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The relevant date for determining the foreign exchange rate applicable to an arbitral award with reference to the VOITH HYDRO LTDA & ORS v. NTPC LIMITED case.
The relevant date for determining the foreign exchange rate applicable to an arbitral award concerning the VOITH HYDRO LTDA & ORS v. NTPC LIMITED case.
The rate of exchange as applicable on the date once the petition of a challenge to an arbitral award is discharged will be the relevant date for ascertaining the exchange rate applicable for deciding the INR comparable to the amounts awarded in foreign currency.
This was held in the case of VOITH HYDRO LTDA & ORS v. NTPC LIMITED[1]
The facts of the case are that an arbitrational award was passed within the context of a dispute between the parties about an agreement to execute a Hydro electrical Project. Compensation was awarded in favor of the petitioner with interest. Respondent filed petition below Section 34, and an SLP set aside the Award, each of that was dismissed. Learned Counsel showing for decree-holder submitted that NTPC had paid an amount the deficit of Rs. 12,09,16,391.27 that was primarily due to two prime reasons, incorrect reliance on the rate of exchange, NTPC mistakenly subtracted tax deducted at source (TDS). It was additionally at risk of pay charges incurred by them for extending the Bank Guarantees. Counsel for decree debtor contended the award amount was paid correctly. Voith was needed to open an escrow account and procure specific approval from RBI that they delayed. The rate of exchange was consented to and accepted in Indian currency in an escrow account. Payment of TDS and any additional charges are unfair.
The tribunal observed the precedent arranged down in Forasol v. Oil and gas Commission, whereby the Supreme Court had held that “The rate of exchange prevailing on the date on which the decree is passed would be the applicable rate of exchange. It additional processed that if the decree is challenged in an appeal and such attractiveness is determined entirely or partially, the rate of exchange prevailing on the date on which the decree or order is passed would be applicable. in so far because the arbitrational awards are involved, the date on which the challenge to the arbitral award is finally rejected would be the date for determinative the interchange applicable to an award created in foreign currency.”
Considering the precedents mentioned above and facts of the case court held, the relevant date for ascertaining the exchange rate is the date of rejection of Special Leave Petition (SLP) and directed that NTPC be attributable to TDS' extent subtracted and deposit it to decree-holder. Considering Voith had voluntarily stocked Bank Guarantees, compensation of bank charges was rejected. The Court commanded that the date on which the challenge to the arbitrational award is finally rejected would be the date for deciding the interchange applicable to an award made in foreign currency.
[1] [OMP (ENF.) (COMM.) 64/2018].
(This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.)
- The rate of exchange as applicable on the date once the petition of a challenge to an arbitral award is discharged
- It will be the relevant date for ascertaining the rate of exchange applicable for deciding the INR comparable to the amounts awarded in foreign currency.
- The Court commanded that the date on which the challenge to the arbitrational award is finally rejected would be the date for deciding the interchange applicable to an award made in foreign currency.
