsubmission of Shri Venugopal is that the date with reference
\nto  which conversion of foreign currency is to be made is  a
\nmatter of substance and is governed by lex contractus, i.e.,
\nthe  law of the contract, and not by lexfori, i.e., the\t law
\nof  the forum.\tIt has been urged that the law of the  State
\nof New York is the law of the contract and that the said law
\nprovides  the date of breach as the date of  conversion\t and
\ntherefore,  the\t amount awarded in U.S.\t dollars  under\t the
\naward of the Arbitral Tribunal must be converted into Indian
\ncurrency  on the basis of the rate prevalent on the date  of
\nthe breach.  It has been submitted that the decision of this
\nCourt  in  Forasol v. O.N.G.C.4 on which reliance  has\tbeen
\nplaced\tby  the\t Division Bench of the High  Court,  has  no
\napplication  to\t the present case because in that  case\t the
\nCourt  was not dealing with a foreign award but was  dealing
\nwith an award made under the Indian Arbitration Act, 1940.\n<\/p>\n
29.  Shri Shanti Bhushan, has, on the other hand,  submitted
\nthat : (i) the scope of enquiry in proceedings under Section
\n5  of  the  Foreign  Awards Act\t is  confined  to  questions
\nrelating  to  the  enforcement of the  award  and  does\t not
\ncomprehend a challenge to the merits and even if a  question
\nof law decided by
\n669<\/span>
\nthe  Arbitrators  is  incorrect,  it  is  not  a  ground  of
\nchallenge  under Section 7 of the Foreign Awards  Act;\t(ii)
\nRenusagar cannot have any grievance that they were unable to
\npresent\t its  case  because it had  voluntarily\t refused  to
\nappear\tbefore the Arbitral Tribunal when it met on  October
\n1,  1985  and further that in the sittings of  the  Arbitral
\nTribunal from February to March 1985 in which Renusagar\t had
\nparticipated  it  had  made oral submissions  and  had\talso
\nproduced documents before the Arbitral Tribunal, with regard
\nto  issues 22(g) to (p) and that in the sittings  held\tfrom
\nOctober\t 1,  1985 onwards, the Arbitral Tribunal  had  dealt
\nwith  rest of the issues which related to the  counter-claim
\nof  Renusagar as well as the claim made by General  Electric
\nagainst the counter-claim which claims have been rejected by
\nthe Arbitral Tribunal; (iii) public policy, comprehended  in
\nSection 7(1)(b)(ii) of the Foreign Awards Act is the  public
\npolicy of India and does not cover the public policy of\t New
\nYork  State; (iv) for the purpose of Section 7(1)(b)(ii)  of
\nthe Foreign Awards Act the expression ‘public policy’ has  a
\nnarrower  connotation than in domestic law; (v) the  regular
\ninterest  was wrongfully withheld by Renusagar because as  a
\nresult\tof the failure on the part of Renusagar\t to  deposit
\nthe  amount  of tax with the Government of  India.   General
\nElectric  was  not able to claim relief under the  U.S.\t tax
\nlaws in respect of the amount payable as tax in India on the
\ninterest and that the interim order passed by the Delhi High
\nCourt  in  the\twrit petition filed  by\t Renusagar  did\t not
\npreclude  Renusagar  from either depositing the\t tax  amount
\nwith  the  Government or remitting the\tinterest  amount  to
\nGeneral\t Electric  at  the  rate of 6  per  cent;  (vi)\t for
\nawarding  compensatory\tdamages for withholding\t of  regular
\ninterest  and on delinquent interest for delayed payment  of
\ninstalments  the tax payable in United States on the  amount
\nof  regular  interest and delinquent interest could  not  be
\ndeducted since tax would be payable in the United States  by
\nGeneral\t Electric  on  the amount  awarded  as\tcompensatory
\ndamages; (vii) the amount of compensatory damages awarded by
\nthe Arbitral Tribunal relates to the merits of the award and
\nthe same cannot be questioned in proceedings for enforcement
\nof  the\t award under Section 7 of the  Foreign\tAwards\tAct;\n<\/p>\n
(viii)\tthe  challenge to the award on the basis  of  unjust
\nenrichment, award of compound interest, award of damages  on
\ndamages\t does  not  fall within\t the  ambit  of\t permissible
\nobjections  on the ground of violation of public  policy  in
\nSection 7(1)(b)(ii) of the Foreign Awards Act; (ix) there is
\nno  violation of the provisions of FERA because in  view  of
\nthe approval that had already been granted by the Government
\nof India to the original contract, there was no\t prohibition
\nagainst\t remittance of regular interest on  the\t instalments
\nwhich had become due and payable and the refusal on the part
\nof  the Government to give approval to rescheduling  of\t the
\npayment\t of  instalments  did not in any  way  preclude\t the
\nGovernment  of India from granting necessary permission\t for
\nremittance  of the interest on the unpaid instalments  under
\nSection 9 of FERA; (x) in any event, the bar of Section 9 of
\nFERA  is not applicable to the proceedings  for\t enforcement
\nfor  the  award\t in view of Section 47(3) of  FERA  and\t the
\nenforcement  of the award does not involve contravention  of
\nthe  provisions\t of  FERA; (xi) the  costs  that  have\tbeen
\nawarded\t are  reasonable  and  that  three  copies  of\t the
\nsupporting vouchers except for the vouchers relating to fees
\nof   M\/s  Amarchand  Mangaldas,\t a  Bombay\/Delhi   firm\t  of
\nSolicitors, were sent to all the three arbitrators and\tthat
\none  set of billings of M\/s Amarchand Mangaldas was sent  to
\nthe Chairman but copies of the letter addressed to  Chairman
\nwere sent to the other Arbitrators and that the
\n670<\/span>
\nbills of M\/s Amarchand Mangaldas were in respect of fees  of
\nIndian lawyers in Bombay High Court and Supreme Court  which
\nclaim of costs has been disallowed by the Arbitral Tribunal;\n<\/p>\n
(xii)  the  rate  of  exchange\tfor  conversion\t of  foreign
\ncurrency  in proceedings for enforcement of a foreign  award
\nis governed by lexfori, i.e., law of the forum in which\t the
\nproceedings  have been instituted and not by the proper\t law
\nof  contract  or  law of place of  performance;\t (xiii)\t the
\nrelevant  date\tfor conversion of U.S. dollars\tinto  Indian
\nrupees in proceedings for enforcement of a foreign award  is
\nthe  date of actual payment and not the date of judgment  as
\nheld  by  the Division Bench of the High  Court;  (xiv)\t the
\ndecision of this Court in Forasol v. O.N.G.C.4 on which\t the
\nreliance  has  been  placed by the  Division  Bench  has  no
\napplication and in any event the said decision does not\t lay
\ndown  the  correct  law\t and  needs  reconsideration;\t(xv)
\nalthough under the award interest has been awarded at 8\t per
\ncent in respect of items 1, 3 and 5 only but in view of\t the
\ninterim\t order\tpassed by this Court on\t February  21,\t1990
\ninterest at the rate of 10 per cent is payable on the entire
\namount;\t (xvi)\tsince  the permission  was  not\t granted  to
\nGeneral\t Electric by the Reserve Bank of India\tto  transfer
\nthe  sum  of  Rs  10.92 crores\tdeposited  by  Renusagar  in
\npursuance  to  the orders of this Court dated  February\t 21,
\n1990 and November 6, 1990 the said amount should be adjusted
\nagainst\t  the  decree  that  is\t ultimately   passed   after
\nconverting  the\t decretal amount in U.S. dollars  to  Indian
\nrupees\ton the basis of the rate of exchange  prevailing  on
\nthe date of the judgment of this Court.\n<\/p>\n
30.Having regard to the foregoing submissions of the learned
\ncounsel the questions that arise for consideration in  these
\nappeals can be thus formulated:\n<\/p>\n
\t      (1)   What   is  the  scope  of\tenquiry\t  in
\n\t      proceedings for enforcement of a foreign award
\n\t      under  Section  5 read with Section 7  of\t the
\n\t      Foreign Awards Act?\n<\/p><\/blockquote>\n
\t      (II)  Were  Renusagar unable to present  their
\n\t      case   before   the  Arbitral   Tribunal\t and
\n\t      consequently  the award cannot be enforced  in
\n\t      view  of\tSection 7(1)(a)(ii) of\tthe  Foreign
\n\t      Awards Act?\n<\/p><\/blockquote>\n
\t      (III) Does Section 7(1)(b)(ii) of the  Foreign
\n\t      Awards  Act  preclude the enforcement  of\t the
\n\t      award of the Arbitral Tribunal for the  reason
\n\t      that the said award is contrary to the  public
\n\t      policy of the State of New York?\n<\/p><\/blockquote>\n
\t      (IV)  What  is  meant by\t‘public\t policy’  in
\n\t      Section 7(1)(b)(ii) of the Foreign Awards Act?
\n\t      (V)   Is\tthe award of the  Arbitral  Tribunal
\n\t      unenforceable as contrary to public policy  of
\n\t      India on the ground that-\n<\/p><\/blockquote>\n
\t      (a)   it\t involves   contravention   of\t the
\n\t      provisions of FERA;\n<\/p><\/blockquote>\n
\t      (b)   it\tpenalises  Renusagar for  acting  in
\n\t      accordance  with the interim order  passed  by
\n\t      the  Delhi  High Court in\t the  writ  petition
\n\t      filed by Renusagar challenging the  withdrawal
\n\t      of  exemption from income tax on the  interest
\n\t\t\t    paid to General Electric;\n<\/p><\/blockquote>\n
\t      (c)   it\tresults in charging of\tinterest  on
\n\t      interest which is compounded and also  damages
\n\t      on damages;\n<\/p><\/blockquote>\n
\t      (d)   it\twould lead to unjust enrichment\t for
\n\t      General Electric.\n<\/p><\/blockquote>\n
\t      671<\/span><\/p>\n
\t      (VI)  Which  law\twould  govern  the  rate  of
\n\t      exchange for conversion of foreign currency in
\n\t      proceedings  for\tenforcement  of\t a   foreign
\n\t      arbitral award?\n<\/p><\/blockquote>\n
\t      (VII) Does    Forasol   v.    O.N.G.C4\tneed\n\t      reconsideration?\n\t      (VIII)\t Is  General  Electric\tentitled  to\n<\/pre>\n
\t      interest pendente lite and future interest and
\n\t      if so, at what rate?\n<\/p><\/blockquote>\n
\t      (IX)  What  should be the rate for  conversion
\n\t      into  U.S. dollars of the amount of  Rs  10.92
\n\t      crores deposited by Renusagar in pursuance  to
\n\t      the  interim  orders passed by this  Court  on
\n\t      February\t21,  1990 and November 6,  1990\t and
\n\t      which has been withdrawn by General Electric?\n<\/p><\/blockquote>\n
\t      1.    Scope  of  enquiry\tin  proceedings\t for
\n\t      recognition and enforcement of a foreign award
\n\t      under the Foreign Awards Act\n<\/p><\/blockquote>\n
31.  During  the course of his submissions,  Shri  Venugopal
\nhas  assailed the award of the Arbitral Tribunal on  grounds
\ntouching  on  the  merits of the said award  insofar  as  it
\nrelates\t to  the award of compensatory\tdamages\t on  regular
\ninterest  (item\t No. 2), delinquent interest (item  No.\t 3),
\ncompensatory damages on delinquent interest (item No. 4) and
\ncompensatory  damages on the price of spare parts (item\t No.\n<\/p>\n
6).  This gives rise to the question whether in\t proceedings
\nfor enforcement of a foreign award under the Foreign  Awards
\nAct it is permissible to impeach the award on merits.\n<\/p>\n
32.  With  regard to enforcement of foreign  judgments,\t the
\nposition  at common law is that a foreign judgment which  is
\nfinal  and  conclusive\tcannot be impeached  for  any  error
\neither\tof  fact  or of law and is  impeachable\t on  limited
\ngrounds,  namely, the court of the foreign country did\tnot,
\nin the circumstances of case, have jurisdiction to give that
\njudgment  in  the  view\t of English  law;  the\tjudgment  is
\nvitiated  by fraud on part of the party in whose favour\t the
\njudgment  is given or fraud on the part of the\tcourt  which
\npronounced  the judgment; the enforcement or recognition  of
\nthe  judgment  would  be  contrary  to\tpublic\tpolicy;\t the
\nproceedings in which the judgment was obtained were  opposed
\nto  natural justice. (See : Dicey & Morris, The Conflict  of
\nLaws, 11th Edn., Rules 42 to 46, pp. 464 to 476; Cheshire  &
\nNorth,\tPrivate\t International Law, 12th Edn.,\tpp.  368  to\n<\/p>\n
392.)\n<\/p>\n
33.  Similarly\tin  the\t matter of  enforcement\t of  foreign
\narbitral awards at common law a foreign award is enforceable
\nif  the\t award\tis  in\taccordance  with  the  agreement  to
\narbitrate which is valid by its proper law and the award  is
\nvalid  and final according to the arbitration law  governing
\nthe  proceedings.   The\t award would not  be  recognised  or
\nenforced  if,  under the submission agreement  and  the\t law
\napplicable thereto, the arbitrators have no justification to
\nmake  it, or it was obtained by fraud or its recognition  or
\nenforcement  would  be\tcontrary to  public  policy  or\t the
\nproceedings in which it was obtained were opposed to natural
\njustice\t (See:\tDicey & Morris, The Conflict of\t Laws,\t11th
\nEdn.,  Rules 62-64, pp. 558 & 559 and 571 & 572; Cheshire  &
\nNorth,\tPrivate International Law, 12th Edn., pp.  446-447).
\nThe English courts would not refuse to recognise or  enforce
\na foreign award merely because the arbitrators (in its view)
\napplied the wrong law to the dispute or misapplied the right
\nlaw. (See : Dicey & Morris, The Conflict of Laws, 11th Edn.,
\nVol.  II, p. 565.)\n<\/p>\n
34.  Under the Geneva Convention of 1927, in order to obtain
\nrecognition or enforcement of a foreign arbitral award,\t the
\nrequirements of clauses (a) to (e) of
\n672<\/span>
\nArticle\t I  had to be fulfilled and in Article\t11,  it\t was
\nprescribed that even if the conditions laid down in  Article
\nI  were fulfilled recognition and enforcement of  the  award
\nwould  be refused if the Court was satisfied in\t respect  of
\nmatters\t mentioned  in\tclauses\t (a),  (b)  and\t (c).\t The
\nprinciples  which  apply to recognition and  enforcement  of
\nforeign awards are in substance, similar to those adopted by
\nthe English courts at common law. (See : Dicey & Morris, The
\nConflict  of  Laws,  11th Edn., Vol. I, p.  578).   It\twas,
\nhowever,  felt\tthat  the Geneva  Convention  suffered\tfrom
\ncertain\t defects  which hampered the  speedy  settlement  of
\ndisputes through arbitration.  The New York Convention seeks
\nto  remedy  the said defects by providing for  a  much\tmore
\nsimple\tand  effective method of obtaining  recognition\t and
\nenforcement   of  foreign  awards.   Under  the\t  New\tYork
\nConvention the party against whom the award is sought to  be
\nenforced  can object to recognition and enforcement  of\t the
\nforeign\t award on grounds set out in sub-clauses (a) to\t (e)
\nof  clause  (1) of Article V and the court can, on  its\t own
\nmotion,\t refuse\t recognition and enforcement  of  a  foreign
\naward for two additional reasons set out in sub-clauses\t (a)
\nand (b) of clause (2) of Article V. None of the grounds\t set
\nout  in sub-clauses (a) to (e) of clause (1) and  subclauses\n<\/p>\n
(a)  and  (b)  of  clause (2)  of  Article  V  postulates  a
\nchallenge to the award on merits.\n<\/p>\n
35.  Albert  Jan van den Berg in his treatise The  New\tYork
\nArbitration Convention of 1958 : Towards a Uniform  Judicial
\nInterpretation, has expressed the view:\n<\/p>\n
\t      “It is a generally accepted interpretation  of
\n\t      the Convention that the court before which the
\n\t\t\t    enforcement of the foreign award is sought\tma
\ny
\n\t      not review the merits of the award.  The\tmain
\n\t      reason is that the exhaustive list of  grounds
\n\t      for  refusal  of\tenforcement  enumerated\t  in
\n\t      Article  V does not include a mistake in\tfact
\n\t      or law by the arbitrator.\t Furthermore,  under
\n\t      the  Convention  the task of  the\t enforcement
\n\t      judge is a limited one.  The control exercised
\n\t      by  him  is limited to  verifying\t whether  an
\n\t      objection of a respondent on the basis of\t the
\n\t      grounds\tfor  refusal  of  Article  V(1)\t  is
\n\t      justified\t and whether the enforcement of\t the
\n\t      award  would violate the public policy of\t the
\n\t      law  of his country.  This limitation must  be
\n\t      seen   in\t the  light  of\t the  principle\t  of
\n\t      international  commercial arbitration  that  a
\n\t      national\tcourt should not interfere with\t the
\n\t      substance of the arbitration.” (p. 269)\n<\/p><\/blockquote>\n
\t      36.   Similarly Alan Redfern and Martin Hunter
\n\t      have said:\n<\/p><\/blockquote>\n
\t      “The  New York Convention does not permit\t any
\n\t      review on the merits
\n\t      of  an award to which the\t Convention  applies
\n\t      and  in this respect, therefore, differs\tfrom
\n\t      the provisions of some systems of national law
\n\t      governing the challenge of an award, where  an
\n\t      appeal  to the courts on points of law may  be
\n\t      permitted.”   (Redfern  &\t Hunter,   Law\t and
\n\t      Practice\t  of\tInternational\t  Commercial
\n\t      Arbitration, 2nd Edn., p. 46 1.)\n<\/p><\/blockquote>\n
37.  In\t  our\topinion,  therefore,  in   proceedings\t for
\nenforcement of a foreign award under the Foreign Awards Act,
\n1961,  the scope of enquiry before the court in which  award
\nis sought to be enforced is limited to grounds mentioned  in
\nSection 7 of the Act and does not enable a party to the said
\nproceedings to impeach the award on merits.
\nII.  Bar  to  the  enforcement of the  award  under  Section
\n7(1)(a)(ii) of the Act\n<\/p>\n
38.  As\t indicated  earlier, the grievance of  Renusagar  is
\nthat  the Arbitral Tribunal on October 1, 1985\tdecided\t the
\npreliminary objection raised by
\n673<\/span>
\nRenusagar  that the Arbitrators had become  functus  officio
\nand  were  not\tentitled to  proceed  with  the\t arbitration
\nproceedings  on\t merits\t and  that  the\t Arbitral   Tribunal
\nthereafter proceeded to deal with the merits of the claim of
\nGeneral Electric without any further notice to Renusagar and
\nas a result Renusagar was unable to present its case  before
\nthe  Arbitral  Tribunal.  This objection was not  raised  by
\nRenusagar  either before the learned Single Judge or  before
\nthe  Division  Bench of the High Court.\t We  have,  however,
\nconsidered the same and we do not find any substance in\t it.
\nAfter  the  Terms  of Reference had been  drawn\t before\t the
\nArbitral  Tribunal  on\tFebruary 8, 1984,  the\tparties\t had
\nappeared  before the Arbitral Tribunal at Paris for  hearing
\nwhich  lasted for ten days between February 25 to  March  8,
\n1985  and  during the course of the said  hearing  Renusagar
\npresented typed submissions and legal authorities before the
\nArbitral Tribunal.  In these hearings, the Arbitral Tribunal
\nconcluded hearing on issues 22(g) to (p) and the matter\t was
\nthereafter adjourned by the Arbitral Tribunal to June 10 but
\non  account  of\t sudden\t illness of Dr\tDixit,\tone  of\t the
\narbitrators,  the  matter  had to be adjourned\tand  it\t was
\nultimately fixed for October 1, 1985.  On June 26, 1988, the
\nChairman  of  the  Arbitral Tribunal sent a  notice  to\t the
\nparties\t wherein  it was stated that the  adjourned  hearing
\nwould  take place in London on Tuesday from October 1  to  4
\nand to continue if necessary during the following week\tfrom
\nOctober\t 7 to 11. In the said communication, it was  further
\nstated:\n<\/p>\n
\t      “5.  At  the  beginning of  the  hearing,\t the
\n\t      Tribunal will be prepared to hear\t submissions
\n\t      if  necessary on the adequacy of the  evidence
\n\t      before  us  on  the relevant  issues  of\tU.S.
\n\t      foreign  tax credit.  But the main purpose  of
\n\t      the  meeting is to deal with the\trespondent’s
\n\t      counter-claims  together with  the  claimant’s
\n\t      claims   for  119,053  U.S.  dollars   (unpaid
\n\t      purchase\tprice  of spare parts)\tand  103,500
\n\t      U.S.  dollars  (unpaid repairs  on  75  M.V.A.
\n\t      Transformers).\n<\/p><\/blockquote>\n
\t      6.    All the above counter-claims and  claims
\n\t      are  old, so before going into details  as  to
\n\t      merit,  the  Tribunal will  wish\tto  consider
\n\t      submissions   on\t the   raised\tissues\t  of
\n\t      limitation, laches, estoppel, abandonment\t and
\n\t      whether the right party is being sued.”\n<\/p><\/blockquote>\n
39.  On July 23, 1985, M\/s Khaitan & Partners, on behalf  of
\nRenusagar,  sent a communication to the\t Arbitrators  giving
\nnotice\tthat Renusagar was abandoning and withdrawing  items\n<\/p>\n
(ii) to (vi) and (viii) of its claim set forth in para 19(g)
\nof the Terms of Reference as amended by Paris hearings.\t  On
\nAugust\t10,  1985,  M\/s Khaitan &  Partners,  on  behalf  of
\nRenusagar, sent a communication to the Arbitrators wherein a
\nreference was made to the notice issued by Renusagar to\t the
\neffect that the ICC Arbitration Tribunal had become  functus
\nofficio\t and  neither  the ICC\tArbitration  Tribunal  could
\nproceed with the arbitration nor Renusagar could participate
\nin the same on the ground that the application submitted  by
\nGeneral\t Electric under Section 3 of the Foreign Awards\t Act
\nhad been rejected by Mirzapur Civil Court and the said order
\nof  the\t court had not yet been set aside or stayed  by\t the
\nAllahabad  High\t Court\tin the revision\t petition  filed  by
\nGeneral\t Electric.  Renusagar, through their advocates\t(M\/s
\nKhaitan & Partners) also sent petition dated August 23, 1985
\nto the Secretary-General, ICC as well as Secretariat, ICC of
\nArbitration reiterating their objection that the arbitrators
\nhad  become  flinctus officio and could not  proceed  and\/or
\nfunction.   In his communication to M\/s Khaitan\t &  Partners
\ndated
\n674<\/span>
\nSeptember  2,  1985 the Chairman of  the  Arbitral  Tribunal
\nintimated  that\t the question as to the effect of  the\tsuit
\nfiled  in  the Mirzapur Court on the  arbitration  would  be
\nconsidered  as a preliminary issue at the scheduled  meeting
\non  October 1, 1985.  On September 23, 1985, M\/s  Khaitan  &
\nPartners, on behalf of Renusagar, addressed a  communication
\nto Mr Roberto Power in the ICC (copies of the same were sent
\nto  the Arbitrators as well as to General Electric)  wherein
\nit  was stated: “Our plea is totally different.\t It is\tthat
\nthe Arbitrators have become functus officio in the facts and
\nlaw  stated by us in the 23rd August, 1985 document and\t our
\ntelexes to the Arbitrators copies of which have been sent to
\nICC.   Therefore, the question of our appearing\t before\t the
\nArbitrators  or\t their\tdetermining the plea  raised  by  us
\ncannot\tand  does  not arise.” In  the\tcommunication  dated
\nSeptember  28,\t1985  from M\/s Khaitan\t&  Partners,  it  is
\nstated:\t “We  have been repeatedly informing  you  that\t the
\nArbitrators  have become functus officio.  Therefore, be  so
\nkind as not to communicate with us any further regarding the
\narbitration  which  has\t become\t infructuous.”\tFrom   these
\ndocuments,  it would appear that the stand of Renusagar\t was
\nthat  the  Arbitrators had become functus officio  and\tthey
\ncould  not  proceed  with the  arbitration  and\t there\twas,
\ntherefore,  no\tquestion of Renusagar appearing\t before\t the
\nArbitral Tribunal on the dates fixed for hearing.  In  these
\ncircumstances,\tit is not open to Renusagar to say that\t the
\nArbitral Tribunal, after having rejected, (by majority)\t the
\nsaid  objection raised by Renusagar, by order dated  October
\n1,  1985  should have given a further  notice  to  Renusagar
\nasking\tthem to appear to make their submission\t before\t the
\nArbitral  Tribunal on the merits on issues 22(q) to  22(bb).
\nIn this context, it may also be stated that issues 22(q) and
\n22(r)  relate to the claim of US $ 119,053.91  for  purchase
\nprice of spare parts which is not disputed by Renusagar\t and
\nissue 22(s) relates to claim for compensatory damages on the
\nsaid amount which has been allowed on the same basis as\t the
\nclaim for compensatory damages on regular interest (Item No.\n<\/p>\n
2) under issue 22(k).  Rest of the matters covered by issues
\n22(t)  to 22(bb) related to counter-claims of Renusagar\t and
\nclaims by General Electric against counter-claims which have
\nbeen disallowed by the Arbitral Tribunal.\n<\/p>\n
40.  We are, therefore, of the opinion that the\t enforcement
\nof  the arbitral award is not barred by Section\t 7(1)(a)(ii)
\nof  the Foreign Awards Act on the ground that Renusagar\t was
\nunable to present its case before the Arbitral Tribunal.
\nIII.  Objection\t to the enforceability of the award  on\t the
\nground that it is contrary to the public policy of the State
\nof New York\n<\/p>\n
41.  Shri Venugopal has urged that although under sub-clause\n<\/p>\n
(b) of clause (2)   of Article V of the New York  Convention
\nthe recognition and enforcement of an arbitral award can  be
\nrefused\t if  the competent authority in\t the  country  where
\nrecognition  and  enforcement  is  sought  finds  that\t the
\nrecognition or enforcement of the award would be contrary to
\nthe  public policy of that country, i.e., the country  where
\nthe  award  is sought to be enforced, a departure  has\tbeen
\nmade in Section 7(1)(b)(ii) of the Foreign Awards Act  which
\nprescribes that the foreign award may not be enforced  under
\nthe said Act if the court dealing with the case is satisfied
\nthat  the  enforcement\tof the award would  be\tcontrary  to
\npublic policy.\tThe submission of Shri Venugopal is that  in
\nSection\t  7(1)(b)(ii)  of  the\tAct,  the   Parliament\t has
\ndeliberately  refrained from using the words “public  policy
\nof  India” which implies that the words “public policy”\t are
\nnot restricted
\n675<\/span>
\nto  the\t public policy of India but would cover\t the  public
\npolicy\tof the country whose law governs the contract or  of
\nthe country of the place of arbitration and the\t enforcement
\nof  an\taward  would be refused if it is  contrary  to\tsuch
\npublic\tpolicy.\t In this context Shri Venugopal has  invited
\nour  attention\tto  the provisions of Section  7(1)  of\t the
\nArbitration  (Protocol & Convention) Act, 1937\twherein\t the
\nwords used are “and enforcement thereof must not be contrary
\nto  the public policy or law of India”.\t According  to\tShri
\nVenugopal   while   under  the\t1937  Act,   objections\t  to
\nenforcement are limited to the public policy of India or law
\nof India, there is no such limitation in Section 7(1)(b)(ii)
\nof  the Foreign Awards Act.  Shri Venugopal has also  placed
\nreliance   on\tthe   decision\tof   this   Court   in\t V\/0
\nTractoroexport, Moscow v. Tarapore & Co.5<\/a> wherein this Court
\nhas  held that there was clear deviation from the rigid\t and
\nstrict\trule  that the courts must stay a suit\twhenever  an
\ninternational commercial arbitration as contemplated by\t the
\nProtocol and the Conventions, was to take place and that  it
\nwas open to the legislature to deviate from the terms of the
\nProtocol  and  the Convention and that it  appears  to\thave
\ngiven  only a limited effect to the provisions of  the\t1958
\nConvention.  We find it difficult to accept this contention.
\nIt cannot be held that by not using the words “public policy
\nof  India”  and\t only using the\t words\t“public\t policy”  in
\nSection\t 7(1)(b)(ii) of the Foreign Awards  Act,  Parliament
\nintended  to  deviate from the provisions of  the  New\tYork
\nConvention contained in Article V(2)(b) which uses the words
\n“public\t policy of that country” implying public  policy  of
\nthe  country  where recognition and enforcement\t is  sought.
\nThat Parliament did not intend to deviate from the terms  of
\nthe New York Convention is borne out by the amendment  which
\nwas  introduced\t in  the Act by Act 47\tof  1973  after\t the
\ndecision  of  this  Court in  Tractoroexport  case5  whereby
\nSection\t 3  was substituted to bring it in accord  with\t the
\nprovisions  of the New York Convention.\t The Foreign  Awards
\nAct  has  been\tenacted\t to give  effect  to  the  New\tYork
\nConvention  which seeks to remedy the defects in the  Geneva
\nConvention  of 1927 that hampered the speedy  settlement  of
\ndisputes  through arbitration.\tThe Foreign Awards  Act\t is,
\ntherefore, intended to reduce the time taken in\t recognition
\nand  enforcement of foreign arbitral awards.  The  New\tYork
\nConvention  seeks  to achieve this objective  by  dispensing
\nwith  the requirement of the leave to enforce the  award  by
\nthe  courts  where the award is made and thereby  avoid\t the
\nproblem of “double exequatue’.\tIt also restricts the  scope
\nof   enquiry  before  the  court  enforcing  the  award\t  by
\neliminating  the  requirement that the award should  not  be
\ncontrary  to  the principles of the law of  the\t country  in
\nwhich  it is sought to be relied upon.\tEnlarging the  field
\nof enquiry to include public policy of the courts whose\t law
\ngoverns\t the  contract\tor  of\tthe  country  of  place\t  of
\narbitration,  would run counter to the expressed  intent  of
\nthe legislation.\n<\/p>\n
42.  With  regard  to  the  provisions\tof  the\t Arbitration
\n(Protocol  &  Convention) Act, 1937, it may be\tstated\tthat
\nSection 7(1) of the said Act, as originally enacted, read as
\nunder:\n<\/p>\n
\t      “7.   Conditions\tfor enforcement\t of  foreign
\n\t      awards.- (1) In order that a foreign award may
\n\t      be enforceable under this Act it must have-\n<\/p><\/blockquote>\n
\t      (a)   been  made in pursuance of an  agreement
\n\t      for arbitration which was valid under the\t law
\n\t      by which it was governed,
\n\t      5 (1969) 3 SCC 562: (1970) 3 SCR 53
\n\t      676<\/span>\n<\/p><\/blockquote>\n
\t      (b)   been  made by the Tribunal provided\t for
\n\t      in  the  agreement or  constituted  in  manner
\n\t      agreed upon by the parties,\n<\/p><\/blockquote>\n
\t      (c)   been  made\tin conformity with  the\t law
\n\t      governing the arbitration procedure,\n<\/p><\/blockquote>\n
\t      (d)   become final in the country in which  it
\n\t      was made,\n<\/p><\/blockquote>\n
\t      (e)   been  in respect of a matter  which\t may
\n\t      lawfully be referred to arbitration under\t the
\n\t      law of British India,
\n\t      and  the\tenforcement  thereof  must  not\t  be
\n\t      contrary\tto the public policy or the  law  of
\n\t      British India.\n<\/p><\/blockquote>\n
\t      (2)   A foreign award shall not be enforceable
\n\t      under  this Act if the Court dealing with\t the
\n\t      case is satisfied that-\n<\/p><\/blockquote>\n
\t      (a)   the\t award\thas  been  annulled  in\t the
\n\t      country in which it was made, or\n<\/p><\/blockquote>\n
\t      (b)   the\t party against whom it is sought  to
\n\t      enforce the award was not given notice of\t the
\n\t      arbitration proceedings in sufficient time  to
\n\t      enable  him to present his case, or was  under
\n\t      some  legal  incapacity and was  not  properly
\n\t      represented or,\n<\/p><\/blockquote>\n
\t      (c)   the\t award\tdoes not deal with  all\t the
\n\t      questions\t referred or contains  decisions  on
\n\t      matters beyond the scope of the agreement\t for
\n\t      arbitration:\n<\/p><\/blockquote>\n
\t      Provided that if the award does not deal\twith
\n\t      all  questions referred the Court may,  if  it
\n\t      thinks fit, either postpone the enforcement of
\n\t      the award or order its enforcement subject  to
\n\t      the  giving  of such security  by\t the  person
\n\t      seeking  to enforce it as the Court may  think
\n\t\t\t    fit.\n<\/p><\/blockquote>\n
\t      (3)   If\t a  party  seeking  to\tresist\t the
\n\t      enforcement  of  a foreign award\tproves\tthat
\n\t      there  is\t any  ground  other  than  the\tnon-
\n\t      existence\t of  the  conditions  specified\t  in
\n\t      clauses  (a), (b) and (c) of sub-section\t(1),
\n\t      or  the existence of the conditions  specified
\n\t      in  clauses  (b) and (c) of  sub-section\t(2),
\n\t      entitling\t him to contest the validity of\t the
\n\t      award, the Court may, if it thinks fit, either
\n\t      refuse  to  enforce the award or\tadjourn\t the
\n\t      hearing  until  after the expiration  of\tsuch
\n\t      period   as  appears  to\tthe  Court   to\t  be
\n\t      reasonably sufficient to enable that party  to
\n\t      take  the\t necessary steps to have  the  award
\n\t      annulled by the competent tribunal.”\n<\/p><\/blockquote>\n
43.  By Indian Independence (Adaptation of Central Acts\t and
\nOrdinances)  Order,  1948  the words  “British\tIndia”\twere
\nsubstituted  by the words “the Provinces”, which words\twere
\nsubstituted  by the words “the States” by the Adaptation  of
\nLaws  Order, 1950.  By Part B States (Laws) Act,  1951,\t the
\nwords  “the  States” were substituted by the  word  “India”.
\nThe  aforesaid\tamendments  introduced\tfrom  time  to\ttime
\nindicate  that\tthe words “public policy” and  “the  law  of
\nIndia”\tare independent of each other and the words  “public
\npolicy”\t are  not qualified by the words  “of  India”  which
\nfollow\tthe word “law” because there was no separate  public
\npolicy for each Province or State in India.  This means that
\neven  in  the  Protocol\t and  Convention  Act  of  1937\t the
\nlegislature  had used the words “Public Policy” only and  by
\nthe said words it was intended to mean “the public policy of
\nIndia”.\t  The New York Convention has further curtailed\t the
\nscope  of enquiry by excluding contravention of law  of\t the
\ncourt  in  which  the award is sought to be  enforced  as  a
\nground for refusing recognition and enforcement of a foreign
\naward.\t The  words  “law of India”  have,  therefore,\tbeen
\nomitted\t in Section 7(1)(b)(ii) of the Foreign\tAwards\tAct.
\nIt cannot,
\n677<\/span>
\ntherefore,  be said that by using the words “Public  Policy”
\nonly Section 7(1)(b)(ii) of the Foreign Awards Act seeks  to
\nmake  a\t departure  from the  provisions  contained  in\t the
\nProtocol and Convention Act of 1937 and, by using the  words
\n“Public\t  Policy”  without  any\t qualification,\t  Parliament
\nintended  to  broaden the scope of enquiry so  as  to  cover
\npublic\tpolicy of other countries, i.e., the  country  whose
\nlaw  governs  the contract or the country of  the  place  of
\narbitration.   In  the U.K., the Arbitration Act,  1975\t has
\nbeen  enacted  to give effect to the provisions of  the\t New
\nYork  Convention.  Section 5(3) of the said Act provides  as
\nunder:\n<\/p>\n
\t      “Enforcement of a Convention award may also be
\n\t      refused if the award is in respect of a matter
\n\t      which   is  not  capable\tof   settlement\t  by
\n\t      arbitration,  or\tif it would be\tcontrary  to
\n\t      public policy to enforce the award.”\n<\/p><\/blockquote>\n
44.   Although\tthe  words “public  policy”  only  are\tused
\nwithout\t indicating whether they refer to public  policy  of
\nEngland,  authors of authoritative textbooks have  expressed
\nthe  view that they only mean  “English public\tpolicy”.  In
\nRussel on Arbitration, 12th Edn. at p. 384 it is stated:\n<\/p>\n
\t      “The  New\t York  Convention  is  to  the\tsame
\n\t      effect.  Accordingly, though the 1975 Act does
\n\t      not   so\tspecify,  it  must  be\ttaken\tthat
\n\t      reference is intended to English public policy
\n\t      which  indeed is the only public\tpolicy\tinto
\n\t      which   the   English  courts   can   sensibly
\n\t      inquire.”\n<\/p><\/blockquote>\n
\t      The  same view is expressed in Dicey &  Morris
\n\t      on The Conflict of Laws, 11th Edn., Vol.\tI at
\n\t      pp. 586-7.\n<\/p><\/blockquote>\n
\t      45.  We are, therefore, of the view  that\t the
\n\t      words   “public\tpolicy”\t used\tin   Section
\n\t      7(1)(b)(ii) of the Foreign Awards Act refer to
\n\t      the public policy of India and the recognition
\n\t      and  enforcement of the award of the  Arbitral
\n\t      Tribunal\tcannot be questioned on\t the  ground
\n\t      that  it is contrary to the public  policy  of
\n\t      the State of New York.\n<\/p><\/blockquote>\n
\t      IV.  Meaning  of ‘public\tpolicy’\t in  Section
\n\t      7(1)(b)(ii) of the Act\n<\/p><\/blockquote>\n
\t      46.  While  observing  that  “from  the\tvery
\n\t      nature  of  things,  the\texpressions  ‘public
\n\t      policy’,\t ‘opposed  to  public\tpolicy’\t  or
\n\t      ‘contrary\t to public policy’ are incapable  of
\n\t      precise definition” this Court has laid  down:
\n\t      (SCC p. 217, para 92)
\n\t      “Public policy … connotes some matter  which
\n\t      concerns\tthe  public  good  and\tthe   public
\n\t      interest.\t The  concept  of what\tis  for\t the
\n\t      public good or in the public interest or\twhat
\n\t      would  be injurious or harmful to\t the  public
\n\t      good  or the public interest has\tvaried\tfrom
\n\t      time  to\ttime.” (See : Central  Inland  Water
\n\t      Transport Corpn. Ltd. v. Brojo Nath Ganguly6.)<\/a>\n<\/p><\/blockquote>\n
\t       47.  The need for applying the touchstone  of
\n\t      public  policy has been thus explained by\t Sir
\n\t      William Holdsworth:\n<\/p><\/blockquote>\n
\t      “In  fact, a body of law like the common\tlaw,
\n\t      which  has grown up gradually with the  growth
\n\t      of the nation, necessarily acquires some fixed
\n\t  principles, and if it is to maintain
\n\t      these  principles\t it  must be  able,  on\t the
\n\t      ground  of  public policy or some\t other\tlike
\n\t      ground,  to  suppress practices  which,  under
\n\t      ever new disguises, seek to weaken or negative
\n\t      them.”\n<\/p><\/blockquote>\n
\t  (History  of English Law, Vol.  III,
\n\t      p. 55)\n<\/p><\/blockquote>\n
\t       48.  Since the doctrine of public  policy  is
\n\t      somewhat open-textured and   flexible,  Judges
\n\t      in  England  have\t shown\tcertain\t degree\t  of
\n\t      reluctance  to  invoke  it  in  domestic\tlaw.
\n\t      There are two conflicting positions which\t are
\n\t      referred as the
\n\t      6(1986)3SCC  156,\t 217: 1986  SCC\t (L&S)\t429:<\/p><\/blockquote>\n
\t      (1986) 1 ATC 103: (1986)2 SCR 278 ,372
\n678<\/span>
\n,narrow view’ and the ‘broad view’.  According to the narrow
\nview courts cannot create new heads of public policy whereas
\nthe  broad  view countenances judicial law  making  in\tthis
\nareas.\t(See : Chitly on Contracts, 26th Edn., Vol. I,\tpara
\n1133, pp. 685-686).  Similar is the trend of the decision in
\nIndia.\t In Gherulal Parakh v. Mahadeodas Maiya7<\/a> this  Court
\nfavoured the narrow view when it said:\n<\/p>\n
\t      “…  though  the\t heads are  not\t closed\t and
\n\t      though theoretically it may be permissible  to
\n\t      evolve   a   new\t head\tunder\t exceptional
\n\t      circumstances  of\t a  changing  world,  it  is
\n\t      admissible  in  the interest of  stability  of
\n\t      society  not to make any attempt\tto  discover
\n\t      new heads in these days” (p. 440)\n<\/p><\/blockquote>\n
49.  In\t later\tdecisions this Court  has,  however,  leaned
\ntowards the broad view. [See : Murlidhar Agarwal v. State of
\nU.P.8;\tCentral Inland Water Transport Corpn. v. Brojo\tNath
\nGanguly6<\/a> at p. 373; Rattan Chand Hira Chand
\nv.   Askar Nawaz Jung9.<\/a>]\n<\/p>\n
50.  In\t the  field  of private\t international\tlaw,  courts
\nrefuse to apply a rule of foreign law or recognise a foreign
\njudgment or a foreign arbitral award if it is found that the
\nsame  is  contrary to the public policy of  the\t country  in
\nwhich  it is sought to be invoked or enforced.\tThe  English
\ncourts follow the following principles:\n<\/p>\n
\t      “Exceptionally,  the  English court  will\t not
\n\t      enforce  or recognise a right conferred  or  a
\n\t      duty  imposed by a foreign law where,  on\t the
\n\t      facts of the particular case, enforcement\t or,
\n\t      as  the  case may be,  recognition,  would  be
\n\t      contrary\tto a fundamental policy\t of  English
\n\t      law.   The  court has, therefore,\t refused  in
\n\t      certain cases to apply foreign law where to do
\n\t      so  would in the particular  circumstances  be
\n\t      contrary\tto  the\t interests  of\tthe   United
\n\t      Kingdom  or contrary to justice or  morality.”
\n\t      (See  : Halsbury’s Laws of England, 4th  Edn.,
\n\t      Vol. 8, para 418.)\n<\/p><\/blockquote>\n
51.  A distinction is drawn while applying the said rule  of
\npublic policy between a matter governed by domestic law\t and
\na matter involving conflict of laws.  The application of the
\ndoctrine  of public policy in the field of conflict of\tlaws
\nis more limited than that in the domestic law and the courts
\nare  slower  to invoke public policy in\t cases\tinvolving  a
\nforeign element than when a purely municipal legal issue  is
\ninvolved.  (See : Vervaeka v. Smith10; Dicey &\tMorris,\t The
\nConflict  of  Laws, 11 th Edn., Vol.  I p.  92;\t Cheshire  &
\nNorth,\tPrivate International Law, 12th Edn., pp.  128-129).
\nThe reason for this approach is thus explained by  Professor
\nGraveson:\n<\/p>\n
\t      “This  concern  of law in\t the  protection  of
\n\t      social institutions is reflected in its  rules
\n\t      of  both\tmunicipal  and\tconflict  of   laws.<\/p><\/blockquote>\n
\t      Although\tthe concept of public policy is\t the
\n\t      same  in nature in these two spheres  of\tlaw,
\n\t      its   application\t  differs  in\tdegree\t and
\n\t      occasion,\t corresponding\tto  the\t fact\tthat
\n\t      transactions containing a foreign element\t may
\n\t      constitute a less serious threat to  municipal
\n\t      institutions    than   would   purely    local
\n\t      transactions.”  (R.H. Graveson :\tConflict  of
\n\t      Laws, 7th Edn., p. 165)
\n7    1959 Supp 2 SCR 406: AIR 1959 SC 781
\n8    (1974) 2 SCC 472, 482: (1975) 1 SCR 575, 584
\n9    (1991) 3 SCC 67, 76-77
\n10   (1983) 1 AC 145,164: (1982) 2 All ER 144,158
\n679<\/span>\n<\/p>\n
\t      52.   In\tLouchs\tv. Standard Oil Co.  of\t New
\n\t      York’ I Cordozo, J. has said:\n<\/p>\n
\t      “The courts are not free to refuse to  enforce
\n\t      a foreign right at the pleasure of the judges,
\n\t      to suit the individual notion of expediency or
\n\t      fairness.\t  They\tdo  not\t close\ttheir  doors
\n\t      unless  help  would violate  some\t fundamental
\n\t      principle\t   of\tjustice,   some\t   prevalent
\n\t      conception  of good morals,  some\t deep-rooted
\n\t      tradition of the common weal.” (p. 111)\n<\/p>\n
53.  The particular rule of public policy that the defendant
\ninvokes\t may  be  of this overriding  nature  and  therefore
\nenforceable in all actions, or it may be local in the  sense
\nthat  it represents some feature of internal policy.  If  so
\nit  must be confined to cases governed by the  domestic\t law
\nand it should not be extended to a case governed by  foreign
\nlaw.  In order to ascertain whether the rule is allpervading
\nor  merely  local, it must be examined in the light  of\t its
\nhistory,  the  purpose\tof its adoption, the  object  to  be
\naccomplished by it and the local conditions. (See : Cheshire
\nand North, Private International Law, 12th Edn., p. 129.)\n<\/p>\n
54.  The cases in which the English courts refuse to enforce
\na foreign acquired right on the ground that its\t enforcement
\nwould affront some moral principle the maintenance of  which
\nadmits\tof no possible compromise, have been  classified  as
\nunder:\n<\/p>\n
\t      “(i)  Where  the\tfundamental  conceptions  of
\n\t      English justice are disregarded;\n<\/p><\/blockquote>\n
\t       (ii) Where   the\t  English   conceptions\t  of
\n\t      morality are infringed;\n<\/p><\/blockquote>\n
\t       (iii)\t Where a transaction prejudices\t the
\n\t      interests\t of the United Kingdom or  its\tgood
\n\t      relations with foreign powers;\n<\/p><\/blockquote>\n
\t      (iv)  Where  a foreign law or  status  offends
\n\t      the  English conceptions of human liberty\t and
\n\t      freedom of action;”\n<\/p><\/blockquote>\n
\t      (See    :\t  Cheshire   and   North,    Private
\n\t      International Law, 12th Edn.,pp. 131-133.)\n<\/p><\/blockquote>\n
55.  As\t observed  by Lord Simon of  Glaisdale\t“an  English
\nCourt  will  exercise  such  a\tjurisdiction  with   extreme
\nreserve”. (Vervaeka v. Smith10)\n<\/p>\n
56.  In\t Dalmia\t Dairy Industries Ltd. v. National  Bank  of
\nPakistan12  the\t Court\tof  Appeal  refused  to\t extend\t the
\ndoctrine of public policy to embrace the principle that\t the
\nEnglish courts should refuse to enforce an award arising out
\nof  a contract between persons who are nationals of  foreign
\nStates\twhich were at war with each other but each of  which
\nwas  in friendly relationship with England.  In\t support  of
\nthe  applicability  of the doctrine, it was argued  that  it
\nwould  be harmful to international relations of\t the  United
\nKingdom\t with  friendly countries if it were  to  allow\t the
\nmachinery of its courts to be used to enforce a judgment, or
\nan  arbitral  award in favour of a national of\tone  foreign
\nState  friendly to the United Kingdom, against the  national
\nof  another  foreign  State, also  friendly  to\t the  United
\nKingdom,  when\tthe two foreign States are  enemies  of\t one
\nanother.   Negativing  the  said contention,  the  Court  of
\nAppeal (Megaw, L.J.) has held:\n<\/p>\n
\t      ” If there is no authority binding on us which
\n\t      specifically adopts that supposed doctrine, or
\n\t      principle, we should unhesitatingly decline to
\n\t      make
\n\t      11 224 NY 99 (1918)
\n\t       12 (1978) 2 Lloyd’s  LR 223
\n\t      680<\/span>
\n\t      new  law\tto  that effect in  this  case.\t  We
\n\t      should   regard  it,  on\tbalance,  as   being
\n\t      contrary to public policy for such a principle
\n\t      to apply.” (p. 300)\n<\/p><\/blockquote>\n
\t      57.   In\t      Deutsche\t      Schachtbau-und
\n\t\t\t    Tiefbohrgesellschaft  mbH  v.  Ras\tAl  Khaima
\nh
\n\t      National\tOil  Co.13 decided by the  Court  of
\n\t      Appeal, Sir John Donaldson M.R. has said:
\n\t      “Consideration  of public policy can never  be
\n\t      exhaustively  defined,  but  they\t should\t  be
\n\t      approached with extreme caution.\tAs  Burrough
\n\t      J. remarked in Richardson v. Mellish14: ‘It is
\n\t      never  argued  at all but\t when  other  points
\n\t      fail.’  It has to be shown that there is\tsome
\n\t      element of illegality or that the\t enforcement
\n\t      of the award would be clearly injurious to the
\n\t      public  good  or, possibly,  that\t enforcement
\n\t      would  be\t wholly offensive  to  the  ordinary
\n\t      reasonable  and fully-informed member  of\t the
\n\t      public on whose behalf the powers of the State
\n\t      are exercised.” (p. 779)\n<\/p><\/blockquote>\n
\t      58.   The\t approach of the American courts  to
\n\t      the   doctrine   of  public  policy   in\t its
\n\t      application to recognition and enforcement  of
\n\t      foreign  arbitral\t awards under the  New\tYork
\n\t      Convention is reflected in the decision of the
\n\t      US  Court of Appeals in Parsons  &  Whittemore
\n\t      Overseas\tCo.  Inc.  v.  Societe\tGenerale  De
\n\t      L’Industrie  Du  Papier (Rakta)  and  Bank  of
\n\t      America15 wherein it has been observed:
\n\t      “The  general pro-enforcement  bias  informing
\n\t      the Convention and explaining its supersession
\n\t      of  the  Geneva  Convention  points  toward  a
\n\t      narrow  reading of the public policy  defense.
\n\t      An  expansive  construction  of  this  defense
\n\t      would vitiate the Convention’s basic effort to
\n\t      remove\t  preexisting\t   obstacles\t  to
\n\t      enforcement. … We conclude, therefore,\tthat
\n\t      the convention’s public policy defense  should
\n\t      be construed narrowly.  Enforcement of foreign
\n\t      arbitral\tawards may be denied on\t this  basis
\n\t      only where enforcement would violate the forum
\n\t      State’s  most  basic notions of  morality\t and
\n\t      justice.” (pp. 973-974)\n<\/p><\/blockquote>\n
\t      59.   While    dealing\twith\t arbitration
\n\t      agreements    in\t  international\t    business
\n\t      transactions,  the  U.S.\tSupreme\t Court,\t has
\n\t      disapproved a parochial refusal by the  courts
\n\t      of  one  country to enforce  an  international
\n\t      arbitration   agreement\tas   well   as\t the
\n\t      “parochial  concept that all disputes must  be
\n\t      resolved\tunder our laws and in  our  courts”.
\n\t      It has been observed:\n<\/p><\/blockquote>\n
\t      “We  cannot have trade and commerce  in  world
\n\t      markets  and international waters\t exclusively
\n\t      on  our  terms,  governed\t by  our  laws,\t and
\n\t      resolved\tin  our Courts.”  (Fritz  Scherk  v.
\n\t      Alberto-Culver Co. 16)\n<\/p><\/blockquote>\n
\t      60.   Similarly in Mitsubishi Motors Corpn. v.
\n\t      Soler   Chrysler-Plymouth\t Inc.  17   it\t was
\n\t      observed:<\/p><\/blockquote>\n
\t      “We  conclude that concerns  of  international
\n\t      comity, respect for the capacities of  foreign
\n\t      and  transnational tribunals, and\t sensitivity
\n\t\t\t    to\tthe  need of the  international\t commercia
\nl
\n\t      system for predictability in the resolution of
\n\t      disputes require that we enforce the  parties’
\n\t      agreement, even assuming that
\n\t      13    (1987) 2 All ER 769
\n\t      14    (1824) 2 Bing 229, 252: (1824-34) All ER
\n\t      Rep 258, 266
\n\t      15    508 F 2d 969 (1974)
\n\t      16    41\tL Ed 2d 270, 279, 281 : 417  US\t 506
\n\t      (1974)<\/span>
\n\t      17    87 L Ed 2d 444
\n\t      681<\/span>
\n\t       a  contrary result would be forthcoming in  a
\n\t      domestic context.” (pp. 456457)\n<\/p>\n
61.  In France, a distinction is made between  international
\npublic\t policy\t (“order  public  international”)  and\t the
\nnational public policy.\t Under the new French Code of  Civil
\nProcedure, an international arbitral award can be set  aside
\nif the recognition or execution is contrary to international
\npublic\tpolicy.\t In doing so it recognises the existence  of
\ntwo  levels of public policy  the national level, which\t may
\nbe  concerned with purely domestic considerations,  and\t the
\ninternational  level,  which  is  less\trestrictive  in\t its
\napproach.  (See\t : Redfern and Hunter, Law and\tPractice  of
\nInternational Commercial Arbitration, 2nd Edn., p. 445.)\n<\/p>\n
62.  According\tto  Redfern  and  Hunter,  “if\ta   workable
\ndefinition of ‘international public policy’ could be  found,
\nit  would be an effective way of preventing an award  in  an
\ninternational  arbitration from being set aside\t for  purely
\ndomestic policy considerations”.  But in the absence of such
\na  definition  “there are bound to be practices\t which\tsome
\nStates\twill  regard  as contrary  to  international  public
\ninterest and other States will not” [See : Redfern & Hunter
\n(supra)\t  pp. 445-446.]\n<\/p>\n
63.In  view  of\t the absence of\t a  workable  definition  of
\n“international public policy” we   find\t it   difficult\t  to
\nconstrue   the\t expression  “public  policy”\tin   Article
\nV(2)(b)\t  of  the New York Convention to mean  international
\npublic\tpolicy.\t In our opinion the said expression must  be
\nconstrued  to mean the doctrine of public policy as  applied
\nby  the\t courts in which the foreign award is sought  to  be
\nenforced.   Consequently, the expression ‘public policy’  in
\nSection\t 7(1)(b)(ii)  of the Foreign Awards  Act  means\t the
\ndoctrine of public policy as applied by the courts in India.
\nThis  raises  the question whether the narrower\t concept  of
\npublic\t policy\t as  applicable\t in  the  field\t of   public
\ninternational law should be applied or the wider concept  of
\npublic policy as applicable in the field of municipal law.\n<\/p>\n
64.  Keeping in view the object underlying the enactment  of
\nthe  Foreign  Awards  Act, this Court has  also\t favoured  a
\nliberal construction of the provisions of the said Act.\t  In
\nRenusagar  case I1 it has been observed: (SCC p.  723,\tpara\n<\/p>\n
50)
\n\t      “It   is\tobvious\t that  since  the   Act\t  is
\n\t      calculated and designed to subserve the  cause
\n\t      of   facilitating\t international\t trade\t and
\n\t      promotion\t thereof  by  providing\t for  speedy
\n\t      settlement  of disputes arising in such  trade
\n\t      through arbitration, any expression or  phrase
\n\t      occurring\t therein should receive,  consisting
\n\t      with  its\t literal and  grammatical  sense,  a
\n\t      liberal construction.” (p. 492)\n<\/p>\n
65.  This  would  imply that the defence  of  public  policy
\nwhich  is  permissible under Section 7(1)(b)(ii)  should  be
\nconstrued  narrowly.  In this context, it would also  be  of
\nrelevance  to mention that under Article I(e) of the  Geneva
\nConvention Act of 1927, it is permissible to raise objection
\nto the enforcement of arbitral award on the ground that\t the
\nrecognition  or enforcement of the award is contrary to\t the
\npublic policy or to the principles of the law of the country
\nin which it is sought to be relied upon.  To the same effect
\nis  the\t provision  in\tSection\t 7(1)  of  the\tProtocol   &
\nConvention  Act of 1837 which requires that the\t enforcement
\nof  the\t foreign award must not be contrary  to\t the  public
\npolicy\tor the law of India.  Since the\t expression  “public
\npolicy”\t covers the field not covered by the words “and\t the
\nlaw of India” which follow the said expression,
\n682<\/span>
\ncontravention  of  law\talone will not attract\tthe  bar  of
\npublic\tpolicy and something more than contravention of\t law
\nis required.\n<\/p>\n
66.  Article V(2)(b) of the New York Convention of 1958\t and
\nSection\t 7(1)(b)(ii)  of  the  Foreign\tAwards\tAct  do\t not
\npostulate  refusal  of\trecognition  and  enforcement  of  a
\nforeign\t award on the ground that it is contrary to the\t law
\nof the country of enforcement and the ground of challenge is
\nconfined  to the recognition and enforcement being  contrary
\nto  the public policy of the country in which the  award  is
\nset  to be enforced.  There is nothing to indicate that\t the
\nexpression  “public  policy” in Article V(2)(b) of  the\t New
\nYork  Convention  and  Section 7(1)(b)(ii)  of\tthe  Foreign
\nAwards\tAct  is not used in the same sense in which  it\t was
\nused  in Article 1(c) of the Geneva Convention of  1927\t and
\nSection\t 7(1)  of the Protocol and Convention Act  of  1937.
\nThis would mean that “public policy” in Section\t 7(1)(b)(ii)
\nhas been used in a narrower sense and in order to attract to
\nbar  of\t public\t policy the enforcement of  the\t award\tmust
\ninvoke\tsomething  more\t than the violation of\tthe  law  of
\nIndia.\t Since\tthe  Foreign Awards Act\t is  concerned\twith
\nrecognition  and  enforcement of foreign  awards  which\t are
\ngoverned by the principles of private international law, the
\nexpression  “public  policy” in Section 7(1)(b)(ii)  of\t the
\nForeign\t Awards\t Act must necessarily be  construed  in\t the
\nsense the doctrine of public policy is applied in the  field
\nof private international law.  Applying the said criteria it
\nmust  be held that the enforcement of a foreign award  would
\nbe  refused  on\t the ground that it is\tcontrary  to  public
\npolicy\tif  such  enforcement  would  be  contrary  to\t (i)
\nfundamental  policy of Indian law; or (ii) the interests  of
\nIndia; or (iii) justice or morality.\n<\/p>\n
V.   Is the award contrary to public policy of India?\n<\/p>\n
67.  Having  examined  the  scope  of  public  policy  under
\nSection\t 7(1)(b)(ii) of the Foreign Awards Act, we will\t now
\nproceed\t to  consider the various grounds on  the  basis  of
\nwhich the said provision is invoked by Renusagar to bar\t the
\nenforcement  for  the award of the  Arbitral  Tribunal.\t  As
\nindicated earlier, Renusagar has invoked the said  provision
\non  the\t ground\t that  enforcement of  the  award  would  be
\ncontrary  to  the  public policy for the  reason  that\tsuch
\nenforcement-\n<\/p>\n
\t      (a)   would   involve  contravention  of\t the
\n\t      provisions of FERA;\n<\/p><\/blockquote>\n
\t      (b)   would amount to penalising Renusagar for
\n\t      not disregarding the interim orders passed  by
\n\t      the  Delhi  High Court in\t the  writ  petition
\n\t      filed by Renusagar;\n<\/p><\/blockquote>\n
\t      (c)   would   enable  recovery   of   compound
\n\t      interest on interest;\n<\/p><\/blockquote>\n
\t      (d)   would  result in payment of\t damages  on
\n\t      damages;\n<\/p><\/blockquote>\n
\t      (e)   would  result  in unjust  enrichment  by
\n\t      General Electric;\n<\/p><\/blockquote>\n
We  will  examine the submissions of learned  counsel  under
\neach head separately.\n<\/p>\n
(a)  Violation of FERA\n<\/p>\n
68.  As mentioned in the Preamble, FERA is a law  regulating
\ncertain\t  payments,   dealings\tin  foreign   exchange\t and
\nsecurities,   transactions  indirectly\t affecting   foreign
\nexchange  and  the  import and export of  currency  for\t the
\nconservation  of  the  foreign\texchange  resources  of\t the
\ncountry and the proper utilisation thereof in the  interests
\nof the economic development of the country.  It was preceded
\nby   Foreign   Exchange\t Regulation  Act,   1947.    Similar
\nenactments
\n 683<\/span>
\nproviding for exchange control exist in other countries.  In
\nthe  United  Kingdom, there is a  similar  enactment,  viz.,
\nExchange  Control Act, 1947, which remains in force but\t its
\noperation  has been suspended since 1979.  The view  of\t the
\nEnglish courts is that the exchange control legislation does
\nnot  belong to the field of revenue laws and application  of
\nsuch  law is not obnoxious to English public policy. (See  :
\nKahler\tv. Midland Bank Ltd.18; Zivnostenska Banka  National
\nCorpn.\tv.  Frankman19.) In Herbert Wagg & Co.\tLtd.,  Re2O,
\nUpjohn J., has said:\n<\/p>\n
\t      “It   cannot  be\tdoubted\t  that\t legislation
\n\t      intended to protect the economy of the  nation
\n\t\t\t    and\t the  general welfare  of  its\tinhabitant
\ns
\n\t      regardless  of  their nationality\t by  various
\n\t      measures\tof  foreign exchange control  or  by
\n\t      altering\t the  value  of\t its  currency,\t  is
\n\t      recognised  by  foreign  courts  although\t its
\n\t      effect  is  usually  partially   confiscatory.
\n\t      Probably there is no civilized country in\t the
\n\t      world  which  has\t not at some  stage  in\t its
\n\t      history altered its currency or restricted the
\n\t      rights  of  its inhabitants  to  purchase\t the
\n\t      currency of another country. (p. 349)
\n\t      In my judgment these courts must recognize the
\n\t      right  of every foreign State to\tprotect\t its
\n\t      economy\tby  measures  of  foreign   exchange
\n\t      control  and  by\taltering the  value  of\t its
\n\t      currency.\t  Effect  must\tbe  given  to  those
\n\t      measures where the law of the foreign State is
\n\t      the  proper law of the contract or  where\t the
\n\t      movable  is  situate  within  the\t territorial
\n\t      jurisdiction of the State.”(p.351)\n<\/p><\/blockquote>\n
\t      69.The   following   principle   of    Private
\n\t      International Law is applicable in relation to
\n\t      such legislation:\n<\/p><\/blockquote>\n
\t      “212.  (1)  A contractual\t obligation  may  be
\n\t      invalidated or discharged by exchange  control
\n\t      legislation if-\n<\/p><\/blockquote>\n
\t      (a)   such  legislation is part of the  proper
\n\t      law of the contract; or\n<\/p><\/blockquote>\n
\t      (b)   it\tis part of the law of the  place  of
\n\t      performance; or\n<\/p><\/blockquote>\n
\t      (c)   it\tis  part  of  English  law  and\t the
\n\t      relevant\tstatute or statutory  instrument  is
\n\t      applicable to the contract:\n<\/p><\/blockquote>\n
\t      Provided\tthat  foreign  exchange\t legislation
\n\t      will not be applied if it is used not with the
\n\t      object  of  protecting  the  economy  of\t the
\n\t      foreign\tState,\tbut  as\t an  instrument\t  of
\n\t      oppression or discrimination.” (See : Dicey  &
\n\t      Morris, The Conflict of Laws, 11 th Edn., Vol.
\n\t      II, 1466.)\n<\/p><\/blockquote>\n
\t      70.   In the comments on the said rule, it  is
\n\t      stated:<\/p><\/blockquote>\n
\t      “An  English  court would\t clearly  refuse  to
\n\t      enforce  a contract the making or\t performance
\n\t      of  which\t was  prohibited  by  the   Exchange
\n\t      Control  Act, 1947 (now suspended) or  by\t any
\n\t      statutory\t instrument made in virtue  of\tthat
\n\t      Act, or which was prohibited by earlier United
\n\t      Kingdom  exchange control\t legislation.\tThis
\n\t      would apply irrespective of the proper law  of
\n\t      the contract and irrespective of the place  of
\n\t      performance.  The question whether the Act  or
\n\t      statutory\t   instrument\tapplied\t   to\t the
\n\t      transaction  would  have\tto  be\tanswered  by
\n\t      construing   it\tin   accordance\t  with\t the
\n\t      principles  of statutory interpretation  which
\n\t\t\t    are\t part of English law.  If it did so  apply
\n,
\n\t      it  would\t be  an example\t of  an\t ‘overriding
\n\t      statute’.”\n<\/p>\n
18 1950 AC 24, 27, 36, 46-47, 57 : (1949) 2 All ER 621
\n19 1950 AC 57,72,  78:\t  (1949) 2 All\tER  671
\n20 (1956) 1 Ch 323
\n684<\/span>
\n(See:\t  Dicey & Morris, op. cit. p. 1469.)\n<\/p>\n
71.  In support of this statement of law reference has\tbeen
\nmade  to  the decision of House of Lords  in  Boissevain  v.
\nWeil21.\t  In that case, the respondent, a  British  subject,
\nand  the  appellant,  a Dutch  subject,\t were  involuntarily
\nresident in Monaco an enemy-occupied territory, in 1944, due
\nto war conditions.  The respondent borrowed a sum of 960,000
\nFrench francs from the appellant in Monaco on an undertaking
\nto  repay the money in sterling in London at an agreed\trate
\nof 160 francs to the pound and drew cheques in blank for the
\nfull amount on English Bank.  The appellant filed a suit  in
\nEngland claiming 6000 pounds from the respondent.  The\tsaid
\nclaim  was opposed by the respondent on the ground that\t the
\nloans given by the appellant to the respondent were  invalid
\nand illegal being contrary to Regulation 2(1) of the Defence
\n(Finance)   Regulations,  1939.\t  The  said  claim  of\t the
\nappellant was allowed by the trial Judge, but on appeal,  it
\nwas  dismissed by the Court of Appeal.\tThe House  of  Lords
\nagreed with the view of the Court of Appeal that  Regulation
\n2(1)  prohibited this borrowing and therefore  rendered\t the
\nappellant’s   claim  for  repayment  unmaintainable.\tLord
\nRadcliffe, who delivered the main speech, has observed:\n<\/p>\n
\t      “If   Regulation\t 2  did\t  extend   to\tthis
\n\t      transaction   it\tforbade\t the  very  act\t  of
\n\t      borrowing, not merely the contractual  promise
\n\t      to  repay.  The act itself being forbidden,  I
\n\t      do not think that it can be a source of  civil
\n\t      rights  in the courts of this country.  …  A
\n\t      court   that   extended  a  remedy   in\tsuch
\n\t      circumstances would merit rather to be  blamed
\n\t      for  stultifying the law than to be  applauded
\n\t      for extending it.” (p. 341)\n<\/p><\/blockquote>\n
72.  Another interesting case is that of Wilson, Smithett  &
\nCope Ltd. v. Terruzzi22.  In that case, the plaintiffs\twere
\nbrokers\t on  the London Metal Exchange\tand  the  defendant,
\nTerruzzi, was a dealer and speculator in metals who lived in
\nItaly.\tThe defendant entered into various contracts for the
\nsale and purchase of metals with the plaintiffs and a sum of
\n195,000\t  pounds  was  payable\tby  the\t defendant  to\t the
\nplaintiffs  in respect of those contracts.  Before  entering
\nthe  said  contracts, defendant had, however,  not  obtained
\nministerial   authorisation  as\t required  by  the   Italian
\nExchange Control Regulations.  An action was brought in\t the
\nEnglish\t court\tby the plaintiffs against the  defendant  in
\nwhich  the  defendant pleaded that it was unlawful  for\t him
\nunder  Italian law to enter into any of the contracts  which
\nwere  “exchange\t contracts” within the\tmeaning\t of  Article
\nVIII,  Section\t2(b)  of the  Bretton  Woods  Agreement\t and
\nunenforceable  by  reason of the  Bretton  Woods  Agreements
\nOrder in Council, 1946.\t The said plea of the defendant\t was
\nrejected by the trial Judge who gave a judgment in favour of
\nthe  plaintiffs\t and the said judgment was affirmed  by\t the
\nCourt  of  Appeal.   It appears that  the  judgment  of\t the
\nEnglish court was sought to be enforced by the plaintiffs in
\nItaly  but  the\t Italian courts\t refused  to  recognise\t and
\nenforce\t the  said  judgment  on the  view  that  since\t the
\ncontracts  ‘  were  entered  in\t violation  of\tthe  Italian
\nExchange Control Regulations their enforcement would  amount
\nto  infringement of Italian public policy and the  contracts
\nwere unenforceable in Italy. (See : Mauro Rubino-Sammartano,
\nPublic Policy in Transnational Relationships, p. 91.)
\n21 1950 AC 327: (1950) 1 All ER 728
\n22 (1976) 1 QB 683 :(1975) 2 All ER 649
\n685<\/span>\n<\/p>\n
73.  Our  attention has also been invited to a\tdecision  of
\nthe  Supreme  Court of Austria dated May 11, 1983  which  is
\nextracted, in brief, in Yearbook of Commercial\tArbitration,
\nVolume X (1985) pp. 421-23.  In that case, an award had been
\nmade  in  favour  of the appellant who\twas  a\tnational  of
\nHolland\t against the respondent who was an Austrian  whereby
\nthe  respondent\t was  directed to pay to  the  appellant  DM
\n667,500.   The appellant sought enforcement of the award  in
\nAustria\t and  the  said\t enforcement  was  opposed  by\t the
\nrespondent  on\tthe ground that\t the  underlying  contracts,
\nthough\tnominally delivery contracts, were in reality  sales
\nand  purchases\ton  a margin basis and\tsuch  contracts\t are
\ncontrary  to Austrian foreign exchange law, unless  specific
\nauthorisation\ttherefor   was\tgiven\tby   the   competent
\nauthorities.  The respondent invoked Article V(2)(b) of\t the
\nNew  York  Convention, 1958 to oppose  the  recognition\t and
\nenforcement  of\t the  award.   The  Austrian  Supreme  Court
\ndismissed the claim of the Dutch national and held that\t the
\naward  could not be recognised and enforced by the court  in
\nview  of Article V(2)(b) of the New York Convention and,  in
\nthat context, it was held:\n<\/p>\n
\t      “That  the transactions concluded between\t the
\n\t      parties  are  not subject to Austrian  but  to
\n\t      Dutch  law is irrelevant because domestic\t law
\n\t      is applicable to the examination whether there
\n\t      has  been\t a  sale and purchase  on  a  margin
\n\t      basis, for determining whether enforcement  is
\n\t      to be refused.  According to Article 81,\tpara
\n\t      4,   of  the  Austrian  Law   on\t Enforcement
\n\t      Procedure,  enforcement has to be\t refused  if
\n\t      sought  for  awards  rendered  in\t respect  of
\n\t      claims  which, under Austrian law,  cannot  be
\n\t      brought  before  Austrian courts.\t This  is  a
\n\t      specific,\t  special  provision   of   domestic
\n\t      Austrian law on public policy.” (p. 422)\n<\/p><\/blockquote>\n
\t      74.   Dr F.A. Mann has also expressed views to
\n\t      the same effect.\tHe has said: “There  remains
\n\t      the   question  whether  a  foreign   judgment
\n\t      rendered\tin  disregard  of  foreign  exchange
\n\t\t\t    regulations\t operating in the country in  whic
\nh
\n\t      it is to be enforced, may or must be  rejected
\n\t      by  the courts of the latter country as  being
\n\t      contrary\tto order public.  Subject  to  local
\n\t      regulations the answer would seem to be in the
\n\t      affirmative.”\n<\/p><\/blockquote>\n
\t  (See: F.A. Mann, The Legal Aspect of
\n\t      Money, 5th Edn., (1992) p. 403,note 31.)\n<\/p><\/blockquote>\n
75.  As\t laid down by this Court, FERA is a statute  enacted
\nfor  the  “national  economic interest” and  the  object  of
\nvarious\t provisions  in the said Act is to ensure  that\t the
\nnation\tdoes  not lose foreign exchange which is  very\tmuch
\nessential  for the economic survival of the nation.  (See  :
\nLIC  of\t India\tv.  Escorts Ltd. 23 and\t M.G.  Wagh  v.\t Jay
\nEngineering Works Ltd.<\/a> 24)\n<\/p>\n
76.  Keeping  in view the aforesaid objects underlying\tFERA
\nand the principles governing enforcement of exchange control
\nlaws  followed in other countries, we are of the  view\tthat
\nthe  provisions\t contained  in FERA  have  been\t enacted  to
\nsafeguard the economic interests of India and any  violation
\nof  the\t said  provisions would be contrary  to\t the  public
\npolicy\tof India as envisaged in Section 7(1)(b)(ii) of\t the
\nAct.   The submissions urged by Shri Venugopal to show\tthat
\nthere  has  been  a violation of  the  provisions  of  FERA,
\ntherefore, need examination.\n<\/p>\n
23 (1986) 1 SCC 264, 314: 1985 Supp 3 SCR 909, 981
\n24 (1987) 1 SCC 542, 546: (1987) 1 SCR 981, 987
\n686<\/span>\n<\/p>\n
77.  Shri  Venugopal has made a two-fold submission in\tthis
\nregard.\t  In the first place, he has urged that in  awarding
\ndelinquent interest, under item No. 3 the Arbitral  Tribunal
\nhas  acted  in\tdisregard  of the  provisions  of  FERA\t and
\nsecondly  the  enforcement  of the  award  of  the  Arbitral
\nTribunal  would\t result in violation of\t the  provisions  of
\nFERA.  As regards the first submission relating to award  of
\ndelinquent  interest,  it  may\tbe  stated  that  the\tsaid
\nsubmission  involves  an attack on the merits of  the  award
\nwhich  is  impermissible at the stage. of  enforcement.\t  We
\nhave, however, examined this submission on merits and are of
\nthe  view that it is without substance.\t Shri Venugopal\t has
\nurged that under the original approval of January 2, 1964 by
\nthe Government of India of the terms of the loan by  General
\nElectric  to  Renusagar the total amount of loan was  to  be
\nrepaid in 16 equal semi-annual instalments between the\t30th
\nand the 120th month from the effective date of the  contract
\nwith  specific provision for interest from the 16th  to\t the
\n30th   month  to  be  capitalised  and\tthe   interest\t was
\nspecifically  restricted to the period from the 16th to\t the
\n30th  month and thereafter on capitalisation from  the\t30th
\nmonth  to the 120th month and that no interest\twas  payable
\nwithout FERA sanction after the due date of each instalment.
\nThis  contention is no longer open to Renusagar in  view  of
\nthe  earlier  decision of this Court in Renusagar  Case\t 11,
\nwherein this Court has considered the question whether there
\nwas  an\t obligation to pay further interest after  June\t 30,
\n1967  till  payment  under the\tcontract.   This  Court\t has
\nreferred to Articles IIIA3(c) and XIV-B of the contract\t and
\nhas held: (SCC p. 710, paras 32 and 33)
\n\t      “In our view these provisions which are to  be
\n\t      found  in the contract clearly show  that\t the
\n\t      promissory  notes are not sole  and  exclusive
\n\t      repository of GEC’s right to claim and receive
\n\t      future interest on unpaid price after June 30,
\n\t      1967 but that the contract itself provides for
\n\t      the obligation to pay such interest after that
\n\t      date till payment.\n<\/p>\n
\t      obligation  to pay future interest  from\tJune
\n\t      30,  1967 onwards till payment and that  these
\n\t      two  claims have been preferred by GEC  before
\n\t      the Court of Arbitration of I.C.C. as  arising
\n\t      not merely ‘out of’ but ‘under the contract’.”
\n\t      (pp. 477-478)\n<\/p>\n
78.  Shri  Venugopal  has, however, urged that\tthe  earlier
\napproval to the terms of the contract was of no\t consequence
\nin  view  of  the subsequent refusal by\t the  Government  on
\nAugust\t1,  1969 to approve the\t agreement  between  General
\nElectric  and Renusagar with regard to the  rescheduling  of
\nthe  dates  of payment of instalments 1, 2, 4  and  5.\tThis
\ncontention   also  stands  concluded  by  the  decision\t  in
\nRenusagar Case II wherein it has been observed: (SCC p. 691,
\npara 7)
\n\t      “In  July\t 1969 Renusagar sought\tthe  Central
\n\t      Government’s  approval to the rescheduling  of
\n\t      the  dates of payment as embodied\t in  October
\n\t      1968  Amendment as also in the  Memorandum  of
\n\t      the  Meeting  held  in December  1968  but  by
\n\t      letters  dated  August 1, 1969 and  August  4,
\n\t      1969   the  Central  Government  declined\t  to
\n\t      approve  the  rescheduling  of  the  dates  of
\n\t      payment on the ground that it would result  in
\n\t      larger outflow of foreign exchange and advised
\n\t      Renusagar\t to  effect  payments  as  per\t the
\n\t      original schedule including instalments  which
\n\t      had since fallen due.  The result was that the
\n\t      original\t schedule   of\t payment    remained
\n\t      operative\t and there was delay on the part  of
\n\t      the  Renusagar  to  make\tpayment\t of  certain
\n\t      instalments on due dates.” (p. 457)
\n687<\/span>\n<\/p>\n
79.  From the observations aforementioned in Renusagar\tCase
\nII  it\tis apparent that the  original\tcontract  postulates
\npayment of interest till payment and the effect of the order
\nof the Government of India dated August 1, 1969 was that the
\noriginal schedule of payment remained operative.  Since\t the
\noriginal  contract  had been approved by the  Government  of
\nIndia  it  cannot  be said that the award  of  interest\t for
\ndelayed\t payment  of instalments involved violation  of\t the
\nprovisions of FERA.\n<\/p>\n
80.  Shri Venugopal has submitted that in Renusagar Case  I1
\nthis  Court  was only required to consider the\tquestion  of
\narbitrability of the disputes and was not concerned with the
\nmerits of the claim and, therefore, the said decision cannot
\nbe held to conclude the matter.\t We are unable to agree.  It
\nis  true  that in that case this Court was  considering\t the
\nquestion  of  arbitrability  of the  disputes  but  for\t the
\npurpose of deciding that issue it was necessary to  consider
\nwhether disputes arose out of or are related to the contract
\nand for that purpose it was necessary to construe the  terms
\nof  the contract and it cannot, therefore, be said that\t the
\nsaid  decision does not conclude this aspect of the  matter.
\nIn  this context, it may also be pointed out that after\t the
\ndecision   in\tRenusagar  Case\t I,   an   application\t for
\nclarification of the said judgment was moved by Renusagar in
\nthis  Court wherein clarification was sought in\t respect  of
\ncertain\t  paragraphs  in  the  judgment\t and  in  the\tsaid
\napplication  no\t objection  was raised with  regard  to\t the
\nobservations  quoted above.  Moreover, the said\t application
\nwas dismissed by this Court by order dated October 29, 1988.\n<\/p>\n
81.  As regards the second submission of Shri Venugopal that
\nthe  enforcement  of  the Arbitral  award  would  constitute
\nviolation of Section 9(1) of FERA which imposes\t prohibition
\nto  make  any  payment to or for the credit  of\t any  person
\nresident outside India except in accordance with any general
\nor special exemption from the provisions of this sub-section
\nwhich may be granted conditionally or unconditionally by the
\nReserve Bank.  The submission is that in view of the earlier
\norder  of  the\tGovernment of India  dated  August  1,\t1969
\nrefusing  to  approve rescheduling of payments\tthe  bar  of
\nSection\t 9 will operate and no order for enforcement of\t the
\naward can be made.  The High Court in this regard has placed
\nreliance  on the provisions of Section 47(3) of\t FERA  which
\nprovides as follows:\n<\/p>\n
\t      “Neither\tthe provisions of this Act  nor\t any
\n\t      term (whether express or implied) contained in
\n\t      any  contract  that  anything  for  which\t the
\n\t      permission  of the Central Government  or\t the
\n\t      Reserve\tBank   is  required  by\t  the\tsaid
\n\t      provisions  shall\t not be\t done  without\tthat
\n\t      permission,  shall prevent  legal\t proceedings
\n\t      being  brought  in India to  recover  any\t sum
\n\t      which, apart from the said provisions and\t any
\n\t      such  term,  would be due,  whether  as  debt,
\n\t      damages or otherwise, but-\n<\/p><\/blockquote>\n
\t      (a)   the said provisions shall apply to\tsums
\n\t      required\tto be paid by any judgment or  order
\n\t      of  any  court as they apply  in\trelation  to
\n\t      other sums;\n<\/p><\/blockquote>\n
\t      (b)   no steps shall be taken for the  purpose
\n\t      of  enforcing  any judgment or order  for\t the
\n\t      payment\tof  any\t sum  to  which\t  the\tsaid
\n\t      provisions  apply except as respects  so\tmuch
\n\t      thereof  as  the\tCentral\t Government  or\t the
\n\t      Reserve  Bank, as the case may be, may  permit
\n\t      to be paid; and
\n\t      688<\/span>\n<\/p><\/blockquote>\n
\t      (c)   for\t the purpose of considering  whether
\n\t      or  not to grant such permission, the  Central
\n\t      Government  or the Reserve Bank, as  the\tcase
\n\t      may be, may require the person entitled to the
\n\t      benefit  of  the\tjudgment or  order  and\t the
\n\t      debtor under the judgment or order, to produce
\n\t      such documents and to give such information as
\n\t      may be specified in the requisition.”\n<\/p><\/blockquote>\n
\t      82.   In\t Dhanrajamal  Gobindram\t v.   Shamji
\n\t      Kalidas  & Co.25<\/a> this Court has construed\t the
\n\t      provisions  of  Section  21  of  the   Foreign
\n\t      Exchange\tRegulation Act,\t 1947.\t Sub-section
\n\t      (3) of Section 21 of the said Act was more  or
\n\t      less  similar to Section 47(3) of FERA.\tThis
\n\t      Court has held:\n<\/p><\/blockquote>\n
\t      “Sub-section  (3) allows legal proceedings  to
\n\t      be  brought  to  recover sum due\tas  a  debt,
\n\t      damages  or otherwise, but no steps  shall  be
\n\t      taken to enforce the judgment, etc., except to
\n\t      the extent permitted by the Reserve Bank.
\n\t      The  effect of these provisions is to  prevent
\n\t      the very thing which is claimed here,  namely,
\n\t      that the Foreign Exchange Regulation Act\tarms
\n\t      persons against performance of their contracts
\n\t      by  setting up the shield of  illegality.\t  An
\n\t      implied term is engrafted upon the contract of
\n\t      parties by the second part of sub-section (2),
\n\t      and by sub-section (3), the responsibility  of
\n\t      obtaining\t the permission of the Reserve\tBank
\n\t      before enforcing judgment, decree or order  of
\n\t      Court,  is transferred to\t the  decree-holder.
\n\t      The section is perfectly plain, though perhaps
\n\t      it  might have been worded better for which  a
\n\t      model existed in England.” (p. 1031)\n<\/p><\/blockquote>\n
\t      83.   To the same effect is the law laid\tdown
\n\t      by  the House of Lords in England in  Contract
\n\t      and  Trading Co. (Southern) Ltd.\tv.  Barbey26
\n\t      wherein  the following observations  from\t the
\n\t      judgment of Somerwell LJ in Cummings v. London
\n\t      Bullion  Co.  Ltd.27  have  been\tquoted\twith
\n\t      approval:\n<\/p><\/blockquote>\n
\t      “The  person entitled to the payment issues  a
\n\t      writ.   The fact that permission has not\tbeen
\n\t      obtained\tis not a defence to the action.\t  On
\n\t      the   one\t hand,\tthe  plaintiff\tcan   obtain
\n\t      judgment,\t the  money due under  the  judgment
\n\t      being  subject to Part 11 of the Act  and\t the
\n\t      Rules to which I have referred.  The defendant
\n\t      assuming that he is admitting liability, apart
\n\t      from  the\t provisions of the Act, can  make  a
\n\t      payment into court.  The Act,is not to be used
\n\t      to enable the defendant to retain the money in
\n\t      his  pocket  but to control its  reaching\t its
\n\t      destination, namely, the plaintiff.” (p. 253)\n<\/p><\/blockquote>\n
84.Shri\t Venugopal  has urged that Section 47(3)  cannot  be
\napplied in the present\t case\tbecause\t it   postulates   a
\nsituation where permission of the Central Government has not
\nbeen  sought  and that in the present  case  permission\t was
\nsought\tbut  was refused earlier.  In our view\tthe  earlier
\nrefusal\t by  the  Government to give  its  approval  to\t the
\nrescheduling  of payment of instalments does not in any\t way
\npreclude the Government of India from considering the matter
\nin the light of the subsequent developments and it cannot be
\nsaid that merely because the Government of India had refused
\nto   give  its\tapproval  to  rescheduling  of\tpayment\t  of
\ninstalments  it\t would not grant  permission  under  Section
\n47(3) of FERA to the enforcement of the judgment that may be
\npassed\tin these proceedings.  It has also been\t urged\tthat
\nSection\t 47(3)\tof  FERA  is  applicable  where\t the   legal
\nproceedings are brought in India to recover a sum
\n25 (1961) 3 SCR 1020: AIR 1961 SC 1285
\n26 1960 AC 244: (1959) 3 All ER 846
\n27 (1952) 1 KB 327 :(1952) 1 All ER 383
\n 689<\/span>
\nwhich is ‘due’, i.e., as liquidated sum presently owing\t and
\nthe  said provision would not apply to an obligation to\t pay
\non  a  future  date.  We do not find any  support  for\tthis
\nsubmission  from  the  language of  Section  47(3)  of\tFERA
\nwherein the words used are “to recover any sum which,  apart
\nfrom  the said provisions and any such term, would  be\tdue,
\nwhether\t as debt, damages or otherwise”.  The  words  “would
\nbe”  which precede the word “due” indicate that the  quantum
\nof  the amount has to be fixed in the legal proceedings\t and
\nthat it need not be a predetermined amount.  Moreover in the
\npresent case, we are concerned with the proceedings for\t the
\nenforcement of the award wherein the amount due has  already
\nbeen   determined  by  the  Arbitral  Tribunal.\t   We\tare,
\ntherefore, unable to hold that the enforcement of the  award
\nwould involve violation of any of the provisions of FERA and
\nfor  that  reason it would be contrary to public  policy  of
\nIndia  so  as to render the award unenforceable in  view  of
\nSection 7(1)(b)(ii) of the Act.\n<\/p>\n
(b)  Disregard of the orders of Delhi High Court\n<\/p>\n
85.  It\t is the fundamental principle of law that orders  of
\ncourts\tmust be complied with for any action which  involves
\ndisregard  for\tsuch  orders  would  adversely\taffect\t the
\nadministration\tof justice and would be destructive  of\t the
\nrule  of  law and would be contrary to public  policy.\t The
\nquestion,  however, is whether the enforcement of the  award
\nof  the\t Arbitral Tribunal would involve  disregard  of\t any
\norder of a court.  The submission of Shri Venugopal is\tthat
\nin the matter of withholding of payment of regular  interest
\nRenusagar were acting in accordance with the interim  orders
\nthat  were passed by Delhi High Court in the  writ  petition
\nfiled by Renusagar which remained in operation from 1970  to
\n1980  and, therefore, the Arbitral Tribunal was in error  in
\nawarding compensatory damages for retention by Renusagar  of
\nthe  amount  of income tax payable on the  regular  interest
\nduring the period the writ petition was pending in the Delhi
\nHigh  Court  and enforcement of the  award  of\tcompensatory
\ndamages on regular interest under item No. 2 is,  therefore,
\ncontrary  to public policy.  We find it difficult to  accept
\nthis  contention.  Renusagar had filed an application,\tC.M.
\nNo.  286-W\/70,\tin C.W. No. 170 of 1970 in  the\t Delhi\tHigh
\nCourt.\tPrayer (i)  of C.M. No. 286-W\/70 was as under:\n<\/p>\n
\t      “Pending\tthe  hearing and final\tdisposal  of
\n\t      this   petition  for  an\tinterim\t  order\t  an
\n\t      injunction restraining the respondent and\t its
\n\t      officers, servants and agents from taking\t any
\n\t      steps    on   proceedings\t   in\t enforcement
\n\t      furtherance, pursuance or implementation or in
\n\t      any  manner giving effect to the\tsaid  orders
\n\t      both   dated  September  11,  1969   or\tfrom
\n\t      preventing  the payment by the  petitioner  of
\n\t      tax  free interest of 6 per cent per annum  to
\n\t      IGE in accordance with the approval granted by
\n\t      the respondent Orders dated September 8,\t1965
\n\t      and  June\t 7, 1967 and to grant  an  ex  parte
\n\t      order pending notice.”\n<\/p><\/blockquote>\n
\t      86.  On  February\t 24,  1970,  the   following
\n\t      interim order was passed in C.M. No. 286-W\/70:
\n\t      “There  shall be interim injunction as  prayed
\n\t      for.   Mr Kirpal to file his counter by  March
\n\t      24, 1970.”\n<\/p><\/blockquote>\n
\t      87.   The\t matter came before the court  after
\n\t      notice  on  May  18, 1970 on  which  date\t the
\n\t      following order was passed:\n<\/p><\/blockquote>\n
\t      “Mr  Ravinder Narain states that he will\tgive
\n\t      security, of the assets of the company to\t the
\n\t      satisfaction  of\tthe Commissioner  of  Income
\n\t      Tax,
\n\t      690<\/span>
\n\t      Lucknow  for Rs Four lakhs.  Let this be\tdone
\n\t      within a month from today. Interim  injunction
\n\t      and   stay   to  continue.   In\tdefault\t  of
\n\t      compliance,  as above, petition for stay\twill
\n\t      stand dismissed.”\n<\/p><\/blockquote>\n
88.  From the prayer contained in C.M. 286-W and the  orders
\ndated February 24, 1970 and May 18, 1970 passed on the\tsaid
\napplication,  it would appear that pending the\thearing\t and
\nfinal  disposal of the writ petition, there was\t an  interim
\ninjunction restraining the Union of India, the respondent in
\nthe  said  writ\t petition, and its  officers,  servants\t and
\nagents from taking any steps on proceedings in\tenforcement,
\nfurtherance,  pursuance or implementation or in\t any  manner
\ngiving\teffect to the said orders dated September  11,\t1969
\nwhereby\t  tax\texemption  had\tbeen  withdrawn\t  and\talso
\nrestraining  from  preventing Renusagar from paying  tax  on
\ninterest  of  6 per cent per annum to  General\tElectric  in
\naccordance  with  the approval granted\tunder  orders  dated
\nSeptember  3,  1965 and June 7, 1967.\tThe  only  condition
\nimposed by the Court was that Renusagar was required to give
\nsecurity for Rs 4,00,000 to the satisfaction of Commissioner
\nof  Income  Tax,  Lucknow within one  month.   These  orders
\nwould,\ttherefore,  show  that on  furnishing  of  the\tsaid
\nsecurity  Renusagar was free to remit regular interest\t@  6
\nper  cent per annum to General Electric as per the  approval
\ngranted\t under\torders dated September 8, 1965 and  June  7,
\n1967.  The said orders of the Delhi High Court did not\talso
\nprevent Renusagar from depositing in the Government Treasury
\nthe  income  tax payable on the amount of  regular  interest
\npayable @ 6 1\/2 per cent per annum.  The said orders instead
\nof  preventing Renusagar from remitting the said  amount  of
\ntax  free interest in fact permitted Renusagar to  make\t the
\nsaid payments to General Electric.  It cannot, therefore, be
\nsaid that in retaining the said amount with itself while the
\nwrit petition was pending in the Delhi High Court during the
\nperiod from 1970 to 1980 Renusagar was acting in  accordance
\nwith  the  orders  passed by the Delhi High  Court  and\t the
\npayment of the said amount by Renusagar to General  Electric
\nor  depositing in the Government Treasury the income tax  on
\nthe  amount of regular interest payable to General  Electric
\nwould have amounted to disregard of the said orders.  In the
\ncircumstances,\tit is not possible to hold that in  awarding
\ncompensatory  damages  under  item  No.\t 2  for\t  wrongfully
\nwithholding the amount of regular interest during the period
\nfrom  1970  onwards  the  Arbitral  Tribunal  has  penalised
\nRenusagar for not disregarding the orders of the Delhi\tHigh
\nCourt  and  the\t enforcement  of the  said  award  would  be
\ncontrary to public policy of India.\n<\/p>\n
(c)  Interest on Interest (Compound Interest)\n<\/p>\n
89.  This  relates  to award of compensatory  damages  under
\nitem  Nos. 2, 4 and 6. It has been urged that the  award  of
\ninterest on interest (compound interest) is not\t permissible
\nunder the law of New York as well as the law in India and is
\nalso  contrary to public policy of the State of New York  as
\nwell  as the public policy of India.  While  construing\t the
\nprovisions of Section 7(1)(b)(ii) of the Foreign Awards Act,
\nwe have held that under the said provisions the\t enforcement
\nof a foreign award can be objected to only on the ground  of
\nsuch  enforcement being contrary to public policy  of  India
\nand  that public policy of other countries e.g.\t country  of
\nthe  law  of  contract\tof  the\t courts\t of  the  place\t  of
\narbitration  cannot be taken into consideration.   For\tthat
\nreason\tan objection to the enforceability of the  award  of
\nthe Arbitration Tribunal cannot be entertained on the ground
\nit  is\tcontrary to the public policy of the  State  of\t New
\nYork.  We
\n691<\/span>
\nwould,\thowever,  examine  whether  award  of  interest\t  on
\ninterest  or compound interest is contrary to public  policy
\nof  India.   Before  we refer to the law in  India  in\tthis
\nregard,\t we  may take note of the law in  England  to  which
\nreference has been made by Shri Venugopal during the  course
\nof his submissions.  At common law in England the  principle
\nthat  is  applied  is  that  laid  down\t in  “the  reluctant
\ndecision” of the House of Lords in London Chatham and  Dover
\nRly.   Co. v. South Eastern Rly.  Co.28 that in the  absence
\nof  any agreement or statutory provision for the payment  of
\ninterest, a court has no power to award interest, simple  or
\ncompound,  by way of damages for the detention\t(i.e.,\ttile
\nlate payment) of a debt.  The injustice resulting from\tthis
\nrule   has  been  sought  to  be  removed   by\t legislative
\nintervention.  By Section 3 of the Law Reform  Miscellaneous
\nProvisions)  Act, 1934 power was conferred on the  court  of
\nrecord to award interest in proceedings for recovery of\t any
\ndebt  or  damages where the debt remained unpaid  until\t the
\njudgment was given.  Section 3 of the 1934 Act was  repealed
\nand  replaced by Section 35-A inserted in the Supreme  Court
\nAct 1981 by the Administration of Justice Act 1982 and power
\nto  award  interest was extended to cover a case  where\t the
\ndebt  is paid late, after Proceedings for its recovery\thave
\nbegun  but  before they have been concluded.  The  power  to
\naward  interest\t does not extend to a case where a  debt  is
\npaid  later but before any proceeding for its recovery\thave
\nbegun.\tThe rule in Lo don Chatham and Dover Rly V. case  28
\nhas  been qualified by the Court of Appeal in  Wadsworth  v.
\nLydall29  to  apply only to claims for interest\t by  way  of
\ngeneral\t damages and does not extend to claims\tfor  special
\ndamages.   In the field of Admiralty law simple interest  is
\nawarded,  as a matter of course, on damages recovered  in  a
\ndamage\taction.\t In the area of equity the Chancery  Courts,
\ndiffering from the common law courts, have regularly awarded
\nsimple interest is ancillary relief in respect of  equitable
\nremedies,  such as specific Performance, recession  and\t the
\ntaking of an account and the Chancery Courts gave  regularly
\nawarded\t interest,  including not only simple  interest\t but
\nalso  compound interest, when they thought that\t justice  so
\ndemanded,  that\t is  to say in cases where  money  had\tbeen
\nobtained and retained by fraud or where it had been withheld
\nor  misapplied\tby a trustee or anyone else in\ta  fiduciary
\nposition.   See\t :  President of India\tv.  La\tPintada\t Cia
\nNavegacion SA 30.)\n<\/p>\n
90.   In  Australia, the matter has been considered  by\t the
\nAustralian High Court in the recent decision in\t Hungerfords
\nv.  Walker31.  Mason, CJ and Wilson, I., after referring  to
\nthe  decisions of the House of Lords in London\tChatham\t and
\nDover Rly.  Co. v. South Eastern Rly.  Co. 28 and  President
\nof India v. La Pintada, Cia30) have observed:\n<\/p>\n
\t      “But  we\tsee  no\t reason\t for  allowing\t the
\n\t      reluctance  of  the common law  to  extend  to
\n\t      cases where the defendant’s breach of contract
\n\t      or negligence has caused the plaintiff to\t pay
\n\t      away  or the defendant to withhold money\tand,
\n\t      as  a result, the plaintiff has been  deprived
\n\t      of  the  use  of the money  so  paid  away  or
\n\t      withheld.” (p. 218)
\n28   1893 AC 429 : (1891-94) All ER Rep Ext 1610
\n29   (1981) 2 All ER 401
\n30   (1984) 2 All ER 773
\n31   (1989) 63 Aus LJR 210
\n692<\/span>
\nThey  upheld  the  decision  of\t the  Full  Court  of  South
\nAustralia awarding damages for the added cost of funding the
\nbusiness  with borrowed money as result of the loss  of\t the
\nuse  of money overpaid in tax by awarding compound  interest
\nfor  the  reason  that simple  interest\t would\tnot  reflect
\naccurately the extent of the respondent’s loss since  simple
\ninterest  almost undercompensates the injured  party’s\ttrue
\nloss.  It was observed:\n<\/p><\/blockquote>\n
\t      “The  disdain of the common law  for  interest
\n\t      especially compound interest, is a relic\tfrom
\n\t      the   days  when\tinterest  was  regarded\t  as
\n\t      necessarily usurious.” (p. 218)
\nBrennan and Deane JJ. have expressed their general agreement
\nwith  the  reasons given by Mason, C.J. and Wilson,  J.\t but
\nDawson, J. has given a dissenting judgment.\n<\/p><\/blockquote>\n<\/blockquote>\n
91.  It\t appears that in Canada also, the  Canadian  Federal
\nCourt  of  Appeal has expressed the view that  there  is  no
\nlonger\tany  reason to retain the common  law  rule  against
\ninterest as damages and the said rule has been described  as
\n“a  judge-made limitation on the awarding of interest  which
\nis clearly no longer seen to be good public policy”. (See  :\n<\/p><\/blockquote>\n
Algonquin Mercantile Corp. v. Dart Industries Canada Ltd.32)\n<\/p>\n
92.  This  would show that award of interest on\t damages  or
\ninterest on interest i.e. compound interest is not  regarded
\nas being against public policy in these countries.\n<\/p>\n
93.  We may now examine the law governing award of  interest
\nin  India.   Shri  Venugopal  has  placed  reliance  on\t the
\nprovisions  of\tSection 3(3)(c) of the Interest\t Act,  1978.
\nSection 3 empowers a court to allow interest and sub-section
\n(3)  of\t the said section provides exceptions  to  the\tmain
\nprovision.  In clause (c) of sub-section (3) it is laid down
\nthat  nothing  in this section shall empower  the  court  to
\naward  interest\t upon  interest.  Shri\tVenugopal  has\talso
\nplaced reliance on the decision of the Judicial Committee of
\nthe  Privy  Council  in\t Bengal Nagpur\tRly.   Co.  Ltd.  v.
\nRuttanji Ramji33 and the decisions of this Court in Union of
\nIndia  v.  West Punjab Factories Ltd.34<\/a>; Union of  India  v.
\nWatkins\t Mayor & Co.35<\/a>; Union of India v. A.L. Rallia  Ram36
\nand Thawardas Pherumal<\/a> v. Union of India37.  The decision of
\nthe Judicial Committee of the Privy Council in Bengal Nagpur
\nRly.   Co. v. Ruttanji Ramji33 is based on London Chatham  &
\nDover  Rly. Co. case28 and following the said  decision,  it
\nhas  been laid down that “interest for the period  prior  to
\nthe  date  of  the  suit may be\t awarded,  if  there  is  an
\nagreement for the payment of interest at a fixed rate, or it
\nis payable by the usage of trade having the force of law, or
\nin  the\t provision  of any  substantive\t law  entitling\t the
\nplaintiff  to recover interest”.  The said decision  of\t the
\nPrivy  Council has been followed by this Court in  Thawardas
\nPherumal  v.  Union  of India37, Union of  India<\/a>  v.  Rallia
\nRam36, Union of India v. Watkins Mayor & Co.35 and Union  of
\nIndia<\/a>  v. West Punjab Factories34 and it has been held\tthat
\nin the absence of any agreement, express or implied, or\t any
\nprovision of law, it is not
\n32   (1987) 16 CPR (3d) 193, 201
\n33   AIR 1938 PC 67: 65 IA 66: (1938) 1 MLJ 640
\n34   (1966) 1 SCR 580: AIR 1966 SC 395
\n35   AIR 1966 SC 275
\n36   (1964) 3 SCR 164: AIR 1963 SC 1685
\n37   AIR 1955 SC 468 : (1955) 2 SCR 48
\n693<\/span>
\npossible  to award interest by way of damages.\t This  would
\nshow that there is no absolute bar on the award of  interest
\nby  way of damages and it would be permissible to do  so  if
\nthere  is  usage  or contract, express or  implied,  or\t any
\nprovision  of  law to justify the award\t of  such  interest.
\nMerely because in Section 3(3)(c) of the Interest Act, 1978,
\nthe  court is precluded from awarding interest\ton  interest
\ndoes  not  mean\t that it is not permissible  to\t award\tsuch
\ninterest under a contract or usage or under the statute.  It
\nis  common knowledge that provision is made for the  payment
\nof  compound  interest in contracts for\t loans\tadvanced  by
\nbanks and financial institutions and the said contracts\t are
\nenforced by courts.  ‘Hence, it cannot be said that award of
\ninterest  on interest, i.e., compound interest,\t is  against
\nthe  public policy of India.  We are, therefore,  unable  to
\naccept\tthe contention that award of interest  on  interest,
\ni.e.,  compound\t interest is contrary to  public  policy  of
\nIndia  and  the\t award in respect  of  compensatory  damages
\nawarded under item Nos. 2, 4 and 6 cannot be enforced  under
\nSection
\n7(1)(b)(ii) of the Act.\n<\/p>\n
(d)  Damages on Damages\n<\/p>\n
94.  This objection relates to award of compensatory damages
\nunder  item No. 4. The submission of Shri Venugopal is\tthat
\nsince  the contract did not provide for payment of  interest
\nfor  the  period  subsequent to the date  of  maturity,\t the
\ndelinquent  interest that has been awarded under item No.  3
\nis  in the nature of damages and the award  of\tcompensatory
\ndamages\t under\titem No. 4 amounts to award  of\t damages  on
\ndamages\t which\tis impermissible and is contrary  to  public
\npolicy\tof  India.   In support\t of  this  submission,\tShri
\nVenugopal has placed reliance on the decision of this  Court
\nin Trojan & Co. Ltd. v. Nagappa Chettiar38<\/a> wherein  interest
\nhad been allowed on damages and it was contended before this
\nCourt that the said interest could not be allowed on damages
\nbecause it would amount to awarding damages on damages which
\nis  opposed to precedent and principle.\t The Court  rejected
\nthe  said  contention and held that interest is\t allowed  by
\ncourt of equity in the case of money obtained or retained by
\nfraud and in that case, the plaintiff had paid the money  to
\ndefendants  on\taccount\t of  fraudulent\t practices  by\t the
\ndefendants on the plaintiffs.\n<\/p>\n
95.  In\t  the  present\tcase,  the  said  decision  has\t  no
\napplication because the basic postulate of the contention of
\nShri  Venugopal\t is  that  the contract\t did  not  make\t any
\nprovision for payment of interest for the period  subsequent
\nto  the\t date  of maturity of the  promissory  notes.\tThis
\ncontention  has\t been  considered  by us  and  it  has\tbeen
\nnegatived and in view of the earlier decision of this  Court
\nin Renusagar Case 11 we have held that the contract provided
\nfor  payment  of interest for the period subsequent  to\t the
\ndate of maturity of the promissory notes till actual payment
\nwas made.  In the circumstances, it cannot be said that\t the
\ndelinquent  interest that has been awarded under item No.  3
\nhas  been  awarded  by\tway of damages and  not\t by  way  of
\ninterest.  Once it is held that delinquent interest  awarded
\nunder  item  No. 3 is by way of interest then  there  is  no
\nquestion  of  damages being awarded on damages\tand  it\t is,
\ntherefore,  not\t necessary to go into the  question  whether
\nawarding damages on damages is contrary to public policy  of
\nIndia.\n<\/p>\n
38 1953 SCR 789 : AIR 1953 SC 235 : (1953) 23 Comp Cas 307
\n694<\/span>\n<\/p>\n
(e)  Unjust Enrichment\n<\/p>\n
96.  Relying  upon  the\t decision of the  Supreme  Court  of
\nRomania\t date(\tFebruary 16, 1985, which  is  extracted,  in
\nbrief, in the Year Book of Commercial Arbitration, Vol.\t XIV
\n(1989)\tpp.  689 to 691, Shri Venugopal has  submitted\tthat
\nunjust enrichment is contrary to public policy of India\t and
\nsince  the  enforcement of award of  the  Arbitral  Tribunal
\nwould  result  in unjust enrichment of General\tElectric  it
\ncannot be enforced under Section 7(1)(b)(ii) of the  Foreign
\nAwards Act.  This contention of Shri Venugopal has a bearing
\non  the\t award of delinquent interest under item No.  3,  as
\nwell as on the award of compensatory damages under item Nos.
\n2 and 4 and award of costs under item, No. 7.\n<\/p>\n
97.  In\t the case decided by the Romanian Supreme  Court,  a
\nLebanese  shipowner had agreed by a charter party  with\t the
\nRomanian  State\t enterprise  to\t transport  from   Costantza
\n(Romania)  to  Bandar Abbas (Iran) certain goods  which\t had
\nbeen  sold  C&F\t to  an\t Iranian  buyer.   The\tvoyage\t was
\ninterrupted at Tripoli (Lebanon) where the shipowner had its
\nseat.  At Tripoli all merchandise disappeared, according  to
\nthe shipowner because of war, and according to the  Romanian
\nenterprise because of a local fraudulent sale.\tThe  dispute
\nwas  referred to arbitration and in the\t arbitration  award,
\nthe  shipowner\twas  directed  to  refund  to  the  Romanian
\nenterprise  part of the freight it had received as  well  as
\nthe value of the lost goods.  The Romanian enterprise sought
\nenforcement  of\t the  arbitration  award  in  Romania.\t The
\nLebanese  shipowner  objected  to  the\trequest\t on  various
\ngrounds\t including  the ground that it was  not\t obliged  to
\nrefund the value of the goods since they had been fully paid
\nfor  by\t the  Iranian  buyer.  It  was\tsubmitted  that\t the
\nenforcement  of\t the award was contrary to  Romanian  public
\npolicy\tsince  it  resulted  in\t unjust\t enrichment  of\t the
\nRomanian  enterprise  inasmuch as the  said  enterprise\t was
\nallowed\t to receive for the second time the price  of  goods
\nwhich\thad  already  been  paid  by  the  Iranian   buyers.
\nRejecting the said objection the Romanian Supreme Court held
\nthat the arbitral award showed that the Romanian  enterprise
\nmeant to obtain repayment of the value of the cargo and\t the
\nfreight\t on behalf of the Iranian buyer acting as  agent  or
\ntrust  and since the Romanian enterprise did not act on\t its
\nown  behalf,  although\tit  had\t no  express  mandate,\t the
\nconditions for unjust enrichment were not met in the case at
\nissue  and,  consequently,  the public\tpolicy\tof  Romanian
\ninternational  private law had not been violated.  The\tsaid
\ndecision  has proceeded on the basis that unjust  enrichment
\nwas  part  of the public policy\t of  Romanian  international
\nprivate law but in that case it was found that there was  no
\nviolation of the said principle of public policy.\n<\/p>\n
98.  The  principle  of unjust enrichment  proceeds  on\t the
\nbasis that it would be unjust to allow one person to  retain
\na  benefit  received at the expense of another\tperson.\t  It
\nprovides  the theoretical foundation for the  law  governing
\nrestitution.   The  principle has, however, its\t critics  as
\nwell as its supporters.\t In the words of Lord Diplock : “…
\nthere is no general doctrine of unjust enrichment in English
\nlaw.   What  it\t does is to  provide  specific\tremedies  in
\nparticular  cases  of  what  might  be\tclassed\t as   unjust
\nenrichment in a legal system that is based upon civil  law.”
\n(See  : Orakpo v. Manson Investments Ltd.39) In The  Law  of
\nRestitution by Goff and Jones, it has, however, been  stated
\n“that the case-law is now sufficiently mature for the courts
\nto recognise a generalised right of
\n39 1978 AC 95, 104: (1977) 3 All ER 1
\n695<\/span>
\nrestitution”  (3rd Edn., p. 15).  In Chitty,  on  Contracts,
\n26th  Edn., Vol. I, p. 1313, para 2037, it has\tbeen  stated
\nthat “the principle of unjust enrichment is not yet  clearly
\nestablished  in\t English law”.\tThe  learned  editors  have,
\nhowever, expressed the view:\n<\/p>\n
\t      ”\t Even  if the law has not yet  developed  to
\n\t      that  extent,  it\t does not  follow  from\t the
\n\t      absence  of  a  general  doctrine\t of   unjust
\n\t      enrichment that the specific remedies provided
\n\t      are  not\tjustifiable  by\t reference  to\t the
\n\t      principle\t of unjust enrichment even  if\tthey
\n\t      were   originally\t  found\t  without    primary
\n\t      reference to it.” (pp. 1313-1314, para 2037)\n<\/p><\/blockquote>\n
99.  In Indian law the principle of unjust enrichment  finds
\nrecognition  in the Indian Contract Act, 1872  (Sections  70
\nand 72).\n<\/p>\n
100.\t  We  do  not consider it necessary to go  into\t the
\nquestion  whether  the principle of unjust enrichment  is  a
\npart  of  the  public policy of India since we\tare  of\t the
\nopinion that even if it be assumed that unjust enrichment is
\ncontrary to public policy of India, Renusagar cannot succeed
\nbecause the unjust enrichment must relate to the enforcement
\nof  the award and not to its merits in view of\tthe  limited
\nscope  of  enquiry in proceedings for the enforcement  of  a
\nforeign award under the Foreign Awards Act.  The  objections
\nraised by Renusagar based on unjust enrichment do not relate
\nto  the enforcement of the award because it is not the\tcase
\nof Renusagar that General Electric has already received\t the
\namount awarded under the arbitration award and is seeking to
\nobtain\tenforcement of the award to obtain  further  payment
\nand would thus be unjustly enriching itself.  The objections
\nabout unjust enrichment raised by Renusagar go to the merits
\nof the award, that is, with regard to the quantum awarded by
\nthe  Arbitral Tribunal under item Nos. 2, 3, 4 and 7,  which
\nis  beyond  the scope of the objections that can  be  raised
\nunder  Section\t7(1)(b)(ii) of the Foreign Awards  Act.\t  To
\nhold  otherwise\t would\tmean that in every  case  where\t the
\narbitrators award an amount which is higher than the  amount
\nthat  should have been awarded, the award would be  open  to
\nchallenge on the ground of unjust enrichment.  Such a course
\nis  not\t permissible under the New York Convention  and\t the
\nForeign\t  Awards  Act.\t We  have,  however,  examined\t the
\nobjections raised by Renusagar relating to unjust enrichment
\neven  on  merits and we are not satisfied that\tthe  amounts
\nawarded under item Nos. 2, 3, 4 and 7 are so excessive as to
\nresult in unjust enrichment of General Electric.\n<\/p>\n
101.\t  One  of  the contentions that was  urged  by\tShri
\nVenugopal  in support of the objections relating  to  unjust
\nenrichment  was\t that the compensatory damages\tshould\thave
\nbeen  awarded after deducting the US tax payable by  General
\nElectric  on  the  amount of regular  interest\tas  well  as
\ndelinquent  interest.\tReliance, in this regard,  has\tbeen
\nplaced\ton  the decision of the House of  Lords\t in  British
\nTransport  Commission v. Gourley40 wherein it has been\tlaid
\ndown  that  when  assessing damages for loss  of  actual  or
\nprospective  earnings allowance must be made for any  income
\ntax  on\t the earnings.\tThis rule in  Gourley  case40  will,
\nhowever,  apply only where two conditions are satisfied :  (\n<\/p>\n
1)  the\t money, for the loss of which damages  are  awarded,
\nwould  have  been Subjected to tax as income;  and  (2)\t the
\ndamages\t awarded to the plaintiff are not subject to tax  in
\nhis  hands. (See : Chitty on Contracts, 26th Edn.,  Vol.  I,
\npp.  1186-87, para 1841.)
\n40 (1955) 3 All ER 796 : 1956 AC 185
\n696<\/span>\n<\/p>\n
102.\t  In  Hanover  Shoe  v.\t United\t Shoe  Machinery   v
\nCorpn.41 the Court of Appeal had remanded the matter to\t the
\nDistrict  Court\t to  take account of  the  additional  taxes
\nHanover\t would have paid for computation of damages, on\t the
\nview that since only after-tax profits can be reinvested  or
\ndistributed to shareholders, Hanover was damaged only to the
\nextent\tof the after-tax profits that it failed to  receive.
\nThe  U.S.  Supreme Court reversed the said decision  of\t the
\nCourt of Appeal and held that the District Court did not err
\non the question of computation.\t The Court observed:\n<\/p>\n
\t      “As Hanover points out, since it will be taxed
\n\t      when it recovers damages from United for\tboth
\n\t      the   actual  and\t the  trebled  damages,\t  to
\n\t      diminish\tthe actual damages by the amount  of
\n\t      the  taxes  that\tit would have  paid  had  it
\n\t      received\tgreater profits in the years it\t was
\n\t      damaged  would be to apply a double  deduction
\n\t      for taxation, leaving Hanover with less income
\n\t      than  it\twould  have had if  United  had\t not
\n\t      injured it.” (p. 1247)\n<\/p><\/blockquote>\n
103. Since General Electric would be liable to pay U.S.\t tax
\non  the\t amount of compensatory damages awarded\t under\titem
\nNos.  2\t and 4 of the Award, it cannot be  said\t that  there
\nwould be unjust enrichment by General Electric on account of
\nnon-deduction  of U.S. tax payable on the amount of  regular
\ninterest    and\t  delinquent   interest\t  while\t   assessing
\ncompensatory damages under item Nos. 2 and 4.\n<\/p>\n
104. As regards amount of delinquent interest awarded  under
\nitem No. 3, it has been submitted that since interest is not
\npayable\t under\tthe  contract  in  respect  of\tthe   period
\nsubsequent to the date of maturity of the promissory  notes,
\nthe  award of delinquent interest for the said period  would
\nresult in unjust enrichment.  This argument about  liability
\nfor  such interest has already been considered by us and  we
\nhave  found that under the contract interest is payable\t for
\nthe  period  subsequent to the maturity\t of  the  promissory
\nnotes  till payment.  There is, therefore, no  substance  in
\nthe  contention\t about unjust enrichment  on  this  account.
\nWith regard to the award of delinquent interest Linder\titem
\nNo.  3 and compensatory damages on the\tdelinquent  interest
\nunder  item No. 4 it has been contended that in view of\t the
\nagreement   between  General  Electric\tand  Renusagar\t for
\nrescheduling of the instalments Renusagar were not  required
\nto  pay\t the instalments as per the original  schedule\tand,
\ntherefore,  Renusagar could not be held liable for  interest
\nfor  delayed payment of the instalments which fall due\ttill
\nAugust\t1,  1969, and they could not also  be  saddled\twith
\ncompensatory  damages  for non-payment of  instalments\tthat
\nfall  due till August 1, 1969 as per the original  schedule.
\nWe have dealt with the effect of order of the Government  of
\nIndia dated August 1, 1969, refusing to give its approval to
\nthe  proposed  arrangement for rescheduling  of\t payment  of
\ninstalments  and  we  have held that as\t a  result  of\tsuch
\nrefusal\t the  original contract regarding payment  of  those
\ninstalments would revive and Renusagar were required to\t pay
\nthe  instalments  in accordance with the terms of  the\tsaid
\ncontract  and  were  required to pay  interest\tfor  delayed
\npayment\t of  those instalments and therefore, it  cannot  be
\nsaid that award of delinquent interest for the period during
\nwhich\tthe  matter  was  pending  consideration  with\t the
\nGovernment  of India, would result in unjust  enrichment  of
\nGeneral Electric.\n<\/p>\n
41 20 L Ed 2d 1231 : 392 US 481 (1968)
\n697<\/span>\n<\/p>\n
105. As\t regards item No. 7 relating to costs, the  case  of
\nRenusagar  is that the costs awarded by the arbitrators\t are
\nexcessive  and\tunconscionable and further  that  the  costs
\nincurred  in relation to the litigation in India, which\t has
\nbeen found inadmissible earlier by the Arbitral Tribunal has
\nbeen  included\tin the costs of arbitration that  have\tbeen
\nawarded resulting in unjust enrichment of General  Electric.
\nWe have considered this objection of Renusagar and we do not
\nfeel  that it can be a ground for refusal of enforcement  of
\naward under Section 7(1)(b)(ii) of the Foreign Awards Act.\n<\/p>\n
106. For  the  reasons\taforesaid, none\t of  the  objections
\nraised\tby  Renusagar against the enforcement of  the  award
\nunder Section 7(1)(b)(ii) of the Foreign Awards Act for\t the
\nreason that such enforcement is contrary to public policy of
\nIndia merits acceptance.\n<\/p>\n
VI.  Relevant  date  for conversion of\tthe  amount  awarded
\nfront foreign currency to Indian currency\n<\/p>\n
107. In\t the field of conflict of laws money serves  a\ttwo-
\nfold function, viz., (i) as a means of measurement; and (ii)
\nmedium\tof  payment.   The  currency  in  which\t a  debt  is
\nexpressed  or  a liability to pay damages is  calculated  is
\ncalled\tthe  ” money of account” or “money of  contract”  or
\n“money\tof measurement” and the currency in which  the\tsaid
\ndebt or liability is to be discharged is called the ”  money
\nof payment”.  The money of account is to be ascertained from
\nthe  terms of the contract construed in accordance with\t the
\nproper\tlaw  of\t the contract and the money  of\t payment  is
\ndetermined  by the law of the country in which such debt  or
\nliability is payable i.e. lex loci solutionis. (See :  Dicey
\n&  Morris, The Conflict of Laws, 11 th Edn., Vol.  2,  Rules
\n209 and 210.)\n<\/p>\n
108. Where the money of account and the money of payment are
\nnot identical the amount of units of the currency of account
\nowed  by  the  debtor must, by\tan  exchange  operation,  be
\ntranslated into the currency in which he is obliged to\tpay.
\nThis  is a matter of substance and the rate of exchange\t for
\nsuch  conversion  is  determined by the proper\tlaw  of\t the
\ncontract or the law governing the liability. (See : Dicey  &
\nMorris,\t The  Conflict of Laws pp. 1442 and 1453.)  By\tthis
\nprocess\t  the\tquantum\t of  the  monetary   obligation\t  is
\ndetermined.    The  questions  relating\t to  conversion\t  of
\ncurrency  often\t arise\tat the stage  of  discharge  of\t the
\nmonetary  obligation when the debtor makes the payment in  a
\ncurrency  other than the money of payment.  Such  conversion
\nis  to be made on the basis of the exchange rate  prevailing
\non the date of payment at the place of payment. (See : Dicey
\n& Morris, The Conflict of Laws, Rule 210(2) at pp.  1453-54;
\nMann:  The  Legal  Aspect  of  Money,  5th  Edn.,  p.  323.)
\nConversion of the currency is also necessary in cases  where
\nlegal proceedings have to be instituted by the creditor.  In
\nsome  legal systems the judgment can be given by the  courts
\nin  the\t  currency of that country only and,  therefore,  it
\nbecomes\t necessary to convert the monetary  obligation\tinto
\nthe  currency of that country at the time of institution  of
\nthe  legal  proceedings.  The exchange for  such  conversion
\nwill depend on the lex fori, i.e., the law of the forum\t and
\nin  many  legal systems it is the date the cause  of  action
\narose, i.e., the date of breach while in some systems it  is
\nthe  date  of  judgment.   In  legal  systems  where  it  is
\npermissible  to\t obtain\t a judgment  in\t   foreign  currency
\nconversion would be necessary at the stage of enforcement or
\nexecution of the judgment.  Same problem would arise when  a
\njudgment  of a foreign court is sought to be enforced.\t The
\nrelevant date for applying the
\n698<\/span>
\nexchange rate for such conversion depends upon the lex\tfor,
\ni.e.,  the law of the forum because it is a matter  relating
\nto   the  procedure.  (See  :  Cheshire\t &  North,   Private
\nInternational  Law,  12th  Edn., p. 106.)  What\t applies  to
\nenforcement  of judgments equally applies to enforcement  of
\narbitral awards.\n<\/p>\n
109. In the instant case, there is no dispute that the money
\nof  account  as well as the money of payment  is  the  same,
\nnamely,\t U.S. dollar.  Here, the question of  convertibility
\nfrom U.S. dollars to Indian rupees arises in the context  of
\nenforcement  of the award of the Arbitral Tribunal which  is
\nin U.S. dollars.  We are, therefore, required to examine the
\nposition  under the Indian law with reference to  conversion
\nof  foreign  currency into Indian currency at the  stage  of
\nenforcement of a judgment or award in foreign currency.\n<\/p>\n
110.\t  Prior\t to  1975, the law in England, was  that  an
\nEnglish\t court will not give judgment for the payment of  an
\namount\texpressed in foreign currency and the amount of\t any
\nforeign\t currency  had\tto be converted in  sterling  on  or
\nbefore the date of judgment and the date for the purpose  of
\nsuch conversion was the date when the cause of action arose.
\nThis  was the law laid down by the House of Lords in  United
\nRailways  of  Havana & Regla Warehouses\t Ltd.,\tRe42.\tThis
\ndecision  was overruled by the House of Lords (by  majority)
\nin  1975 in Miliangos v. George Frank (Textiles)  Ltd.43  In
\nthat  case,  a\tSwiss seller had agreed\t to  supply  English
\nbuyers\twith goods at a price expressed in the\tcontract  in
\nSwiss francs.  The goods and invoices were delivered but the
\nprice\twas  not  paid\tand  bills  of\texchange  drawn\t  in
\nSwitzerland  and accepted by the buyers were dishonoured  on
\npresentation.  The seller brought action in England  wherein
\nhe claimed the sums due in Swiss francs.  Originally he\t had
\nasked  for conversion of Swiss francs into sterling  at\t the
\nbreach date in view of the law laid down in United  Railways
\nof  Havana,  Re,  case42 but subsequently  in  view  of\t the
\ndecision  of the Court of Appeal in Schorsch Meier  G.m.b.H.
\nv. Hennin44 the seller amended his statement of claim so  as
\nto  claim  the\tamount\tdue to him in  Swiss  francs  as  an
\nalternative  to claiming judgment in sterling.\tBristow,  J.
\ngave  judgment\tfor the moneys due  expressed  in  sterling,
\nholding that the rule that the English courts could  express
\ntheir judgments only in sterling had not been altered either
\nby Parliament or by any decision of the House of Lords.\t The
\nCourt  of Appeal reversed the said decision  and,  following
\nSchorsch  Meier G.m.b.H. v. Hennin44 gave judgment  for\t the
\nseller\tordering  the  buyers to pay the sum  due  in  Swiss
\nfrancs,\t or  the  equivalent  in sterling  at  the  time  of
\npayment.  Affirming the said decision of the Court of Appeal
\nand  departing\tfrom  its earlier  decision  in\t the  Havana
\nRailways  case42  the House of Lords has held  that  it\t was
\nlegitimate for the House of Lords to depart from the “breach
\ndate  conversion” rule and recognise that an  English  court
\nwas  entitled to give judgment for a sum of money  expressed
\nin a foreign currency in the case of obligations of a  money
\ncharacter to pay foreign currency arising under a  contract,
\nthe  proper law of which was that of a foreign\tcountry\t and
\nwhere  the  money  of account and payment is  that  of\tthat
\ncountry,  or possibly of some other country but not  of\t the
\nUnited\tKingdom.  It was further held that the claim had  to
\nbe specifically for the
\n42  1961 AC 1007 : (1960) 2 All ER 332 sub nom Tomkinson  v.
\nFirst Pennsylvania Banking and Trust Co.\n<\/p>\n
43 1976\t AC  443: (1975) 3  All\t ER 801
\n44 1975\t QB  416: (1975) 1  All\t ER 152
\n699<\/span>
\nforeign\t  currency  or\tits  sterling  equivalent  and\t the
\nconversion  shall be at the date of payment, i.e., the\tdate
\nwhen  the  courts authorise enforcement of the\tjudgment  in
\nterms of sterling.  The said decision was, however, confined
\nin  its\t application to foreign money  obligations  and\t the
\ncourt  left open for future discussion the question  whether
\nthe  rule  applying  to money obligations  should  apply  as
\nregards\t claims\t for damages for breach of contract  or\t for
\ntort.  In his dissenting opinion, Lord Simon, has reiterated
\nthe  law laid down in Havana Railways case 42. it may be  of
\ninterest to note that Lord Wilberforce, who gave the leading
\nspeech in Miliangos case  43  had appeared in Havana Railway
\ncase\t  42  but failed to persuad  the House of  Lords  to
\naccept\this  contention.  He, however,\tsucceeded  15  years
\nlater,\tin having his views accepted by the House of  Lords.
\nSubsequently  in  Services Europe Atlantique Sud  (Seas)  of
\nParis  v. Stockholms Rederiaktiebolag  Svea  of\t Stockholm45
\nthe  House  of\tLords has extended the\trule  laid  down  in
\nMiliangos case\t43 to claims for damages for tort and breach
\nof contract. The rule laid down in Miliangos case    43\t has
\nbeen  held to be applicable to an action at common law on  a
\nforeign\t judgment  (See : Dicey & Morris,  The\tConflict  of
\nLaws, 11 th Edn., Vol. 2, p. 146 1.) In relation to arbitral
\nawards the matter had come up before the Court of Appeal  in
\nJugoslavenska  Oceanska\t Plovidba v. Castle  Investment\t Co.
\nInC.46\twherein it was held that an award could be  made  by
\nthe arbitrators in England in terms of U.S. dollar and\tthat
\nthe  same  could  be  enforced\tby  converting\tthe  foreign
\ncurrency into sterling at the rate prevailing at the date of
\nthe   award.  While  referring\tthe  said   decision,\tLord
\nWilberforce, in Miliangos case\t43 has said:\n<\/p>\n
\t      “In  the case of arbitration, there may  be  a
\n\t      minor  discrepancy, if the practice  which  is
\n\t      apparently  adopted  (see\t the   Jugoslavenska
\n\t      case(46)\tremains as it is, but I can  see  no
\n\t      reason  why, if desired, that practice  should
\n\t      not be adjusted so as to enable conversion  to
\n\t      be  made as at the date when leave to  enforce
\n\t      in sterling is given.” (p. 469)\n<\/p><\/blockquote>\n
111. The impact of Miliangos case43 was not confined to\t the
\nBritish\t shores.  It has been felt across the  Atlantic\t and
\nthere  is a perceptible change in the law in Canada as\twell
\nas in the United States.\n<\/p>\n
112.  Following\t the law in England, the  Supreme  Court  of
\nCanada\thad  applied  the breach date  rule  for  converting
\nforeign\t currency  into\t Canadian  dollar  in  two   earlier
\ndecisions. (See : The Custodian v. Bhucher47; Gatineau Power
\nCo.  v.\t Crown\tLife  Insurance\t Co.48)\t But  subsequent  to
\nMiliangos cas43 Carruthers J. of the High Court of  Ontario,
\nin  Batavia  Times  Publishing Co. v.  Davis49\tapplied\t the
\njudgment  date rule in a suit for enforcement of  a  foreign
\njudgment.  Distinguishing  the\tearlier\t judgments  of\t the
\nSupreme Court as dealing with actions based on the  original
\ncause of action, the learned judge held that in a proceeding
\nto  enforce  a foreign judgment he was free  to\t adopt\tthat
\nconversion date which in his view “avoids an injustice”\t and
\nis  “in step with commercial needs”. The said  judgment\t was
\naffirmed by the Court of Appeal.50  In Clinton v.
\n45   1979   AC\t 685  :\t (1979)\t 1  All\t ER  421   sub\t nom
\nEleftherotria (M.  V.) (Owners) v. Despina (M.\tV.) (Owners)
\nsub nom Despina R. The
\n46  1974 QB 292 :(1973) 3 All ER 498
\n47  1927 SCR 420, 427 (Can)
\n48  1945 SCR 655, 658 (Can)
\n49  1978 DLR 3d 144
\n50  (1980) 102 DLR (3d) 192
\n700<\/span>
\nFord51 the Court of Appeal of Ontario affirmed the order  of
\nthe trial Judge applying the rate prevailing at the date  of
\nthe Statement of Claim on the view that in awarding judgment
\non  a  foreign judgment the trial Judge should\tbe  free  to
\nadopt  a  date for the conversion of foreign  currency\tinto
\ndomestic  currency  which avoids injustice and which  is  in
\nstep with commercial needs.\n<\/p>\n
\t      113.  The federal law in the United States  is
\n\t      thus explained by Prof.  F.A. Mann:\n<\/p>\n
\t      “Where  the  breach  or wrong  occurred  in  a
\n\t      foreign country (especially by non-payment  of
\n\t      money due there), the damages are measured  in
\n\t      the  currency of that country and\t the  dollar
\n\t      equivalent calculated at the rate of  exchange
\n\t      obtaining\t at  the  date of  judgment  can  be
\n\t      recovered; where the breach or wrong  occurred
\n\t      in  the  United  States  (especially  by\tnon-\n<\/p>\n
\t      payment  of  foreign  money  due\tthere),\t the
\n\t      damages, being measured in dollars, are to  be
\n\t      converted at the rate of exchange of the\tdate
\n\t      of breach or wrong.”\n<\/p>\n
\t      (Mann:\t Legal\tAspects of Money, 5th  Edn.,
\n\t      p. 347)\n<\/p>\n
114. According\tto the learned author the first part of\t the
\nabove statement is based on the decision of the U.S. Supreme
\nCourt  in Deutsche Bank Filiale Nurenberg v. Humphrey52\t and
\nthe  latter  part  of  the statement  is  supported  by\t the
\ndecision of the U.S. Supreme Court in Hicks v. Guinness53.\n<\/p>\n
115. Most  of  the States, including the State of  New\tYork
\n(till  recently), follow the old English rule and apply\t the
\nrate  of exchange prevailing at the date of breach.  In\t the
\nState  of New York, however, there has been a  departure  in
\nsome  cases where the judgment-date rule has  been  applied.
\n(See  :\t John  S.  Metcalf  Co.\t v.  Mayer54  and  Sirie  v.
\nGodfrey55.) Even in the matter of application of the  breach
\ndate rule in actions for enforcement of a foreign  judgment,
\nthe  New York courts have applied the breach date rule\twith
\neffect from the date of the judgment sought to be  enforced.
\nIn  Indag  v. Irridelco Corpn.56 one of the cases  on  which
\nreliance  was  placed  by Shri\tVenugopal,  the\t action\t was
\nbrought\t to  enforce  a judgment entered in  favour  of\t the
\nplaintiff by the courts of Switzerland and the United States
\nDistrict  Court in New York held that the date of  entry  of
\nSwiss judgment, rather than the date of breach of underlying
\nobligation, i.e., its agreement to repay certain notes,\t was
\ncontrolling as to application of breach-day conversion rule.
\nIt  was held that the date of award for damages by  Cantonal
\nCourt  was the relevant date for application of breach\tdate
\nconversion  rule even though that judgment was\tsubsequently
\nappealed.   In taking this view, the Court relied  upon\t the
\ndecision in Competex S.A. v. Lalord57.\tIt appears that\t the
\nprovisions  in\tthis regard contained in Section 27  of\t the
\nJudiciary Law of the State of New York have now been amended
\nin 1987.  Earlier Section 27 provided that all judgments  or
\ndecrees\t rendered  by  any court for any  debt,\t damages  or
\ncosts,\tall  executions issued thereupon, and  all  accounts
\narising from judicial proceedings shall be computed, as near
\nas may be, in U.S.\n<\/p>\n
51   (1982) 137 DLR 3d 192
\n52   272 US 517 : 71 L Ed 383 (1926)
\n53   269 US 71 : 70 L Ed 168 (1925)
\n54   (1925) 211 NY Supp 53
\n55   (1921) 188 NY Supp 52
\n56   (1987) 658 F Supp 763
\n57   (1986) 783 F 2d 333
\n701<\/span>
\ndollars\t and  cents,  rejecting\t lesser\t fractions,  and  no
\njudgment or other proceeding, shall be considered  erroneous
\nfor such means.\t Section 27 as amended reads as under:\n<\/p>\n
\t      “27.  (a) Except as provided  in\tsub-division\n<\/p><\/blockquote>\n
\t      (b)  of this section, judgments  and  accounts
\n\t      must be computed in dollars and cents.  In all
\n\t      judgments or decrees rendered by any court for
\n\t      any  debt,  damages or costs,  all  executions
\n\t      issued  thereupon,  and all  accounts  arising
\n\t      from  judicial proceedings shall be  computed,
\n\t      as near as may be, in U.S. dollars and  cents,
\n\t      rejecting lesser fractions, and no judgment or
\n\t      other   proceeding,   shall   be\t  considered
\n\t      erroneous for such means.\n<\/p><\/blockquote>\n
\t      (b)  In any case in which the cause of  action
\n\t      is  based upon an obligation denominated in  a
\n\t      currency\tother  than currency of\t the  United
\n\t      States,  a  court\t shall\trender\tor  enter  a
\n\t      judgment or decree in the foreign currency  of
\n\t      the  underlying obligation.  Such judgment  or
\n\t      decree shall be converted into currency of the
\n\t      United   States  at  the\trate   of   exchange
\n\t      prevailing  on  the  date\t of  entry  of\t the
\n\t      judgment or decree.”\n<\/p><\/blockquote>\n
116.  As a result of this amendment, instead of\t breach-date
\nrule which was prevailing earlier the judgment-date rule has
\nbeen introduced.  This amendment came into operation on July
\n20,  1987.   It was introduced at the request  of  New\tYork
\nState  Bar Association and the Erie County  Bar\t Association
\nand  it was supported by the Association of the Bar  of\t the
\nCity  of  New  York.   According  to  the  chairman  of\t the
\nCommittee on International Trade and Transactions of the New
\nYork State Bar Association the said amendment was  necessary
\nbecause\t in  view  of  the decision of\tHouse  of  Lords  in
\nMiliangos  case\t 43 ” a number of transactions\twhich  would
\notherwise  be  governed\t by  New  York\tlaw,  and,   involve
\nprofessional  and financial advisors in New York, have\tbeen
\nstructured in England and covered by English law”.\n<\/p>\n
117.   In India, the law relating to conversion\t of  foreign
\ncurrency  into Indian currency in the matter of\t enforcement
\nof  judgments or awards is governed by the decision of\tthis
\nCourt  in Forasol case 4. That case arose out of a  contract
\nbetween\t Forasol, a foreign company and the Oil and  Natural
\nGas Commission, a Government of India Undertaking.   Certain
\ndisputes  arose between the parties which were\treferred  to
\narbitration  in\t accordance  with  the\tarbitration   clause
\ncontained  in  the  contract.\tThe  said  arbitration\t was
\ngoverned  by  the Indian Arbitration Act, 1940.\t  The  award
\ndirected  certain payments to be made in French\t francs\t but
\ndid  not  specify the rate of exchange at which\t the  French
\nfrancs were to be converted into Indian rupees.\t Proceedings
\nwere initiated ill Delhi High Court for passing a decree  in
\nterms  of the award and a question arose as to the  exchange
\nrate  for  conversion of French francs into  Indian  rupees.
\nThis  Court  examined  the question with  reference  to\t the
\nfollowing dates:\n<\/p>\n
\t      (1)  the date when the amount become  due\t and
\n\t      payable;\n<\/p><\/blockquote>\n
\t      (2)   the\t date  of the  commencement  of\t the
\n\t      action;\n<\/p><\/blockquote>\n
\t      (3)   the date of the decree;\n<\/p><\/blockquote>\n
\t      (4)   the date when the court orders execution
\n\t      to issue; and
\n\t      (5)   the\t date  when the decretal  amount  is
\n\t      paid or realised.\n<\/p><\/blockquote>\n
118.   The  court also pointed out that in a  case  where  a
\ndecision  has been passed by the court in terms of an  award
\nmade in a foreign currency a sixth date, namely, the date of
\naward also enters the competition.  As there was lack of
\n702<\/span>
\nauthority of any Indian court, this Court has considered the
\ndecision of English Courts including the Miliangos case43.\n<\/p>\n
119. The  first date, i.e., the date when the amount  became
\ndue  and  payable,  was not accepted by the  Court  for\t the
\nreason that it cannot be said to be just, fair or  equitable
\nbecause\t in  a\tcase where the rate  of\t exchange  has\tgone
\nagainst\t the  plaintiff, the defendant escapes by  paying  a
\nlesser sum than what he was bound to and thus is the  gainer
\nby his default while in the converse case where the rate  of
\nexchange has gone against the defendant, the defendant would
\nbe  subject  to a much greater burden than  what  he  should
\nbear.  The Court felt that the same criticism would apply to
\nthe   second  of  the  dates,  namely,\tthe  date   of\t the
\ncommencement  of  the action or suit because suits  are\t not
\noften disposed of for an unconscionably long time and if  we
\ntake  into account the time that would be spent in  appeals,
\nfurther appeals, and revision and review applications  which
\nmay be filed, the longevity of the litigation is doubled, if
\nnot  tripled,  so that none can with any  certainty  predict
\neven  a probable date for its termination.  As\tregards\t the
\nthird  date,  namely,  the date of  the\t decree,  the  Court
\nobserved  that a decree crystallizes the amount\t payable  by
\nthe  defendant to the plaintiff and it is the  decree  which
\nentities the judgment-creditor to recover the judgment\tdebt
\nthrough\t the processes of law.\tDealing with  the  objection
\nthat the date of tile decree of the trial court is not final
\ndecree for there may be appeals or other proceedings against
\nit in superior courts and by the time the matter is  finally
\ndetermined, the rate of exchange prevailing on that date may
\nbe  nowhere  near that which prevailed at the  date  of\t the
\ndecree\tof  the\t trial\tcourt, it  was\tobserved  that\tthis
\ndifficulty is easily overcome by selecting the date when the
\naction is finally disposed of, in the sense that the  decree
\nbecomes\t final\tand binding between the\t parties  after\t all
\nremedies  against it are exhausted.  As regards\t the  fourth
\ndate,  i.e.,  the date when the court  orders  execution  to
\nissue,\tit  was\t felt that execution of a decree  is  not  a
\nsimple\tmatter\tbecause\t it involves execution\tof  a  money
\ndecree and the judgment-debtor’s property has to be attached
\nand pending attachment a third party, at times set up by the
\njudgment-debtor, may prefer a claim to the attached property
\nwhich  will  have to be investigated and determined  by\t the
\nexecuting  court  and even where no claim is  preferred\t the
\nattached property cannot be brought to sale immediately\t and
\ncertain formalities have to be complied with and even  after
\nthe  sale has taken place, the judgment debtor\tmay  further
\nhold  up  the receipt of the sale proceeds  by\tthe  decree-
\nholder\tby raising objection to the conduct of the sale\t and
\nat times, a fresh auction sale may be have to be held if the
\nauction-purchaser  commits default in paying the balance  of
\nthe purchase price and a considerable time would thus elapse
\nbetween\t the date when the court orders execution  to  issue
\nand  the  date of the receipt of the sale  proceeds  by\t the
\ndecree-holder.\t It was also pointed out that at  times\t the
\njudgment  debt\tis not recovered in full when  the  attached
\nproperty  is sold in execution and further  application\t for
\nexecution  may\tbecome necessary and this would lead  to  an
\nanomalous position for the Court would have to fix the\trate
\nof  exchange, which may be different from  each\t application
\nfor execution.\tA further difficulty that was pointed out by
\nthe  court  was\t that execution can only  issue\t for  a\t sum
\nexpressed  in  Indian currency and it cannot be\t for  a\t sum
\nwhich  would be determined and fixed by the executing  court
\nat  the\t time of granting an  execution\t application.\tWith
\nregard\tto the fifth date, namely, the date of payment,\t the
\nCourt felt that there were three practical and procedural
\n703<\/span>
\ndifficulties  namely, payment of court fees,  the  pecuniary
\nlimits of the jurisdiction of courts and execution.  Keeping
\nin  view  the considerations referred to above,\t this  Court
\ndeclined  to adopt the rule laid down in Miliangos  case  43
\nand  held that it would be fair to both the parties to\ttake
\nthe date of passing the decree, i.e., the date of  judgment.
\nThe  said  date was also held applicable to a case  where  a
\ndecree\tis  made  in terms of an award\tmade  in  a  foreign
\ncurrency.\n<\/p>\n
120.  The practice which ought to be followed in   suits  in
\nwhich  a  sum of money expressed in a foreign  currency\t can
\nlegitimately be claimed by the plaintiff and decreed by\t the
\ncourt, has been thus indicated:\n<\/p>\n
\t      “…  the plaintiff, who has not received\t the
\n\t      amount  due to him in a foreign currency\tand,
\n\t      therefore,  desires to seek the assistance  of
\n\t      the  court  to recover that  amount,  has\t two
\n\t      courses open to him.  He can either claim\t the
\n\t      amount due to him in Indian currency or in the
\n\t\t\t    foreign  currency in which it was payable.\t I
\nf
\n\t      he chooses the first alternative, he can\tonly
\n\t      sue  for that amount as converted into  Indian
\n\t      rupees  and his prayer in the plaint can\tonly
\n\t      be  for  a sum in Indian currency.   For\tthis
\n\t      purpose,\tthe plaintiff would have to  convert
\n\t      the  foreign currency amount due to  him\tinto
\n\t      Indian  rupees.\tHe can do so either  at\t the
\n\t      rate  of exchange prevailing on the date\twhen
\n\t      the amount became payable for he was  entitled
\n\t      to receive the amount oil that date or, at his
\n\t      option, at the rate of exchange prevailing  on
\n\t      the  date\t of the filing of the  suit  because
\n\t      that  is the date on which he is\tseeking\t the
\n\t      assistance  of  the court for  recovering\t the
\n\t      amount  due  to  him.  In\t either\t event,\t the
\n\t      valuation\t of  the suit for  the\tpurposes  of
\n\t      Court-fees  and  the pecuniary  limit  of\t the
\n\t      jurisdiction  of the court will be the  amount
\n\t      in  Indian currency claimed in the suit.\t The
\n\t      plaintiff\t may,  however,\t choose\t the  second
\n\t      course  open  to\thim  and  claim\t in  foreign
\n\t      currency\tthe  amount due to him.\t In  such  a
\n\t      suit,  the proper prayer for the plaintiff  to
\n\t      make in his plaint would be for a decree\tthat
\n\t      the  defendant  do  pay  to  him\tthe  foreign
\n\t      currency sum claimed in the plaint subject  to
\n\t      the  permission of the  concerned\t authorities
\n\t      under  the  Foreign Exchange  Regulation\tAct,
\n\t      1973,  being granted and that in the event  of
\n\t      the foreign exchange authorities not  granting
\n\t      the requisite permission or the defendant\t not
\n\t      wanting  to make payment in  foreign  currency
\n\t      even  though such permission has been  granted
\n\t      or the defendant not making payment in foreign
\n\t      currency\tor  in Indian rupees,  whether\tsuch
\n\t      permission  has  been  granted  or  not,\t the
\n\t      defendant\t do pay to the plaintiff  the  rupee
\n\t      equivalent of the foreign currency sum claimed
\n\t      at the rate of exchange prevailing on the date
\n\t      of  the judgment.\t For the purposes of  court-
\n\t      fees  and jurisdiction the  plaintiff  should,
\n\t      however,\tvalue  his  claim  in  the  suit  by
\n\t      converting the foreign currency sum claimed by
\n\t      him into Indian rupees at the rate of exchange
\n\t      prevailing  on the date of the filing  of\t the
\n\t      suit  or\tthe  date  nearest  or\tmost  nearly
\n\t      preceding\t such  date, stating in\t his  plaint
\n\t      what  such  rate of exchange  is.\t  He  should
\n\t      further give an undertaking in the plaint that
\n\t      he  would\t make  good the\t deficiency  in\t the
\n\t      court-fees,  if  any, if at the  date  of\t the
\n\t      judgment,\t  at  the  rate\t of  exchange\tthen
\n\t      prevailing,   the\t rupee\tequivalent  of\t the
\n\t      foreign  currency sum decreed is\thigher\tthan
\n\t      that mentioned in the plaint for the  purposes
\n\t      of   court-fees  and  jurisdiction.   At\t the
\n\t      hearing  of  such a suit, before\tpassing\t the
\n\t      decree,\tthe  court  should  call  upon\t the
\n\t      plaintiff\t to  prove  the\t rate  of   exchange
\n\t      prevailing  on the date of the judgment or  on
\n\t      the date nearest or most nearly preceding\t the
\n\t      date  of\tthe judgment.  If  necessary,  after
\n\t      delivering  judgment on all other issues,\t the
\n\t      court may stand over the rest of the  judgment
\n\t      and the passing of the, decree
\n\t      704<\/span>
\n\t      and adjourn the matter to enable the plaintiff
\n\t      to prove such rate of exchange.  The decree to
\n\t      be  passed  by the court should be  one  which
\n\t      orders  the defendant to pay to the  plaintiff
\n\t      the foreign currency sum adjudged by the court
\n\t      subject  to  the requisite permission  of\t the
\n\t      concerned\t  authorities  under   the   Foreign
\n\t      Exchange Regulation Act, 1973, being  granted,
\n\t      and  in  the  event of  the  Foreign  Exchange
\n\t      authorities   not\t  granting   the   requisite
\n\t      permission  or  the defendant not\t wanting  to
\n\t      make  payment in foreign currency even  though
\n\t      such  permission\thas  been  granted  or\t the
\n\t      defendant\t  not  making  payment\tin   foreign
\n\t      currency\tor  in Indian rupees,  whether\tsuch
\n\t      permission  has  been  granted  or  not,\t the
\n\t      equivalent   of  such  foreign  currency\t sum
\n\t      converted\t into Indian rupees at the  rate  of
\n\t      exchange proved before the court as aforesaid.
\n\t      In the event of the decree being challenged in
\n\t      appeal or other proceedings and such appeal or
\n\t      other proceedings being decided in whole or in
\n\t      part in favour of the plaintiff, the appellate
\n\t      court or the court hearing the application  in
\n\t      the  other proceedings challenging the  decree
\n\t      should follow the same procedure as the  trial
\n\t      court for the purpose of ascertaining the rate
\n\t      of  exchange  prevailing on the  date  of\t its
\n\t      appellate\t decree\t or  of its  order  on\tsuch
\n\t      application  or  on the date nearest  or\tmost
\n\t      nearly  preceding the date of such  decree  or
\n\t      order.  If such rate of exchange is  different
\n\t      from  the\t rate in the decree which  has\tbeen
\n\t      challenged,   the\t  court\t should\t  make\t the
\n\t      necessary\t modification  with respect  to\t the
\n\t      rate  of exchange by its appellate  decree  or
\n\t      final order.  In all such cases, execution can
\n\t      only issue for the rupee equivalent  specified
\n\t      in  the  decree,\tappellate  decree  or  final
\n\t      order,  as the case may be.  These  questions,
\n\t      of  course, would not arise if pending  appeal
\n\t      or other proceedings adopted by the  defendant
\n\t      the  decree  has been executed  or  the  money
\n\t      thereunder  received by the  plaintiff.”\t(pp.
\n\t      587-589)\n<\/p><\/blockquote>\n
\t      121.  Referring  to arbitrations,\t this  Court
\n\t      has held that, on principle, there can be\t and
\n\t      should be no difference between an award\tmade
\n\t      by arbitrators or an umpire and a decree of  a
\n\t      court and has observed:<\/p><\/blockquote>\n
\t      “In  the type of cases we are  concerned\twith
\n\t      here  just as the courts have power to make  a
\n\t      decree  for  a  sum of money  expressed  in  a
\n\t      foreign  currency subject to  the\t limitations
\n\t      and  conditions  we have set  out\t above,\t the
\n\t      arbitrators  or umpire have the power to\tmake
\n\t      an  award\t for a sum of money expressed  in  a
\n\t      foreign  currency.  The arbitrators or  umpire
\n\t\t\t    should,  however, provide in the award for\tth
\ne
\n\t      rate of exchange at which the sum awarded in a
\n\t      foreign  currency should be converted  in\t the
\n\t      events  mentioned above.\tThis may be done  by
\n\t      the  arbitrators or umpire taking\t either\t the
\n\t      rate of exchange prevailing on the date of the
\n\t      award  or\t the  date nearest  or\tmost  nearly
\n\t      preceding\t  the  date  of\t the  award  or\t  by
\n\t      directing\t that the rate of exchange at  which
\n\t      conversion  is  to be made would be  the\tdate
\n\t      when  the court pronounces judgment  according
\n\t      to  the award and passes the decree  in  terms
\n\t      thereof  or  the date nearest or\tmost  nearly
\n\t      preceding\t the  date of the  judgment  as\t the
\n\t      court  may determine.  If the  arbitrators  or
\n\t      umpire  omit  to\tprovide\t for  the  rate\t  of
\n\t      conversion,  this\t would\tnot  by\t itself\t  be
\n\t      sufficient to invalidate the award.  The court
\n\t      may either remit the award under Section 16 of
\n\t      the Arbitration Act, 1940, for the purpose  of
\n\t      fixing  the  date of conversion or may  do  so
\n\t      itself  taking the date of conversion  as\t the
\n\t      date  of its judgment or the date\t nearest  or
\n\t      most   nearly  preceding\tit,  following\t the
\n\t      procedure\t outlined above for the\t purpose  of
\n\t      proof  of the rate of exchange  prevailing  on
\n\t      such  date.   If however,\t the  person  liable
\n\t      under such an award
\n\t      705<\/span>
\n\t      desires to make payment of the sum in  foreign
\n\t      currency awarded by the arbitrators or  umpire
\n\t      without  the  award being made a rule  of\t the
\n\t      court,  he would be at liberty to do so  after
\n\t      obtaining\t the  requisite\t permission  of\t the
\n\t      concerned\t authorities under the\tFERA.”\t(pp.
\n\t      589-590)\n<\/p>\n
122. While passing the decision in terms of U.S. dollars the
\nlearned\t Single\t Judge\thas not\t considered  the  matter  of
\nconversion of US dollars into Indian currency.\tThe Division
\nBench has, however, adverted to this aspect and applying the
\nlaw laid down in Forasol case4 the decree has been passed in
\nterms of US dollars as well as Indian rupees on the basis of
\nthe rupee-dollar exchange rate prevailing on the date of the
\ndecree\tpassed by the learned Single Judge.  The  said\tdate
\nwas  applied for the reason, that according to the  Division
\nBench  the letters patent appeal filed by Renusagar was\t not
\nmaintainable.\n<\/p>\n
123.\t  It appears that both the parties are not satisfied
\nwith  said view of the Division Bench of the High  Court  in
\napplying the decision in Forasol case4 to the present case.\n<\/p>\n
124. Shri  Venugopal  has urged that in Forasol\t case4\tthis
\nCourt was dealing with the enforcement of an award  governed
\nby  the Indian Arbitration Act and that the principles\tlaid
\ndown  in the said decision cannot be applied to the  present
\ncase arising out of a foreign award which is not governed by
\nthe  provisions\t of  the  Indian  Arbitration  Act  but\t is”
\ngoverned by the provisions of the Foreign Awards Act.  It is
\nno  doubt  true\t that in the Forasol case4  this  Court\t was
\ndealing with an award governed by Indian Arbitration Act but
\nthat does not affect the applicability of the said  decision
\nto proceedings for enforcement of a foreign award in  Indian
\ncourts because the matter of conversion of foreign  currency
\ninto Indian currency at the stage of enforcement of an award
\nis  governed by the same principle irrespective of the\tfact
\nwhether the award is governed by the Indian Arbitration\t Act
\nor  a  foreign\taward governed by the  Foreign\tAwards\tAct.
\nMoreover the position has been made clear by Section 4(1) of
\nthe Foreign Awards Act which lays down that a foreign  award
\nshall  subject to the provisions of this Act be\t enforceable
\nin India as if it were an award made on a matter referred to
\narbitration in India.  The said provision equates a  foreign
\naward to an Indian award for the purpose of enforcement with
\nthe  exception that such enforcement will be subject to\t the
\nprovisions  of the Foreign Awards Act.\tThere is nothing  in
\nthe provisions of the Foreign Awards Act which excludes\t the
\napplicability  of the principles laid down in Forasol  case4
\nwith  regard  to  enforcement of  foreign  awards.   In\t our
\nopinion,  therefore,  the enforcement of the  award  in\t the
\ninstant\t case  is governed by the law laid down\t in  Forasol
\ncase4.\n<\/p>\n
125. Shri  Venugopal  has further urged that the  matter  of
\nconversion of foreign currency and the rate of exchange\t for
\nsuch conversion is not a matter of procedure but is a matter
\nof  substance and it is governed by the proper law and\tthat
\nsince  the contract as well as performance of  the  contract
\nare both governed by the New York law, the breach-date\trule
\nwhich  was  applicable\tin  the State of  New  York  at\t the
\nrelevant  time,\t should\t be  applied  for  the\tpurpose\t  of
\nascertaining  the  exchange  rate  for\tconversion  of\tU.S.
\ndollars\t into  Indian rupees and that the  rule\t in  Forasol
\ncase4  can  have no application to the present\tcase.\tShri
\nVenugopal  has\tin this regard placed  reliance\t on  certain
\nobservations  in  Legal Aspects of Money by F.A.  Mann,\t 5th
\nEdn.  at  pp. 326-327 and The Conflict of Laws\tby  Dicey  &
\nMorris, 11th Edn., Vol. II, p. 1454.  We are unable to agree
\nwith this submission of Shri Venugopal.\t The manner in which
\nthe court should
\n706<\/span>
\npass the decree in a case where a foreign award is sought to
\nbe  enforced is a matter of procedure and not  of  substance
\nand  is\t governed by lex fori, i.e., the law of\t the  forum.
\nThe rule laid down in Miliangos case43 has been described as
\na  rule of procedure. (See : Services Europe Atlantique\t Sud
\n(Seas)\tof  Paris  v. Stockholms  Rederiaktiebolag  Svea  of
\nStockholms45   at   p.\t704;  Cheshire\t&   North,   Private
\nInternational  Law,  12th  Edn.,  p.  100).   For  the\tsame
\nreasons,  the principles laid down in Forasol case4 must  be
\nheld to be rule of procedural law and would be applicable to
\nthe proceedings for enforcement of a foreign award under the
\nForeign Awards Act.\n<\/p>\n
\t      126.  The passage from Legal Aspects of  Money
\n\t\t\t    by F.A. Mann, on which reliance has been place
\nd
\n\t      by Shri Venugopal reads thus:\n<\/p>\n
\t      “This   situation\t  involves   two    distinct
\n\t      questions:  which\t is the\t legal\tsystem\tthat
\n\t      determines  whether there exists a right or  a
\n\t      duty to convert the money of account into\t the
\n\t      (local) money of payment?\t Which is the  legal
\n\t      system  that  governs  the  mechanics  of\t the
\n\t      conversion  (the type of the rate of  exchange
\n\t      to  be employed, tile date and the place\twith
\n\t      reference\t  to  which  the  rate\tis   to\t  be
\n\t      ascertained)?\n<\/p>\n
\t      As regards the first point it is necessary  to
\n\t      repeat that, except in unusual  circumstances,
\n\t      the creditor suffers no prejudice from payment
\n\t      in   the\tmoneta\tloci  solutionis.    It\t  is
\n\t      suggested,  therefore, that in general,  i.e.,
\n\t      where  no problem of construction arises,\t the
\n\t      question\tof the right or duty  of  conversion
\n\t      may be treated as one relating to the mode  of
\n\t      performance and, consequently, subject to\t the
\n\t      lex  loci\t solutionis.  The  decision  on\t the
\n\t      second  point, however, is liable to  encroach
\n\t      severely upon the substance of the obligation:
\n\t      whether  the  creditor who is entitled  to  be
\n\t      paid  1000 Spanish pesetas in  Gibraltar\tmust
\n\t      accept the pound equivalent calculated at\t the
\n\t      rate of peseta notes or of cable transfers  to
\n\t      Madrid,  or calculated with reference  to\t the
\n\t      rate  prevailing\tat the date of\tmaturity  or
\n\t      payment,\tor  calculated at the  Gibraltar  or
\n\t      Madrid rate  these are substantial matters  on
\n\t      which  the quantum eventually received by\t the
\n\t      creditor\tdepends, if payment is not  made  in
\n\t      actual  pesetas.\t These\taspects,  therefore,
\n\t      cannot be described as relating merely to\t the
\n\t      mode  of performance, but ought to be  subject
\n\t      to the proper law of the contract.” (pp.\t326-\n<\/p>\n
\t      327)\n<\/p>\n
127. We find that in the said passage which falls in Chapter
\nXI  relating to “The Payment of Foreign\t Money\tObligations”
\nthe  learned  author is dealing with the conversion  of\t the
\nmoney  of  account to the money of payment and\the  has\t not
\nconsidered  the\t matter\t of convertibility  of\tthe  foreign
\ncurrency at the stage of enforcement of a judgment or award.
\nWe  have already indicated that convertibility of the  money
\nof account into the money of payment involves  determination
\nof  the liability and is a matter of substance\tgoverned  by
\ntile proper laws of contract.  This question arises prior to
\nthe  stage  of the judgment or award.  Here we\tare  dealing
\nwith  a\t case where the award has already been made  and  is
\nsought to be enforced in India and the question is about the
\nconversion  of the foreign currency in which the  award\t has
\nbeen  made  into Indian currency.  This\t question  has\tbeen
\ndealt  with by Dr F.A. Mann in Chapter XII relating to\t“The
\nInstitution of Legal Proceedings and its effect upon Foreign
\nMoney Obligations” and the learned author has stated:\n<\/p>\n
\t      ”\t It is now clear that English law  does\t not
\n\t      require  any  foreign money obligation  to  be
\n\t      converted\t into  sterling for the\t purpose  of
\n\t\t\t    instituting
\n\t      707<\/span>
\n\t      proceedings   or\tof  the\t judgment;  on\t the
\n\t      contrary, where the plaintiff claims a sum  of
\n\t      foreign  money, he is both entitled and  bound
\n\t      to apply for judgment in terms of such foreign
\n\t      money  and it is only at the stage of  payment
\n\t      or  enforcement that conversion into  sterling
\n\t      at the rate of exchange then prevailing  takes
\n\t      place.   This is so whether the claim  is\t for
\n\t      payment of a specific sum contractually due or
\n\t      for damages for breach of contract or tort  or
\n\t      for  a just sum due in respect of\t unjustified
\n\t      enrichment  or for restitution.  Nor  does  it
\n\t      matter  whether  the  contract  sued  upon  is
\n\t      governed by English or by foreign law.  Nor is
\n\t      it  necessary to ask for specific\t performance
\n\t      rather  than  payment:  in  either  case\t the
\n\t      defendant\t will  be  ordered  to\tpay  foreign
\n\t      money.   Moreover\t an  award  in\tan   English
\n\t      arbitration  may be expressed and enforced  in
\n\t      foreign  currency\t and  a\t foreign  award\t  or
\n\t      judgment so expressed may be enforced like the
\n\t      English award or judgment.” (p. 352)\n<\/p><\/blockquote>\n
\t      128.  The entire position has been thus summed
\n\t      up by Dr Mann:\n<\/p><\/blockquote>\n
\t      “As  regards the date with reference to  which
\n\t      the rate of
\n\t      exchange is to be ascertained, the law is to a
\n\t      large extent
\n\t      settled.\t In connection with  conversion\t for
\n\t      the  purpose of proceedings  the\tpayment-date
\n\t      rule    is   firmly   established.     Outside
\n\t      proceedings   the\t  date\t depends   on\t the
\n\t      construction of the contract, but there exists
\n\t      a\t strong tendency to apply  the\tpayment-date
\n\t      rule.” (p. 436)\n<\/p><\/blockquote>\n
\t      129.  Same is the position with regard to\t the
\n\t      passage at p. 1454 of The Conflict of Laws  by
\n\t      Dicey  &\tMorris, 11th Edn.,  Vol.  II,  which
\n\t      reads thus:\n<\/p><\/blockquote>\n
\t      “The  quantum of money tokens to\tbe  tendered
\n\t      is, however, always a matter of substance\t and
\n\t      not  a question of the manner of\tperformance.
\n\t      Hence  it\t should always be  governed  by\t the
\n\t      proper  law,  irrespective  of  the  place  of
\n\t      payment.” (p. 1454)\n<\/p><\/blockquote>\n
\t      130.The  said  passage falls  under  Rule\t 210
\n\t      relating\tto  discharge  of  foreign  currency
\n\t      obligations which is in following terms:<\/p><\/blockquote>\n
\t      “210. Irrespective of the currency in which  a
\n\t      debt  is expressed or damages  are  calculated
\n\t\t\t    (money  of account), the currency in which\tth
\ne
\n\t      debt  or liability can and must be  discharged
\n\t      (money of payment) is determined by the law of
\n\t      the country in which such debt or liability is
\n\t      payable, but (semble) the rate of exchange  at
\n\t      which  the money of account must be  converted
\n\t      into the money of payment is determined by the
\n\t      proper  law  of  the  contract  or  other\t law
\n\t      governing the liability.\n<\/p>\n
\t      If  a  sum  of money expressed  in  a  foreign
\n\t      currency is payable in England, it may be paid
\n\t      either in units of the money of account or  in
\n\t      sterling\tat  the rate of\t exchange  at  which
\n\t      units of the foreign legal tender can, on\t the
\n\t      day  when\t the  money is paid,  be  bought  in
\n\t      London in a recognised and accessible  market,
\n\t      irrespective of any official rate of  exchange
\n\t      between  that currency and sterling.   Quaere,
\n\t      whether this rate of exchange also applies  if
\n\t      English  law  is\tnot the proper\tlaw  of\t the
\n\t      contract.”\n<\/p>\n
At  the\t beginning of the comment on the said rule,  it\t has
\nbeen  stated: “This Rule deals with the question  whether  a
\ndebtor\thas,  by  making  a  payment  in  a  given  currency
\ndischarged  the debt.  The effect of proceedings in  English
\ncourt on a foreign currency obligation is not considered  in
\nthis  rule  but in Rule 21 1.” (pp.  1453-54).\t This  would
\nindicate  that\tthe observations relied upon  (at  p.  1454)
\nwhich\tfollow\tthis  statement\t have  no  bearing  to\t the
\nproceedings in a court on
\n708<\/span>
\nforeign\t currency  obligations and have to  be\tconfined  to
\npayments by a debtor in discharge of the debt.\n<\/p>\n
\t    Reconsideration of Forasol Case\n<\/p>\n
131. Shri  Shanti  Bhushan also does not wish to go  by\t the
\nprinciples laid down in Forasol case4 and has submitted that
\nthe  exchange  rate for conversion of  foreign\tcurrency  to
\nIndian\tcurrency  should be that prevailing on the  date  of
\nactual\tpayment and that the law laid down in Forasol  case4
\nthat the conversion should be on the basis of exchange\trate
\nprevailing  on\tthe date of judgment does not lay  down\t the
\ncorrect\t law  and that it needs\t reconsideration.   In\tthis
\nregard Shri Shanti Bhushan has urged that the purpose of the
\nrule relating to conversion of foreign currency into  Indian
\nrupees at the stage of enforcement of a foreign award should
\nbe to ensure that the amount that has been awarded under the
\naward  in  foreign  currency is available  in  full  to\t the
\ncreditor and this can be achieved only if the exchange\trate
\nfor the purpose of such conversion is that prevailing on the
\ndate  of payment as held by the House of Lords in  Miliangos
\ncase43.\t According to Shri Shanti Bhushan the practical\t and
\nprocedural  difficulties  pointed  out\tby  this  Court\t for
\nrejecting  the\tdate  of,  payment  rule  are  not  of\tsuch
\nsignificance  so  as to render the said\t rule  inapplicable.
\nShri Shanti Bhushan has also relied on the following passage
\nfrom The Conflict of Laws by Dicey & Morris:\n<\/p>\n
\t      “If  a debt or other liability expressed in  a
\n\t      foreign  currency is payable in  England,\t the
\n\t      debtor  may tender pounds in discharge.\tThis
\n\t      is  ‘primarily a rule of\tconstruction’  which
\n\t      was  ‘understandable  at a time  when  foreign
\n\t      exchange\twas freely obtainable’.\t Where\tthis
\n\t      is  not  the  case, the rule  may\t defeat\t the
\n\t      intention of the parties, and it may therefore
\n\t      ‘require reconsideration.\t Despite a number of
\n\t      dicta  to\t the contrary, the debtor  may\talso
\n\t      discharge\t his  liability\t by  tendering\t the
\n\t      foreign  currency in specie, but the  creditor
\n\t      cannot  compel  him  to do so.   The  rate  of
\n\t      exchange to be applied is that of the day when
\n\t      the  debt\t is paid.” (11th Edn., Vol.  II,  p.
\n\t      1454)\n<\/p><\/blockquote>\n
\t      132.  These  observations\t have been  made  in
\n\t      comment  under  Rule 210 and, as\tpointed\t out
\n\t      earlier, the said rule relates to payment made
\n\t      by a debtor in discharge of the debt and\tdoes
\n\t      not  deal\t with  proceedings  in\tcourts\t for
\n\t      enforcement  of foreign  currency\t obligations
\n\t      which have been dealt with in Rule 211,  which
\n\t      is in following terms:\n<\/p><\/blockquote>\n
\t       “211. (1) An English court can give  judgment
\n\t      for an amount expressed in foreign currency.
\n\t      (2)   For procedural reasons the amount of the
\n\t      judgment\tmust  be  converted  into   sterling
\n\t      before execution can be levied.  The date\t for
\n\t      conversion will be the date of payment,  i.e.,
\n\t      the date when the court authorises enforcement
\n\t      of  the  judgment, unless some other  date  is
\n\t      prescribed by statute.”\n<\/p><\/blockquote>\n
133. As\t regards  the  submissions of  Shri  Shanti  Bhushan
\nassailing  the correctness of the decision in Forasol  case4
\nit may be stated that even Miliangos case43 does not provide
\nfor conversion on the basis of the exchange rate  prevailing
\non  the date of actual payment and it postulates  conversion
\non  the\t basis\tof  the\t date  when  the  court\t  authorises
\nenforcement  of the judgment.  The rule in Miliangos  case43
\nhas  not been adopted in Section 27 of the Judiciary Act  of
\nNew York, as amended in 1987 and it provides that a judgment
\nor  decree  in\tforeign currency  shall\t be  converted\tinto
\ncurrency of the United States at the rate
\n709<\/span>
\nof exchange prevailing on the date of entry of the  judgment
\nor decree.  “The Legislature’s concern of how this could  be
\neffected  by  a sheriff’ appears to be the  reason  for\t not
\nadopting  the  date  of execution of  the  judgment  in\t the
\namended\t   provision.\t The   practical   and\t  procedural
\ndifficulties  pointed  out by this Court in Forasol  case  4
\nagainst\t adopting the date of payment cannot, therefore,  be
\nignored.   As at present advised, we are not satisfied\tthat
\nthe  decision  in Forasol case4 calls  for  reconsideration.
\nSince  this is the only question raised in C.A.\t No.  379\/92
\nfiled by General Electric, the said appeal must fail.
\nVIII.\t  Interest pendente lite and future interest\n<\/p>\n
134. In\t an international commercial arbitration,  like\t any
\ndomestic arbitration, the award of interest would fall under
\nthe following periods:\n<\/p>\n
\t      (i)   period prior to the date of reference to
\n\t      arbitration;\n<\/p><\/blockquote>\n
\t      (ii)  period  during  which  the\t arbitration
\n\t      proceedings    were   pending    before\t the
\n\t      arbitrators;\n<\/p><\/blockquote>\n
\t      (iii) period  from the date of award till\t the
\n\t      date of institution of proceedings in a  court
\n\t      for enforcement of the award;\n<\/p><\/blockquote>\n
\t      (iv)  period  from the date of institution  of
\n\t      proceedings in a court till the passing of the
\n\t      decree; and\n<\/p><\/blockquote>\n
\t      (v)   period  subsequent\tto the\tdecree\ttill
\n\t      payment.\n<\/p><\/blockquote>\n
135. The  interest in respect of the period covered by\titem\n<\/p>\n
(i),  namely, prior to the date of reference to\t arbitration
\nwould be governed by the proper law of the contract and\t the
\ninterest  covered by items (ii) and (iii), i.e., during\t the
\npendency  of the arbitral proceedings and subsequent to\t the
\naward till the date of institution of the proceedings in the
\ncourt for the enforcement of the award would be governed  by
\nthe  law  governing  the arbitral  proceedings.\t  These\t are
\nmatters\t which have to be dealt with by the  arbitrators  in
\nthe award and the award in relation to these matters  cannot
\nbe questioned at the stage of enforcement of the award.\t  At
\nthat stage the court is only required to deal with  interest
\ncovered\t by  items (iv) and (v).  The award of\tinterest  in
\nrespect\t of  these periods would be governed  by  lex  fori,
\ni.e.,  the law of the forum where the award is sought to  be
\nenforced.  According to Alen Redfern and Martin Hunter “once
\nan  arbitral award is enforced in a particular country as  a
\njudgment  of a court, the arbitral post-award interest\trate
\nmay be overtaken by the rate applicable to civil judgments.”
\n[See  : Redfern & Hunter, Law and Practice of  International
\nCommercial Arbitration, 2nd Edn., p. 406.]\n<\/p>\n
136. Moreover,\tSection 4(1) of the Foreign Awards Act\tlays
\ndown that the foreign award shall, subject to the provisions
\nof this Act, be enforceable in India as if it were an  award
\nmade  on  a matter referred to arbitration  in\tIndia.\t The
\nprovisions  of the Arbitration Act, 1940  would,  therefore,
\napply in the matter of enforcement of awards subject to\t the
\nprovisions  of\tthe  Foreign Awards  Act.   With  regard  to
\ninterest,  the following provision is made in Section 29  of
\nthe Indian Arbitration Act:\n<\/p>\n
\t      “Interest\t on  Awards.- Where and\t insofar  as
\n\t      award  is for the payment of money  the  Court
\n\t      may  in  the decree order interest,  from\t the
\n\t\t\t    date  of the decree at such rate as\t the  Cour
\nt
\n\t      deems reasonable, to be paid on the  principal
\n\t      sum as adjudged by the award and confirmed  by
\n\t      the decree.”\n<\/p><\/blockquote>\n
137. Unlike  Section  34  of the Code  of  Civil  Procedure,
\nwhereunder  the Court can award interest for the  period  of
\npendency of the suit as well as for the
\n710<\/span>
\nperiod subsequent to the decree till realisation, Section 29
\nof the Arbitration Act empowers the court to award  interest
\nfrom  the date of decree only.\tIt has, however,  been\theld
\nthat while passing a decree in terms of the award, the Court
\ncan   award  interest  for  the\t period\t during\t which\t the
\nproceedings were pending in the Court, i.e., the period from
\nthe  date of institution of proceedings for the\t enforcement
\nof the award in the court till the passing of the decree  in
\ncases  arising after the Interest Act, 1978. (See :  Gujarat
\nWater  Supply & Sewerage Board v. Unique Erectors  (Gujarat)
\n(P) Ltd.<\/a> 58\n<\/p>\n
138. In the instant case, the Arbitral Tribunal has  awarded
\ninterest  by way of compensatory damages in respect  of\t the
\nperiod\tprior  to the date of reference as well as  for\t the
\nperiod\tcovered by the arbitral proceedings up to March\t 31,
\n1986.\tIn  respect of the period subsequent  to  March\t 31,
\n1986,  the  Arbitral Tribunal has awarded interest  only  on
\nitem  No.  1  (regular interest),  item\t No.  3\t (delinquent
\ninterest)  and item No. 5 (costs of spare parts)  until\t the
\npayment.   No  direction  with\tregard\tto  the\t payment  of
\ninterest pendente lite, i.e., for the period the proceedings
\nwere  pending  in  the Bombay High Court till  the  date  of
\ndecree\tas well as for the period subsequent to the  decree,
\nhas been given either by the learned Single Judge or by\t the
\nDivision Bench of the High Court.  Taking into consideration
\nthe facts and circumstances of the case we are not  inclined
\nto  interfere with that part of judgment of the\t High  Court
\nand  to\t award interest for the period the  proceedings\t for
\nenforcement  of\t the award were pending in the\tBombay\tHigh
\nCourt and in this Court.\n<\/p>\n
139. Shri  Shanti Bhushan has, however, placed\treliance  on
\nthe interim order passed by this Court on February 21,\t1990
\nwhereby this Court stayed the operation of decree and  order
\nunder  appeal  subject\tto  Renusagar  depositing  the\t sum
\nequivalent to one-half of the decretal amount calculated  as
\non  date and furnishing security to the satisfaction of\t the
\nHigh Court in respect of the balance of the decretal  amount
\nand further directed that interest in respect of the rest of
\nthe   one-half\tof  the\t decretal  amount  which   was\t not
\nrecoverable by General Electric by virtue of the said  order
\nwould be @ 10 per cent per annum calculated from this day on
\nthe entirety of the balance irrespective of the terms as  to
\nthe  rate and mode of calculation of interest granted in  or
\npermitted  by the decree under appeal.\tShri Shanti  Bhushan
\nhas  urged  that in view of the said order  passed  by\tthis
\nCourt on February 21, 1990, General Electric is entitled  to
\naward  of interest @ 10 per cent per annum on  the  decretal
\namount after deducting the amounts deposited by Renusagar in
\npursuance to the orders dated February 21, 1990 and November
\n6,  1990.   The order dated February 21, 1990  was,  in\t our
\nopinion,  in  the nature of an interlocutory order  and\t the
\ndirections  contained  therein were  also  interlocutory  in
\nnature which are subject to the final orders that are passed
\nin  the\t appeals.   We ought, here, to take  notice  of\t the
\ndevelopments  in the international monetary exchange  system
\ninsofar\t as  Indo American currencies  are  concerned.\t The
\neffect\tof  these  changes  in the  exchange  rates  made  a
\nlandslide change in the size of the financial obligations of
\nRenusagar  under  the Award.  The  liability  thereunder  in
\nterms  of  Indian rupees virtually became  double.   It\t is,
\nhowever,   true\t that  that  so\t far  General  Electric\t  is
\nconcerned, it secures no more than what the Award gave it in
\nterms  of  U.S. dollars.  This judgment assures\t to  General
\nElectric that quantum of U.S.\n<\/p>\n
58 (1989) 1 SCC 532, 541-42: (1989) 1 SCR 318, 328
\n711<\/span>
\ncurrency.  But the area of the discretion of the court is in
\nthe  interlocutory  dispensation.  We  are,  therefore,\t not
\ninclined  to award interest pendente lite, i.e., during\t the
\npendency of the proceedings for enforcement of the award  in
\nthe  High Court as well as this Court and we  hereby  recall
\nthe  directions\t contained in the order dated  February\t 21,
\n1990  as regards payment of interest on the balance  of\t the
\ndecretal  amount.   The\t award of interest  for\t the  period
\nsubsequent  to\tthe date of passing of the  award  till\t the
\npassing\t of  this judgment in these appeals  is,  therefore,
\nconfined  to the period till the date of institution of\t the
\nproceedings for enforcement of the Arbitration Award in\t the
\nBombay High Court i.e. up to October 15, 1986.\n<\/p>\n
140. As regards future interest, we are inclined to take the
\nview  that  for the period subsequent to the  date  of\tthis
\njudgment Renusagar should pay interest @ 18 per cent on\t the
\ndecretal amount that remains due after adjusting the sum  of
\nRs  10,69,26,590  paid by Renusagar to General\tElectric  in
\npursuance to the directions given by this Court on  February
\n21, 1990 and November 6, 1990 till the\tpayment of the\tsaid
\nbalance amount.\n<\/p>\n
IX.  Adjustment\t of the sum of Rs 10,69,26,590 deposited  by
\nRenusagar against the\t decretal amount:\n<\/p>\n
141.   As indicated earlier, in pursuance to the  orders  of
\nthis  Court dated February 21, 1990, Renusagar\tdeposited  a
\nsum of Rs 9,69,26,590 on March 20, 1990 and a further amount
\nof Rs 1,00,00,000 was deposited by Renusagar in pursuance to
\nthe order dated November 6, 1990 on December 3, 1990.  These
\namounts\t have  been  withdrawn\tby  General  Electric.\t The
\nquestion  is how and at what rate the said amount should  be
\nadjusted  against the decretal amount.\tIt is  not  disputed
\nthat  on  the  date  when the said  deposits  were  made  by
\nRenusagar  and\twere withdrawn by General  Electric,  rupee-
\ndollar\texchange  rate was Rs 17 per  dollar.\tShri  Shanti
\nBhushan\t has,  however,\t submitted  that  although   General
\nElectric had withdrawn the amount deposited by Renusagar, it
\nwas  not  able to use the same because the Reserve  Bank  of
\nIndia  did not grant the permission to General\tElectric  to
\nremit the amount by converting the same into U.S. dollars on
\naccount of the pendency of these appeals in this Court.\t  In
\nthis regard, Shri Shanti Bhushan has placed before us copies
\nof  the\t letters  dated\t April\t30,  1990,  June  25,  1990,
\nSeptember 10, 1990 and November 29, 1990 of the Reserve Bank
\nof  India.   On the basis of the said letters,\tShri  Shanti
\nBhushan\t has submitted that out of a sum of Rs 10.69  crores
\nwhich  was received by General Electric it was permitted  by
\nthe Reserve Bank of India to utilise only Rs 3.52 crores for
\nmeeting\t administrative\t and  operational  expenses  of\t the
\nLiaison\t Office\t of  General Electric and the  rest  of\t the
\namount\twould be converted only after the decision in  these
\nappeals.  Shri Shanti Bhushan has, therefore, submitted that
\nthe amounts deposited by Renusagar should be converted\tfrom
\nIndian\trupees\tinto  U.S.  dollars  at\t the  exchange\trate
\nprevalent on the date of the judgment of this Court and\t not
\non  the basis of the rate of exchange prevalent at the\ttime
\nof  the said payments by Renusagar.  We are unable to  agree
\nwith this submission.  The convertibility into U.S.  dollars
\nof  money  paid\t by Renusagar in Indian rupees\tis  not\t the
\ncondition  for discharge of the decree and as laid  down  in
\nForasol\t case  the decree can be discharged  by\t payment  in
\nIndian\trupees and it is for General Electric to obtain\t the
\nnecessary permission from the Reserve Bank of India for such
\nconversion of Indian rupees to U.S. dollars and the transfer
\nthereof\t to  the United States.\t If  General  Electric\twere
\nfinding a difficulty in such transfer on
\n712<\/span>
\naccount of the pendency of these appeals in this Court\tthey
\ncould\thave  moved  this  Court  and\tobtained   necessary
\nclarification in this regard.  They did not choose to do so.
\nIn these circumstances, the amount of Rs 10,69,26,590  which
\nhas been paid by Renusagar in pursuance to the orders  dated
\nFebruary  21, 1990 and November 6, 1990 has to be  converted
\ninto U.S. dollars on the basis of the rupee-dollar  exchange
\nrate  of Rs 17.00 per dollar prevalent at the time  of\tsuch
\npayment\t and calculated on that basis the said amount  comes
\nto US $ 6,289,800.00.\n<\/p>\n
142. The  judgment  of the High Court passing  a  decree  in
\nterms  of  the award is, therefore,  affirmed.\t This  would
\ncover  the amount awarded by the Arbitral Tribunal  in\tU.S.
\ndollars and interest on amounts awarded under item Nos. 1, 3
\nand 5 for the period from April 1, 1986 to October 15, 1986,
\nthe  date of filing of the petition by General Electric\t for
\nenforcement  of\t the award in the Bombay  High\tCourt.\t The
\namount\tpaid  by  Renusagar during  the\t pendency  of  these
\nappeals\t will have to be adjusted against the said  decretal
\namount\tand  the present liability of Renusagar\t under\tthis
\ndecision  has to be determined accordingly.  Calculating  on
\nthis basis the amount payable by Renusagar under the  decree
\nin terms of U.S. dollars is:\n<\/p>\n
Amount awarded by the Arbitral Tribunal :   12,215,622.14
\nInterest on US $  2,716,914.72 (the
\ntotal amount awarded under item
\nNos. 1, 3 and 5) @ 8% per annum from
\n1-4-1986 to 15-10-1986\tin terms of theaward  117,733.00\n<\/p>\n
\t\t\t\t\t      ————\n<\/p>\n
\t\t\t\t\t      12,333,355.14
\nLess: Amount paid by Renusagar in pursuance
\nof the orders dated 21-2-1990 and 6-11-1990
\nduring the pendency of the appeals in this
\nCourt\t\t\t\t\t 6,289,800.00\n<\/p>\n
\t\t\t\t\t     ————-\n<\/p>\n
\t\t\t\t\t      6,043,555.14\n<\/p>\n
143.In\taccordance  with the decision in Forasol  case\tthe
\nsaid  amount has to be converted into Indian rupees  on\t the
\nbasis  of the rupee-dollar exchange rate prevailing  at\t the
\ntime  of this judgment.\t As per information supplied by\t the
\nReserve\t Bank of India, the Rupee-Dollar Exchange  (Selling)
\nRate as on October 6, 1993 was Rs 31.53 per dollar.\n<\/p>\n
144.At\tthis  stage  it may be\tmentioned  that\t after\tthe
\narguments were concluded and the judgment had been reserved,
\nan application [I.A. No. 9 of 1993 in C.A. Nos. 71 and\t71-A
\nof 1990] was filed on behalf of Hindalco Industries Ltd. for
\namendment of the cause title to substitute the applicant  as
\nappellant in C.A. No. 71 of 1990 in place of Renusagar.\t The
\nsaid application has been moved on the ground that after the
\nfiling\tof  the said appeal the Bombay High  Court,  by\t its
\norder  dated  April  22, 1993, has sanctioned  a  scheme  of
\namalgamation of Renusagar with Hindalco Industries Ltd.\t and
\nthe  said scheme has also been sanctioned by  the  Allahabad
\nHigh  Court by its order dated March 26, 1993.\tA true\tcopy
\nof the said scheme of amalgamation has been filed along with
\nthe  said  application.\t  In clause (i) of  para  4  of\t the
\nscheme, it is stated:\n<\/p>\n
\t      “(i) If any suit, appeal or other\t proceedings
\n\t      of  whatever nature (hereinafter\tcalled\t‘the
\n\t      proceedings’)  by\t or against  the  Transferor
\n\t      Company  be  pending, the same  shall  not  be
\n\t      abate,  be  discontinued\tor  be\tin  any\t way
\n\t      prejudicially   affected\tby  reason  of\t the
\n\t      transfer or the undertaking of the  Transferor
\n\t      Company  or  of  anything\t contained  in\tthis
\n\t      Scheme but the said
\n\t      713<\/span>
\n\t      proceedings  may be continued, prosecuted\t and
\n\t      enforced by or against the Transferor  Company
\n\t      as if this Scheme had not been made.”\n<\/p><\/blockquote>\n
145.In\tview of the aforesaid provision in the scheme,\tall
\npending\t suits,\t appeals or other  proceedings\tof  whatever
\nnature by or against the transferor company, viz., Renusagar
\nshall  not  abate  or  be discontinued\tor  in\tany  way  be
\nprejudicially  affected\t by reason of the  transfer  of\t the
\nundertaking  of Renusagar and that the said proceedings\t may
\nbe continued, presented and enforced by or against Renusagar
\nas  if\tthe  scheme  had  not  been  made.   The  scheme  of
\namalgamation  does  not, therefore, in any  way\t affect\t the
\ncontinuance of the proceedings in the above appeals in\tthis
\nCourt  by Renusagar and in these circumstances, we  find  no
\nground for substituting the name of Hindalco Industries Ltd.
\nas  the\t appellant in place of Renusagar in C.A. No.  71  of
\n1990.  The said application is, therefore, rejected.\n<\/p>\n
146.In\tthe result, C.A. Nos. 71 and 71-A of 1990 and  C.A.
\nNo.  379 of 1992 are dismissed and the decree passed by\t the
\nHigh  Court is affirmed with the direction that in terms  of
\nthe  award  an amount of US $ 12,333,355.14  is\t payable  by
\nRenusagar  to  General Electric out of which a sum of  US  $
\n6,289,800.00 has already been paid by Renusagar in discharge
\nof  the\t decretal amount and the balance amount\t payable  by
\nRenusagar under the decree is US $ 6,043,555.14 which amount
\non conversion in Indian rupees at the rupee-dollar  exchange
\nrate  of Rs 31.53 per dollar prevalent at the time  of\tthis
\njudgment  comes\t to Rs 19,05,53,293.56.\t Renusagar  will  be
\nliable\tto pay future interest @ 18 per cent on this  amount
\nof  Rs 19,05,53,293.56 from the date of this  judgment\ttill
\npayment.  The parties are left to bear their own costs.\n<\/p>\n
714<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Renusagar Power Co. Ltd vs General Electric Co on 7 October, 1993 Equivalent citations: 1994 AIR 860, 1994 SCC Supl. (1) 644 Author: S Agrawal Bench: Agrawal, S.C. (J) PETITIONER: RENUSAGAR POWER CO. LTD. Vs. RESPONDENT: GENERAL ELECTRIC CO. DATE OF JUDGMENT07\/10\/1993 BENCH: AGRAWAL, S.C. (J) BENCH: AGRAWAL, S.C. (J) VENKATACHALLIAH, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-75183","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nRenusagar Power Co. 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