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1 - 6 of 6 (1.86 seconds)Damodar Valley Corporation vs K. K. Kar on 12 November, 1973
34. It is not unknown in commercial world that the parties
amend original contract and even give up their claims under the
subsisting agreement. The case on hand is one such case where
the parties consciously and with full understanding executed AoA
whereby the contractor gave up all his claims and consented to
the new arrangement specified in AoA including that there will be
no arbitration for the settlement of any claims by the contractor
in future. Having chosen to adopt that path, it is not open to the
contractor to now take recourse to arbitration process or to
resurrect the claim which has been resolved in terms of the
amended agreement, after availing of steep revision of rates being
condition precedent. We may usefully rely on the underlying
principle expounded by this Court in Damodar Valley
Corporation vs. K. K. Kar3, wherein the Court observed as
follows:
“…..As the contract is an outcome of the agreement
between the parties it is equally open to the parties
thereto to agree, to bring it to an end or to treat it as if it
never existed. It may also be open to the parties to
terminate the previous contract and substitute in its
place a new contract or alter the original contract in such
3 (1974) 2 SCR 240 @ 243244
Page 24 of 27
a way that it cannot subsist. In all these cases, since the
entire contract is put an end to, the arbitration clause,
which is a part of it, also perishes along with it. Section
62 of the Contract Act incorporates this principle when it
provides that if the parties to a contract agree to
substitute a new contract or to rescind or alter it, the
original contract need not be performed. Where,
therefore, the dispute between the parties is that the
contract itself does not subsist either as a result of its
being substituted by a new contract or by rescission or
alteration, that dispute cannot be referred to the
arbitration as the arbitration clause itself would perish if
the averment is found to be valid.
National Insurance Co. Ltd vs M/S. Boghara Polyfab Pvt.Ltd on 18 September, 2008
As the very jurisdiction
of the arbitrator is dependent upon the existence of the
arbitration clause under which he is appointed, the
parties have no right to invoke a clause which perishes
with the contract.”
In a subsequent decision in National Insurance Company
Limited vs. Boghara Polyfab Private Limited4, in paragraph
52 this Court held as follows:
Section 9 in The Arbitration Act, 1940 [Entire Act]
Section 62 in The Indian Contract Act, 1872 [Entire Act]
The Arbitration And Conciliation Act, 1996
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