In a rather intense hearing that stretched through the afternoon, the Supreme Court on Thursday refused to interfere with a long-running arbitral award ordering BPL Limited to pay over ₹27 crore plus high interest to Morgan Securities & Credits Pvt Ltd. The bench, led by Justice J.B. Pardiwala, said the courts cannot rewrite commercial bargains simply because the terms “appear harsh in hindsight.”
Background
The dispute began two decades ago when BPL Display Device Ltd (BDDL) and BPL Limited availed a bill discounting facility from the finance company to ease cash flow for supply transactions. As per the sanction letters of 2002 and 2003, Morgan agreed to advance funds at a concessional 22.5% interest, but the standard rate of 36% per annum-with monthly compounding-would apply if payments were delayed.
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What followed was a chain of defaults, delayed payments, and even post-dated cheques that were never honoured. By 2007, Morgan invoked arbitration, claiming ₹25.79 crore, and the arbitrator eventually ruled in its favour, holding BPL and BDDL jointly and severally liable. Multiple rounds of challenge before the Delhi High Court failed, prompting BPL to approach the Supreme Court.
Court’s Observations
The hearing had a noticeably sharp tone, especially when BPL argued that 36% interest with monthly rests amounted to “penal interest on penal interest,” contrary to Section 74 of the Contract Act and public policy.
The bench, however, was unmoved. Justice Pardiwala remarked, “This is not an old-world loan transaction. Bill discounting carries inherent commercial risk. You negotiated the terms, benefited from them, and defaulted. Now you cannot turn around and say the terms were unfair.”
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The Court underscored that:
- The contract was purely commercial, negotiated between sophisticated entities.
- The Usurious Loans Act, 1918 did not apply because this was not a loan but a bill-discounting arrangement.
- BPL had acknowledged its debt in 2007, so limitation arguments fell flat.
- The arbitrator had correctly applied Section 31(7)(a) of the Arbitration Act, which allows interest “as agreed between the parties.”
At one point, the bench observed, “High interest may appear morally uncomfortable, but in modern commerce, it reflects risk, not exploitation.”
The Court also noted BPL never raised several arguments-like lack of notice for withdrawal of concessional rate-before the arbitrator or the High Court. Raising them now, the bench hinted, was “too late in the day.”
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Decision
Concluding the matter, the Supreme Court dismissed the appeals, affirming that there was no illegality or perversity in the arbitral award or the Delhi High Court’s reasoning.
The decision means BPL must pay ₹7,27,05,579 and ₹20,62,28,681, along with 36% interest till the award date and 10% thereafter, exactly as directed earlier. With a subtle note of finality, the Court said the award “neither shocks the conscience nor violates public policy.”
And with that, the courtroom fell silent-the decade-long dispute effectively sealed.
Case Title: BPL Limited vs. Morgan Securities and Credits Private Limited
Case No.: Civil Appeal Nos. 14565–14566 of 2025 (arising out of SLP (C) 32849–32850 of 2025 @ Diary No. 56596 of 2024)
Case Type: Civil Appeal / Arbitration Matter (Challenge to arbitral award under Sections 34 & 37 of Arbitration Act)
Decision Date: 2025 (as per judgment reference: 2025 INSC 1380)