FOOD CORPORATION OF INDIA FOOD CORPORATION OF INDIA Vs. NEW INDIA ASSURANCE COMPANY LIMITED:ANAND INSURANCE COMPANY LIMITED

JUDGEMENT

(1.) Even though I respectfully agree with brother Venkatachala, J., that the order of the Madras High Court allowing the appeal of the insurance guarantor and dismissing the suit of the appellant corporation for recovery of the money is not liable to be maintained yet considering the importance of the legal issue involved in this appeal arising in day-to-day commercial dealings and absence of any authoritative pronouncement of this Court specially when the High Court has traversed wide field it appears appropriate to add a few words of my own.

(2.) Shortly the issue of law that arises for consideration in these appeals directed against judgment of Madras High Court is, if the suit filed after six months by the appellant, a public sector corporation, against Insurance Company was barred by time in view of the following recital in the Fidelity Insurance Guarantee.

(3.) Both the courts below thus found as a fact that an agreement was entered between the appellant and the company on 24th March 1970 stipulating period of guarantee from 15th February 1970 to 15th February 1971, that the default occurred on 1st July 1970, that the demand was made on 17th June 1971 and the suit was filed on 20th January 1973 but they differed as a matter of law on the effect of Section 28 of the Contract Act on such agreement. Section 28 is extracted below: