Substituted contract extinguishes prior arbitration clause, so a suit cannot be stayed under the Arbitration Act.

A later written agreement that expressly settled outstanding claims and materially changed the subject matter, price and performance terms was treated as a substituted contract under the Contract Act. Because the parties intended to wipe out the earlier arrangements, the prior contracts stood discharged by accord and satisfaction, and the arbitration clause in those contracts also ceased to operate. Oral evidence could not be used to vary the written terms, as Section 92 of the Evidence Act barred such reliance. The result was that the suit was not liable to be stayed under Section 34 of the Arbitration Act.

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Issues: Whether the written arrangement dated 26-9-1957 created a new and independent contract superseding the earlier contracts and extinguishing the arbitration clause so that the suit could not be stayed under Section 34 of the Arbitration Act.

Analysis: The recorded terms of the later agreement controlled the parties' rights and liabilities after 26-9-1957. The substantial changes in the subject-matter, price and performance terms, coupled with the express stipulation that the parties would have no claim or objection regarding the outstanding contracts, showed an intention to wipe out the prior arrangements. On that construction, the later agreement amounted to a substituted contract and an accord and satisfaction under Sections 62 and 63 of the Contract Act. Once the earlier contracts stood discharged, the arbitration clause contained in them also ceased to operate. Section 92 of the Evidence Act barred reliance on oral variation to displace the written terms.

Conclusion: The agreement dated 26-9-1957 superseded the earlier contracts and the arbitration clause in those contracts did not survive; the suit was not liable to be stayed under Section 34 of the Arbitration Act and the respondent succeeded.

Ratio Decidendi: Where parties enter into a later written agreement that expressly settles outstanding claims and is intended to substitute the earlier contract, the original contract and its arbitration clause are extinguished and disputes must be governed by the substituted contract alone.

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