New Delhi, Nov. 19 -- The Supreme Court has upheld an arbitral award imposing a 24 percent annual interest rate, ruling that such a rate agreed upon in a commercial loan contract does not violate the fundamental policy of Indian law.

A Bench of Justices JB Pardiwala and KV Viswanathan ruled that disagreements over interest rates cannot normally be challenged on public-policy grounds under Section 34 of the Arbitration and Conciliation Act, 1996.

They clarified that interference is justified only if the interest rate is 'so perverse and so unreasonable' that it shocks the conscience of the court.

The dispute stemmed from two 2006 loan agreements in which the borrowers took Rs 1.57 crore from a Non-Banking Financial Company (NBFC) at a 2...