Sabyasachi Mukharji, J.:— This is an appeal arising out of the order passed and judgment delivered on 31st Oct., 1979 dismissing an application for setting aside of an award. It appears that a Policy of Insurance against burglary and house breaking was issued by the appellant in favour of the respondent No. 1 on 7th Aprl., 1972. On 13th Oct., 1972 there was an endorsement in respect of the amount and schedule of the articles insured under the Policy and all other terms and conditions of the Policy remained unchanged. The said Policy including the endorsement was valid till 29th Mar., 1973. The said Policy contained an arbitration clause which it is material to set out. The said clause was as follows:

“All differences arising between Society and the insured of the Claimant hereunder shall be referred to the decision of an arbitrator to be appointed in writing by the parties in difference or if they cannot agree upon a single Arbitrator to the decision of two Arbitrators one to be appointed in writing by each of the parties. Before entering upon the reference the Arbitrators shall appoint an Umpire and in case of disagreement between the Arbitrators reference shall be made to the Umpire whose decision shall be final. The arbitration shall take place in Calcutta or in such other place as the Society shall at their discretion appoint. The obtaining of an award shall be a condition precedent to any liability or right of action against the society in respect of any such difference. If the Society shall disclaim liability to the Insured for any claim hereunder and such claim shall not within three calendar months from the date of such disclaimer have been referred to arbitration under the provision herein contained then the claim shall for all purposes he deemed to have been abandoned and thereafter no right shall be enforceable and nothing shall be recoverable hereunder.”

2. There was also an agreed bank clause which is not relevant for our present purpose. On the 19th Mar., 1973 the alleged burglary in respect of this claim had taken place. On the 29th Mar., 1973 the respondent No. 1 had submitted a claim for Rupees 37,400 in respect of the alleged loss due to the said alleged burglary. By a letter dated 2nd May, 1973, the insurer, the appellant herein, repudiated the liability. On the 14th July, 1973, there was a letter from the insurer's lawyer reiterating the repudiation of liability. Three months thereafter, on 24th Oct., 1973, the respondent No. 1 referred the dispute to arbitration and appointed one Sri S.M Chowdhury, as his arbitrator and called upon the appellant to appoint their arbitrator. On the 25th Aprl., 1974 an order passed in an application under S. 20 of the Arbitration Act, 1940 filed by the respondent No. 1, being Special Suit No. 1 of 1974, and the said agreement was ordered to be filed in Court and an order of reference was made in terms of the arbitration agreement. We shall have occasion to refer to the decision in the said case while considering whether the specific question of law had been referred to the arbitrator or not. On the 9th Mar., 1976 an order was made appointing Mr. P.K Roy, Barrister-at-Law, as the sole Arbitrator on a further application of the respondent No. 1 in the said Special Suit No. 1 of 1974. On the 23rd Mar., 1976 the sole Arbitrator had entered upon reference. On the 11th May, 1976 the arbitrator settled the issues. It is relevant in view of the contentions raised before us to refer how the arbitrator settled the issues. In his award dated 21st July, 1977 the arbitrator observed, inter alia, as follows:

“And whereas upon going through the respective pleadings of the claimant and the respondent No. 1 and hearing respective submissions on behalf of the said parties, I settled the issues on May 11, 1976 as set out hereinafter.”

Thereafter on the 21st July, 1977, the Arbitrator made his award. In the said award, after reciting the necessary facts of his appointment and the order of the High Court and after setting out what we have set out before, the Arbitrator observed, inter aha, as follows:

“And whereas by construing the printed Condition 10 of the relevant Policy of Insurance being No. CBB/16191 dated April 7, 1972 I have come to the conclusion that the Last Part thereof limits the time within which the Insured may enforce his right under the Policy and hence void to that extent under Section 28 of the Indian Contract Act, 1972.”

Then, he proceeded to answer the issues. It is also material to set out the issues, which the arbitrator has answered in the award which reads as follows:

“Issues. Answers 1. Is the alleged claim of the claimant not maintainable or enforceable or recoverable on the grounds alleged in para 2 of the Counter Statement of the respondent No. 1? No. The claim is maintainable. 2. Has the claimant any cause of action for the present Arbitration proceedings? Yes. 4. (i) Was there any burglary and house breaking committed as alleged in para 7 of the Statement of Facts? Yes. (ii) If so, did the unknown miscreants take away alleged 400 Kgs. of Nylon Hosiery and Iron rods alleged to be weighing approximately 1 ton alleged to be lying and stored at claimant's factory premises as alleged in para 7 of the Statement of Facts? Re: Nylon Hosiery — Yes. Re: Iron Rods — No finding is warranted. (iii) If so, were the 400 kgs. of Hosiery and Iron Rods weighing approximately 1 ton the properties of the claimant, as alleged in para 7 of the Statement of Pacts? Re: Nylon Hosiery — Yes. Re: Iron Rods — No finding is warranted. 5. Was the respondent No. 1's disclaimer and/or rejection of the claimant's claim by, inter alia, letters dated 2nd May, 1973, 24th May, 1973 and 14th July, 1973 wrongful as alleged in paras 9, 10 and 11 of the Statement of Facts? Yes. 6. To what relief, if any, is the claimant entitled? Rs. 37,400/- being the value of 400 Kgs. of Nylon Hosiery.”

In the premises, me arbitrator awarded a sum of Rs. 37,400/- in favour of the claimant against the insurer with a direction that each party will pay and bear his/its own cost of reference. On the 17th Dec., 1977, notice under Section 14(2) of the Arbitration Act was issued. The said notice was addressed to all the parties and was to the following effect:

“To: 1. Punak Chand Jain.

2. National Insurance Co. Ltd.

3. State Bank of Bikaner and Jaipur.

Take notice that the Award of the Arbitrator appointed in the matter of the above Arbitration Agreement had been filed on the 8th day of Dec., 1977 and that the Court will proceed to pronounce judgment on such Award on the 31st day of Jan., 1970.

Dated the 17th day of Dec., 1977.”

The reason why we have set out before the said notice is that from the said notice, it appears that the award had been filed on the 8th Dec., 1977 but the said notice dated 17th Dec, 1977 under Section 14(2) of the Arbitration Act was served upon the parties on the 19th Dec., 1977. On the 18th Jan., 1978, the petition for setting aside the award was affirmed and it was noted as made on the same day. Thereupon the matter came up for hearing after filing of the affidavit before the learned trial Judge and by a judgment delivered and order passed by the learned trial Judge dismissed the application and upheld the award. This appeal, as we have mentioned hereinbefore, is on the said judgment and order. A point was urged, before us, on behalf of the respondent No. 1 that the application for setting aside the award was barred by limitation. It was contended that the application having been filed beyond 30 days' of the knowledge of the filing of the award, the appellant was not entitled to maintain the application. We must observe that this point had neither been taken in the affidavit in opposition nor was this point urged before the learned trial Judge. The reason why this point was sought to be canvassed before us was that in the petition in para 13 it was stated that the award had been filed by the arbitrator on the 8th Dec., 1977. It was urged on behalf of the respondent No. 1 that the petitioner having come to know of the filing of the award on the 8th Dec., 1977, as would be apparent from the averments made in para 13 of the petition, the limitation ran from the date and in view of the principles enunciated in the case of Nilkanta Sidramappa Ningashetti v. Kashinath Somanna Ningashetti, AIR 1962 SC 666 and as followed by the decision of this Court in the case of The State Of West Bengal… v. L.M Das…., AIR 1976 Cal 406 and also in the case of Octavious Steel Co. Ltd.…Plaintiff; v. Endogram Tea Co. Ltd.…Defendant., AIR 1980 Cal 78 at page 80, this application before the learned Judge was made beyond time and, as such, had been rightly dismissed. It was submitted that in para 17 of the affidavit in opposition filed by the respondent No. I it was stated that the application was barred by limitation. In paragraph 17 of the affidavit in reply, this allegation was denied. It is quite true, as Mr. Bhabra contended, that the limitation would run from the date of the knowledge of the filing of the award. It was not necessary that for the limitation to run the notice should be given to the applicant. But the question, is, that there is no clear evidence that the appellants knew of the filing of the award on the 8th Dec., 1977. It is possible to read from the notice dated 17th Dec. that they came to know of that fact from the said notice. Therefore, whether the independent of the said notice the appellant had knowledge of the filing of the award on the date of the 8th Dec., 1977 is not quite clear. Furthermore, this point had not been taken in the affidavit. The parties had no opportunity to explain the position. There is also no categorical statement either by the appellant or the respondent that the appellant had knowledge as to that on the 8th Dec., 1977. In that background and in the background of the facts that this point was not stated in the affidavit nor was this point urged before the learned trial Judge, who might have investigated this question as a fact, we are of the opinion that the respondent No. 1 is not entitled to take this point in support of the judgment of the learned trial Judge and we therefore reject this contention for the purpose of this appeal that the application was barred on the ground of limitation.

3. Before we proceed further, in order to appreciate whether the learned trial Judge was right in upholding the award or not, it is necessary to refer to certain statements filed before the arbitrator. Before the arbitrator, the respondent No. 1 had filed its claim. To this the appellant herein filed a counter statement. Therein, the appellant has stated as follows:

“2. The Claimant's alleged claim made in his statements of claim is not maintainable and is unenforceable and not recoverable by reason of his failure to Defer his alleged claim to arbitration under the provisions of Clause 10 of the said Policy, of Insurance within 3 calendar months from the date of the disclaimer and/or rejection of liability by this respondent and as such the claimant's alleged claim should for all purposes be deemed to have been abandoned and has been abandoned by him.”

There was a rejoinder by statement-in-reply to the said counter statement where it was stated as follows:

“1. Each and every allegation contained in paras 1, 2 and 3 of the counter statement of facts is denied. It is denied that the claimant has no cause of action or that his claim is not maintainable or that he has abandoned his claim or that his claim is outside the scope or purview of the said Insurance Policy as alleged or at all. The claimant states that he has duly referred his claim to arbitration within time. The purported date of the purported disclaimer has not been intimated by the respondent No. 1 to the claimant at all. The claimant further states that the portion of Clause 10 of the said Insurance Policy limiting the time for referring the claim in the event of disclaimer by the respondent No. 1 is not applicable to the instant case as the purported date of the alleged disclaimer was not and has not been made known to the claimant by the respondent No. 1 at all. In any event, the respondent No. 1 has waived and/or deemed to have waived the time limited for preferring a claim under the said arbitration clause. The respondent No. 1 by reason of its conduct express and/or implied and by its correspondence is estopped from alleging that the claimant was required to refer his claim to arbitration within three months from the purported date of its purported disclaimer. In this context the claimant states that the respondent No. 1 in the proceedings in the Hon'ble High Court at Calcutta and before the previous joint arbitrators, Mr. S.M Chowdhury and Mr. P.K Ganguly intentionally abandoned and/or waived the plea now alleged in para 2 of the counter-statement.” It was urged that there was an error of law on the construction of Clause 10 of the insurance policy in view of Section 28 of the Contract Act. It was urged that specific question of law had been referred to the arbitration and as such the arbitrator had jurisdiction to decide that question of law and even if the arbitrator had decided the question of law wrongly that decision should not be interfered with and in this regard the learned trial Judge was right. It will be material in this context to refer to the decision referring the matter to arbitration under Section 20 which is the statutory provision in connection with the scope and order and the order made in the case of Punam Chand Jain v. General Assurance Society Ltd. between the same parties as the appellant and respondent No. 1, reported in AIR 1974 Cal 335. There, sitting singly, I myself observed when an application under Section 20 was filed, the question, when after the matter vent before the arbitrator, it would be held that the matter had become time barred or had been abandoned was not to be decided at that stage. Reliance was placed on several decisions in arriving at the said decision. It was recorded, the second point in opposition to the application for filing of application under Section 20 was that the claim had become barred by limitation and as such, the plaintiff, viz. the respondent No. 1 herein had abandoned the claim and was not entitled to proceed with the arbitration. Reliance was also placed on the aforesaid arbitration clause and it was contended that in view of the fact there was repudiation on the 2nd May, 1973, or in any event, on the 14th July, 1973 and the claim had been referred to arbitration on the 24th Oct., 1973, the claim was no longer alive. In support of this argument, reliance was placed on certain observations of this Court in the case of Girdharilal Hanuman Bux v. Eagle Star and British Dominions Insurance Co. Ltd., AIR 1924 Cal 186 a decision to which we shall have occasion to refer later in dealing with the argument whether the arbitrator had committed an error on the face of the record. But it had been observed in the decision just now mentioned, that is to say, in the case of Punam Chand Jain v. General Assurance Society Co. Ltd. (AIR 1974 Cal 335). Whether the claim had become time barred or not was not a material question under Section 20 application and that would be a matter to go into in the arbitration. It was sought to be urged that this precise question, viz. whether in view of Clause 10 of the insurance policy, the respondent No. 1 had waived or abandoned its right was a specific question of law which had been referred to the arbitrator. It is true that this contention was raised in opposition to the filing of the arbitration agreement. But, it appears to us that there was no specific question, as such, of law, which was referred on this aspect to the arbitrator. But what was noted in the said decision was that whether the claim had been abandoned or the claim had become barred by lapse of time was a question to be adjudicated, if it arose for consideration before the arbitrator. Therefore, there was, as such, no clear reference of any specific question of law by the said decision to the arbitrator. We have set out hereinbefore the issues that were framed by the arbitrator, as arose before him. No issue, as such, specifically was submitted to the arbitrator but parties had raised their contention in their statement and in their counter statement and the reply thereto and on those the arbitrator had framed the issues as he thought arose on the statement, counter statement and the reply and the parties participated in the arbitration proceeding thereafter. The question is, can it be said by that fact the specific question had been referred to the arbitrator whether in view of Section 28 of the Contract Act, Clause 10 of the policy of insurance was void or invalid? In this connection, it was contended on behalf of the appellant that no such specific question had been raised and the specific question of law had to be raised in a particular manner and that had not been done in the facts and circumstances of this case. It was further submitted that the counter claim did not specifically raise the question whether in view of Section 28 of the Contract Act, Clause 10 of the policy of insurance was valid or invalid. Therefore, there was no specific reference for a specific question of law by filing of the statement and counter-statement of claim. It was also submitted that the issue as framed by the arbitrator was not on this aspect and was rather vague, i.e, whether the claim was maintainable or enforceable or recoverable on the grounds alleged in para 2 of the counter-statement, which we have stated hereinbefore. Neither in para 2 nor in the issues, according to the appellant, there was no specific issue raised as to whether in view of Section 28 of the Contract Act, Clause 10 of the Policy of Insurance was invalid or had become bad.

4. In this connection, our attention was drawn to the decision in the case of In re. King and Duveen, (1913) 2 KBD 32, where it was observed that if a specific question was submitted to an arbitrator and he answered it, the fact that the answer involved an erroneous decision in point of law did not make the award bad on its face so as to permit of its being set aside. Our attention was drawn to the several questions that were referred specifically to the arbitrator. The questions were as follows:—

“(a) Which, if any, of the flues belonging to 138, Piccadilly emit smoke into any room passage or other place in 138, Piccadilly by reason of the erection of the new building adjoining thereto; (b) what works, if any, should be done with a view to cure such, if any of the said flues as to emit smoke as aforesaid; (c) if such, if any, of the said flues as do emit smoke as aforesaid should continue to emit smoke after the completion of the works directed by you, if any, or if you should be of opinion that no works can usefully be done to cure such flues, then whether under the agreement of October 25, 1905, the executors of Sir Joseph Joel Duveen are liable to pay damages in respect thereof to Mr. Henry James King, and, if they are so liable, what damages should be paid; (d) as to the payment of the costs of and incidental to this reference.”

In view of the fact that there was specific question on the construction of the agreement dated Oct. 25, 1905 and whether on that construction and in the facts that was specifically submitted, the executors of Sir Joseph Joel Duveen were liable to pay damages was specifically referred to the Court. The Court of Appeal in England found that the specific question of law having been referred to the arbitrator, his decision was final even if it might be erroneous.

5. Our attention was drawn to that decision to indicate in what precise manner a specific question of law had to be referred to. In this case no such question had been specifically referred to in that fashion. The attention of the learned Judge was drawn to the decision of the Supreme Court in the case of Vulcan Insurance Co. v. Maharaj Singh, AIR 1976 SC 287. There, A had mortgaged his properties with bank B and B insured the properties with the Insurance Company C. Fire had broken out in the premises and A had claimed certain amount as damages. C, however, had totally repudiated its liability under the insurance policy. There, the insurance policy, which was the subject-matter of adjudication by the Supreme Court, contained Clauses 18 and 19 which were as follows:—

“18. If any difference arises as to the amount of any loss or damage such difference shall independently of all other questions be referred to the decision of an Arbitrator, to be appointed in writing by the parties in difference, or, if they cannot agree upon a single Arbitrator to the decision of two disinterested persons as Arbitrators … … .. .. .. .. .. And it is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy that the award by such arbitrator, arbitrators or Umpire of the amount of the loss or damage if disputed shall be first obtained.

19. In no case whatever shall the company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration.”

The Supreme Court referring to the clause observed that Clause 18 makes the award a condition precedent to any right of action or suit and this question had come up, according to the Supreme Court, for the first time in considering the case of Scott v. Avery, (1856) 25 LJ Ex 308: 5 HLC 811, and since then the Supreme Court noted, such clauses were commonly called Scott v. Avery clauses. Construing the present clause in the instant case, the learned Judge had observed that there was no Scott v. Avery clause. That was an obvious error. The Supreme Court further held that a clause which provided that in no case whatever should the company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim was the subject of pending action or arbitration, was not hit by Section 28 of the Contract Act and was valid. The clause had not prescribed a period of twelve months for the filing of an application under Section 20 of the Act. There was no limitation prescribed for the filing of such an application under the Limitation Act, 1908 or the Limitation Act, 1963. Article 181 of the former Act did not govern such an application. The period of three years prescribed in Article 137 of the Act of 1963 might be applicable to an application under Section 20. The Supreme Court noted several decisions in deciding whether the application under Section 20 was barred or not. The Supreme Court observed that it was not necessary to decide whether the action commenced by the respondent No. 1, Maharaj Singh, under Section 20 of the Arbitration Act was barred under Clause 19 of the insurance policy. The Supreme Court noted that it had been repeatedly held that such a clause was not hit by Section 28 of the Contract Act. The Supreme Court referred to the numerous decisions including the decision of the Calcutta High Court in the case of Dawood Tar Mahomed Bros. v. Queensland Insurance Co. Ltd., AIR 1949 Cal 390. It was, therefore, clear from the aforesaid observation of the Supreme Court that the Supreme Court's reading of these cases was that it had been repeatedly held by these decisions that the clause like Clause 19 in that case which is similar to the present clause in the instant case before us was not hit by Section 28 of the Contract Act. It is true that the Supreme Court observed that they were not deciding the question for themselves, because that would be a matter which would require to be gone into under Section 20 of the Arbitration Act. Therefore, this decision of the Supreme Court appears to be an authority of the Supreme Court that a clause like the present clause in the instant case before us is a clause which has Scott v. Avery clause. Secondly, it is an authority for the proposition that several decisions with which the Supreme Court was not disagreeing had held that the clause like the Clause 10 in the instant case was not hit or was not barred by Section 28 of the Contract Act. It also appears that when a clause of the present type had come up for consideration in the different High Courts, no Court has expressed a view contrary to the decisions referred to in the aforesaid decisions noted by the Supreme Court and including the decision in the case of Girdharilal Honuman Bux v. Eagle Star and British Dominions Insurance Co. Ltd. AIR 1924 Cal 186.

6. We may incidentally refer to the observation of Pollack and Mulla on Indian Contract and Specific Relief Acts, Ninth Edition. After discussing several decisions, the learned editor of that book has observed at page 296 as follows:—

“In short, an agreement providing for the relinquishment of rights and remedies is valid, but an agreement for the relinquishment of remedies only falls within the mischief of Section 28.”

7. In the case of Girdharilal Honuman Bux v. E.S and B.D Insurance Co. Ltd., AIR 1924 Cal 186, the plaintiff had insured with the defendant company under two policies dated the 4th Nov., 1920 and 28th Feb., 1921, loose jute. The insurances were effected subject to the terms and conditions endorsed or otherwise expressed on the policies. Both the policies contained a condition (No. 13) which was to the following effect:—

“If the claim be made and rejected and an action or suit be not commenced within three months after such rejection or (in case of an arbitration taking place in pursuance of the 18th condition of this policy) within three months after the arbitrator or arbitrators or umpire shall have made their award, all benefit under this policy shall be forfeited.”

The jute insured under the policies was destroyed by fire on 7th June, 1921, and the plaintiff had submitted its claim under the policies on the 14th June, 1921, and the claims were rejected by the defendant company on the 30th Jnly, 1921, and the suit was commenced on the 5th May, 1922. There, it was held that condition No. 13 in the policies in suit did not infringe the provisions of Section 28, and if it did not infringe Section 28, it could not be said to infringe Section 23. In coming to the said conclusion, the Division Bench of this Court had referred to the decision in the case of Hirabai v. Manufacturers Life Insurance Co., (1912) 14 Bom LR 741, and in the case of Baroda Spinning and Weaving Co. Ltd. v. Satyanarayan Marine and Fire Insurance Co. Ltd., (1914) ILR 38 Bom 344: 15 Bom LR 948: (AIR 1914 Bom 225 (2)). The Division Bench also referred to the Porter's Laws of Insurance, 6th Edn., p. 195, where it was stated that insurers might lawfully limit the time within which an action might be brought to a period less than that allowed by the statute of limitation and that the true ground, on which the clause limiting the time of claim rested and was maintainable, was that, by the contract of the parties, the right to indemnity in case of loss and the liability of the Company therefor did not become absolute unless the remedy was sought within the time fixed by the condition in the policy. The true principle seems to be that you cannot keep the right alive and prescribe a shorter period of limitation. That would be bad. But, parties would certainly contract to extinguish both the rights as well as remedies. In this connection, it would be instructive to bear in mind the actual terms of Section 28 of the Contract Act which stipulates, inter alia, that every agreement by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract by the usual legal proceedings in the ordinary tribunal or which limits the time within which he may thus enforce his rights, is void to that extent.

8. It is significant that the section prohibits the limitation in enforcing the rights as well as the limitation within which the enforcement of right is restricted. But the section does not prohibit or deal with a situation where parties bargain for extinguishment of their rights or abandonment of the right. It is one thing to say that you keep the right alive and make the remedies ineffective. It is another thing to extinguish the right itself. To extinguish the right, naturally the remedy also goes.

9. Reference may be made to the observation of McNair, J. in the case of Dawood Tar Mahomed Bros. v. Queensland Insurance Co. Ltd., AIR 1949 Cal 390, a decision which was referred to by the Supreme Court in the decision which we have just now noted. There it was held by the learned Judge that in a fire insurance contract a clause in the policy that the company was not liable for loss after expiration of twelve months from happening of loss was not one which defeated provisions of limitation law and, therefore, void. It was observed in that case where a clause in a fire insurance contract was, “in no case whatever shall the company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration”, it was held, the clause was not void; it did not operate so as to defeat me provisions of the law of limitation. The plaintiff, in that case, was not limited as to the time within which he might bring a suit; the restriction was on the time during which the company would accept liability for loss.

10. We have already referred to the decision, to which our attention was drawn, in the case of Punam Chand Jain v. General Assurance Society Ltd., AIR 1974 Cal 335, a decision on which reliance was placed on the scope and effect of the order under Section 20 of the Arbitration Act.

11. Our attention was drawn to the decision in the case of K.N Co-operative Dairy Farm Society Ltd. v. Union of India, AIR 1973 SC 1338 in support of the proposition that where a specific question of law has been referred to the Arbitrator, then his decision is final. It was observed in para 12 that where an arbitrator is called upon to decide the effect of the agreement, he has really to decide a question of law. i.e of interpreting the agreement, and hence, his decision is not open to challenge. There is a statement to that effect in para 12. Reliance was placed in (1902) 29 Ind App 51 (PC) and in the case of Durga Prosad v. Sewkishendas, AIR 1949 PC 334. There the claim that was referred to having regard to the agreement whether the claim was barred by limitation. A question referred to was whether having specificated that the claim was based on the agreement and on nothing else and the arbitrator had decided the effect of the agreement, the arbitrator really had decided the question of law in interpreting the document and his decision to interpret the document was accepted to be beyond challenge. In this case it is not a question of interpreting the effect of a document. In this case the specific question of law, as the arbitrator has decided, is whether Clause 10 is violative of Section 28 of the Contract Act. In view of the manner in which such questions of law are required to be referred, as we have indicated before, in our opinion no specific question of law as such on this aspect was referred to arbitrator and in any event, his decision will run contrary to well settled principles laid down on interpretation of Section 28 of the Contract Act. Reliance was also placed on the decision in Union Of India v. A.L Rallia Ram, AIR 1963 SC 1685. There the Supreme Court observed that though the issues of law arising out of the pleadings might be material for the determination of the dispute, these could not be regarded as issues of law specifically referred ta the arbitrators. The only permissible inference from the agreement recorded by the arbitrators was that the parties agreed to have the disputes adjudicated on the issues raised and not to submit the issues raised for adjudication. Reliance was placed on several decisions. There the Supreme Court distinguished the decision in the case of Durga Prosad v. Sewkishendas, AIR 1949 PC 334. In this connection reliance was also placed on the observations of the Supreme Court at p. 1691 of the report where the Supreme Court observed as follows:—

“The award is the decision of a domestic tribunal chosen by the parties, and the Civil Courts which are entrusted with the power to facilitate arbitration and to effectuate the awards, cannot exercise appellate powers over the decision. Wrong or right the decision is binding if it be reached fairly after giving adequate opportunity to the parties to place their grievances in the manner provided by the arbitration agreement. But it is now firmly established that an award is bad on the ground of error of law on the face of it, when in the award itself or in a document actually incorporated in it, there is found some legal proposition which is the basis of the award and which is erroneous. An error in law on the face of the award means: “you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. It does not mean that if in a narrative a ‘reference is made to a contention of one party, that opens the door to setting first what that contention is, and then going to the contract on which the parties’ rights depend to see if that contention is sound”; Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd., (1923) 50 Ind App 324: (AIR 1923 PC 66). But this rule does not apply where questions of law are specifically referred to the arbitrator for his decision; the award of the arbitrator on these questions is binding upon the parties, for by referring the specific questions the parties desire to have a decision from the arbitrator on those questions rather than from the Court, and the Court will not, unless it is satisfied that the arbitrator had proceeded illegally, interfere with the decision.”

The Supreme Court also noted the argument advanced on behalf of the respondent that in the present case specific questions were referred to the umpire and his decision on those questions must be regarded as binding and hot liable to be re-opened, even assuming that there was some error on the face of the award. After setting out the facts where one of the issues was that by the letter dated 26th June, 1946 the respondent intimated the Director of Purchases that he had appointed an arbitrator on his behalf in accordance with Clause 13 of the general conditions of the contract and the appointment of an arbitrator by the Union by their letter dated 7th July, 1948 subject to the reservation of a right to contend that there was no dispute for adjudication of the claim made by the respondent. In these two letters there was no reference to any specific question to be referred to the arbitrator — the Supreme Court observed — nor can the filing of pleadings in support of their respective cases by the parties pursuant to the direction given by the arbitrators, and the framing of issues arising thereon with the object of focussing the attention of the parties on the question to be decided for adjudicating upon the dispute amounted to a reference on specific questions, rendering the award binding upon the parties. The Supreme Court referred to the decision in the case of F.R Absalom Ltd. v. Great Western (London) Garden Village Society Ltd., (1933) AC 592 at p. 616 where it was observed “Simply because the matter was referred to incidentally in the pleadings and arguments in support of, or against, the general issue about liability for damages, that is not enough to clothe the arbitrator with exclusive jurisdiction on a point of law”. The Supreme Court also referred to the decision in the case of Durga Prosad v. Sewkishendas, AIR 1949 PC 334 where the Judicial Committee held that questions of law were specifically referred to arbitration where in a pending suit after issues were raised with the consent of parties the outstanding matters' in the suit were referred to three named arbitrators, conferring upon them special enumerated powers. But the decision was reached in the special circumstances of the case, and not on the view that where agreed issues were raised before the arbitrator on the pleadings filed before him, the reference must be regarded as a reference on the specific questions incorporated in the issues. Similarly the Supreme Court also dealt with the decision of Supreme Court in the case of Alopi Prashad and Sons Ltd. v. Union of India, AIR 1960 SC 588, where the Supreme Court observed as follows (at p. 1692 of AIR):—

“Issues were undoubtedly raised by the arbitrators, but that was presumably to focus the attention of the parties on the points arising for adjudication. The Agents had made their claim before the arbitrators, and the claim and the jurisdiction of the arbitrators to adjudicate upon the claim, were denied. The arbitrators were by the terms of reference only authorised to adjudicate upon the disputes raised. There is no foundation for the view that a specific reference, submitting a question of law for the adjudication of the arbitrators, was made.”

The passages aforesaid referred to indicate two salient points that questions of law must be specifically referred to and even in cases where the questions of law had been specifically referred to if the arbitrator in deciding the question of law had acted — in the words of Supreme Court — “illegally”, the award is liable to be set aside. That expression “illegally” must, in the context, mean that it must be in a manner which cannot be supported by well settled principles of law.

12. In the case of New Great Insurance Company of India Ltd. v. United Equipments and Stores (Pvt.) Ltd., AIR 1970 Cal 221, the learned Judge sitting singly observed that an agreement between the parties by which recourse to a Court of Law was absolutely prohibited would be against Section 28 and would be void but it was still open to the parties to stipulate by a valid agreement between themselves that any dispute between them would be referred to arbitration and that the making of an award should be the condition precedent to any right of cause of action. Such a clause did not close the final door to a Court of Law. The approach to the Court might be not by the straight path but by the by-lanes or, in other words, the approach might be a staggered one and would not be a contravention of Sec. 28. If there was only a clause to the effect that the parties were to refer the matter to arbitration then in such a situation a suit would still lie and the remedy of the other party would be to apply under Section 34 of the Arbitration Act for a stay of that suit. If, however, the making of an award was made a condition precedent to a right of action, the suit would not be allowable. The judgment is referred to in several decisions for having the effect of adjudication of the condition precedent to any right of action. In paras 12 and 13 of this decision, the effect of this clause was discussed as follows:

“12. Mr. Mitra submits further that the last sentence in clause 7 of the contract of insurance is to be read independently and separately, and that this clause is void, inasmuch as, it limits the right of the party to have recourse to any Court of Law, and as such, contravenes Section 28 of the Contract Act. Let us examine this proposition of Mr. Mitra carefully. In the first place, I do not think that this last sentence in clause 7 can be read divorced from the previous portion of the same clause. The use of the term ‘If’ at the beginning of this last sentence would also show that it is to be construed with reference to the foregoing provision in the same clause. In my view, the only reasonable construction of this portion would be that under the earlier portion of clause 7 all differences are to be referred to the decision of the Arbitrator within one calendar month after having been received in writing so to do, but if the differences relate to the disclaimer of liability to the insured, then this time is extended in favour of the insured to a period of 12 calendar months from the date of such disclaimer. Or in other words, such an arbitration is to be resorted to within twelve months from the date of disclaimer instead of one month as in the earlier portion of the same clause.

13. Even assuming Mr. Mitra's contention in this respect to be correct and this portion to be read separately and independently, still I do not think that it ousts the jurisdiction of the Court at all. It is perfectly open to the parties to a contract to stipulate that the other party would lose his right to enforce it on the lapse of a particular time, or in other words, to have a time limit for the purpose of the contract, and to provide that if it is not performed within the time stipulated by parties concerned, the other party would lose his right. That is not a case of ouster of jurisdiction of Courts. In this view of the matter this clause cannot be held to have contravened the provision of Sec. 28 of the Contract Act.”

Reference was also made to a decision in the case of Jiwnani Engineering Works Pvt. Ltd.…Applicant; v. Union Of India…., AIR 1978 Cal 228, where it was held that in an application under Section 20 of the Arbitration Act, the question whether the claim had become barred or not was not to be decided. There, after referring to the question of limitation, it was observed in the said decision at page 230 of the report as follows:

“6. …….. There is a good deal of substance in the contention that the claim now sought to be referred to arbitration is barred by limitation. But the Supreme Court has observed in the case of Wazir Chand v. Union of India. AIR 1967 SC 990, that in an application under Section 20 of the Arbitration Act the Court was not concerned with the question whether the claim sought to be referred to arbitration was barred by limitation or not. That was a matter within the jurisdiction of the arbitrators to decide. The same view was reiterated by the Supreme Court in the case of Mohd. Usman v. Union of India, AIR 1969 SC 474. The Supreme Court in its decision in the case of Kerala S.E Board v. T.P Kunhaliumma, AIR 1977 SC 282 did not approve of the views of the Supreme Court in the cases mentioned before that application under Sec. 20 of the Arbitration Act, 1940 would not be governed by the limitation prescribed by the Limitation Act. But the Supreme Court was there dealing with question whether in any application under any Act other than Civil P.C Art. 137 of the Limitation Act would be applicable or not. The Supreme Court was not dealing in the last mentioned case with the question whether the contention that the claim was barred by limitation or not before the arbitrator is a relevant consideration for refusing an application under Section 20 of the Arbitration Act, 1940. In the aforesaid view of the matter, it must be held that the, question whether a claim is barred by limitation or not before the arbitrator is not a relevant consideration for an order under Sec. 20 of the Arbitration Act, 1940. This contention urged on behalf of the respondent, therefore, cannot be accepted.”

On behalf of the respondent it was contended that the decision of the Calcutta High Court in the case of Girdharilal Honuman Bux v. Eagle Star and British Dominions Insurance Co. Ltd., AIR 1924 Cal 186, the Calcutta High Court had relied on certain observations in the case of Baroda Spinning & Weaving Co. Ltd. v. Satyanarayan Marine and Fire Insurance Co. Ltd., ILR (1914) 38 Bom 344: (AIR 1914 Bom 225 (2)). It was submitted that the reading of the Calcutta High Court and Bombay High Court decisions was not correct. Our attention was drawn to the observations of the learned trial Judge in that case. En that case the learned trial Judge felt that in view of the decision of the High Court in the case of Hira Bhai v. Manufacturers Life Insurance Co. Ltd., (1912) 14 Bom LR 741, the learned Judge was bound to hold that clause 12 of the Insurance Clause in that case, which was very similar to our present case, was not void under Section 28 of the Contract Act. The learned Judge further observed that he was bound by the Division Bench decision though his own views were to the contrary. When the matter went up before the Division Bench, Chief Justice Scott, at pp. 353-354 (of 14 Bom LR) of the decision reported in ILR (1914) 38 Bom 344: (AIR 1914 Bom 225 (2)), observed as follows:—

“In my opinion Sec. 28 of the Contract Act is aimed only at covenants not to sue at any time and covenants not to sue for a limited time, which had given rise to difficulty in England: See the judgment of the Exchequer Chamber in Ford v. Beech, (1848) 11 QB 852 at p. 871; Beech v. Ford, (1848)7 Hare 208; Bibbons v. Vouilon, (1849) 8 CB 483; Newington v. Levy, (1870) LR 6 CP 180 at p. 191; and the judgments in Slater v. Jones, (1873) LR 8 Ex. 186. A conditional release or forfeiture was a very different thing from a covenant not to sue, although in order to avoid circuity of action a covenant not to sue was sometimes held to be equivalent in effect to a conditional release. For this reason I share the doubt of Beaman, J. as to the correctness of the decision in Hirabhai v. Manufacturers Life Insurance Co., (1912) 14 Bom LR 741, where the agreement was that— ‘No suit shall be brought against the Company in connection with the said policy later than one year after the time when the cause of action accrues’. As however the condition of forfeiture which we have to deal with here is not in my opinion within the scope of Section 28, I would affirm the decree, and with costs, for the reasons given by the learned Judge for disallowing costs to the successful defendants do not appear to me adequate.

Similarly Mr. Justice Beaman observed in the said decision at pages 348-349 (of ILR): (at p. 226 of AIR 1914 Bom) of the report as follows:

“The reason of the decision, which is of a broadly general character, appears to be: first, that clauses of this kind in policies of insurance need not be interpreted literally but with special reference ‘to the object and exigencies of insurance’, secondly, that although in form agreements of this kind appear to limit the period within which suits can be brought to enforce rights under the policy, they in substance amount to a waiver of the rights of the insured subject to the condition, and therefore, go much further than merely barring the remedy. The decision, therefore, appears to me to be of a general character and to support the defendants' contention here that the particular clause upon which he relies is not void by reason of anything contained in S. 28 of the Contract Act. The language of the clause in this case is far more favourable to the defendants having regard to the reasoning which seems to have commended itself to the learned Judges in the case of Hirabhai v. Manufacturers Life Insurance Co. for here the insured agrees that on failure to institute proceedings within three months of the rejection of his claim he will forfeit all the benefits to which he might otherwise be entitled under the policy and the use of such language might give some colour to the distinction upon which the learned Judges rely for taking all contracts of this kind out of the scope and intention of Sec. 28. It is not for me to state critically all the reasons that might be adduced against the conclusion, which I feel to be binding upon me. It is enough for me to say that after having given the reasoning of the learned Judges in that case my fullest and most careful attention I am still of opinion, with the great deference, that there is room for very grave doubt whether the case was rightly decided; for there can, I think, be no doubt at all but that it does decide the contention upon which the plaintiffs here mainly rely, and as it is a decision of this Court it is binding upon me. I must, therefore, hold, however, reluctantly, that the condition in clause 12 is not void under Sec. 28 of the Contract Act.”

In the said decision, Mr. Justice Batchelor, at pages 355-356 (of ILR): (at p. 229 of AIR) after setting out Sec. 28 of the Contract Act, observed certain doubts, as follows:

“Section 28 of the Contract Act provides as follows:—

‘Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent.’

The phrase ‘thus enforce his rights’ refer, I understand, to the enforcement ‘by the usual legal proceedings in the ordinary Tribunals’.

The question is whether the agreement in clause 12 of the conditions is void under this section. As I understood the argument for the appellants, the learned Advocate General, while admitting — what has often been decided — that the Indian Limitation Act operates in such a case as this not to extinguish rights, but only to bar remedies, contended that for the purposes of this appeal we should look rather to the substantial effect intended by the section than to the precise form of words which the Legislature has used. The argument was that, however, valid and important in law be the distinction between the barring of a remedy and the extinguishment of a right, yet to the man of business it is much the same thing whether his right be gone or the remedy for enforcing that right be barred and it was urged that in substance and effect there was no appreciable distinction between saying “I agree that upon the expiry of three months after the rejection of my claim my rights shall be forfeited” as is said here, and saying ‘as to the time within which I may enforce my rights, I agree to limit it to the period of three months after the rejection of my claim’; and this latter covenant would undoubtedly be void under the section. In my opinion, however, the distinction, which beyond question exists, is vital in the construction of the section. As I understand the matter, what the plaintiff was forbidden to do was to limit the time within which he was to enforce his rights; what he has done is to limit the time within which be is to have any rights to enforce; and that appears to me to be a very different thing. This seems to have been the view which was tacitly accepted by the Calcutta High Court in The South British Fire and Marine Insurance Co. v. Brojo Nath Shaha, (1909) ILR 36 Cal 516, though it must be admitted that decision is of no direct assistance, since the question of the effect of S. 28 of the Contract Act on such agreements was not expressly considered.”

But, in this decision, none of the learned Judges has really doubted that there can be distinction between one limiting or extinguishing the right and other in extingushing of creating an embargo remedy. Reliance was also placed on the decision of the House of Lords in the case of Atlantic Shipping and Trading Co. Ltd. v. Louis Dreyfus & Co., (1922) AC 250, where it was held that the arbitration clause in that case was not open to objection on the ground that it ousted the jurisdiction of the Court but inasmuch as the claim in that action was founded upon the breach of the implied condition of seaworthiness there being in the charterparty no express provision relating to unseaworthiness, the shipowners were not entitled to the benefit of the term in the clause restricting the time within which the action could be brought and that consequently the claim was not barred by the arbitration clause. That case, however, was concerned with the construction of the clause whether the claim was really barred or not. But, here, we are not really concerned with that position. So far as the decision of the Atlantic Shipping and Trading Co. Ltd. is concerned, it is pointed out on behalf of the respondent that it proceeded on concession and left this question, whether in a particular case a clause could be construed to have violated the provisions of law open. Reliance was placed on behalf of the respondent on certain observations in U.N Mitra's Law of Limitation, 9th Edition, p. 86 as well as on the observations of the learned author at page 1026. These observations are the views of the learned author suggesting the view point which is not in consonance with the decisions, which we have referred to hereinbefore. Reliance was also placed on certain views expressed in an Article in 27 Mad LJ 79 where a reference was made to the case of Hirabhai v. Manufacturers Life Insurance Co. Ltd. (1912-14 Bom LR 741), referred to hereinbefore. The learned author of the Article observed that it was well established that the time allowed by the law for institution of a suit could not be extended by a party. In the case of Baroda Spinning & Weaving Co. Ltd. v. Satyanarayan Marine & Fire Insurance Co. Ltd., (1914) ILR 38 Bom 344: (AIR 1914 Bom 225 (2)), the question was whether the agreement could be so carefully worded that the time limit could not be curtailed. This question had been dealt with in Hirabhai's case and the corectness of the decision had been doubted by Mr. Justice Beaman. In the case before us, the other side, not being forbidden because of the inapplicability of S. 28, as the agreement in question did not limit the period within which the insurer was to enforce its right, participated Within the time limit to enforce its right. In our opinion, the same distinction would be applicable in the facts and circumstances of the case.

13. Lastly, it was submitted where two views were possible on a question of law, then in such a case, it could not be submitted that there was an error apparent on the face of it. In this connection, reference was made to the observation of the Supreme Court in the case of Satyanarayan Laxminarayan Hedge & Co. v. Mallikarjun Bhavanappa Tirumale, AIR 1960 SC 137, where it was observed by the Supreme Court, in dealing with a writ of certiorari under Art. 226 of the Constitution that the error had to be established by a long drawn process of reasonings on all points where there might conceivably be two opinions, could hardly be said to be an error apparent on the face of the record. It must be observed that firstly we have to come to a conclusion that by the conduct of the parties or by the order of Section 20 or by the issues raised before the arbitrator, no specific question as to whether clause 10 had violated Section 28 of the Contract Act was referred. In our opinion, no specific question of law was referred to the arbitrator in the manner in which the said specific question of law is required to be referred to arbitrator. Apart from that, it appears to us, that the arbitrator in stating that clause 10 was violative of Section 28 had committed an error of law in the sense because the very statement is contradictory of the provisions of S. 28 and which has been unanimously held by the High Courts of the different States. Such kind of an error is an error of law obviously on the face of the record. In committing such an error, the award became liable to be set aside.

14. A further point was taken that the award was contrary to clause 10 or violative of Sec. 46 of the Insurance Act. Section 46 of the Insurance Act reads as follows:

“46. Application of Indian Law to policies issued in India.— The holder of a policy of insurance issued by an insured in respect of insurance business transacted in India after the commencement of this Act, shall have the right, notwithstanding anything to the contrary contained in the policy or in any agreement relating thereto, to receive payment in India or any sum secured thereby and to issue for any relief in respect of the policy in any Court of competent jurisdiction in India; and if the suit is brought out in India any question of law arising in connection with any such policy shall be determined according to the law in force in India.

Provided that nothing in this section shall apply to a policy of marine insurance.”

15. In our opinion, this question had not been specifically referred to the Arbitrator. Secondly, this question was not decided by the arbitrator. Thirdly, it appears to us that it cannot be said that clause 10 of the policy of insurance in the instant case was in any way violative of S. 46. Section 46 dealt with, inter alia, a different contingency and not all types of the claims under clause 10 were meant to be covered. In that view of the matter, we are unable to accept the contention urged on behalf of the respondent.

16. In the premises, it is not possible to sustain the order and judgment of the learned trial Judge. Therefore, the judgment and the order of the learned trial Judge are set aside. The appeal is allowed and the application for setting aside the award must be allowed and the award dated 21st July, 1977 made by the arbitrator in this case is hereby set aside and quashed.

17. Interim orders, if any, are vacated. Bank guarantee, if any, given under the interim order is also discharged. In the facts and circumstances of this case, the parties will pay and bear their own costs.

Suhas Chandra Sen, J.:— I agree.

Appeal allowed.