A. Engineering,USD,EUR,INR
,"325,871.38","926,789.53","95,356,757.96
B. Material,"12,547,850.37","2,992,800.66","186,932,479.79
C. Model Test,-,"639,203.14",-
D. On-site expenses,-,-,"19,249,500.00
E. Off-site expenses,"871,962.20","915,069.97","259,235,689.53
F. Bank Guarantees,-,"229,472,02","377,004.62
Less Advance Received,"(3,057,228.00)","-(2,362,164.00)","-(407,656,254.00)
Total,"10,688,455.95","3,341,171.32","153,495,177.90
Remaining 25% amount as on 15 September 2017
Interest on this remaining 25% amount","INR 16,38,25,209.56; EUR
15,71,300.52; USD
37,37,271.86; GBP
INR 3,04,26,207.19; EUR
83,052.31; USD 1,97,536.42;
GBP 1,287.86",,
Shortfall in the payment under the Niti Aayog Office
Memorandum","Â Rs. Â 12,09,16,391.27",,
Interest on the Shortfall under the Niti Aayog Office
Memorandum","Â Rs. Â 2,24,57,027.11",,
TOTAL AMOUNT IN INR AFTER TAKI
INTO CONSIDERATION THE EXCHAN
RATE AS ON 17.10.2019","NÂG Rs. Â 74,86,34,859.42
GE",,
exchange rate and the parties had agreed that the cut-off date for calculation would be 15.09.2017. She referred to the Minutes of the Meeting dated,,,
11.09.2017, in support of her contention. She further contended that the correspondence exchanged between the parties also clearly established that",,,
Voith had agreed to this exchange rate. She referred to an email dated 14.11.2018, indicating the breakup of 75% of the awarded amount and pointed",,,
out that the said email clearly indicated the exchange rate as well as the deductions made by NTPC on account of tax deducted at source (TDS). She,,,
stated that, thereafter, by a letter dated 16.11.2018, the petitioner acknowledged the receipt of the remittances and requested NTPC to issue a consent",,,
letter to enable withdrawal of amounts from the escrow account. A draft of the said consent letter, which was forwarded by Voith to NTPC, also",,,
indicated the exchange rate applied for computing the amount deposited by NTPC.,,,
22. She further submitted that insofar as the TDS is concerned, the same was deducted as Voith had agreed to receive the payments in Indian",,,
currency. She stated that directions to pay the TDS amount would unfairly prejudice NTPC, as it would amount to requiring NTPC to pay the said",,,
amount twice. She submitted that it is not disputed that the amounts were to be paid to foreign companies, but Voith had consciously opened the",,,
Escrow Account and accepted that the money be paid in Indian currency.,,,
23. Lastly, she submitted that NTPC cannot be called upon to pay the cost of the Bank Guarantees. She submitted that the Advance Bank Guarantees",,,
were given by Voith to NTPC in terms of the contractual provisions and against advances made by NTPC. The said Bank Guarantees had been kept,,,
alive in view of NTPC’s challenge to the Award. The Award did not contemplate payment of any charges for the bank guarantees till the same,,,
were returned. She submitted that the charges for the Niti Aayog BG would necessarily have to be borne by Voith as it had volunteered to furnish the,,,
said guarantees to avail the benefit of the Niti Aayog Circular. She submitted that in terms of the Niti Aayog Circular, Voith was required to furnish",,,
the Bank Guarantees against which 75% of the awarded amount could be released. She stated that Voith complied with the said condition by also,,,
accounting for the Advance BGs and furnished the Niti Aayog BG for the remaining amount. She contended that in the circumstances, the Advance",,,
BGs were, essentially, kept alive to secure NTPC against the amount disbursed in terms of the Niti Aayog Circular. Thus, Voith was not entitled for",,,
reimbursement of any cost for the said Bank Guarantee.,,,
Reasons and Conclusion,,,
24. As is apparent from the above, the following three principal questions fall for consideration before this Court:",,,
(i) Whether there is any binding agreement between the parties whereby they have agreed that the amounts awarded in foreign currency would be,,,
computed at the exchange rate as prevalent on 15.09.2017? If not, the exchange rate to be applied for discharge of the amounts awarded in foreign",,,
currency.,,,
(ii) Whether it was open for NTPC to deduct TDS on the awarded amounts and whether the deduction of the said amount and deposit of the same,,,
with the Income Tax Authorities constitutes a discharge of the amounts awarded to the aforesaid extent?,,,
(iii) Whether Voith is entitled to charges for extending the Bank Guarantees, as claimed?",,,
Re: Exchange Rate,,,
25. The question as to which is the exchange rate applicable for determining the amounts payable in Indian currency in execution of an award made in,,,
foreign currencies, is no longer res integra. Concededly, the said issue is covered by the decision of the Supreme Court in Forasol v. Oil and Natural",,,
Gas Commission: 1984 (Supp) SCC 263, as followed by the Supreme Court in Renusagar Power Co. Ltd. v. General Electric Co. Ltd.: 1994 Supp (1)",,,
SCC 644.,,,
26. In Forasol v. Oil and Natural Gas Commission (supra), the Supreme Court had held that the exchange rate prevalent on the date on which the",,,
decree is passed would be the applicable exchange rate. It further clarified that if the decree is challenged in an appeal and such appeal is decided,,,
wholly or in part, the exchange rate prevailing on the date on which the decree or order is passed, would be applicable. Insofar as the arbitral awards",,,
are concerned, the date on which the challenge to the arbitral award is finally rejected, would be the date for determining the foreign exchange",,,
applicable to an award made in foreign currency. In Furest Day Lawson Limited v. Jindal Exports Limited: (2012) 194 DLT 439 and Progetto Grano,,,
S.P.A. v. Shri Lal Mahal Limited: Ex.P. No. 52/2012, decided on 29.05.2014, this Court had considered the date on which the Special Leave Petition",,,
against the order rejecting objections to recognition and enforcement of a foreign award was dismissed as the relevant date for determining the,,,
exchange rate to be applied for enforcing the awards made in foreign currency.,,,
27. Ms Anand did not dispute the above. She, however, rested NTPC’s case on the ground that the parties had arrived at a settlement and Voith",,,
was bound by the same. According to NTPC, the parties had agreed that 15.09.2017 would be the cut-off date for determining the exchange rate. Ms",,,
Anand relied on the Minutes of the Meeting dated 11.09.2017 and Voith’s letter dated 16.11.2018, in support of her contention that the parties had",,,
agreed to the exchange rate as prevailing on 15.09.2017. The said contention is unmerited. A plain reading of the Minutes of the Meeting dated,,,
11.09.2017 indicates that it does not record any agreement regarding the applicable exchange rate. The said minutes relate to the amounts that were,,,
required to be released in terms of the Office Memorandum of Niti Aayog dated 05.09.2016 (Niti Aayog’s Circular).,,,
28. More importantly, the Niti Aayog Circular was issued by Niti Aayog to provide measures for revival of the construction sector. The Niti Aayog",,,
Circular contemplates release of 75% of the arbitral award against the Bank Guarantees. This was only an ad hoc measure to elevate stress in the,,,
construction sector. The amounts released in terms of the Niti Aayog Circular cannot be considered as amounts disbursed in discharge of an arbitral,,,
award. The Standing Operating Procedure (SOP) issued on 24.11.2016 for release of the payments in terms of Niti Aayog’s Circular also makes,,,
it amply clear that the payments released under the said Circular would be without prejudice to the rights to the Departments/PSUs. Furthermore, the",,,
same would be required to be secured by bank guarantees and in the event the departments/ PSUs prevail in their challenge to the arbitral award, the",,,
amount disbursed would be liable to be recovered with interest.,,,
29. Thus, in the present case, the exchange rate as applicable on the date when the NTPC’s Special Leave Petition was dismissed by the",,,
Supreme Court â€" that is, 22.09.2020 â€" will be the relevant date for ascertaining the exchange rate applicable for determining the INR equivalent to",,,
the amounts awarded in foreign currency. However, according to Voith, as part payment had been received on 06.11.2018, the exchange rate",,,
applicable on that date may be considered for determining the awarded amounts paid by NTPC. Since the value of foreign currencies as on,,,
22.09.2020 was higher than on 06.11.2018, this Court considers it apposite to bind Voith to its concession in this regard.",,,
30. In view of the above, the exchange rate as applicable on 06.09.2018 would be considered relevant for the amounts released on 06.11.2018 being",,,
the part payment released by NTPC in terms of the Niti Aayog Circular and the exchange rate as applicable on 22.09.2020 would be considered for,,,
discharging the remaining amount awarded in foreign currency.,,,
Re: TDS,,,
31. The next question to be addressed is whether NTPC is entitled to credit for the TDS deducted from the payments made to Voith.,,,
32. Mr Mukhopadhaya had referred to the decision of the Supreme Court in All India Reporter Ltd. v. Ramchandra D. Datar (supra), wherein the",,,
Supreme Court had held that once a claim â€" in that case, a claim for compensation to an employee for wrongful termination of an employment â€" is",,,
decreed, “the claim assumes the character of a judgment-debt by a Civil Court and must be executed subject to deductions and adjustments",,,
permissible under the Code of Civil Procedureâ€. The Court further observed as under:,,,
“The rule that the decree must be executed according to its tenor may be modified by a statutory provision. But there is nothing in the Income Tax,,,
Act which supports the plea that in respect of the amount payable under a judgment-debt of the nature sought to be enforced, the debtor is entitled to",,,
deduct income tax which may become due and payable by the judgment-creditor on the plea that the cause of action on which the decree was passed,,,
was the contract of employment and a part of the claim decreed represented amount due to the employee as salary or damages in lieu of salaryâ€.,,,
33. In Islamic Investment Company v. Union of India and Anr.: (supra), the Bombay High Court following the decision in All India Reporter Ltd. v.",,,
Ramchandra D. Datar (supra) rejected the contention that the Judgment Debtor (in that case, the Food Corporation of India) must be allowed to",,,
deduct TDS on the interest payable to a non-resident. The Court observed that:,,,
“when such amounts becomes part of a judgment-debt, they lose their original character and assume the character of a judgment debt. Once such",,,
an amount assumes the character of judgment debt, the decree passed by the civil court must be executed subject only to the deductions and",,,
adjustments permissible under the Code of Civil Procedureâ€.,,,
34. The Court further observed that there was no provision under the Income Tax Act or under the Code of Civil Procedure, 1908 where an amount",,,
of interest payable under a decree would be subject to TDS.,,,
35. In Glencore International AG v. Dalmia Cement (Bharat) Limited: Ex. P. 75/2015 dated 31.07.2019, this Court, inter alia, referred to the following",,,
decisions:,,,
(i) All India Reporter v. Ramachandra D. Datar, (1961) 2 SCR 773.",,,
(ii) V.K. Dewan v. DDA, Execution Petition No. 194/2005, Delhi High Court.",,,
(iii) Sino Ocean Limited v. Salvi Chemical Industries Limite, Chamber Summons No. 76/2013 in Execution Application (Lodg.) No. 263/2012.",,,
(iv) American Home Products Corporation v. MAC Laboratories Pvt. Ltd. and Anr., (1986) 1 SCC 465.",,,
(v) Islamic Investment Company v. Union of India (UOI) and Anr., 2002 (4) BOMCR 685.",,,
(vi) S.S. Miranda Ltd. v. Shyam Bahadur Singh, (1985) 154 ITR 849.",,,
36. After referring to the aforesaid decision, this Court observed as under:",,,
“I may, however, note that these judgments do enunciate the principle, which is, that once a claim merges into a decree of the Court it transcends",,,
into a judgment-debt and, therefore, only those adjustments and deductions can be made which are permissible under the Code of Civil Procedure,",,,
1908. The judgments encapsulate the theme that a decree should be executed according to its tenor unless modified by a statute such as the 1962,,,
Act.â€,,,
37. Ms Anand also did not dispute that TDS was not liable to be deducted on judgment debts. However, she contended that the payments had been",,,
made in Indian currency and therefore, were subjected to TDS and that the same had been accepted by Voith without any protest.",,,
38. Mr Mukhopadhaya submitted that Decree Holder nos. 2 and 3 state that they are not assessees under the Income Tax Act, 1961 and are not",,,
required to file their Income Tax return in India. He also contended that Decree Holder nos. 2 and 3 are not liable to pay any tax in India. This Court,,,
is not required to examine whether Decree Holder nos. 2 and 3 are liable to pay tax in India. However, it is clear that tax was not required to be",,,
deducted at source since the payments made by NTPC were in discharge of the Award or as ad hoc payments under a mechanism evolved under the,,,
Niti Aayog Circular.,,,
39. The contention that Voith had agreed to such deduction is also unmerited. Decree Holder no.1 had accepted the said payments not only on its,,,
behalf but also on behalf of other Decree Holders and therefore, this Court finds it difficult to accept that the Decree Holder no.1 had accepted and",,,
agreed to NTPC deducting tax at source. However, there is merit in the contention that Voith knew, as way back in 2018, that NTPC had deducted",,,
TDS and it does not appear that Voith had raised any objection to the same at the material time.,,,
40. This Court is of the view that failure of Voith to object at the material time would not amount to accepting deduction and deposit of TDS as,,,
payment towards the awarded amount.,,,
41. It is relevant to note that NTPC had deducted TDS in two tranches. It had deducted  Rs. 2,58,55,348/- ( Rs. 1,32,10,961/- on the principal and",,,
 Rs. 1,26,44,387/- on the interest) and had deposited the same on 07.12.2018. This amount was deducted at the time of remission of money in terms",,,
of the Niti Aayog Circular. The second tranche of  Rs. 1,34,488/- was deducted by NTPC while depositing the balance amount. Out of the aforesaid",,,
amount  Rs. 1,10,84,032/- was deducted on account of the principal amount and  Rs. 23,50,456/- on account of interest. The said TDS was",,,
deposited on 07.01.2020. During the course of arguments, Mr Mukhopadhaya submitted that a sum of  Rs. 1,06,42,438/- could be absorbed by",,,
Decree Holder No.1 against the TDS of  Rs. 2,58,55,138/- deducted and deposited by NTPC. He further stated that a further sum of  Rs.",,,
55,29,831/- could be absorbed by Decree Holder No.1 out of the sum of  Rs. 1,34,488/- deducted and deposited by NTPC on 07.01.2020.",,,
42. In view of the above, this Court considers it apposite to direct that NTPC be credited to the extent of TDS amounting to  Rs. 1,61,72,269/- ( Rs.",,,
1,06,42,438/- plus  Rs. 55,29,831/-) against TDS deducted and deposited by NTPC. The said amount would be considered as discharged by NTPC",,,
on the dates when these amounts were deposited to the credit of Decree Holder No.1.,,,
43. Insofar as the remaining amount of TDS is concerned, NTPC is entitled to apply to the Income Tax Authorities for refund of the same. It is",,,
further directed that the Income Tax Authorities shall process NTPC’s request for refunding of the TDS incorrectly deposited on the strength of,,,
this order.,,,
Re: Bank Guarantee Charges,,,
44. The third question to be addressed is whether Voith is entitled to cost allegedly incurred by it for extending the bank guarantees (Arbitration BGs,,,
and Niti Aayog BGs).,,,
45. Insofar as the Advance BGs are concerned, the same had been extended in terms of the orders passed by this Court pending consideration of",,,
NTPC’s challenge to the Arbitral Award. Indisputably, NTPC’s challenge to the Arbitral Award cannot be stated to be insubstantial. In the",,,
circumstances, this Court does not consider it apposite to entertain Voith’s prayer for such charges. It is also relevant to mention that Voith had",,,
voluntarily furnished Bank Guarantees for release of the part of the awarded amount in terms of the Niti Aayog Circular. The Niti Aayog Circular,,,
does not provide for payment of any charges for furnishing Bank Guarantees. Voith had elected to receive payments in terms of the Niti Aayog,,,
Circular and therefore, this Court does not consider it apposite to accede to its prayer for Bank Guarantee Charges which were incurred by Voith for",,,
furnishing the Bank Guarantees against payments in terms of the Niti Aayog Circular. It was also pointed out that NTPC had released the payment,,,
under the Niti Aayog Circular while accepting the Advance BGs to cover part of the amount so released. It was submitted that in this view, the",,,
Advance BGs should also be considered as Bank Guarantees furnished in terms of the Niti Aayog Circular. This contention is merited.,,,
46. In any view of the matter, as stated above, given the facts and circumstances of the case, this Court does not consider it apposite to accede to the",,,
prayers for reimbursement of bank charges. The prayer made by Voith in this regard, is rejected.",,,
47. In addition to the questions as discussed above, NTPC had also raised an objection regarding the calculation of the shortfall as claimed by Voith. It",,,
was submitted that Voith has also calculated interest on the interest component by adjusting the advances against the amount due against the interest,,,
awarded. According to NTPC, Voith had added the advances which were directed to be adjusted under the Arbitral Award to the amount awarded. It",,,
had calculated the interest on the resultant amount by considering the same as the awarded amount. It had thereafter, adjusted the advance from the",,,
said amounts.,,,
48. In this regard, this Court considers it necessary to clarify that the calculations for discharge of the amount would be in accordance with the tabular",,,
statement in the Arbitral Award setting out the amounts awarded in different currencies. It is seen that the Arbitral Tribunal had deducted the,,,
advances and had computed the total amount payable after such deduction. Thus, the total amount as awarded after deduction of the advances would",,,
necessarily have to be considered as the awarded amount and the amounts paid by NTPC would be adjusted against the awarded amounts and the,,,
interest thereon. The amounts paid by NTPC are required to be first appropriated towards interest and the remaining against principal.,,,
49. NTPC shall recompute the shortfall payable by NTPC and shall pay the shortfall as computed.,,,
50. The parties shall file their respective calculations made in view of the above within a period of one week from today.,,,
51. List on 26.03.2021 for reconciliation of the amount and for consideration of any further issues that arises in connection with the aforesaid,,,
calculations.,,,
