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Report No. 97

2.4. Illustrative cases.-

We may, in the first place, refer to a few cases illustrating the operation of the present position. In a case which went up to the Supreme Court,1 a clause in an insurance policy provided that all benefits under the insurance policy shall be forfeited if a suit was not brought within a specified period. The clause was held to be valid. The judgment expressly approves High Court decisions which had taken a similar view, including the oft cited Bombay case on the subject.2

There are decisions of many High Courts taking a similar view)3-8

These cases hold that it is only when a period of limitation is curtailed that section 28 of the Contract Act comes into operation. As was observed in a Bombay case, "It [section 281 does not come into operation when the (contractual) term spells out an extinction of the right of the plaintiff to sue or spells out the discharge of the defendants from all liability in respect of the claim.9"

1. Vulcan Insurance Co. v. Maharaj Singh, AIR 1976 SC 287 (294).

2. Baroda Spinning and Weaving Co. v. Satyanarayan Marine Ins. Co., AIR 1914 Born 223, followed in Slialthor v. Hind & Co., AIR 1932 Born 330.

3. Girdharilal v. Eagle Star Ins. Co., (1923) 27 CWN 955: AIR 1924 Cal 186.

4. New India Ins. Co. v. R.M Khandelwal, AIR 1974 Born 228.

5. Ghose v. Reliance Ins. Co. P. Ltd., ILR 11 Rang 475.

6. NUMC v. 7'irath Ram, AIR 1980 Del 185 (187), para. 7.

7. Ruby General Ins. Co. v. Bharat Bank, AIR 1950 EP 852.

8. See further, paras. 3.4 and 3.5, infra.

9. Ranjit Karamji v. Unique Motor Ins. Co., AIR 1951 Bom 347 (352).

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

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