Law: Limitation Act (IX of 1908)

Section: 3, 23, 28, 181

Law: Arbitration Act (X of 1940)

Section: 37, 20

(a) Arbitration-Arbitration agreement fixing time during which reference may be made to arbitration-Valid-Clause in contract limiting time, within which a reference to arbitration could be made, to a period of one month only from date of expiry of agreement-Neither void under S. 23, Contract Act, 1872 nor of such a nature as would defeat provisions of Limitation Act, 1908-Contract Act (IX of 1872), Ss. 23 & 28-Arbitration Act (X of 1940), Ss. 37 & 20-Limitation Act (IX or 1908), S. 3. A clause in a contract agreement provided for reference to arbitration, of a person named therein, of any dispute arising between the parties. The succeeding clause in the agreement laid down that the reference could be made either during the currency of the agreement or within one month of its expiry. The contract under the agreement was completed in 1955 but on dispute having arisen between the parties an application under section 20 of the Arbitration Act was initiated in 1962, for reference of dispute between the parties to arbitration. This application was opposed by the other party on the ground that it militated against the arbitration clause because it was being filed long after the period of one month mentioned therein had expired. The issue was, therefore, whether the application was within time. The applicant contended that the time limit of one month in the arbitration clause of the agreement was repugnant to the provisions of the Limitation Act, 1908 and that the clause was, therefore, void under section 23 of the Contract Act, 1872. Held : A plain reading of section 3 of the Limitation Act and section 23 of the Contract Act will show that an agreement to enhance the period of limitation or a promise by the defendant not to raise the plea of limitation is in effect a covenant to defeat the provisions of the Limitation Act. It will be contract ing oneself out of the statute of limitation and such agreement will be void. There is, however, a marked distinction between a condition which shortens or limits the time within which a suit may be brought. There is nothing in the above provisions to justify the inference that a stipulation allowing curtailment of period…