Superseded Contract –Survival of Arbitration clause

An arbitration clause in an agreement cannot survive if the agreement containing arbitration clause has been superseded/novated by a later agreement. The Hon’ble Apex Court in Union of India v. Kishori Lal Gupta and Bros., AIR 1959 SC 1362, examined the question whether an arbitration clause can be invoked in the case of a dispute under a superseded contract. The principle laid down is that if the contract is superseded by another, the arbitration clause, being a component part of the earlier contract, falls with it. But where the dispute is whether such contract is void ab initio, the arbitration clause cannot operate on those disputes, for its operative force depends upon the existence of the contract and its validity. Young Achievers, v. IMS Learning Resources Pvt. Ltd, (2013) 10 SCC 535.

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