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TMI Blog1953 (2) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ions the same shall be referred to the award of an arbitrator to be nominated by the purchaser and an arbitrator to be nominated by the contractor.........." 3. Under each of these contracts the Governor-General in Council now represented by the respondent supplied raw materials and the contractor made part supplies. All these three contracts were later cancelled. 4. By the contract dated 2-4-1943, the contractors agreed to supply to the Government 43,000 ladies cook. This contract was cancelled on 21-5-1945 and a claim by the Government for price of raw materials supplied remained outstanding. On the 6-9-1948 the parties entered into a settlement contract which is as follows: " (1) The contractor expressly agrees to pay the Government the sum of ₹ 3,164-8-0 only on this contract. (2) The contract on payment of the amount mentioned in Clause (i) shall stand finally determined." 5. By the contract dated 15-9-1944 the contractors agreed to supply to the Government 15,500 bath Ovals. This contract was cancelled on 21-5-1945 and there remained outstanding claims by the contractors for compensation and claims by the Government for price of raw materials suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l machinery sheds and leasehold interest in land measuring about 5.75 acres at mouja Bamangachi in Howrah. The firm further undertakes to execute the necessary stamped documents for the purpose as drafted by the Govt. Solicitor at Calcutta. 6. The contract stands finally concluded in terms of the settlement and no party will have further or other claim against the other." 7. Between 28-10-1948 and 17-1-1949 the contractors had in all paid a sum of ₹ 9.000/- to the Government under the first two settlement contracts. Since the 3rd settlement contract the contractor paid in all a sum of ₹ 11,000/- i.e. ₹ 3,000/- on 10-3-1949, ₹ 3,000/- on 26-4-1949, ₹ 1,000/- on 12-8-1949, ₹ 3,000/- on 3-9-1949 and ₹ 1,000/- on 31-10-1949. The contractor defaulted in payment of all the instalments payable under the third settlement contract. By letters dated 28-3-1949, 1-4-1949 and 4-5-1949, the Government requested the contractors to pay the instalments in arrears and the instalments to fall due. By letter dated 17-5-1949 the Government requested the contractors to execute the hypothecation bond and also reminded them that in default of payment of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contract dated 22-9-1944 for kettles camp after appropriating another sum of ₹ 20,000/- which had been paid sometime in June 1948. The Government also stated that it did not claim relief in respect of the contract for bath ovals having regard to the concession before Banerjee J. that the arbitration clause in respect of that contract has ceased to exist. The contractors filed their counter-state of facts on or about 29-9-1950 challenging the jurisdiction of the arbitrator to arbitrate in the matter and alleging that the arbitration clauses in the several contracts had ceased to exist. The contractors also challenged the claim of the Government and the appropriation of payments made in the state of facts. 12. On 31-7-1951, the arbitrator made an award for the sum of ₹ 1,16,446-11-5 interest at 6 per cent per annum from 10-8-1949 and ₹ 1,000/- for cost in favour of the Government and against the contractors. The arbitrator repelled the contention that the arbitration clauses had ceased to exist. 13. This application is made by one Kishorilal Gupta. He admittedly was a partner of the contractor firm Kishorilal Gupta & Co. Originally, there were two other partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions do not apply after there has been a breach of the original contract." 19. The view of this Court, therefore, is that under Section 62, Contract Act the contract can be rescinded only after breach; -- 'New Standard Bank v. Probodh Chandra' AIR 1942 Cal 87 at p. 90 (B). I notice that Panckridge J. found some difficulty in applying this principle to all cases -- 'Brijmohon v. Mahabir' 40 CWN 808. 20. The rescission under Section 62 may be express or implied. It is a question of construction of the new contract whether or not it rescinds the original contract. -- 'Morris v. Baron & Co.' 1918 AC 1 . 21. If the contract is rescinded wholly, the arbitration clause which forms part of that contract is also rescinded. If the original contract is not rescinded by the new contract the arbitration clause contained in the original contract is also not rescinded. -- 'Uttamchand v. Mahmood Jewa' AIR 1920 Cal 143. 22. Section 62 requires an agreement which necessarily implies consideration. 23. Section 63, Contract Act does not require an agreement with or without consideration. Under that section the promisee may before breach gratuitously release t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al v. Tulsi Singh' AIR 1940 Pat 121 (J). In -- 18 CWN 617 Lord Moulton observed thus: "The receipt given by the appellants and accepted by the respondent and acted by both parties proves conclusively that all the parties agreed to a settlement of all their existing disputes by the arrangement formulated in the 'receipt'. It is a clear example of what used to be well known in Common Law Pleading as 'accord and satisfaction by a substituted agreement'. No matter what were the respective rights of the parties 'inter se'. They are abandoned in consideration of the acceptance by all of a new agreement. The consequence is that when such an accord and satisfaction takes place the prior rights of the parties are extinguished. They have, in fact, been extinguished for the new rights; and the new agreement becomes a new departure and the rights of all the parties are fully represented by it." 30. The accord and satisfaction discharges the causes of action for breaches of contract already committed. Where the accord and satisfaction is by substituted agreement it is a question of construction of that agreement whether it also extinguishes all pre-exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusion or termination is immediate. It is in terms of the settlement or the bargain which is embodied in the document. No party thenceforth will have further and other claims against the other. There is complete and immediate abrogation of the contract. The parties have settled all their disputes directly. There is accord and satisfaction by substituted agreement. The substituted agreement discharges the existing causes of action. It also totally discharges and extinguishes the original contract. The arbitration clause which is contained in the original contract perishes with it. 34. Very soon after the settlement the contractors committed breaches of the several terms of the settlement. Even after such breaches the Government insisted on performance of the substituted agreement and received payment under it. Persistent breaches of the substituted agreement cannot and does not revive the original contract. 35. In my opinion the arbitration clause contained in the contract for Kettles Camp dated 22-9-1944 has ceased to exist since 22-2-1949. The arbitrator, therefore, had no jurisdiction to entertain any claim with regard to that contract and the award, so far as it relates to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was appropriated towards the contract dated 2-4-1943 for Ladies Cook and the contract dated 22-9-1944 for Kettles Camp. A separate finding with regard to appropriation may not be necessary for a lump sum award but such finding is clearly necessary if the arbitrator were to make separate awards in respect of the last two contracts. Even if the figure of ₹ 1,16,446711/- is split up into 2 figures the Court must add further words in the award to indicate in respect of which contract the good part of the award is made. If the Court were to pass judgment on the award for ₹ 3,16478/-without specifying in the award that it is for the contract dated 2-4-1943 the Union of India may be met by a plea of res judicata when it subsequently enforces its rights in respect of other matters. The award of ₹ 1000/- for costs is clearly effected by the decision of the arbitrator with regard to the contract dated 22-9-1944. The Court is not certain in whose favour and for what sum the award for costs would have been if the arbitrator had decided in favour of the petitioner with regard to the contract dated 22-9-1944. The Court cannot re-write this award. Part of the award is void and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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