Judgment

Banerjee, J.-These appeals by the grant of Special Leave pertains to the effect of the usual ‘excepted clause’ vis-a-vis the arbitration clause in a Government contract. While it is true and as has been contended, that the authorisation of the arbitrators to arbitrate, flows from the agreement but the High Court in the judgment impugned thought it fit to direct adjudication of ‘excepted matters’ in the agreement itself by the arbitrators and hence these appeals before this Court.

2. At the outset, it is pertinent to note that in the usual Governmental con­tracts, the reference to which would be made immediately hereafter, there is exclusion of some matters from the purview of arbitration and a senior officer of the Department usually is given the authority and power to adjudicate the same. The clause itself records that the decision of the senior officer, being the adjudicator, shall be final and binding between the parties-this is what popularly known as ‘excepted matters’ in a Government or Governmental agencies’ contract.

3. ‘Excepted matters’ obviously, as the parties agreed, do not require any further adjudication since the agreement itself provides a named adjudicator - concurrence to the same obviously is presumed by reason of the unequivocal acceptance of the terms of the contract by the parties and this is where the courts have found out lacking in its jurisdiction to entertain an application for reference to arbitration as regards the disputes arising therefrom and it has been the consist­ent view that in the event the claims arising within the ambit of excepted matters, question of assumption of jurisdiction of any arbi­trator either with or without the intervention of the court would not arise; The parties themselves have decided to have the same adjudicat­ed by a particular officer in regard to these matters: what are these exceptions however are questions of fact and usually mentioned in the contract documents and forms part of the agreement as such there is no ambiguity in the matter of adjudication of these specialised matters and termed in the agreement as the excepted mat­ters.

4. As noticed above, the High Court, however, has in fact, referred matters which are in terms of the agreement within the excepted mat­ters to the arbitrator along with the other arbitrable disputes. It would be convenient to note the Arbitration clause at this juncture.

“All disputes and differences arising out of 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 a person appointed by the Managing Director of the FCI. It will be no objection to any such appointment that the person appointed is or was an employee of the Corporation that he had to deal with the matters to which the contract relates and that in the course of his duties as such employee of the corporation he had expressed views on all or any of the matters in dispute of difference. The Board of such Arbitration shall be final and binding on the parties of this contract. It is a term of this contract that in the event of such arbitration to whom the matter is originally re­ferred being transferred or vacating his office or being unable to act for reasons the Manager/Managing Director of the FCI at the time of such transfer, vacation of office or inability to act shall appoint another person as arbitrator. Such persons shall be entitled to pro­ceed with reference from the stage at which it was left by his prede­cessor. It is also a term of this contract that no person other than a person appointed by the Managing Director as aforesaid shall act as Arbitrator and if for any reasons that it is not possible the matter is not be referred to Arbitration at all.

It is term of a contract that the party invoking arbitration under this clause shall specify the disputes and/or difference to be re­ferred to arbitration together with