Decided on September 25,1970

British Jeffrey -Diamond Ltd. Appellant
Hindusthan Development Corporation Ltd. Respondents


Sabyasachi Mukherjee, J. - (1.) This is an application for an order asking that the decree passed by me on November 18, 1968, be modified and/or altered and/or varied to the extent that instead of the sum of Rs. 1,39,203 -90, the principal amount of the decree, be made for the sum of Rs. 87,918 in terms of the calculation and/or on, the basis mentioned in the petition and that interim and further interest be passed at the rate of 6 % per annum on the principal sum of œ6,000 equivalent to Rs. 79,980 and not on the entire amount claimed under para. 18 of the plaint. Alternatively, there is a prayer that a decree be passed for such amount as this Court thinks fit and proper. The Petitioner, who was the Defendant in this suit, also prays that the decretal amount be paid in instalments at the rate of Rs. 5,000 per month or at such other rate or rates as this Court might direct. Originally, there was an application by the Plaintiff for judgment upon admission. It appears that the suit was instituted on June 23, 1967, and in the petition in support of the judgment upon admission the Plaintiff's claim was for the aggregate sum of œ6,595 -9 -4 on the basis of the balance of the price of goods sold and delivered, alternatively for the principal sum due under the several bills of exchange, as mentioned in the petition, amounting to œ6,000. Further interest and costs were also claimed. The said claim for œ 6,000 was based on six bills of exchange each dated June 1, 1965, -and payable on several dates of maturity between March 14, 1965, and November 10, 1965. It appears further that I had delivered a short judgment on November 18, 1968, on the application by the Plaintiff. In the said application it was claimed that the equivalent of œ6,595 -9 -4 would be Rs. 1,39,203 -90. As in that application I was satisfied that there was an unconditional and an unequivocal admission of liability, I - passed judgment accordingly. There was no question raised before me as to what should be the correct rate of exchange. There are three different rates of exchange at three different points of* time. Prior to the devaluation of the Indian, rupee on June 6, 1966, the rate of exchange in respect of sterling was œ 1 equivalent to Rs. 13 -33. Upon that basis the equivalent of the sum of œ 6,595 -9 -4 would, be Rs. 87,918. After the devaluation of June 6, 1966, the rate of exchange which - became effective was œ T equivalent to Rs. 21 -10. On that basis the equivalent of œG.595 -9 -4 would be Rs. l,39,203; -90. Since then the sterling has been devalued on November 18, 1967, and the rate of exchange thereafter became œ1 equivalent to Rs. 18 -08. According to that rate the equivalent of œ6,565 -9 -4 would be Rs. 1,19,267 -01. The, order or the decree dated November 18, 1968, has not yet been drawn up and completed. Previously an application was made before me asking for an order directing that the decree for the sum of Rs. 1,19,267 -01 instead of Rs. 1,39,203 -90 be passed. Upon the hearing of that application the Petitioner submitted that that was not the correct amount and the decree should really be for Rs. 87,918 on the basis that the correct rate which should have been applied was the rate of œ 1 being equivalent to Rs. 13 -33 which was the rate prior to devaluation of the Indian rupee on June 6, 1966. I gave the Petitioner leave to withdraw the said application with the liberty to make a fresh application upon the same cause of action upon the Petitioner paying to the Respondent the costs which I assessed The costs have been paid and this is the second application.
(2.) The point for consideration in this application is whether the decree has been properly passed. Counsel for the Petitioner does not dispute that there was an admission and, as such, he does not dispute that position. But, according to him, the correct, calculation of the Indian rupee would be on the rates prevalent between March 14, 1965, and November 10, 1965, that is to say, prior to the devaluation of June 6, 1966, being the dates on which the several bills matured. Counsel for the Petitioner submitted this was the clearly established proposition of law and this fact was hot brought to the notice of the Court through inadvertence at. the time of the hearing of the original application which resulted in the order of November 18, 1968, and inasmuch as the said order has not yet been drawn up and perfected the same should be corrected in accordance with law. Counsel for the Respondent, on the other hand, contended that it was not correct to say that the undisputed position in law was that the rates prevalent on the dates of maturity of the several bills should be the rates applicable in this case. He further submitted that the time to make the payment of the different bills were extended from time to time upon the request of the Petitioner and it was because of such extensions that the suit was not filed prior to June 6, 1966, and, as such, the rates prevalent on the date of the maturity should not be taken as the basis. According to him, the order dated November 18, 1968, has been correctly passed. Furthermore, he submitted that it was permissible in law to extend 'the time for payment, in respect of the bills" of exchange, and in that event the proposition of law advanced by the counsel for the Petitioner would not apply in this case. He further submitted that, in any event, this was a controversial question which could not be gone into at this stage because, according to him, that would be rehearing the matter and passing a different order. This, counsel for the Respondent submitted should not be permitted after such lapse of time.
(3.) The first question that has to be decided is what is the rate of exchange in which the claim of the Plaintiff in the suit, which has been expressed in the bill of exchange in sterling, should be converted into Indian rupee. The learned Counsel for the Petitioner in this application contends that it should be at the rate prevalent on the dates when the bills, of exchange matured or. became due to be payable. He has drawn my attention to Dicey's Conflict of Laws (8th. ed., p. 889). In r. 154, it has been stated in the aforesaid Dicey's Conflict of Laws that an English Court cannot give judgment for payment of an amount in foreign currency. A debt which is expressed and damages which are calculated in a foreign currency must, therefore, be converted into sterling for the purposes of litigation. The learned editors of Dicey have expressed (p. 892) the view that, as soon as proceedings begin in an English Court, the debt which was incurred in foreign currency is, according to the practice approved by the House of Lords, retrospectively, converted into a sterling debt. It has to be remembered, however, as noted in the aforesaid book, that the origin of this rule is to be found in the period of prolonged stability of sterling when the rule could only operate against a defaulting debtor. In the context of the present fluctuation of the exchange rate of the Indian rupee it is, therefore, necessary to apply the principle of English private international law with caution. The learned editors of the 7th ed. of the said book (p. 887) have further observed that this rule is based on the nominalistic principle and, according to the learned editors this is an encroachment of the law of procedure upon substantive rights, and it is difficult to justify it from the point of view of justice, convenience or logic. Cheshire in the Private International Law (5th cd., p. 575) also states that if an action is brought in England to recover damages for the breach of a foreign contract, the amount of "English judgment must be based on the quantity of English sterling that would be required to purchase in England at the ruling rate of exchange the amount of the foreign currency due. Cheshire also states that this rule also applies to cases of non -payment of promissory notes or bills of exchange. The learned Counsel also drew my attention to the decision of the Privy Council in the case of Syndic in Bankruptcy of Salim Nasrallah Khoury v/s. Khayat, (1943) AC 507 The Judicial Committee held in that case that the English rule was. that the correct date for determining the rate of exchange of foreign currency into local currency was that for the breach by non -payment it was held, accordingly, that the conversion from Turkish to Palestinian currency must take place at the rate of exchange ruling at the date of maturity of the promissory note and not at the date of any actual payment made subsequently. In this connection, it is important to bear in mind the dissenting observations of Lord Carson in the case of S.S. Celia v/s. S.S. Voltruno (1921) AC. 544 (567). According to Lord Carson, the true rule ought to be that the foreigner should, when the damages as assessed or agreed upon are in foreign currency, receive under the judgment neither more nor less than that sum and that the proper date to ascertain this is when the entry of judgment is being made for the purpose of making the judgment available. Reliance was also placed on the decisions in the cases, of In re United Railways of Havana and Regla Warehouses Ltd. (1961) A.C. 1007, Societe Des Hotels Le. Touguet Paris -Place v/s. Cummings, (1922) 1 K.B. 451 and East India Trading Co. Inc. v/s. Carmel Exporters and Importers Ltd. (1952) 2 Q.B. 439.;

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