TaxTMI 
TaxTMI 
2008 (12) TMI 664
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....nt of heavy rains in the Shimla region in September 1988 and consequent large scale flooding in the South Zone, the insured timber was washed away. This fact was conveyed to the respondent by several letters between 3rd October 1988 and 31st September 1989. The case of the appellant is that instead of meeting its contractual obligations, the respondent refuted its liability to pay on the 13th October 1988 on the pretext that the policy had, in fact, been issued for a period of 8 months only starting from 6th November 1987 and ending on 5th July 1988 and the period of one year mentioned in the policy was on account of a typographical mistake. It also appears that after prolonged negotiations, some additional premium was paid with respect to the aforesaid policy. It is the grievance of the appellant that despite having accepted the additional premium even after the policy had been repudiated on 13th October 1988, the respondentcompany still refused to make good the loss. The appellant accordingly issued a legal notice dated 7th May 1992 followed by another dated 7th December 1992 but to no avail, and on the contrary, the respondent vide its communication dated 24th December 1992 yet ....
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....e pre amended Section 28 ibid was, therefore, inapplicable. Mr. Nandwani, the learned counsel for the respondent has, however, submitted that the claim had, in fact, been repudiated on 13th October 1988 and as the 3 years period was deemed to have commenced from that day, the complaint was barred even on the appellant's best case as the complaint had been filed in April 1994. He has, further, argued that as far back as in the judgment in Vulcan Insurance Co.Ltd. vs. Maharaj Singh & Anr. (1976) 1 SCC 943 and followed subsequently in several judgments (and even in those referred to above), it had been held that a clause in an Insurance Policy fixing a period of limitation extinguishing the right to file a suit or complaint within a certain stipulated period which could be less than that prescribed by the Limitation Act, was not violative of Section 28 of the Contract Act and as such the findings of the Commission were perfectly in accordance with the law for this additional reason as well. 4. We have considered the arguments advanced by the learned counsel for the parties. 5. It is clear from the record that the timber had been washed away some time in September 1988 and after prol....
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.... to find out if the amendment had, indeed, been made and, if so, to what effect. During the resumed hearing, the learned counsel for the appellant candidly admitted that the amendment had been made but had thereafter been repealed and the matter would, thus, have to be examined under Section 28 of the Contract Act, as originally placed. We have, accordingly, chosen to deal with this matter under that provision. 7. It would be clear from the above prefatory note that the discussion would involve an appreciation of Clause 6(ii) of the Policy and Section 28 of the Contract Act. Both these clauses are reproduced below: "6(ii) In no case whatsoever shall the company be liable for any loss or damage after the expiration of 12 months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration: it being expressly agreed and declared that if the company shall declaim liability for any claim hereunder and such claim shall not within 12 calendar months from the date of the disclaimer have been made the subject matter of a suit in a court of law then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be rec....
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....ted above and several other cases, in addition, this is what the Court ultimately concluded: "16. From the case-law referred to above the legal position that emerges is that an agreement which in effect seeks to curtail the period of limitation and prescribes a shorter period than that prescribed by law would be void as offending Section 28 of the Contract Act. That is because such an agreement would seek to restrict the party from enforcing his right in Court after the period prescribed under the agreement expires even though the period prescribed by law for the enforcement of his right has yet not expired. But there could be agreements which do not seek to curtail the time for enforcement of the right but which provide for the forfeiture or waiver of the right itself if no action is commenced within the period stipulated by the agreement. Such a clause in the agreement would not fall within the mischief of Section 28 of the Contract Act. To put it differently, curtailment of the period of limitation is not permissible in view of Section 28 but extinction of the right itself unless exercised within a specified time is permissible and can be enforced. If the policy of insurance pr....