It has been decided that the parties are not free, by agreement, to delegate jurisdiction to a court which they did not have on the other hand, in accordance with Article 20 of the Code of Civil Procedure; Patel Roadways v. Prasad Trading Company, AIR 1992 SC 1514. This article was written by Khushi Agrawal, a student at Symbiosis Law School, Noida. She discussed at length the concepts of agreements limiting legal proceedings. In Food Corporation of India v. New India Assurance Co.Ltd. , taking into account a clause in the loyalty insurance obligation, the Supreme Court stated that it is apparent from the agreement that it does not contain a clause found to be contrary to Article 28 of the Contracts Act, since it does not impose any restriction on the lodging of an appeal within six months from the date of closure of the contract invoked by the insurance company. However, it was agreed that on the expiry of a period of six months from the date of termination of the contract, the Food Corporation would not be entitled to this loan and that this clause could not be interpreted as a reduction in the normal limitation period for filing the appeal. This Section shall cancel only the agreement which completely prevents a Party from asserting the rights of this Treaty before the ordinary courts. It does not apply where a party agrees not to restrict the application of its law before the ordinary courts, but only to accept a selection of one of the ordinary courts for which an appeal would normally be heard. The validity of an agreement in which the parties prefer one of the two courts depends on the jurisdiction of both courts to rule on the case. If two or more courts have jurisdiction for the appeal, there is no opposition to public order or violation of section 28 of the Contracts Act to the agreement between the parties which limits jurisdiction to a court. (a) which completely prevents a party from asserting its rights under or in respect of a contract before the ordinary courts, or which limits the period within which it may thereby assert its rights; or Exception 2 – In addition to the contract for the mediation of questions already asked – This section also does not make illegal a written contract by which two or more persons agree to refer to an arbitration procedure that has already occurred or to infringe a provision of a law currently in force with respect to references to arbitration.
Exception 1 – Retention of the contract relating to the relationship to arbitration disputes that may arise – This section does not make illegal a contract by which two or more persons agree that any dispute that may arise between them with respect to a subject or class of subjects is referred to arbitration and that only the amount awarded in such arbitration proceedings is returned to arbitration and that only the amount awarded in the framework of such arbitration proceedings shall be referred to arbitration. . . . .