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of <h1>New contract dated 26-9-1957 replaces prior contracts and arbitration clause, appeal dismissed.</h1> The High Court upheld the decision that the document dated 26-9-1957 established a new contract, replacing the previous contracts and their arbitration ... - Issues Involved:1. Whether the document dated 26-9-1957 establishes a new contract between the parties superseding the previous contracts dated 28-5-1957.2. Whether the arbitration clause in the previous contracts applies to the disputes arising under the new contract dated 26-9-1957.3. Whether the trial of the suit should be stayed under Section 34 of the Arbitration Act.Detailed Analysis:Issue 1: Whether the document dated 26-9-1957 establishes a new contract between the parties superseding the previous contracts dated 28-5-1957.The plaintiff argued that the contracts dated 28-5-1957 were settled and replaced by a new contract on 26-9-1957, under which the defendant agreed to supply cloth on new terms. The defendant contended that the original contracts were merely modified regarding the time and mode of delivery, leaving them intact otherwise. The trial court found that the old contracts were substituted completely by a new contract on 26-9-1957, canceling the previous contracts by mutual agreement. The High Court upheld this finding, noting that the language of the new contract was broad enough to indicate that the parties intended to wipe out pre-existing claims in exchange for mutual promises made in the subsequent contract. Thus, the document dated 26-9-1957 established a new and independent contract, completely discharging the earlier contracts.Issue 2: Whether the arbitration clause in the previous contracts applies to the disputes arising under the new contract dated 26-9-1957.The defendant argued that the arbitration clause in the original contracts should apply, while the plaintiff contended that the new contract did not contain an arbitration clause. The High Court referred to the principles laid down in Union of India v. Kishorilal Gupta and Bros., noting that an arbitration clause is a collateral term and perishes with the contract unless the parties agree otherwise. The trial court's finding that there was no arbitration clause in the previous contracts was deemed erroneous by the High Court, which emphasized that the earlier decision implied the validity of the original contracts containing the arbitration clause. However, the High Court concluded that the new contract did not leave the previous contracts alive, thus the arbitration clause in the old contracts did not apply to the disputes under the new contract.Issue 3: Whether the trial of the suit should be stayed under Section 34 of the Arbitration Act.The defendant's application for staying the trial under Section 34 was initially rejected by the trial court, which found that the new contract did not contain an arbitration clause. The High Court agreed with this finding, stating that the new contract was a complete substitution of the old contracts, which included the arbitration clause. As the new contract did not contain any agreement to refer disputes to arbitration, the plaintiff's suit could not be stayed under Section 34 of the Arbitration Act. The appeal was therefore dismissed with costs.Conclusion:The High Court upheld the trial court's decision that the document dated 26-9-1957 established a new contract, completely discharging the previous contracts and their arbitration clause. Consequently, the plaintiff's suit could not be stayed under Section 34 of the Arbitration Act, and the appeal was dismissed.
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