Contractual arbitration survives statutory substitution where a statute preserves sums payable under the agreement and does not exclude the agreed remedy.

Section 5 of the Calcutta Tramways Act, 1951 was construed as effecting a statutory substitution of the Government in place of the Corporation, while the proviso preserved sums payable under the agreements as if the Act had not been passed. That preservation extended to the contractual enforcement machinery, including the arbitration clause, because the statute did not clearly exclude the agreed remedy. The Court held that the statutory fiction should not separate the right to receive the sums from the contractual means of enforcement, and the reference to arbitration was therefore valid for disputes over those sums.

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Issues: Whether, on the proper construction of section 5 of the Calcutta Tramways Act, 1951, the Corporation retained the right to invoke the arbitration clause in respect of sums payable under the agreements notwithstanding the statutory substitution of the Government as party to the agreements.

Analysis: Section 5 effected a statutory substitution of the Government in place of the Corporation in the agreements, but the proviso preserved the sums payable under those agreements as if the Act had not been passed. The proviso was construed as preserving not merely the substantive right to receive the sums but also the contractual machinery for enforcing that right, including arbitration. The fiction created by the substantive part of section 5 was held to yield to the contract to the extent necessary to save both the debt and the agreed remedy. A contrary construction would separate the right from the remedy and create anomalies in the enforcement of the agreements.

Conclusion: The Corporation could rely on the arbitration clause for disputes concerning sums payable under the agreements, and the reference to arbitration was valid.

Ratio Decidendi: Where a statute preserves contractual sums payable under an agreement while effecting a limited statutory substitution of parties, the contractual arbitration clause governing enforcement of those sums remains operative unless the statute clearly excludes the agreed remedy.

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