Arbitration clause time-bar restrictions can be unenforceable when they extinguish the right to arbitrate under amended contract law.

A contractual clause requiring notice within 14 days of a DRB recommendation was held unenforceable to the extent it extinguished the right to arbitrate, because the amended Section 28 of the Indian Contract Act, 1872 voids restraints that curtail enforcement of contractual rights after a short stipulated period. The court also held that an arbitral order refusing to entertain claims on the basis of such a contractual bar is a jurisdictional decision, since the objection goes to arbitrability and may be raised under Section 16(2) of the Arbitration and Conciliation Act, 1996; an appeal under Section 37(2)(a) was therefore maintainable. The arbitral refusal was set aside and the claims were directed to be decided on merits.

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Issues: (i) Whether the appeal under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996 was maintainable against the arbitral order refusing to entertain claims as barred by the contractual dispute-resolution procedure; (ii) Whether the contractual stipulation requiring notice within 14 days of the DRB recommendation was enforceable or void as a restraint on legal proceedings under Section 28 of the Indian Contract Act, 1872.

Issue (i): Whether the appeal under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996 was maintainable against the arbitral order refusing to entertain claims as barred by the contractual dispute-resolution procedure.

Analysis: A plea that claims are not arbitrable or fall outside the scope of the arbitration agreement is a jurisdictional objection within Section 16(2) of the Arbitration and Conciliation Act, 1996. Such an objection may be taken in the statement of defence and, if accepted by the tribunal, attracts an appeal under Section 37(2)(a). The impugned order was not a decision on the merits of the claims but an order holding that the claims could not be entertained because the contractual mechanism had not been invoked in time and the DRB recommendation had attained finality.

Conclusion: The appeal was maintainable and the objection to maintainability was rejected.

Issue (ii): Whether the contractual stipulation requiring notice within 14 days of the DRB recommendation was enforceable or void as a restraint on legal proceedings under Section 28 of the Indian Contract Act, 1872.

Analysis: Section 28 of the Indian Contract Act, 1872, as amended, voids agreements that either restrict the time for enforcing contractual rights or extinguish such rights on expiry of a specified period. A clause that effectively curtails the right to arbitrate by making the remedy unavailable after 14 days was treated as an impermissible restraint. Earlier authorities under the unamended provision were distinguished, and the contractual restriction was read down as inconsistent with the amended statutory scheme.

Conclusion: The 14-day restriction was held unenforceable to the extent it barred arbitration and the claims had to be entertained on merits.

Final Conclusion: The arbitral ruling refusing to entertain the appellant's claims was set aside, and the tribunal was directed to adjudicate the claims on merits in accordance with law.

Ratio Decidendi: A contractual clause that extinguishes or bars the right to arbitrate unless invoked within a short stipulated period is void to that extent under the amended Section 28 of the Indian Contract Act, 1872, and an arbitral order accepting such a bar is an appealable jurisdictional decision under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996.

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