This appeal under Section 39 of the Arbitration Act, 1940, arises from the judgment in Suit No. 209-A/73, delivered on the Original Side of this Court on 12th November, 1975, on a petition under Section 20 of the Arbitration Act, 1940.

2. There was a contract between the Food Corporation of India and Shri P.L Juneja carrying on business in the name of M/s. Juneja ‘and Company, whereby the contractor had undertaken loading, unloading and handling and transport work for the Food Corporation of India at certain godowns situated at Meerut or near Meerut. The work under the contract involved the carriage of foodgrain bags between railheads and Food Corporation of India's godowns and also included stacking of the said foodgrain bags inside the godowns. The contract involved a large number of services relating to foodgrains and appears to be an item-rate contract. Certain disputes had arisen between the parties which were referred to the arbitration of Shri P.H Ramchandani, Additional Legal Adviser in the Ministry of Law in accordance with clause XIX of the contract between the parties. However, certain other claims made by the contractor were not referred on the footing that they were outside the, scope of the arbitration clause.

3. Being aggrieved by the failure to refer these disputes, the contractor filed the petition under Section 20 claiming that the additional disputes which had not been referred were ‘ also referable to arbitration. The disputes which were not referred were three in number. They were— (1) According to the contractor, 4,86,569 bags of foodgrains were in the godowns when the contract was taken and these were, therefore, claimed to be additional works for which extra payment was to be paid. The contractor wanted a special rate for these bags, but the payment was made by the Food Corporation of India at the contract rate. (2) At Rohta Road there is a railway crossing which remains closed for six hours due to a number of trains. So, the contractor claimed that he had to go by a longer route nor proceeding from the railway goods sheds (city branch) to the Rohta Road godown which involved an additional distance of 2.3 kilometres. He claimed that he had transported 1,14,559 bags of foodgrains for this additional distance. (3) Under the contract, the contractor was required to take possession of some new godowns which were found unfit for work as there were no approach roads and the floors were badly damaged. Extra expense was incurred for doing this work for which the contractor had given due notice to the Corporation. The contractor wanted these three items to be referred to the arbitrator.

4. The petition was resisted by the respondent (now appellant) on the ground that there was a special term in the contract relating to extra work. It was claimed that if extra work was ordered, a representation had to be made to the Regional Manager whose decision was final. As no representation had been made, so there was no dispute whatsoever relating to these items.

5. The learned single Judge who heard the petition came to the conclusion that the disputes had to be resolved by the arbitrator. Even the question whether there has been a decision of the Regional Manager had to be decided by the arbitrator. The question whether there was any extra work or whether that extra work had been done, were all left to be decided by the arbitrator, and hence, a reference was ordered.

6. The Food Corporation of India has appealed and learned counsel for the appellant contends that clauses XV and XIX of the contract have to be construed together to understand the scope of the question that arises before us. It is first necessary to quote these terms. Clause XV which relates to remuneration reads as follows: “XV. Remuneration:

(a) The contractors shall be paid the remunerations in respect of the services described in Para XX and performed by them at the contract rates.

(b) If the contractors are required to perform any service in addition to those specifically provided for in the contract and the annexed schedule the contractors’ remuneration for the same will be paid at the rates as negotiated and fixed by mutual agreement. Failing such an agreement the matter shall be referred to Arbitration under Clause XIX.

(c) The question whether a particular service is or is not covered by any of the services specifically described and provided for in the contract, or is or is not auxiliary or incidental to any such services shall be decided by the Regional Manager whose decision shall be final, and biding on the contractors.

(d) The contractors will have the right to represent in writing to the Regional Manager that a particular service which they are being called upon to perform, is not covered by any of the services specifically provided for in the contract, or as the case may be, is not auxiliary or incidental to such services, provided that such representation in writing must be made within 15 days after the date of actual performance of such services. If no such representation in writing is received within the said time, the contractors' right in this regard will be deemed to have been waived.”

The relevant portion of clause XIX is as follows:—

“XIX. All disputes and differences arising out of or in any way touching or concerning this agreement whatsoever (except as to any matter the decision of which is expressly provided for in the contract) shall be referred to the sole arbitration of any person appointed by the Managing Director of the Food Corporation of India.........”

The construction of the latter clause shows that all disputes and differences have to be referred to the sole arbitration of a person to be appointed by the Food Corporation of India. But, there is an exception and that exception is in matters the decision of which is expressly provided for in the contract. In order to apply the provision to the three claims now under consideration, it has to be determined whether these are exceptions in the sense that they have to be decided by some other person. It seems clear that when there is an express power given under the contract, then the matter is outside the scope of the arbitration clause.

7. The peculiar feature of the present case is that it deals with claims which seem to be extra contractual in the sense that they are relating to extras not covered by the contract. Firstly, the claim relating to the existing bags is claimed to be outside the contract. Secondly, the claim relating to longer distance relates to extra work done under the contract but necessitated by the level crossing. Thirdly, the claim relating to repairs of godowns and building of an approach road seems to be extra contractual though necessitated by the work involved in the contract. The question to be seen is whether such claims can be referred to arbitration.

8. Learned counsel for the appellant contended that clause XV covers every situation and every possibility that may arise relating to extra work. He claims that it is only when the contractor is required to perform any additional services then the rate has to be negotiated and failing settlement, the matter can be referred to arbitration. He says this situation never arose under any of the three items, so there is nothing to refer to arbitration. Counsel for the respondent-contractor contends that the Regional Manager never decided that these services were extra or not extra, therefore this matter has to be decided by the arbitrator.

9. It would be useful at this stage to refer to certain points made by counsel for the respondent in support of the claim that the matter has to be referred to the arbitrator. Reliance was placed on the Supreme Court's judgment in Union of India v. Salween Timber and Construction Co. (India), AIR 1969 SC 488, wherein it was held that if recourse is necessary to the terms of the agreement for deciding the dispute, then the arbitrator has jurisdiction to decide such a dispute. The term of the contract involved in that case was of the normal D.G.S and D's contract wherein clause 21 of the form W.S.B 133 is reproduced in the judgment and is similar to the clause now under consideration. In that case, the contractor had claimed that certain logs of wood supplied to various consignees had not been returned despite repeated requests. The contractor wanted the return of the timber and compensation. The Government claimed that the supply was in excess quantity which was outside the scope of the arbitration agreement. The Court held that the question whether it was excess quantity or not had to be decided by reference to the contract and hence the matter could be referred to arbitration. Learned counsel for the respondent contends that on a parity of reasoning, the question whether the present work is extra or not has also to be referred to arbitration. This contention is not well founded in the present case. Here, the contractor makes his claim on the basis that it is extra; he claims that the work is beyond that was contemplated by the contract. So, it is not a work arising directly under the contract, but father outside it. If extra work is done then clause XV deals with how extra work is to be dealt with. The question whether the work is extra or not is to be decided under sub-clause (e) of clause XV by the Regional-Manager whose decision ‘shall be final and binding on the contractors’. If a matter is to be decided by the Regional Manager, then it is a matter provision for which has been expressly made and is outside the arbitration clause. This was not the point involved before the Supreme Court.

10. Learned counsel has also relied upon Ruby General Insurance Co. Ltd. v. Pearey Lal Kumar, AIR 1952 SC 119, in which case the arbitration clause stated that if the company disclaimed liability for any claim under the motor insurance contract involved in the case, then arbitration had to commence within twelve calendar months. In that case, the Insurance Company had claimed that the matter was outside the scope of the arbitration agreement as they had made a disclaimer and the arbitration had not been invoked within twelve months of the disclaimer. But the owner of the insured vehicle had contended that the disclaimer was invalid. The Supreme Court held that there was no question relating to the arbitration agreement or its effect, but a question as to whether the conditions of the agreement had been fulfilled. The exact words used by the Court were as follows:—

“Again, no question of determining the effect of the arbitration agreement arises, because there is no dispute between the parties as to what it means. The language of the arbitration clause is quite clear, and both parties construe it in the same way. The real question between their is whether respondent 1 has or has not complied with the conditions of the agreement. But this question does not turn on the effect of the agreement. This is the view which has substantially been taken by the High Court, and in our opinion it is correct.”

In the present case, we are determining the scope of the arbitration agreement itself because we are trying to determine whether the claims made by the contractor are items whose decision has been provided for expressly otherwise than by reference to arbitration. So, this judgment is also of no effect.

11. Another judgment relied upon by learned counsel is Punjab State v. Moji Ram, AIR 1957 Punj 223, wherein a suit had been brought claiming compensation for certain extra works done, but the Government had claimed that the matter was covered by the arbitration clause. The Court granted a stay of the proceedings under Section 34 of the Act on the ground that the matter was covered by the arbitration agreement. It is, therefore, contended that even extra work can be included within the scope of the arbitration agreement. Actually, this judgment is based on the clause used in the contract in question. The words of the arbitration clause involved were as follows;-

“In matter of dispute the case shall be referred to the Superintending Engineer of the Circle, whose order shall be final.”

The Court held that this clause also covered the question whether the work done was extra or not. If a similar arbitration clause was in operation in the present case, we would have no hesitation in holding that the questions now before us had to be referred to arbitration, but in view of the fact that there is a special reservation in clause XIX and a special procedure provided by clause XV relating to the extra works, the judgment can have no application in the present case.

12. Learned counsel for the respondent contended that in order to determine the questions involved in the present case, recourse had to be had to the contract and, therefore, it involved a question relating to the interpretation of the contract between the parties, and hence, all the questions sought to be referred had to be referred to arbitration. If this contention is correct, then it would mean that the arbitrator will have to decide whether any items are excepted from his authority and what are those items. It is well settled that the arbitrator cannot give himself jurisdiction and this matter has to be decided by the Court by recourse to Section 33 of the Arbitration Act. Even when a petition is moved under Section 20, the question to be determined by the Court is whether the arbitration agreement in question applies to the dispute. So, we have to determine the scope of the arbitration agreement in the present case.

13. It seems from the clause relating to arbitration that the scope of reference relates to all matters arising under or relating to the contract, but certain exceptions are there for which provision has been expressly made. So, the real question for determination is whether there is an express provision for decision of disputes relating to extra works. An examination of clause XV would show that there is an express provision covering claims for extra work. It now remains for us to examine the said clause XV. The clause has been reproduced above in full but it will now be necessary to refer to particular aspects of the clause.

14. Sub-clause (a) merely provides that remuneration will be given to the contractors for services described in Para XX at the contract rates. The contract contains an extensive and detailed description of the services that have to be performed by the contractor. These services include loading and unloading at railheads, carriage of goods from and to the godowns or depots of the Food Corporation of India; carriage from depots to railheads and so on. It would appear that the carriage of bags that were originally at the depots should be included in those rates because there is a specific description. Nevertheless, the contractor is entitled to contend that the existing bags which were more than four lacs in number are additional work and the question is not whether this is extra work, but who is to decide that it is extra work. If it is extra work, no doubt the contractor can claim special remuneration,

15. The special remuneration for extra services appears to be covered by sub-clause (b) of clause XV which may be quoted again for convenience:—

(b) If the contractors are required to perform any service in addition to these specifically provided for in the contract and the annexed schedule the contractors remuneration for the same will be paid at the rates as negotiated and fixed by mutual agreement. Failing such an agreement the matter shall be referred to arbitration under Clause XIX.”

This clause shows that if the contractor is required to perform any service which is not specifically provided for then the question of remuneration, if not settled by negotiations, can be referred to arbitration. The primary condition for its application is that there should by some extra service not provided for in the contract. In order to see whether the service is provided for in the contract, one has to look at the contract. The contract appears to include at least Claim No. 1. But as already said, this question whether it is extra or not, is to be decided by the contract and not by the Court. How then is the question of extra work to be decided? It appears that it is to be decided under sub-clause (c) which reads as follows:—

“(c) The question whether a particular service is or is not covered by any of the services specifically described and provided for in the contract, or is or is not auxiliary or incidental to any such services shall be decided by “the Regional Manager whose decision shall be final and binding on the contractors.”

This clause clearly shows that it is the Regional Manager whose decision is to be final and binding on the question whether any work is extra or not. It will be recalled that not only claim No. 1 is claimed to be extra, but claims Nos. 2 and 3 are also claimed to be extra. The question whether they are extra is not to be decided by the arbitrator, it is not to be decided by the Court, it is to be decided by the Regional Manager and his decision will be final and binding. Therefore, this matter cannot be referred to arbitration. It has to be referred to the Regional Manager.

16. This brings us to the next clause which is how this decision is to be recorded. This appears to be provided for by sub-clause (d). It may be recalled that the Regional Manager is not sitting at the Depots nor at the railheads. He is sitting in an office in Delhi or at some other place. He can only give a decision if somebody brings to his notice that a matter is extra or a service not mentioned in the schedule is being performed or some work is being done which is outside the scope of the contract. He can then decide whether this matter is extra or not. This is how sub-clause (d) operates because the said clause states:—

“(d) The contractors will have the right to represent in writing to the Regional Manager that a particular service which they are being called upon to perform, is not covered by any of the services specifically provided for in the contract, or as the case may be, is not auxiliary or incidental to such services, provided that such representation in writing must be made within 15 days after the date of actual performance of such services. If no such representation in writing is received within the said time, the contractors' right in this regard will be deemed to have been waived.”

This sub-clause shows that if the contractors are called upon to perform a service which according to them is not provided for, then they may make a representation to the Regional Manager. Here perhaps, it may be necessary to draw a distinction between claim No. 1 and claims Nos. 2 and 3. Claim No. 1 is specifically provided for in the contract or so it appears, but claims Nos. 2 and 3 are not provided for, Claim No. 2 deals with an extra distance covered. In this connection, the contract shows that the decision regarding the distance between the railhead and the godown has to be fixed in accordance with Note No. 5 appearing at page 45 of the contract. The said note reads:—

“(5) The distance will reckoned as fixed by the Chief Engineer, P.W.D, or an officer nominated by him or by the Regional Manager, Food Corporation of India or checked by an officer acting on his behalf rounded off to the nearest 0.50 kilometer (applicable to item 7).”

Thus, it would appear that when transport is involved then the distance is to be fixed under the contract by a designated official. If the contractor chooses to follow a longer route, he does so for his own convenience. But the question whether it is extra or not will have to be determined by the Regional Manager in the manner just mentioned. It is not for the arbitrator to decide.

17. As far as claim No. 3 is concerned, it would appear that the same does not relate to any service provided for under the contract, but to the provision of some road and repairs to the godowns themselves. This work appears to be purely extra contractual. It would prima facie not appear to be covered by the contract. If it is claimed as an extra service under the contract, then clause XV would apply and the Regional Manager would be the final authority to determine the question whether it is extra or not. If he does determine that it is extra then the question of rates can go to arbitration. Unless it is first determined as extra, the question of the matter going to arbitration does not arise.

18. So, the result would be that in each one of these three claims there has to be a prior decision by the Regional Manager that the work is extra and there has to be a dispute about the rates, only then the matter can be referred to arbitration. Otherwise, the matter is outside the scope of arbitration.

19. Unfortunately, the facts disclosed in this case do not reveal as to when the claims were noised and how they were raised. It seems plain that there has been no decision of the Regional Manager, so it would follow that these matters cannot be referred to arbitration and accordingly we have to accept this appeal and dismiss the petition under Section 20 of the Arbitration Act. However, we would leave the parties to bear their own costs keeping in view the intricacies of the questions involved.

Appeal allowed.