When Liability Caps meets Default Interest

This case addresses the interplay between a capped liability clause and a default interest clause in a corporate guarantee. 

The NCLAT decisively held that while the principal guaranteeliability may be capped, default interest arising from the guarantor’s own delay constitutes a separate and independent obligation. 

The judgment underscores that non-obstante clauses cannot be mechanically applied to extinguish commercially meaningful provisions unless a direct conflict exists.