JUDGMENT : -

ANIL R. DAVE, J.

1. Aggrieved by the judgment dated 9th September, 2005 delivered by the High Court of Judicature, Andhra Pradesh at Hyderabad, in CMA No.476 of 2005, this appeal has been filed by M/s Harsha Constructions, a contractor, against Union of India and its authorities. Hereinafter, the appellant has been described as a 'Contractor'.

2. The Union of India had entered into a contract for construction of a road bridge at a level crossing and in the said contract there was a clause with regard to arbitration. The issue with which we are concerned in the instant case, in a nutshell, is as under:-

“When in a contract of arbitration, certain disputes are expressly “excepted”, whether the Arbitrator can arbitrate on such excepted issues and what are the consequences if the Arbitrator decides such issues?”

3. For the purpose of considering the issue, in our opinion, certain clauses incorporated in the contract are relevant and those clauses are reproduced hereinbelow :-

“Clause 39. Any item of work carried out by the Contractor on the instructions of the Engineer which is not included in the accepted schedule of rates shall be executed at the rates set forth in the “Sche