Judgment :- Radhakrishnan, J. Appellant and respondent had entered into an agreement on 20-6-1975 by which the appellant company had agreed to compress the oxygen supplied by the respondent as per the terms of the contract. The contract was extended from time to time and the last extension was from 1-1-1985 to 31-3-1985. It was a term of the agreement that the by-product oxygen to be supplied by the respondent would have a manufacturing purity of 99.2%. From November 1977 to August 1979 appellant was compressing the full volume of oxygen of agreed purity made available by the respondent and was effecting payments regularly to respondent at the rate of Re.1 per cubic metre upto 20-12-197S and thereafter at the rate of Re. 1.10 per cubic metre upto August 1979. There was a total strike at the respondent's company and consequently there was non supply o f oxygen during the period from September 1979 to December 1979. From January 1983 to October 1983 appellant could not compress any oxygen at the respondent's factory premises because of partial and total power cut. Articles 1, 5 and 6 of the agreement dated 20-6-1975 provided for payment by the appellant to the respondent at Re.1 per cubic metre of oxygen of 99.2% purity and the quantity to be supplied at atmospheric pressure and temperature, as measured in cylinders plus 5% to cover for losses during compression and the rate payable was to be reviewed at the end of every quarter as per agreement contained in Article 6. The rate per cubic metre of oxygen payable by the appellant to the respondent was revised by mutual consent as agreed in writing from time to time whenever found necessary based on such reviews at the end of every quarter. On account of the increase in the unit cost of electric power brought about by the Kerala State Electricity Board the price of oxygen gas was increased with effect from 15-1-1983 from Rs.1.50 to Rs.2.18 per cubic metre in accordance with Article 4 of the Articles of Agreement which is evident from respondent's letter No.G.-9837 dated 14/15-1-1983 to the appellant and appellant's letter No.WC:TOG:1:1150:82-83 dated 29-1-1983. Agreement was extended from 1-1-1984 to 31-3-1984 on the then existing terms and conditions as agreed in writing by respondent's letter No.G-9636 dated 28/29-12-1983 and appellant's letter No.WC:TOG:1:1318/83/84 dated 30-12-1983. Later the agreement was further extended from 1-4-1984 to 31-12-1984. Agreement was extended from 1-1-1984 to 31-3-1984 on the then existing terms and conditions as agreed in writing by respondent's letter No.G-9636 dated 28/29-12-1983 and appellant's letter No.WC:TOG:1:1318/83/84 dated 30-12-1983. Later the agreement was further extended from 1-4-1984 to 31-12-1984. There was another extension from 1-1-1985 to 31-3-1985. 2. Appellant stated that respondent had started raising debit notes on the appellant from 1983 onwards including for volumes of impure oxygen not supplied or compressed by the appellant. Appellant returned such debit notes without accepting them. On 3/6-9-1984 respondent sent letter No.G-5642 enclosing a statement showing an alleged accumulated balance of Rs.7,18,013.85 as the amount due from the appellant. Since the dispute arising out of the said statement dated 3/6-9-1984 making such unjustified demand by the respondent for an amount of Rs.7,18,013.85 could not be resolved by negotiations, appellant invoked the arbitration agreement as contained in Article 26 of the agreement dated 20-6-1975 by letter dated 12-9-1984. Sri K.P.P. Nambiar was appointed as the appellant's nominee and the respondent by letter dated 1/31-10-1984 nominated Sri K.V. Narayanamurti as Joint Arbitrator. 3. Appellant states the disputes between them were settled on the appellant paying an amount of Rs.18,952.90 by cheque dated 31-5-1985 and Rs.50,000 by allowing the security deposit of the appellant to be adjusted against the balance of Rs.50,000. Both the parties therefore did not find it necessary to pursue the matter for which arbitrators were appointed by the parties as early as 12-9-1984 and 31-10-1984. Appellant stated about 4 years later, on 9-8-1988 respondent, vide letter No. G-5790 sought to revive the disputes by calling upon the appellant to appoint an arbitrator in place of Mr. K.P.P. Nambiar alleging that he had neglected to act as Arbitrator. Appellant vide letter dated 22-8-1988 replied stating that the disputes referred to arbitration of Sri Narayanamurti and Sri Nambiar stood settled as early as 31-5-1985 by the appellant paying Rs.18,952.90 by cheque and by permitting adjustment of the appellant's security deposit of Rs.50,000 and that there was no relevance for the appointment of an arbitrator in place of Sri Nambiar as there were no subsisting disputes between the appellant and the respondent. 4. 4. Respondent however, filed an Arbitration O.P. No. 50 of 1989 before the Sub Court, Ernakulam under Sections 5 and 9 of the Arbitration Act which was allowed by the court and one Dharmapal, was appointed as Arbitrator in place of Sri K.P.P. Nambiar by Judgment dated 21-12-1993. Appellant took up the stand that the disputes which were not in existence as on 12-9-1984 could not form the subject-matter of the reference to P. Dharmapal and K V. Narayanamurti. Appellant also took up the stand that for resolving the entire dispute between the parties based on the demand of Rs.7,18,013.85 (Rs.2,93,781.66 claimed under clause 6 and Rs.4,24,232.19 claimed under clause 5) arbitrators were appointed and the matter stood settled between the parties. 5. Respondent however, after four years in its claim statement filed before the arbitrators raised the following claims: 1. Rs.7,26,464.87 under clause 6 towards 50% of the difference in price of oxygen gas between that fixed by Indian Oxygen Ltd. and Rs.6.33 per cubic metre. 2. Rs.11,55,079 towards interest @ 18% per annum on Rs.7,26,464.57 from 30-3-1985 to 31-1-1994. 3. Rs.7,04,023.26 towards price for the quantity of oxygen let out from November 1983 to March 1985 under Clause 5. 4. Rs.11, 19, 397 towards interest 64 18% per annum on Rs.7, 04, 023. 26 from 30-3-1985 to 31-1-1994. 5. Pendente lite and future interest and costs. Arbitrators however, taking note of various contentions raised by the parties passed award dated 19-9-1994 and submitted the same before the court below. Respondent filed a petition under sections 17, 28 and 29 of the Indian Arbitration Act for passing a judgment and decree in terms of the award before the Sub Court, Ernakulam. Appellant herein filed objections requesting the court to set aside the award. 6. Main point which was considered by the court below was whether the arbitrators have got authority to arbitrate on any dispute arose after 12-9-1984. Appellant contended that arbitrators could arbitrate upon matters upto 12-9-1984 on which date the respondent had invoked the arbitration clause by letter dated 12-9-1984 which was marked as Ext.R-1 before the arbitrator. In other words according to the appellant the arbitrators have no jurisdiction to arbitrate on any matter which arose after 12-9-1984 and as the arbitrators have adjudicated difference upto March 1985, the arbitrators exceeded authority and they have gone beyond the terms of reference. In other words according to the appellant the arbitrators have no jurisdiction to arbitrate on any matter which arose after 12-9-1984 and as the arbitrators have adjudicated difference upto March 1985, the arbitrators exceeded authority and they have gone beyond the terms of reference. Court below however, rejected the contention and made the award rule of court. Aggrieved by the same this appeal has been preferred. 7. Counsel appearing for the appellant reiterated the contentions raised before the court below. Counsel submitted, arbitrators had committed a serious error by awarding a sum of Rs.7,26,464.87 against claim No.1 and recording in paragraph 5(b) of the award that the period of the claim in this case was also November 1983 to March 1985. Counsel submitted that when arbitration agreement was invoked by the appellant on 12-9-1984 and when the arbitrators' appointments were completed by 31-10-1984, the disputes to be resolved had necessarily to be disputes existing as on 12-9-1984, especially in view of the fact that the invocation of the arbitration agreement by the appellant was as a sequel to the demand of Rs.7,18,013.85 made by the respondent. Further it was stated that there was no dispute involving an amount of Rs.7,26,464.87. Counsel submitted it was for the first time that a claim of Rs.7,26,464.87 was raised by the respondent and that too in the claim statement dated 9-2-1994. Counsel submitted, in the absence of any notice by the respondent to the appellant demanding Rs.7,26,464.87 and crystallisation of a dispute or difference arising out of such claim and which did not form part of the reference, the arbitrators have committed a grave error, in awarding that amount. In support of his contention, counsel placed reliance on the decision of the apex court in Inder Singh Rekhi v. Delhi Development Authority A.I.R. 1988 S.C. 1007, Santokh Singh Arora v. Union of India A.I.R. 1992 S.C. 1809, Union of India v. Santiram Ghosh (A.I.R. 1989 S.C. 402) and T. N. Electricity Board v. Bridge Tunnel Constructions (1997) 4 S.C.C. 121. 8. Counsel for the respondent on the other hand, supported the award as well as the order o f the court making the award rule of court. 8. Counsel for the respondent on the other hand, supported the award as well as the order o f the court making the award rule of court. Placing reliance on the decision of the apex court in M/s Shyama Charan Agarwala & Sons v. Union of India (A.I.R. 2002 S.C. 2659) counsel submitted that if any dispute has arisen while the agreement was in force the same can be resolved by the arbitrators. Counsel submitted the aim of arbitration is to settle all the disputes between the parties and to avoid further litigation. 9. We heard counsel on either side at length. We find it difficult to support the award as well as order passed by the court making it as rule of the court. Facts would clearly show that appellant had invoked the arbitration agreement dated 20-6-1975 by letter dated 12-9-1984 which led the appointment of two arbitrators. While the arbitration was on the appellant had paid an amount of Rs.18,952.90 by cheque dated 31-5-1985 and an amount of Rs. 50,000 by allowing the security deposit of the appellant to be adjusted against the balance of Rs. 50,000. By effecting those payments the disputes were settled and both the parties did not find it necessary to pursue the matter for which arbitrators were appointed by the parties as early as 12-9-1984 and 31-10-1984. Later after a period of four years, on 9-8-1988 respondent sought to revive the disputes by calling upon the appellant to appoint an arbitrator in the place of K.P.P. Nambiar. No claim was raised by respondent against the appellant for an amount of Rs.7,26,464.87 before the arbitrators were appointed. Respondent also could not produce any document to show that they had called upon the appellant to pay the above-mentioned amount and consequently there was no denial on the part of the appellant in paying that amount. No dispute was raised with regard to payment of Rs.7.26,464.87 before appointment of arbitrators. In fact it was not included in the terms of reference to the arbitrators. No dispute was raised with regard to payment of Rs.7.26,464.87 before appointment of arbitrators. In fact it was not included in the terms of reference to the arbitrators. In our view arbitrators had no authority or jurisdiction to adjudicate upon the claims relating to the period beyond July 1984 upto March 1985 since the arbitration agreement was invoked on 12-9-1984 for resolving disputes arising out of the claim of the respondent for the period upto July 1984 only, which is evident from letters dated 3/6-9-1984 (Ext.C-14), 12-9-1984 (Ext.C-15) and 1/31-10-1984 (Ext.C-16) produced before the arbitrators. In fact there was no dispute existed as on 12-9-1984 demanding an amount of Rs.7,26,464.87 which was never included in the terms of reference to the arbitrators. Therefore, arbitrators have no jurisdiction to decide that claim. 10. We may in this connection refer to the decision of the apex court in Inder Singh Rekhi's case (supra) wherein the apex court has taken the view that in order to be entitled to ask for a reference under section 20 of the Act there must not only be an entitlement to money but be a difference or a dispute must arise. A dispute arises where there is a claim and a denial and repudiation of the claim. The existence of dispute is essential for appointment of an arbitrator under section 8 or a reference under section 20 of the Act. There should be dispute and there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. In Santokh Singh Arora's case (supra) apex court held that inclusion of fresh items in statement of claims after reference of claims to arbitration cannot be permitted. Apex court in Tamil Nadu Electricity Board's case has taken the view that if the arbitrator decides a dispute which is beyond the scope of his reference or beyond the subject-matter of the reference or he makes the award disregarding the terms of reference or the arbitration agreement or terms of the contract, it would be a jurisdictional error beyond the scope of reference, he cannot clothe himself to decide conclusively that dispute as it is an error of jurisdiction which requires to be ultimately decided by the court. The decision of the apex court in Shyama Charan Agarwala's case, in our view is not applicable to the facts of this case. The decision of the apex court in Shyama Charan Agarwala's case, in our view is not applicable to the facts of this case. That was a case where the contractor had made a claim in respect of future period also and hence on facts it is distinguishable. 11. Under such circumstance we hold that the arbitrators have exceeded their jurisdiction in deciding claim No.1 with regard to Rs.7,26,464.87. We are therefore inclined to allow this appeal and set aside the award and the order of the court below making it as a rule of the court. We do so. No costs.