Arbitration Dispute On Interest Rate Not A Public Policy Ground To Set Aside Award: Supreme Court

The Supreme Court held that disputes relating to the rate of interest awarded by an arbitral tribunal ordinarily do not fall under the “public policy” ground for setting aside arbitral awards under Section 34 of the Arbitration and Conciliation Act. The Court emphasized that public policy challenges must remain narrow and cannot be allowed to become a backdoor for re-arguing merits. Only violations such as fraud, corruption, fundamental unfairness, or patent illegality can attract Section 34 intervention. While parties often dispute interest rates as excessive or arbitrary, the Court clarified that such issues fall within the arbitrator’s domain unless the interest awarded is shockingly disproportionate or violates statutory standards. This judgment reinforces the pro-arbitration stance of Indian courts, limiting judicial interference and ensuring finality of arbitral awards.