Section 28 of the Contract Act does not bar exclusive jurisdiction clauses. What has been barred is the absolute restriction of any party from approaching a legal forum. The right to legal adjudication cannot be taken away from any party through contract but can be relegated to a set of Courts for the ease of the parties. In the present dispute, the clause does not take away the right of the employee to pursue a legal claim but only restricts the employee to pursue those claims before the courts in Mumbai alone.
... the Court must already have jurisdiction to entertain such a legal claim. This limb pertains to the fact that a contract cannot confer jurisdiction on a court that did not have such a jurisdiction in the first place."
[Extracted from: Rakesh Kumar Verma v HDFC Bank Ltd 2025 INSC 473]
Section 28 Indian Contract Act
The question asks to identify the number of exceptions appended to Section 28 of the Indian Contract Act. The provided context discusses the general treatment of contracts and the specific implications of Section 28 regarding legal proceedings and jurisdiction.
Section 28 Scope and Vitiating Factors
Section 28 of the Indian Contract Act primarily deals with agreements that seek to restrain legal proceedings. It states that any agreement which prevents a party from enforcing their contractual rights through the ordinary legal channels, or which limits such rights, is void to that extent. This aligns with the general principle that contracts should not oust the jurisdiction of courts or prevent access to justice. The text notes that contracts should not suffer from vitiating factors that would render them unenforceable.
However, the section allows for certain limitations, such as exclusive jurisdiction clauses, as long as they do not constitute an absolute restriction. The right to approach a legal forum cannot be entirely removed, but it can be channelled to specific courts for the convenience of the parties, provided those courts have the requisite jurisdiction.
Exceptions to Section 28
While Section 28 prohibits agreements that unduly restrict legal recourse, the Act itself provides specific exceptions where such agreements are considered valid. These are formally appended to Section 28.
There are exactly three exceptions that are part of Section 28 of the Indian Contract Act.
Section 28: The Three Exceptions
These exceptions clarify the situations where agreements limiting legal proceedings are upheld:
- Exception 1: An agreement to refer disputes to arbitration.
- Exception 2: An agreement to refer any question concerning accounts between parties to arbitration.
- Exception 3: A contract that limits the time within which an action can be brought, provided that the period stipulated is shorter than the period prescribed by the Limitation Act, 1963.
Answering the Contract Act Question
Based on the established provisions of the Indian Contract Act, Section 28 is accompanied by three specific exceptions that define its scope and limitations. Understanding these exceptions is key to correctly interpreting the enforceability of contractual clauses related to legal proceedings.
Therefore, Section 28 of the Contract Act is subject to three exceptions appended to it.
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Important Questions from Legal Aptitude
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