FORASOL versus OIL & NATURAL GAS COMMISSION (AND VICE VERSA)

Citation: [1984] 1 S.C.R. 526 · Decided: 25-10-1983 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Disposed off
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Judgment (excerpt)

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FORASOL 
v. 
OIL & NATURAL GAS COMMISSION 
(AND VICE VE
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RSA) 
October 25, 1983 
[D.P. MADON AND SABYASACH! MUKHARJi, JJ.j 
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Code of Civil Procedure, 1908-s. 47-Decree passed according to award 
in foreign curre'ncy without fixing rate Of exchange-In execution pro-
. ceedings court niust decide and select proper date for 
fix/11g rate of 
exchange-Criteria for selection of date-Date which puts plaint~ff iii same 
posiiion in which he would have been had the defendant discharged his obligation 
when he ought to have done. 
Proper date is the date of decree. 
Arbitration Act, 1940-:-s. 17-Judginent according to the award-When it 
is. Provisions of s. 17 are different from the provisiOns Of s. 26 (1) of the English 
Arbitration Act. 
Precedents-English' decisions not binding but have high pursJ.1asiv.r value. 
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Prac/ice & procedure-General practice & procedure . to be followed .by 
plaintiff while claiming suni in foreign currency, arbitrator while making the 
· award and court while passing d~cree-Lai~ down. 
Forasol, it French Company having its principal office in P·aris,' Ffance, 
entered· into a contract on February 17, 1964 with Oil and Natural Gas 
Commission (ONGC), a Govern~ent of I~dia undCrtaking, for carrying. out . 
·structural drilling in relation to the 'exploration for .oil.in India. Jllrticle IX-3 
of the contract provided that the amount payable to Fora$Ol on account of 
operatiOnal fee, standqy fee, and equipment charges shall ·be computed in 
French Francs and ONGC shall pay so3· of that amount in French Francs, in 
Paris, France_, and the remaining 20% in Indian rupees using a fixed conversion 
rate of FF. 1.033=Re. 1.000. Art IX~1.2 provided that certain other charges, 
e.g., insurance, freight,. etc., incurred by .Forasol were to be reimburzed to 
Parasol by ONGC in "Indian rupees if the expenditure was initially incurred by 
Parasol in Indian rupees, otherwise in French Francs. Article X-2, X-3 ,and 
X-4 of the contract set out estimates of the payments to be made to Forasol in 
Frensh Francs, the invoicing 'rules and the rate of payment. Under_ Art. X·3.3, 
Forasol was to ilidicate in each of its invoices, the amount payable ·to it in 
French Francs and the amount payable to it in Indian rupees un~r the con· 
tract. Art. XI provided for paymentS to be made to Forasol in Indian rupees. 
The contract which was initially for a period of one year was extended twice 
and Addendum Nos. 1, 2 & 3 were added to the Contract. During the exten-
ded' period of the contract the Indian rupee was devalued in June 1966 and 
consequently Forasol ID:ade a claim tor conversion of Indian rupees into French • 
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FORASOL V. 0.11.0. COMMISSION 
527 
Francs at a rate higher than the rate specified in Art. IX-3. The disputes and 
differences which arose between the partie~ were referr.cd to arbitration .. The 
Umpfre who made the award directed certain payments to be made in French 
Francs, but did not specify the rate of exchange at which the French Francs 
were to be converted into Indian rupees. The award further directed that 
from November 30~ 1966, the rupee portion should be converted at the higher 
rate of FF. 1,000 equal to rupees 1,517.80. The award was filed in the Delhi 
High Court and the High Court passed a decree in terms of the award simpli-
citer Without fixing ~ny date for Conversion of the French Francs into Indian · 
rupees, with interest at the rate of 6% per annun1 fron1 the date of the decree 
till the date of payment 
Neither party raised any objection lo tl1e said ·award 
or.to the form in which the said decree was passed. Forasol filed an applica· 
tion in the High Court for. execution of the decree .. ONGC contended that 
tho enhanced rate of exchange specified in the award was appliCable only with 
respect to the interest payable to 'Forasol from November 30, 1966 and that 
to the rest of the payments to be 1nade under the award either in French Francs 
or in Indian rupee, the contract rate of exchange was applicable. I\ single 
Judge of the High Court held that the coniract rate of exchange applied only 
to the rupee part of' the payn1ent in respect of the 'iten1s specified in Art. IX-
3.1 and that in respect of the other paymeD.ts to be made ·to Forasol in French 
Francs the rate of exchange prevailing at the date of the decree would apply. 
In appeal, a Division Bench of the High Court held that the enhanced rate of 
exchange specified in th~ aw
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