Arbitral Tribunal Imposing Exorbitant Interest Not Violative Of Fundamental Policy Of Indian Laws: Delhi High Court

The Delhi High Court bench of Justice Yashwant Varma and Justice Dharmesh Sharma, while hearing a review petition of an appeal filed by the appellant u/s 37 of the A&C Act read with Section 13 of the Commercial Court Act observed that the exuberant interest rate charged in the commercial world depends upon the transparency of the terms and conditions of the contract entered into. The bench further observed that the arbitral tribunal imposing a high interest rate cannot be said to violate the fundamental policy of Indian laws. Analysis of the Court: The bench observed that the issue of 'unreasonableness' of the rate of interest claimed on the bills discounted concerning the two sanction letters was argued before the tribunal, then before the single judge u/s 34 petition, and lastly before the division u/s 37 petition, and was argument was rejected by all three forums. Lastly, the bench observed that after a plain and grammatical construction of clauses and of Explanation 1 to Section 34 of the A&C Act, imposing exorbitant interest in the background of contemporary commercial practices cannot be said to be violative of the fundamental policy of Indian laws.