(1)  Suits instituted in the territories to which this Act extends on contracts entered into in the State of Jammu and Kashmir or in a foreign country shall be subject to the rules of limitation contained in this Act.

   (2)  No rule of limitation in force in the State of Jammu and Kashmir or in a foreign country shall be a defence to a suit instituted in the said territories on a contract entered into in that State on in a foreign country unless—

   (a)  the rule has extinguished the contract; and

   (b)  the parties were domiciled in that State or in the foreign country during the period prescribed by such rule.