Can the bank in a guarantee issued by it restrict the claim period so as to avoid its liability? Discuss.

With effect from 1 st January, 1987, Section 28 of Indian Contract Act had been amended. As a result of which the standard limitation clauses in the bank guarantees by which the banks extinguished their liability have been declared illegal. As such, at present, if a beneficiary is to invoke the guarantee within the claim period, for a default committed by the debtor during the validity period, then in case the bank does not make any payment, the beneficiary can sue the bank within the normal period as provided in the Limitation Act, 1963. This period under the Limitation Act is 30 years in case the beneficiary is a Government Department or Municipal Body and 3 years in all other cases.