Arbitrability of full and final settlement disputes remains intact where the contract and arbitration clause still subsist.

A dispute over alleged full and final settlement of contractual claims remains arbitrable where the contract and arbitration agreement still subsist; questions of accord and satisfaction, repudiation, breach, or discharge are disputes arising out of or in connection with the contract and fall within a wide arbitration clause. Only if the contract has been extinguished altogether or replaced by a new agreement would the arbitration clause cease to operate. The High Court also erred in dismissing the petition in toto, because other objections, including the validity of the sole arbitrator's appointment and the effect of section 9(b), still required adjudication.

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Issues: (i) Whether a dispute as to alleged full and final settlement of contractual claims could still be referred to arbitration under the arbitration clause. (ii) Whether the High Court was justified in setting aside the order permitting evidence and dismissing the petition in toto.

Issue (i): Whether a dispute as to alleged full and final settlement of contractual claims could still be referred to arbitration under the arbitration clause.

Analysis: The arbitration clause was wide enough to cover disputes arising upon, in relation to, or in connection with the contract. A plea of full and final settlement, or a dispute whether claims stood settled, does not by itself destroy the contract or the arbitration agreement. Where the contract is not alleged to be void, illegal, non-existent, or wholly substituted by a new agreement, questions concerning repudiation, breach, discharge, or accord and satisfaction remain disputes connected with the contract and fall within the arbitration clause. The survival of the arbitration clause depends on whether the underlying contract itself has ceased to exist for all purposes or only its future performance has ended.

Conclusion: The dispute was arbitrable, and the arbitration clause survived for deciding the issue of alleged final settlement.

Issue (ii): Whether the High Court was justified in setting aside the order permitting evidence and dismissing the petition in toto.

Analysis: The petition under sections 9(b) and 33 of the Arbitration Act, 1940 raised multiple contentions, and the Subordinate Judge had not decided all of them. Even if the plea of final settlement did not exclude arbitration, the court was still required to examine the other objections, including the validity of appointment of the sole arbitrator and the consequences flowing from section 9(b). The High Court, therefore, ought not to have dismissed the petition wholesale.

Conclusion: The High Court erred in dismissing the petition in toto, and the matter had to go back for decision according to law.

Final Conclusion: The decision affirmed that a plea of full and final settlement does not automatically oust arbitration where the contract otherwise subsists, but the remaining objections to the arbitral appointment and related relief still required adjudication.

Ratio Decidendi: A dispute concerning accord and satisfaction, repudiation, or full and final settlement of claims under a subsisting contract is itself a dispute arising out of or in connection with that contract and remains within the scope of a wide arbitration clause, unless the contract has been extinguished altogether or replaced by a new agreement.

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