JUDGMENT D. P. Sood, J—The plaintiff a transport company entered into an agreement dated September 30, 1986 with National Hydroelectric Power Corporation Ltd. (defendant) whereby three 44-seater buses were hired by the defendants for plying the same on various Project sites for a period of 2 years. The defendants agreed to pay a sum of Rs. 1,050 per 100 kilometres per day covered by each bus and the said amount was to include passenger tax, surcharge thereon and expenditure on petrol, oil and lubricants etc. At the material time the rate of passenger tax was 17% of the total freight charge plus 20% surcharge over and above. This continued right upto November i5, 1986. Thereafter the rate of tax charged was raised to 35% besides 20% surcharge w. e. f. November 15, 1986 Consequently, the plaintiff had become liable to pay an amount of Rs. 3,87,880 as additional tax to the Himachal Pradesh Government. The plaintiff performed its part of the contract and submitted the final bill, recoverable from the defendant on October 1, 1988, to the tune of Rs. 8,81,045. It is alleged that the defendants were duly informed about the enhancement of the tax and further that the defendants not only wrongfully withheld the amount pertaining to the enhancement of the tax but also the hiring charges which they were liable to reimburse under the terms and conditions of the contract within 10 days of the submission of the monthly bills. It led to the filing of the claim by the plaintiff. Similarly, there was also some increase in the rate of token tax w. e. f. May 1, 1981 to September 14, 1988. The claim for higher charges from the months of April 1988 to September 1988 had also not been cleared by the defendants. The plaintiff claimed the amount, referred to above on the following counts: (i) hire charges from the months of April 1988 to September 1988. Rs. 4,51,500 (ii) Interest at the rate of 15% with effect from April 1988 to Sept., 1988. Rs. 15,606 (iii) Difference of enhanced passenger tax and surcharge which had already been claimed. Rs. 3,87,818 (iv) Difference of enhanced token tax from Rs. 2,200 to Rs. 4,400 per quarter for the period from May 1988 to September 1988 Rs. 11,001 (v) Difference of enhanced monthly wages increased by the H. P. Government paid to three drivers, Rs. Rs. 15,606 (iii) Difference of enhanced passenger tax and surcharge which had already been claimed. Rs. 3,87,818 (iv) Difference of enhanced token tax from Rs. 2,200 to Rs. 4,400 per quarter for the period from May 1988 to September 1988 Rs. 11,001 (v) Difference of enhanced monthly wages increased by the H. P. Government paid to three drivers, Rs. 15, 120 Total Rs. 8,81,045 2. The defendants having refuted the claim of the plaintiff vide letter dated August 22, 1988, culminated into filling of the application under section 20 of the Arbitration Act seeking direction to the defendants to file arbitration agreement and to appoint an arbitrator for final adjudication of the dispute arising in between the parties The same has been registered as Civil Suit No 96 of 1988 3. The suit has been resisted by the defendants mainly on the ground that no dispute exists between the parties since enhancement in the rate of existing taxes was the sole responsibility and liability of the plaintiff under the agreement. It was only in the event of new taxes being levied that the defendants could be saddled with additional claim to that extent. Thus, the plaintiff has no cause of action at all against the defendants and the suit is not maintainable. The following issues were framed on August 30, 1990: 1. Whether there existed any dispute falling within the ambit of contract entered into in between the parties to the instant list O. P. Parties. 2. In case issue No. 1 is decided in the affirmative, whether it can be referred to the Arbitrator in accordance with Clause 30 1 of the agreement entered into between the parties Parties ? O P. 3. Relief. 4. The parties adduced their evidence by way of filing affidavits. The photostat copy of the original agreement was also placed on the record by consent of the parties. The arguments have also been heard at length and I have also carefully gone through the record. Issues No. 1 and 2: 5. These issues are intrinsically inter-woven. As such in order to avoid repetition of discussion of evidence, I proceed to decide them together. 6. The factual position emerging from the pleadings of the parties is not at controversy. Clause 31,1 of the notice inviting tender which is admittedly applicable to the parties in this case reads: 31.1. "Clause 31 Arbitration. These issues are intrinsically inter-woven. As such in order to avoid repetition of discussion of evidence, I proceed to decide them together. 6. The factual position emerging from the pleadings of the parties is not at controversy. Clause 31,1 of the notice inviting tender which is admittedly applicable to the parties in this case reads: 31.1. "Clause 31 Arbitration. —All questions, disputes or differences in respect of which the decision has not been final and conclusive, arising between the contractor and the corporation, in relation to or in connection with the contract shall be referred for arbitration in the manner provided as under and to the sole arbitrator appointed as follows:—" 7. The perusal of the aforesaid arbitration clause clearly indicates that all disputes arising between the parties to the instant Us pertaining to the terms and conditions of the contract were agreed to be determined through an arbitrator. The latter portion of the arbitration clause lays down the procedure for appointment of the arbitrator. The work in question was awarded to the plaintiff as per terms and conditions of the letter of award dated August 29, 1986 It has been filed by the defendant and its contents stand admitted by the opposite side. 8. As stated earlier, the defendants had hired three 44-seater buses from the plaintiff A sum of Rs. 1,050 was also agreed to be paid to the plaintiff per 100 kilometers (both for kutcha and pucca routes). Admittedly, the passenger tax and token tax were enhanced during the period of contract. Also, the plaintiff had to pay higher wages to its employees because of issuance of a statutory notification. The defendants refuted these claims of the plaintiff in its entirety. In the circumstances, the only dispute between the parties is that as to whether difference has arisen between them inter se to which the agreement applies or not and if so whether it can be referred to arbitration. 9. The relevant terms and conditions are given in the agreement dated August 30, 1986, particularly in Clauses 28.1 and 28.2 which can be usefully reproduced: "28.1. All existing sales tax or any other tax duty or levy such as octroi, dharat, royalty and terminal tax on all materials including petrol, oil and lubricants (and increase, if any, on these during the contract) sic. All existing sales tax or any other tax duty or levy such as octroi, dharat, royalty and terminal tax on all materials including petrol, oil and lubricants (and increase, if any, on these during the contract) sic. the contractor has to purchase for the performance of the contract shall be payable by the contractor and the corporation will not entertain any claims for compensation whatsoever in this regard. 28.2. However, if a new tax or duty or levy (other than that existing on the date of opening of the tender) is imposed under a statute or law during the currency of the contract and the contractor becomes liable and actually pays same for obtaining material required for bona fide use on the works contracted, then the contractor shall immediately inform the Engineer-in-charge in this regard. The corporation will re-imburse the same to the contractor on production of satisfactory proof of payment provided that the amount thus claimed is not paid under price variation clause " 10. Obviously, from the perusal of the pleadings of the parties, it is clear that each one of them are having recourse to the terms and conditions of the agreement aforesaid in support of their respective claims It is well settled that the test for determining whether dispute is one "arisen out of the contract" or "in connection with the contract" is whether recourse the contract by which both the parties are bound is necessary for the purpose of determining whether the claim of the party is justified or otherwise. If it is necessary to take recourse to the terms of the contract for the purpose of deciding the matter in dispute, it must be held that the matter is within the scope of the arbitration clause and the arbitrators have jurisdiction to decide that dispute In its view, this Court is fortified by the dictum laid down in A. M. Mair & Co. v. Gordhandas Sagarmull, AIR (38) 1951 S. C. 9 and Union of India v. Salween Timber and Construction Co. (India) and others, AIR 1969 SC 488. The same view has been taken by a Division Bench of this Court in Shanti Swamp Banta v. The State of Himachal Pradesh and another, 1980 Sim. L. C 255. 11. There is no controversy that the point to be determined will have to depend on harmonious construction of the aforesaid two conditions. (India) and others, AIR 1969 SC 488. The same view has been taken by a Division Bench of this Court in Shanti Swamp Banta v. The State of Himachal Pradesh and another, 1980 Sim. L. C 255. 11. There is no controversy that the point to be determined will have to depend on harmonious construction of the aforesaid two conditions. This Court would not like to deal with this question in depth and record a finding since this would be essentially a function of an arbitrator. All the same, one thing which is clear is that the parties did intend that passenger tax and surcharge on it if exempted by the H. P. Government was to be refunded out of the rate of Rs. 1,500. In other words the above rate did include the passenger tax component and this was dependent on the fixation by the State Government of rates with respect to it Whether on increase of the tax aforesaid, the plaintiff is liable to be reimbursed or the same is liable to be refunded to the opposite party is a matter, strictly speaking, to be decided by the arbitrator However, in view of the circumstances discussed above, it cannot be said that this point simply does not arise for determination at all, Similarly, whether there was any stipulation with respect to the increase in the staff salary in the agreement or not is also a point within the jurisdiction of an arbitrator and he can certainly go into this aspect of the case. 12. Mr. K. D. Shreedhar, learned Counsel for the defendants, has vehemently stressed that no new taxes were imposed by the State Government. Rather, the existing taxes were simply enhanced and as per Clause 28.1 of the agreement the liability qua enhancement is that of the plaintiff alone. As such the said exigencies have not been covered by the terms of the agreement Accordingly, no dispute can be deemed to have arisen between the parties in connection with or under contract, I have not been able to agree with the contentions raised by learned Counsel for the defendants for the detailed reasons given above. 13. For the foregoing reasons, I am of the opinion that disputes have certainly arisen between the parties and that the same are liable to be referred to arbitration under the agreement. 13. For the foregoing reasons, I am of the opinion that disputes have certainly arisen between the parties and that the same are liable to be referred to arbitration under the agreement. I, therefore, decide issues No. 1 and 2 in favour of the plaintiff Issue No. 3; 14 In view of the decision on issues No. 1 and 2 above it is ordered that the arbitration agreement be filed in Court and that the disputes be referred to the arbitrator to be appointed as per procedure laid down in the agreement. The Chief Engineer incharge of the work will send a panel of three persons to the plaintiff within the ambit of Clause 31.1. (ii) of the Notice inviting tender and further action taken as laid down therein within six weeks from today. Order accordingly.