Contract-Arbitration clause-Cancellation of contract-Settlement of disputes by mutual agreement-Arbitration clause, if survives-Award based on such clause-Validity; The respondents entered into three several contracts with the appellant, for the fabrication and supply of diverse military stores, each of which contracts contained an arbitration clause. Before the contracts had been fully executed disputes arose between the parties, one alleging that the other was committing a breach of the contract. The parties then entered into three fresh contracts on successive dates purporting to settle these disputes on the terms therein contained. By the first two of these settlement contracts the respondents agreed to pay to the appellant certain moneys in settlement respectively of the disputes relating to the first two original contracts. By the last of these settlement contracts the respondents agreed to pay to the appellant in specified instalments certain moneys in settlement of the disputes relating to the third original contract as also the moneys which had then become due on the first two settlement contracts and had not been paid and further undertook to hypothecate certain properties to secure the due repayment of these moneys. The third settlement contract provided: "The contracts stand' finally concluded in terms of the settlement and no party will have any further or other claim against the other."

The respondents paid some of the instalments but failed to pay the rest. They also failed to create the hypothecation. The appellant then referred its claims for breach of the three original contracts to arbitration under the •arbitration clauses contained in them. On this reference an award for a total sum of Rs. 1,16.446-n-5 was made against the respondents in respect of the appellant's claim on the first and the third original contracts, the claim in respect of the second original contract having been abandoned by the appellant, and this award was filed in the High Court at Calcutta. The respondents applied to the High Court for a declaration that the arbitration clauses in the original contracts had ceased to have any effect and the contracts stood finally determined as a result of the settlement contracts and for an order setting' aside the award as void and nullity. The High Court held that the first original contract had not been abrogated by the settlement in respect of it, but the third original contract and the arbitration clause contained in it had ceased to exist as a result of the last settlement and the arbitrator had no jurisdiction to arbitrate under that arbitration clause. It further  held that as the award was a single and inseverable award the whole of it was null and void. In this view the High Court set The Union of India aside the award.