NATIONAL PROJECTS CONSTRUCTION CORPORATION LIMITEDversusROYAL CONSTRUCTION COMPANY PRIVATE LTD.

                [2023] 15 S.C.R. 393 : 2023 INSC 899


                             CASE DETAILS

    NATIONAL PROJECTS CONSTRUCTION CORPORATION
                      LIMITED
                                      v.
       ROYAL CONSTRUCTION COMPANY PRIVATE LTD.
                     (Civil Appeal No. 1991 of 2019)
                           OCTOBER 10, 2023
         [ANIRUDDHA BOSE AND VIKRAM NATH, JJ.]
                              HEADNOTES
     Issue for consideration: Whether the arbitration agreement, arbitral
award or the judgment of Supreme Court dated 24.02.2015 passed in earlier
round of litigation between the parties, provided for payment of the awarded
amount in Indian currency.
    Arbitration – Amount awarded in Iraqi Dinars if was to be
converted in Indian currency:
      Held: Neither the arbitration agreement, arbitral award or the judgment
of Supreme Court dated 24.02.2015 permit payment of the awarded amount
in Indian currency except the amount of Rs. 20 lacs with admissible interest
against the encashment of bank guarantee – Thus, there would be no question
of the amount awarded in Iraqi Dinars to be converted in Indian currency
– The only conversion permissible was in US Dollars – Thus, the question
referred by the impugned judgment to be answered by this Court that in
terms of the agreement between the parties and in light of the judgment
dated 24.02.2015 of the Supreme Court, what should be the relevant date for
conversion of the awarded sum from USD to Indian rupees may not arise at
all – There is no occasion or requirement for determining or fixing any date
for conversion of the US Dollars into Indian Currency (INR) – No issue was
raised by the parties with regard to contents of the agreement or the award or
the proceedings undertaken till the impugned order by the Division Bench
had been passed referring the question under Article 134A of the Constitution
– The agreement is thus binding on the parties – The award has attained
finality and the orders passed in the multiple rounds of the litigations are
                                    393
394          SUPREME COURT REPORTS                         [2023] 15 S.C.R.


also not in issue – The payment has to be made in the foreign currency only
along with computed interest – It would be open for the parties to pay and
the other parties claiming to accept the Indian currency either at the current
rate or at the agreed rate – But, this Court cannot meddle with the terms of
the agreement or the award or the directions contained in the judgment of
this Court dated 24.02.2015 inter alia holding that the date of conversion
would be as per the original agreement and the directions given by the
arbitrator in the award will govern the field – RCCPL at liberty to continue
with its execution proceedings in accordance with law – Constitution of
India – Article 134A – Arbitration and Conciliation Act, 1996 – ss.34, 37.
[Paras 3, 5, 12 and 13]
       OTHER CASE DETAILS INCLUDING IMPUGNED
              ORDER AND APPEARANCES

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1991 of 2019.
     From the Judgment and Order dated 17.12.2018 of the High Court of
Delhi at New Delhi in EFA (OS) No. 19 of 2017.
      With
      Civil Appeal No. 2528 of 2019.
      Appearances:
    Dhruv Mehta, Sanjay R. Hegde, Sr. Advs., Rajat Arora, Sarvam Ritam
Khare, Ms. Meena Sehrawat, Ms. Vrinda Kapoor, Shahrukh Ali, Raghav
Gupta, Ms. Urvi Kuthiala, Advs. for the appearing parties.

       JUDGMENT / ORDER OF THE SUPREME COURT

                               JUDGMENT
      VIKRAM NATH, J.
     1. These two appeals have been filed under Article 134A read with
Article 133(1)(a) of the Constitution of India by the rival parties before the
High Court of Delhi in EFA (OS) No.19 of 2017. The High Court, by the
impugned order, certified that the case involved the following substantial
question of law of general importance which required a decision by this
Court.
    NATIONAL PROJECTS CONSTRUCTION CORP. LTD. v. ROYAL                      395
     CONSTRUCTION COMPANY PVT. LTD. [VIKRAM NATH, J.]


       “In terms of the agreement dated 29th June 1982 between the parties
       and in light of the judgment dated 24th February 2015 of the Supreme
       Court of India in Civil Appeal Nos. 2543-44/2015, what should be the
       relevant date for conversion of the awarded sum from USD to Indian
       rupees?”
       2. Relevant facts necessary for adjudication of the issue are as follows:
       2.1. An agreement was executed between the parties to carry out earth
            work in Iraq by the Royal Construction Company Private Limited1
            given by the National Projects Construction Corporation Limited2.
            According to the contract, Clauses 31 and 32 of the agreement
            along with their sub-paragraphs relate to payments and advances,
            the same are reproduced hereunder:
            “31. PAYMENTS AND ADVANCES:
            All amounts and schedule of prices as mentioned in the
            Agreement documents are in Iraqi Dinars3 and represent
            the total lump sum amount payable to the Associate for
            various components of works. For the purpose of payment,
            the schedule of prices shall be used, and payment released
            against all monthly account bills submitted by the Associate
            after due verifications.
            32. PAYMENT OF WORK IN PROGRESS
            32.1. The NPCC may pay initial advance in the form of purchase
            of air tickets for workers and staff of the Associate from Delhi to
            Iraq.
            2. The NPCC shall give advance, towards the construction of
            residential accommodation including field office, store at the
            site of work, towards cost of transport vehicles (1 mini - bus, 1
            land Rover and Jeep, 2 Mobile lighting units garage tools and
            equipment).



1    RCCPL
2    NPCCL
3    ID
396     SUPREME COURT REPORTS                        [2023] 15 S.C.R.


      3. Help required for setting up of camp and for initial running of
      equipment will be extended to by the Chief Project Manager to
      the extent he deems necessary in the interest of work.
      The above advances shall be recovered from the “on account
      bills” after 10% of the work is completed and before 90% of the
      work is complete. The recovery will be in the same currency as
      NPCC has spent for the advance. The recovery shall be made on
      the pro-rata basis.
      Payment of work in progress:
      32.2 The monthly running account bills for the quantity of
      work executed by the Associate shall be presented to the Chief
      Project Manager, NPCG before the 10th of every month. The-
      Associate shall be paid the net amount due after all deductions
      towards advances, retention money and recoveries towards cost
      of materials and other services. The payment shall normally be
      made within 15 days of such presentation of the bill. All monthly
      payment shall be treated as advance payments only. The running
      payment shall be made in the from of 65% in U.5$ and 35% in
      I.D. The rate of exchange for the purpose of calculations will be
      1 ID = 3.37778 U.S. Dollar and this rate of exchange shall be
      operative throughout the period as contract.
      32.3 Payment Adjustment:
      Any due payment under the Agreement to be made by the
      Associate or to him contrary to the work completed shall be added
      or deducted from the payment certificate issued by the Contractor.
      The - Contractor may adjust any payment certificate, if necessary,
      with respect to other previous payment certificates. The Associate
      shall have no right to claim; thereto for compensation.
      32.4 Deduction from payment due to the Associates:
      All payments due by the Associate to the Contractor under this
      Agreement shall be deducted from any other payments due to the
      Associate, and if the event of no such dues, the Contractor shall
      recover the same against the performance bond furnished by the
      Associate. The Associate must, thereafter immediately replenish
NATIONAL PROJECTS CONSTRUCTION CORP. LTD. v. ROYAL                   397
 CONSTRUCTION COMPANY PVT. LTD. [VIKRAM NATH, J.]


      such recoveries. All deductions shall be made irrespective of any
      apportion from the Associate and without any court action, but
      under advice to the Associate.
      32.5 Retention money: Retention money shall be done by the
      Contractor at the rate of 10% of the gross value of each R.A. Bills
      subject to a total deduction of 5% of the contract value.
      32.6 Currency:
      Payments against monthly account bill’s shall be made to the
      Associate by the NPCC in Iraqi Dinars and US Dollars.
      i) 35 %        Iraqi Dinars
      ii) 55 %       US Dollars
      32.7 Payments not to be deemed as the Acknowledgements:
      Payments made to the Associate shall not be deemed as the
      acknowledgement on the part of the contractor, of acceptance of
      work and any part thereof and/or of materials and workmanship
      etc.
      32.8 Exchange Rate:
      For the purpose of conversion of Iraqi Dinars to US Dollars,
      the exchange rate of 1 Iraqi Dinars equivalent to 3.37778 US
      Dollars shall be applicable.
      32.9 Refund of Retention Money after Maintenance Period:
      Necessary or desirable and for that purpose, shall have power to
      order the Associate to do and -the Associate shall do any or all
      of the following: -
      a) Increase or decrease the quantity of any work’ included in the
      Agreement
      b) Quit any such work.
      c) Change the -character or quality or kind of any such work.
      d) Change levels, lines, positions and dimensions of any part of
      the works and
398            SUPREME COURT REPORTS                          [2023] 15 S.C.R.


            e) Execute additional work of any kind necessary for the
            completion of the works and no such variation shall in any way
            vitiate or invalidate the Agreement. The value (if any) of all such
            variations shall be taken into account in ascertaining the amount
            of the Agreement Price and its completion time.”
       2.2. Sometime in the year 1988, the parties invoked the arbitration
            clause. The arbitrator gave an award dated 10.08.2002. Award
            was given in the currency of Iraq i.e., Iraqi Dinars. Following is
            the operative portion of the award:
            “After setting off the allowed counter claims of the respondent
            against the allowed claims of the claimant, I thus make the award
            as follows: -
            (a) The respondent shall pay ID 223777.14 (two lakh twenty-
            three thousand seven hundred seventy-seven and point one
            four) to the claimant along with 12% interest p.a. from date
            of commencement of arbitration proceedings i.e. 26.9.1988 to
            the date of payment.
            b) The respondent shall also pay to the claimant a sum of
            Rs.20,00,000/- (Rupees twenty lakh) along 12% interest p.a.
            from the date of encashment of Bank Guarantee upto the date of
            payment.
            c) The amount payable in ID shall be convertible into US
            dollars as per the original agreement dated 29.6.1982. Further,
            all payments of settlement in foreign exchange shall be made
            as per original agreement and Government rules.
            d) There shall be no order as to cost and the parties are left to bear
            their own costs.
            Award made and pronounced at New Delhi on 10th August, 2002.”
       2.3. Aggrieved by the said award, objections were filed under section
            34 of the Arbitration and Conciliation Act, 19964 by the NPCCL



4     The 1996 Act
NATIONAL PROJECTS CONSTRUCTION CORP. LTD. v. ROYAL                       399
 CONSTRUCTION COMPANY PVT. LTD. [VIKRAM NATH, J.]


        which were dismissed on 26.05.2008. Further, the appeal filed
        under section 37 of the 1996 Act was disposed of, vide judgment
        dated 19.05.2014 wherein the Division Bench of the Delhi High
        Court firstly, reduced the rate of interest from 12 % p.a. to 6% p.a.
        and secondly, fixed the date of further conversion of US dollars
        into Indian Rupees as the date of the award i.e. 10.08.2002. A
        Review filed by the appellant was also dismissed by the Division
        Bench on 19.09.2014.
   2.4. Aggrieved by the same, the NPCCL preferred a Special Leave
        Petition before this Court. This Court vide order dated 24.02.2015
        after granting leave, allowed the appeal, set aside both the orders
        of the Division Bench i.e. 19.05.2014 and 19.09.2014. This Court
        further held that whatever directions have been given in the award
        by the learned Arbitrator would govern the field. This Court had
        further held that the date of conversion would be as per the original
        agreement dated 26.09.1982, as the learned Arbitrator had already
        in clear terms said so. It further was of the view that the midway
        approach of the Division Bench by reducing the rate of interest
        was also not justified. It would be beneficial to reproduce the last
        two paragraphs of the judgment of this Court:
        “The issue that arises for consideration is whether the High
        Court should have fixed the date of conversion contrary to the
        agreement and contrary to the award which is in consonance
        with the agreement and further reduced the rate of interest. In
        our considered opinion, when the· learned arbitrator had already,
        in clear terms, stated the date of conversion would be as per the
        original agreement dated 29.06.1982, the same could not have
        been changed. That apart, we do not see any justification to change
        the rate of interest as has been determined by the learned arbitrator.
        It needs no special emphasis to state that while dealing with an
        appeal from an order rejecting an application under Section 34
        and the principles relating to arbitration. The High Court would
        not have passed such an order terming it as “mid-way approach”.
        In view of the aforesaid, we allow the appeals and set aside both
        the orders passed by the High Court. Needless to emphasize,
400           SUPREME COURT REPORTS                          [2023] 15 S.C.R.


            whatever the directions given in the award by the learned arbitrator
            shall govern the field. The amount that has been deposited before
            this Court in pursuance of the order dated 08.12.2014 be refunded
            to the appellant. There shall be no order as to costs.”
      2.5. After the judgment of this Court, the respondent RCCPL initiated
           execution proceedings. The learned Single Judge decided the same
           vide order dated 26.05.2017 and directed for payment to be made
           in Indian Rupees and the date of conversion from US Dollars to
           Indian Rupees to be the date of agreement i.e. 26.09.1982. The
           respondent RCCPL preferred an appeal before the Division Bench.
           By the impugned order dated 17.12.2019, the Division Bench
           had allowed the appeal, set aside the order passed by the Single
           Judge and had referred the question of law to this Court. That is
           how the present appeals are before us, one filed by NPCCL and
           other by RCCPL.
      3.    The counsel for the parties have not raised any issue with regard
            to contents of the agreement or the award or the proceedings
            undertaken till the impugned order by the Division Bench had
            been passed referring the question under Article 134A of the
            Constitution. The agreement is thus binding on the parties. The
            award has attained finality and the orders passed in the multiple
            rounds of the litigations are also not in issue. Thus, we have to
            proceed on the basis of the material on record and answer the
            question requiring this Court to determine the date of conversion
            of US Dollars into Indian Rupees.
      4.    We have gone through the contents of the agreement, the award
            and the order passed by this Court on 24.02.2015 allowing the
            appeal of the NPCCL and issuing directions.
      5.    This Court in the judgment dated 24.02.2015, relevant part of
            which is already extracted above, clarified the following:
      i)    The date of conversion would be as per the original agreement
            dated 29.06.1982.
      ii)   The change of rate of interest by the Division Bench by reducing
            it from 12 percent to 6 percent terming it as midway approach
NATIONAL PROJECTS CONSTRUCTION CORP. LTD. v. ROYAL                     401
 CONSTRUCTION COMPANY PVT. LTD. [VIKRAM NATH, J.]


        was not sustainable as it was beyond the scope of section 37 of
        the 1996 Act.
   iii) The directions given by the learned arbitrator in the award will
        govern the field.
   6.   It is very clear from the above that we have to fall back upon the
        terms of the agreement for the purposes of deciding the question
        regarding the date of conversion.
   7.   In the entire agreement, the relevant paragraphs dealing with the
        payments and advances and the payments of work in progress
        is laid down in paragraphs 31 and 32 and its sub-paragraphs.
        Paragraph 32.6 of the agreement states that payments against
        monthly account bills shall be made in Iraqi Dinars and US
        Dollars out of which 35 percent would be in Iraqi Dinars and 65
        percent would be in US Dollars. Further, paragraph 32.8 defines
        the exchange rate for the purposes of conversion of Iraqi Dinars to
        US Dollars and the exchange rate being 01 Iraqi Dinar equivalent
        to 3.37778 US Dollars.
   8.   We do not find any mention of payment being made in the Indian
        Currency i.e. INR from the agreement. Once there is no contract
        between the parties of making payment in Indian Currency INR,
        then, there would be no question of determining or finding out
        any date of conversion.
   9.   Next, we need to examine the award and directions issued therein
        whether the award contained any stipulation of making the
        payment in Indian currency. The operative portion of the award
        contains three directions:
        a)   The present appellant NPCCL shall pay Iraqi Dinars of
             2,23,777.14 to the respondent RCCPL along with the
             interest at the rate of 12 percent per annum from the date of
             commencement of arbitration proceedings i.e. 26.09.1988
             to the date of payment.
        b)   The second direction was that NPCCL to pay Rs. Twenty
             Lakhs to the RCCPL along with the interest of 12 percent
402             SUPREME COURT REPORTS                        [2023] 15 S.C.R.


                 per annum from the date of encashment of Bank Guarantee
                 upto the date of payment.
           c)    The third direction was that the amount payable in Iraqi
                 Dinars shall be convertible into US Dollars as per the original
                 agreement dated 29.06.1982 and further all payments of
                 settlements in foreign exchange shall be made as per the
                 original agreement and Government Rules.
      10. The agreement had stipulated that the Iraqi Dinar would be
          convertible to US Dollars at the following rate i.e. 1 Iraqi Dinar
          = 3.37778 US Dollars. The award does not permit or grant the
          liberty to the appellant to make the amount payable in Iraqi Dinars
          to be converted into Indian Currency (INR).
      11. Apart from the amount of Bank Guarantee which had been
          encashed by the NPCCL of Rs.20 Lakhs, the other amount
          awarded is in Iraqi Dinars only.
      12. The first question to be considered is whether the agreement,
          award or the judgment of this Court dated 24.02.2015 provided
          for payment of the awarded amount in Indian currency. In our
          considered view, perusal of the above material does not permit
          payment of the awarded amount in Indian currency except
          the amount of Rs. 20 lacs with admissible interest against the
          encashment of bank guarantee. As a necessary corollary, there
          would be no question of the amount awarded in Iraqi Dinars to
          be converted in Indian currency. The only conversion permissible
          was in US Dollars. In the above back drop, the question referred
          by the impugned judgment to be answered by this Court may not
          arise at all.
      13. In the above fact situation, there is no occasion or requirement for
          determining or fixing any date for conversion of the US Dollars
          into Indian Currency (INR). The payment has to be made in the
          foreign currency only along with computed interest. It would be
          open for the parties to pay and the other parties claiming to accept
          the Indian currency either at the current rate or at the agreed rate
          but this Court cannot meddle with the terms of the agreement
 NATIONAL PROJECTS CONSTRUCTION CORP. LTD. v. ROYAL                         403
  CONSTRUCTION COMPANY PVT. LTD. [VIKRAM NATH, J.]


            or the award or the directions contained in the judgment of this
            Court dated 24.02.2015.
      14. The question is accordingly answered. Both the appeals stand
          disposed of as directed above. The RCCPL would be at liberty to
          continue with its execution proceedings in accordance with law.
      15. Pending applications, if any, stand disposed of.


Headnotes prepared by:                                       Appeals disposed of.
Divya Pandey