The Delhi HC recently interpreted exception 3 of section 28 of the Indian Contract Act, 1872. HC states that exception 3 of section 28 of the Indian Contract Act, 1872 does not deal with the “claim period” under the Bank Guarantees.

It says that this exception deals with the curtailment of the period to knock the door of the Court or tribunal to enforce the rights mentioned under the Bank Guarantees.

The judgment authored by Justice Jayant Nath held -

“It is dear that exception 3 to section 28 of the contract act deals with curtailment of the period for the creditor to approach the court/tribunal to enforce this right. It does not in any manner deal with the claim period within which the beneficiary is entitled to ledge his claim with the bank/guarantor.”