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Madhavji Visram Thacker Vs. Ramniklal Vadilal - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 4039 of 1921
Judge
Reported in(1923)25BOMLR173
AppellantMadhavji Visram Thacker
RespondentRamniklal Vadilal
Excerpt:
foreign judgment - suit to recover amount awarded by the high court in england--rate of exchange applicable.;the plaintiffs claimed from the defendants the equivalent in rupees the amount in sterling decreed against the defendants by the high court of justice in england, on february 23, 1921, as converted at the rate of exchange ruling upon that date. the defendants contended that the rate of exchange at which the amount should be converted into the indian currency should be that ruling on the date on which the judgment in the plaintiffs' suit in bombay was pronounced:-;that the rate of exchange to be adopted should be the rate prevailing at the date of the judgment of the high court in england.;di ferdinando v. simon, smits and co. [1920] 3 k.b. 409, lebeaupin v. crispin [1920] 2 k. b...........in that section applying.3. the only question raised by mr. wadia for defendants is that the rate of exchange, at which the two sums should be converted into indian currency, should be that ruling on the date of this court's judgment, instead of on february 23, 1921, the date of the english high court judgment.4. mr. campbell for plaintiffs relies on the volturno (1921) 125 l.t. 191 : [1921] 2 a.c. 544 which follows di ferdinando v. simon, smita and co. [1920] 3 k.b. 409 in deciding that, when damages are assessed in a foreign currency, they must be converted at the rate of exchange ruling at the date with reference to which the damages in the foreign currency have in law to be assessed, and not at the rate of exchange ruling at the date when the tribunal is called upon to convert.....
Judgment:

Fawcett, J.

1. Plaintiffs sue to recover the equivalent in rupees etc. of the sums of 138-4-1 and 21-17-5, decreed ex parte against defendants by the High Court of Justice, King's Bench Division, in England, on February 23, 1921, as converted at the rate of exchange ruling upon the said February 23, 1921, with costs and interest on judgment.

2. The judgment is conclusive under Section 13, Civil Procedure Code, none of the exceptions specified in that section applying.

3. The only question raised by Mr. Wadia for defendants is that the rate of exchange, at which the two sums should be converted into Indian currency, should be that ruling on the date of this Court's judgment, instead of on February 23, 1921, the date of the English High Court judgment.

4. Mr. Campbell for plaintiffs relies on The Volturno (1921) 125 L.T. 191 : [1921] 2 A.C. 544 which follows Di Ferdinando v. Simon, Smita and Co. [1920] 3 K.B. 409 in deciding that, when damages are assessed in a foreign currency, they must be converted at the rate of exchange ruling at the date with reference to which the damages in the foreign currency have in law to be assessed, and not at the rate of exchange ruling at the date when the tribunal is called upon to convert into English money the damages to be ascertained. This does not, however, strictly apply to the point now arising, for even Mr. Campbell does not ask the Court to allow the rate prevailing on the day when the breach of contract occurred, in respect of which the plaintiffs obtained the English judgment sued upon. But in so far as the cause of action for the present suit is the judgment in question, and the breach of contract is the cause of action in a case like that of Di Ferdinando v. Simon, Smits & Co ,the principle of the decision in that case does, I think, apply to the present. That principle is that once the damages recoverable have, so to speak, crystallized at the date of default, they do not change afterwards, and the Courts do not take account of the inevitable delay which must occur before the trial of the action. This is the view taken by McCardie J. in Lebeaupin v. Crispin [1920] 2 K.B. 714 which has been endorsed by the Court of Appeal in the two decisions already mentioned. He there says (p. 722):

To hold otherwise would produce extraordinary results, The damages, payable would depend partly on the date when the plaintiff issued his writ, partly on the length of the interlocutory proceedings, partly on the illness or good health of the parties as the trial approached, partly on the number of prior cases which occupied the time of the Court, and partly on whether the Judge reserved his decision or not. They might depend also on whether judgment was entered for the plaintiff by the judge of first instance, or by the Court of Appeal or by the House of Lords. Such a state of things would, I think, be most unsatisfactory. It would encourage a plaintiff to hasten or postpone the trial according to his view of the money market, and he might gamble on the rate of exchange. If the damages are fixed at the date of breach where the contract is wholly to be performed in England, such also, I think, should be the result where the breach is out of England, There should not be varying rules in such a case. If the damages are once crystallized at the date of breach, then a definite date is given for the ascertainment of exchange, and the amount found payable at the hearing is awarded without regard to the fluctuations of the possible date of trial.

5. These considerations apply to the present case. It is undesirable that the amount which the plaintiffs receive should depend on the particular date on which this Court gives judgment, a date which depends on varying circumstances. On the date on which the English High Court gave its judgment, defendants came under a legal obligation to pay the sums in question to the plaintiffs, for a foreign judgment is regarded as creating a debt, the defendants being under an implied liability to pay its amount (see Halsbury's Laws of England, Vol. VI, Article 417, p. 281); and the principle applicable in the case of the breach of contract which brought defendants under a legal obligation to pay damages to plaintiff's applies equally in favour of converting at the rate of exchange ruling when that legal obligation arose. The subsequent variations in exchange under which those sums became of greater or less value, when expressed in Indian currency, are immaterial for reasons given in the judgment of Scrutton L. J. in Di Ferdinando v. Simon Smit and Co. He says (pp. 414 and 415):

On principle the matter appears to stand thus: When a plaintiff claims damages for breach of contract) to deliver goods in a foreign country at a fixed date, the measure of damages is, if there is a market, the market value of those goods at the place where and on the day when they should have been delivered ; and it is immaterial to prove that at the date of the judgment awarding the damages the goods were either worth more or worth less than they were at the date of the breach....The reason...is that susbequent fluctuations in the value of the goods which ought to have been delivered are too remote, as a consequence of the original breach, to be taken into account by the Court. Therefore shutting out the change in the value of the goods after the date of breach, if the damages have to be assessed in the currently of a foreign country, the Court has to arrive at a figure expressed in foreign currency. An English Court however cannot give judgment in foreign currency, there being no power to enforce such a judgment. Therefore the Court must translate into English currency the figure arrived at as the damages in foreign currency on the date of the breach. Just as the Court has to exclude from the calculation of the damages the subsequent change in the value of the goods after the date of breach, so also it has to exclude the subsequent change in the value of the currency after the date of the breach; and for the same reason-namely, that the changes in the value of the currency are too remote a consequence of the breach to be taken into consideration by the Court.

6. So, here, in calculating in Indian currency the damages due to plaintiffs for defendants' failure to fulfil their obligation to pay the sums of 138-4-1 and 21-17-6 arising under the judgment of February 23, 1921, this Court must exclude from the calculation of those damages the subsequent change in the value of this currency.

7. It should also be noticed that the Court of Di Ferdinando's case rely on Scott v. Bevan (1831) 2 B. & Ad. 78. The substance of the decision in that case is given in Sorutton L. J.'s judgment just referred to. That was a case of an action brought on a Jamaica judgment for a sum of money, and the Court held that this should be converted on the basis of the actual rate of exchange at the date of the Jamaica judgment. Mayne on Damages, 7th Edn., p. 256, cites this case as authority for the general proposition that the rate of exchange prevailing at the date of the foreign judgment sued on is the one to be taken ; and this view has clearly been affirmed by the Court of Appeal in England.

8. I think the same rule should be followed here. As an analogous case I may refer to the one where 'monies expressed to be payable in British currency are payable in India,' under an order of the Privy Council. Under Section 610 of the former Code of 1882, these were to be 'estimated according to the rate of exchange for the time being fixed by the Secretary of State for India in Council, with the concurrence of the Lords Commissioners of Her Majesty's Treasury, for the adjustment of financial transactions between the Imperial and the Indian Governments,' The Allahabad and Bombay High Courts held that, where payment was made after execution is issued in India, the rate must be that at the time of issuing the writ: Param Sukh v. Ram Dayal I.L.R. (1886) All. 650 and Ishwardas v. Mir Ajmudinkhan (1881) P.J. 40 The Calcutta High Court on the other hand held that the rate should be that prevailing at the date of the Privy Council order: Dakhina Mohan Roy Chowdhry v. Saroda Mohan Roy Ohowdhry I.L.R.(1896) Cal. 357 and Mahomed Abdul Hye v. Gajraj Sahai I.L.R. (1897) Cal. 283. This difference of opinion has been settled in favour of the Calcutta view by the insertion of the words 'at the date of the making of the order' (i. e., the order of His Majesty in Council) after the words 'for the time being fixed' in the corresponding provision contained in Order XLV, Rule 15(3), of the present Code. This supports the view that the rate of exchange at the date of a foreign judgment sued on should similarly be determinative in preference to that prevailing on the date when the judgment is ordered to be given effeot to in India,

9. It is agreed that the rate of exchange as on February 23, 1921, was 1s. 3 11/16 d.

10. The full amount due (Rs. 2448-14-0) has already been paid to plaintiff as admitted by Mr. Campbell.

11. Decree for plaintiffs for costs of the suit.


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