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Report No. 97

3.8. Assumed justification for present position.-

We have been at pains to consider whether there are any strong reasons justifying the present position. We must, in this context, note the reasons sometimes given in reported cases in support of the present approach. In a Punjab case in which the validity of a prescriptive clause in contract was upheld, the High Court set out certain grounds in support of its conclusion.1 They may be summarised as under,-.

(1) The primary duty of a court of law is to enforce a promise and to uphold the sanctity of contracts not opposed to public policy or law.

(2) The objects and exigencies of insurance are such that promptitude in asserting or enforcing a claim, and in its settlement, is of the essence. The Insurance Companies would thus be justified in putting a time limit within which the claim must be enforced, failing which all rights under the policy would come to an end.

(3) A prescriptive clause does not provide a limitation period different from the statutory period. The insured can still maintain an action within the statutory period, if the company waives the clause.

(4) A contract may contain within itself the elements of its own discharge (express or implied), for its determination in certain circumstances.

(5) As the clause does not limit the time within which the insured could enforce his rights and only limits the time during which the contract will remain alive, it is not hit by section 28 of the Contract Act.

1. Pearl Ins. Co. v. Atma Ram, AIR 1960 Punj 237 (240), para. 9 (FB) (per A.N. Grover, J.).

Section 28 of the Indian Contract Act, 1872 - Prescriptive Clauses in Contracts Back

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