JUDGMENT G.C. Bharuka, J. The present appeal has been filed for setting aside the judgment and decree dated 5th of February, 1993 passed by Shri Nishikant Chaudhary, Principal Sub-ordinate Judge, 1st Court, Dhanbad, by which he has made the award dated 30.7.1992 of the sale arbitrator as the rule of the Court. 2. The appellant had published a notice inviting tender bearing no. ST/1/88 dated 14.4.1988 for transportation of sand from different river ghats to East, North and South banker of the Kustore Collieries for the periods 1988-89, 1989-90 and 1990-91. It appears from the letters dated 31st March, 1988 (Annexure 'A') issued by the General Manager (S & PW) to the respondent that the latter was advised to transport sand at the rates agreed to between the parties for the year 1988-89. This letter also indicates that the rate for the year 1989-90 and 1990-91 were to be negotiated later. Accordingly, the respondent continued and completed the transportation work for all the three years. It further appears that some dispute had arisen between the parties with regard to the rate of transportation for the latter two periods, namely, 1989-90 and 1990-91 and to press his demand for enhancement, the respondent had stopped the transportation of sand which had caused safety risks of the coal mines under operation. Face to this situation, the appellant made a lump-sum payment of Rs. 8,08,303.31 paise being 7% enhancement of the negotiated rates for resumption of transportation of sand and thereafter in order to finally resolve the dispute the parties entered into an arbitration agreement dated 4.3.1991. The material clauses whereof read as under : "1. That in consideration of the aforesaid decision/settlement the parties hereto have agreed to refer the dispute relating to finalisation of rate for sand transportation for the period 1989-90 and 1990-91 to Sri B.K. Singh, Addl. Secretary, Deptt. of Coal, Ministry of Energy, Government of India, who will act as the sole Arbitrator, whose decision/ award shall be final and binding on the parties. 2. Secretary, Deptt. of Coal, Ministry of Energy, Government of India, who will act as the sole Arbitrator, whose decision/ award shall be final and binding on the parties. 2. It is further agreed by the parties that the said adhoc payment released to the contractor shall not in any manner prejudice the arbitration proceeding and the adjudication of the dispute and in case no amount is found payable in terms of the award given by the sale arbitrator, the adhoc amount already paid and released to the contractor shall be adjusted against the outstanding bills." 3. It is a matter of record that Shri B.K. Singh, Additional Secretary, Department of Coal, had refused to act as the sale Arbitrator as agreed to between the parties. Accordingly, the parties agreed in writing to appoint Sri S.N. Singh, Ex-Chairman-cum-Managing Director, Eastern Coal Limited as the arbitrator. By letter dated 14.12.1991 the Chairman -cum-Managing Director referred the dispute to the said arbitrator by specifically formulating the dispute in the following terms : "Whether the contractors of sand transportation contract for the year 1989-90 and 1990-91 would be entitled to get the enhancement in rate, and if so, at what percentage." 4. Thereafter the respondent made the following claims before the arbitrator : "Sl. Nos. A. Claims for difference in rates in respect of sand transportation work for the year 1989-90 Rs. 29,21,807.11 B. Claims for difference in rates in respect of sand transportation work for the period from 1.4.90 to 15.1.90 Rs. 9,74,066.33 C. Claims for difference in rates in respect of sand transportation work for the period from 16.10.90 to 31.3.1991 Rs. 13.76,108.27 D. Labour Escalations. Rs. 3,00,000.00 E. POL Escalations Rs. 5,00,000.00 F. Material Escalations. Rs. 80,000.00 G. Overhead Losses and Loss of Profit @20% Rs. 11,80,000.00 H. Interest over due amount @18% p.a.c.q. Rs. 34,71,000.00 I. Arbitration Cost Rs. 35,000.00 J. Idle Labour Rs. 1,00,000.00 Rs. 108,57,981.71 It will be seen that out of the total claims of Rs. 108,57,981.71 the claim pertaining to difference in the rates of transportation represented by serial Nos. A, B and C amounted to Rs. 52,71,981.71 paise. The appellant filed a cross statement/objection disputing the claim of the respondent, inter alia, stating therein that the respondent is not entitled to any enhancement in rate and he should be directed to refund 7% adhoc payment made to him and also pay the cost of arbitration. A, B and C amounted to Rs. 52,71,981.71 paise. The appellant filed a cross statement/objection disputing the claim of the respondent, inter alia, stating therein that the respondent is not entitled to any enhancement in rate and he should be directed to refund 7% adhoc payment made to him and also pay the cost of arbitration. The Arbitrator by his impugned award dated 30th July, 1992 by an unspeaking order directed the appellant to pay a lump sum amount of Rs. 47,82,000/- towards the claim of serial No. A to J, referred to above, in addition to 7% adhoc amount already paid to the respondent and for refund of the security money of Rs. 2,23,753/-. He also awarded interest at the rate of 13% per annum from 30.10.1992 till the date of payment or the date of decree whichever was earlier. This award was sent to the Court on 12.8.1992 whereupon the same was registered as Title (Arbitration) Suit No. 142 of 1992 and notices were sent to the respective parties under section 14 (2) of the Arbitration Act (hereinafter in short the 'Act') to show cause as to why the award be not made rule of the Court. In response to the said notice both the parties filed a petition under section 30 of the Act for setting aside the award on various grounds but during the hearing of the suit the respondent did not press his objection. The appellant assailed the award on the following grounds : (i) In view of the dispute referred to the arbitrator he was merely required to adjudicate on the question pertaining to rate of transportation, but contrary to the dispute referred, he has given an award directing lump sum payments on account of various claims made by the contractor. (ii) Keeping in view the facts of the case, the award ought to have been a reasoned one. (iii) The arbitrator has acted beyond jurisdiction in directing for refund of the security deposit. (iv) It was incompetent on the part of the arbitrator to allow the claim of the respondent without deducting 7% adhoc payment amounting to Rs. 8.08,303.32 and (v) The Arbitrator has erred in granting interest at the rate of 13% which was beyond the reference made to him. 5. (iv) It was incompetent on the part of the arbitrator to allow the claim of the respondent without deducting 7% adhoc payment amounting to Rs. 8.08,303.32 and (v) The Arbitrator has erred in granting interest at the rate of 13% which was beyond the reference made to him. 5. The Court below has rejected all the aforesaid objections raised by the appellant by holding that (i) in view of clause 24 of the notice inviting tender and clause 1 of the Agreement dated 4.3.1991 the Arbitrator was not required to give award only in respect of the rate for sand transportation, (ii) there is no legal requirement to give a reasoned award, (iii) since the Arbitrator has allowed even less than half of the amount claimed by" the Contractor, therefore, the lump sum amounts awarded cannot be said to be excessive, (iv) in view of clause 3(B) of the notice inviting tender the Arbitrator cannot be said to have acted beyond jurisdiction while granting refund of the security deposit, (v) as per clause 2 of the Agreement dated 4.3.1991 the Arbitrator was not required to adjust the adhoc amount paid against the transportation charges and (vi) it was competent on the part of the Arbitrator to award interest for the period commencing from the date of award. 6. In my opinion, the first and foremost question which needs to be considered in this appeal is as to whether the Arbitrator has acted beyond the term of reference and has thereby exceeded his jurisdiction resulting in nullification of the award Since the learned Sub-ordinate Judge has relied on clause 24 of the notice inviting tender dated 14.4.1988 for answering this question against the appellant, it is better to first notice that clause, which reads as under: "All disputes of differences whatsoever arising out of between the contractor and colliery area relating to transportation of sand and operation of the contract shall be settled by the sole Arbitrator appointed by Director-in-charge of the concerned division and the award of Arbitrator shall be final and binding." 7. No doubt the respondent was• given contract for transportation of sand in accordance with the notice inviting tender dated 14.4.1988 for the three periods, namely, 1988-89, 1989-90 and 1990-91 but the rate of transportation was settled only for the first period and so far as the subsequent periods are concerned, those were to be negotiated later. No doubt the respondent was• given contract for transportation of sand in accordance with the notice inviting tender dated 14.4.1988 for the three periods, namely, 1988-89, 1989-90 and 1990-91 but the rate of transportation was settled only for the first period and so far as the subsequent periods are concerned, those were to be negotiated later. It further appears that during the execution of the contract during the subsequent periods, some dispute had arisen between the parties in respect of the rate of transportation and accordingly, settlement contract dated 4.3.1991 (Annexure 1) was entered into between the parties, the preamble whereof reads as under: "WHEREAS vide order no. : BCCL : S : KA : 88 : F : 23 : 2750 dt. 28.5.1988. The sand transporting contract was awarded to the contractor with terms and conditions mentioned in the Notice Inviting Tender for a period of three (3) years. And WHEREAS the contractor has been agitating for enhancement of rate due to price increase in diesel/petrol and other accessories etc., over which some difference/dispute have arisen between the parties. And WHEREAS, the Employer was anxious to examine the claim in proper perspective so as to arrive at an equitable, legitimate and expeditious Settlement thereof." 8. It was in the above background that the parties agreed to refer the dispute relating to finalisation of the rate as embodied in clauses 1 and 2 of this Agreement which has been quoted above. Further it was only pursuant to arbitration clause contained in the aforesaid settlement contract dt. 4.3.91 that on refusal of Mr. B.K. Singh to act as an Arbitrator, the parties agreed in writing to appoint Shri S.N. Singh, the present Arbitrator, by specifically formulating the reference of dispute, according to which the Arbitrator was required to give his award only in relation to the rate of transportation. In substance the Arbitrator on the basis of evidence laid before him was required to pronounce only the rate to which the Contractor was entitled for the transportation in the two latter periods. In substance the Arbitrator on the basis of evidence laid before him was required to pronounce only the rate to which the Contractor was entitled for the transportation in the two latter periods. In my opinion, the learned Sub-ordinate Judge has committed a serious error of law in holding that the reference in question to the Arbitrator was one under clause 24 of the notice inviting tender because the said arbitration clause was superseded by the subsequent agreement dated 4th of March, 1991 at least in respect of the determination of the rate of transportation, which was required to be settled by a named Arbitrator agreed to between the parties. 9. I may observe here that if any other dispute relating to the contract in question was subsisting between the parties, then the same could have been referred to a sole Arbitrator appointed by the Director-incharge of the concerned division in terms of the aforesaid clause 24. But we are not concerned with that situation here. Accordingly, I am constrained to hold that the Arbitrator has acted beyond the term of reference made to him rendering the award without jurisdiction and thus, as not binding the parties. 10. A similar question had arisen before the Supreme Court in the case of Union of India vs. Santiram Ghosh ( AIR 1989 S.C. 402 ). In this case under the terms of reference, the Board of Arbitrator was required to consider whether Scientific Assistants of the Botanical Survey of India were entitled to the revised pay scale. But the said Board instead of giving the award in terms of the reference, prescribed two level pay scales as done by the Pay Commission and also prescribed certain minimum qualifications for the said purpose. It also directed the Government to frame recruitment rules for Level I and Level II posts of Scientific Assistants. Keeping in view these facts, the Apex Court set aside the award by holding that: "It is, therefore apparent that in making the Award, the Board of Arbitrators had acted beyond the terms of reference. There can be no doubt that when an Arbitrator acts beyond the terms of reference, the Award is illegal and not binding upon the parties." 11. There can be no doubt that when an Arbitrator acts beyond the terms of reference, the Award is illegal and not binding upon the parties." 11. In the present case, since under the terms of reference the Arbitrator was required to merely adjudicate upon the rate of transportation lawfully payable to the respondent-Contractor, it was not within the jurisdiction of the Arbitrator to award any lump sum amount against the various other claims made by him. Accordingly, the award is remitted to the Arbitrator for re-consideration and for giving an award only in respect of the rate of transportation in term of the reference after giving due opportunity of hearing and leading fresh evidence to the parties, if they so desired. The award should be filed in the court below within three months from the date of communication of this Judgment. 12. The appeal is thus allowed to the above extent but without any costs.