In Brief
Grasim Industries, a rayon pulp manufacturer in Kerala, held contractual rights granted by the Government through multiple agreements dating back to 1958. All agreements contained an arbitration clause requiring disputes be settled by arbitration. When supplementary agreements modified certain terms in 1988, they preserved unmodified provisions. Grasim later sought arbitration for claimed losses from inadequate raw material supply (1988–2001), invoking the original arbitration clause. The High Court rejected the claim as barred by limitation and by time restrictions in the contract. The Supreme Court held that unmodified clauses subsist through supplementary agreements, that contractual time restrictions on arbitral claims are void under the Indian Contract Act, and that the three-year Limitation Act period governs (barring claims before 9 May 1999). The appeal was allowed and arbitration ordered.
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