B. N. Kirpal ( 1 ) THIS is an application under Section 20 of the Arbitration Act in which it is, inter alia, prayed that there was an arbitration agreement between the parties and the same should be filed in Court and the disputes arising between the parties be REFERRED TO for arbitration in terms thereof. ( 2 ) IT is admitted case of the parties that on 19th March, 1983 a distributorship agreement was entered into between the petitioner and respondent No. "1. As per this agreement the distributorship rights for Delhi-Uttar Pradesh circuit was agreed to be given to respondent No. 1 on his paying a sum of Rs. 16,00,000. The distributorship right of the film in question, namely, "savere Wali Gadi" was registered in the name of respondent No. 1. It is also not in dispute that the agreement of 19th March, 1983 contained an arbitration clause which, inter alia, provided that any dispute between the parties would be REFERRED TO to the arbitration of respondent No. 2 and the Indian Motion Pictures Producers Association, Bombay". ( 3 ) SUBSEQUENTLY, a document dated llth March, 1985 was executed by both the petitioner and respondent No. 1. As per this document it was mutually agreed that respondent No. 1 had consented to leave the distributorship of Delhi-Uttar Pradesh territory for Rs. 6,50,oco. 00 and the petitioner was to get the release within six months of the signing of the said document. It was further stated therein that all the earlier correspondence stood cancelled and the present agreement was irrevocable. ( 4 ) THE petitioner thereafter on 22nd June, 1985 wrote to respondent No. 2 informing it of the arrangement dated llth March, 1985 and requested that a circular be issued inviting dues, if any, against the aforesaid picture from the other members. Such a circular was issued on 15th July, 1985. It, however, appears that on that date i. e. 15th July, 19^5 respondent No. 1 wrote a letter to respondent No. 2 informing it that after llth March, 1985 a sum of Rs. 3,00,000 had been paid by respondent No. 1 to the petitioner and that the agreement dated llth March, 1985 was overruled. Respondent No. 1 asserted his right to distribute the said film. 3,00,000 had been paid by respondent No. 1 to the petitioner and that the agreement dated llth March, 1985 was overruled. Respondent No. 1 asserted his right to distribute the said film. This was followed by another letter dated llth September, 1985 by respondent No. 1 to respondent No. 2 in which it was stated that the sum of Rs. 6,50,000. 00 had not been paid within the stipulated period of six months and, therefore, the letter dated llth March, 1985 stood cancelled and that the said picture stood registered in the name of respondent No. 1. This letter was acknowledged by respondent No. 2 vide its letter dated 19th September 1985 and it was confirmed by the Motion Pictures Association that in view of the failure of the petitioner herein to pay Rs, 6,50,000. 00 the said picture stood regittered in the name of respondent No. 1. ( 5 ) THE case of the petitioner herein is that in terms of the earlier agreement dated 19th March, 1983 payment has not been made by respondent No. 1 and the picture had not been released. As disputes had arisen between the parties, the present application had been filed, inter alia, contending that under Arbitration Clause No. 19 of the agreement dated 19th March, 1983 the disputes should be REFERRED TO to arbitration. ( 6 ) THE contention of respondent No. 1, however, is that there is no valid and binding arbitration agreement. Shortly put the submission of respondent No. 1 is that by virtue of the arrangement dated llth March, 1985 the earlier agreement dated 19th March, 1983 stood superseded. ( 7 ) AFTER the replication was filed, the following three issues were framed :- "1. Whether there was any arbitration agreement between the parties and whether it still exists ? 2. Whether disputes raised are liable to be REFERRED TO to the named arbitrators ? 3. Relief". ( 8 ) THE parties were required to file affidavits by way of evidence. I will now deal with the issues. The only main question which arises for consideration is whether the agreement dated 19th March, 1983, which admittedly contained an arbitration clause stood superseded by the subsequent arrangement dated llth March, 1985 and further what is the effect of the arrangement dated llth March, 1985 not being complied with. I will now deal with the issues. The only main question which arises for consideration is whether the agreement dated 19th March, 1983, which admittedly contained an arbitration clause stood superseded by the subsequent arrangement dated llth March, 1985 and further what is the effect of the arrangement dated llth March, 1985 not being complied with. ( 9 ) THERE can be little doubt that the intention of the parties when agreement dated 11th March, 1985 was entered into was that the earlier contract dated l9th March, 1983 should be superseded. A new arrangement was sought to be brought about whereby the rights of respondent No. 1 under agreement dated 19th March, 1983 were to be yielded for a sum of Rs. 6,50,000. This amount of Rs. 6,50,000 was not paid by the petitioner. It was the case of respondent No. 1 that the agreement of llth March, 1985 stood cancelled. It is respondent No. 1 who claimed rights under the earlier agreement dated 19th March, 1983 and sought the continuation of his registration of distributorship with respondent No. 2. It is at the instance of respondent No. 1 that respondent. No. 2 confirmed vide its letter dated 19tn September 1985 that as the petitioner had failed to pay Rs. 6,50,000. 00 the aforesaid picture stood registered in the name of respondent No. 1. This registration could continue only by virtue of the earlier agreement dated 19th March, 1983. Respondent No. 1 had after llth March, 1985 asserted that the said agreement of llth March, 1985 had come to an end and the earlier agreement dated 19th March, 1983 had revived. It is true that petitioner earlier in June 1985 wrote that respondent No. 1 had given up its distributorship right by virtue of the arrangement arrived at by the document dated llth March, 1985, but thereafter the petitioner also has not written to the Motion Pictures Association for the cancellation of the distributorship rights of respondent No. 1 in respect of Delhi, Uttar Pradesh territory. It is clear that both the parties have accepted the non-performance of the agreement dated llth March, 1985. In this connection reference may usefully be made to the decision reported as Babulal Marwari and others v. Tulsi Singh and others. 1 The head note of which reads as under :- "section 62 does not deal with a case of part performance. In this connection reference may usefully be made to the decision reported as Babulal Marwari and others v. Tulsi Singh and others. 1 The head note of which reads as under :- "section 62 does not deal with a case of part performance. It deals with a case of novation, that is, where the parties to a contract agree to substitute a new contract for it, or to rescind or alter it and enacts that the original contract need not be performed. But where the parties agree that the old contract should be substituted by a new contract namely by payment cash down of Rs. 500 and by execution and registration of a mortgage bound for the balance and the amount is not paid and the other party does not accept by words or conduct the position as a mortgagee, there is no novation in the eyes of the law. The provisions of Section 39 would apply to such a case and the party can fall back on the original contract. " ( 10 ) THE aforesaid ratio is completely applicable to the present case. The agreement of llth March. 1985 fell through with the non payment of Rs. 6,50,000. 00 and as such, there was no valid novation of the contract dated 19th March, 1983. In view of the fact that the agreement dated 19th March, 1983 admittedly contained an arbitration clause, it has to follow that there is a valid and binding arbitration agreement between the parties and the disputes arising between them are liable to be REFERRED TO to the named arbitrators. ( 11 ) FOR the aforesaid reasons, the issues are decided in favour of the petitioner. The arbitration agreement is directed to be filed. All the disputes set out in the petition are REFERRED TO to the arbitration of the Indian Motion Pictures Producers Association, Bombay and Motion Pictures Association, Delhi, who should give their award within four months from their entering upon the reference. ( 12 ) THE parties to bear their own costs.