ORDER Arun Mishra, J. This appeal has been preferred u/s 39 of the Arbitration Act, 1940 aggrieved by judgment dated 16th January. 1992 passed by District Judge, Jabalpur, making the award rule of the Court and passing a decree in terms thereof. Respondent was given a contract to execute the work of excavation from R.D. 27750 to 27980 R.D, of Bargi Left Bank Main Canal in 1980. The contract was for a sum of Rs. 7.43 lacs. Completion period was 18 months. The work order was issued on 12-9-1980. Work was to be completed by 11-3-1982. The lender was below 6.82% UCSR (1977). The contractor completed work of 4.33 lacs within the stipulated period. He prayed for extension 3 times. Still the excavation work was not completed till 13-6-1983. The work of 6.15 lacs was done. Ultimately contract was rescinded by the Executive Engineer. An application u/s 21 of the Arbitration Act was filed for appointment of arbitrator, it was registered as Civil Suit No. 7-A/84. Prayer was made to file arbitration agreement, Respondents No. 1 to 3 be directed to expedite the appointment of arbitrator and in case of failure on their part to appoint the arbitrator, the Court may appoint an arbitrator. Application was contested. Claims made by the contractor was disputed. Ultimately as per order dated 24-12-1985 passed by District Judge, Jabalpur claim made by the contractor was referred. The arbitrator was directed to "settle the dispute and differences" in terms of clause in the agreement. Time of 4 months was fixed from the date he enters arbitration. V.M. Chitle, Arbitrator passed an award dated 10-11-1989 awarded a sum of Rs. 1,69,913/- along with interest at the rate of 12% per annum from the date of award or from the date of the passing of decree by the Court whichever was earlier. Several claims were raised by the contractor. The Respondent modified his claim for Rs. 12,93,449/- as under: (A) Loss of Labour Advance 10,000/- (B) (C) Claim for payment for work executed but not paid Claim for labour escalation s 5,38,779/- (i) during the period of contract 1,70,000/- (ii) during the extended period 1,62,137/- (D) Loss of anticipated profits 30,000/- (E) Claim for interest on value of work done 3,82,533/- Total 12,93.449/- The State of M.P. also denied the aforesaid claims and raised counter claims before the arbitrator for Rs. 1.50 lacs under the terms and conditions of the Contract Agreement Clause 4.3.3.1. State M. P. made the following claims: (i) Non-submission of labour Report for 70 defaults @ Rs. 50/- 3,500/- (ii) Non-employment of Graduate Engineer 35,000/- (iii) Forfeiture of E.M. of S.D. under Clause 4.3.3.1 30,000/- (iv) Liquidated damages sustained by the department for delay in execution 39,100/- (v) Penalty for throwing the spoil Haphazardly and not as per specification 10,000/- (vi) Loss of boulder buried by the Contractor 42,800/- (vii) Penalty for delayed completion of work as imposed by S. E. Memo No. 146/4 dated 30-1-1988 34,600/- Total 2,10,760/- Deduct Amount of final bill and additional deposit 60,682/- 1,50,078/- Arbitrator without considering the claims raised by the State and deciding on merit the counter claim raised by the State, has awarded the aforesaid sum of Rs. 1,69,913/-. Award passed by the arbitrator was filed before the District Judge for making it rule of the Court. State filed objections to set aside the award contending that work was done through debital agency, State had incurred the loss that was liable to be adjusted as against the claim raised by the contractor in the final bill. In spite of 3 extension of time work was not completed, thus, agreement was rightly terminated, penalty as per Clause 4.3.29.1 was also to be levied from the contractor as he had made himself liable for it. the claim of the State ought to have been looked into, escalation could not have been claimed as there was no provision. The wages prevailing time to time were required to be paid by the contractor. The learned District Judge as per impugned order held that there was no error apparent on the face of record in order to set aside the award, thus, decree has been passed in terms of the award making it rule of the Court; aggrieved thereby this appeal has been preferred by Irrigation Department of State of M.P. It was submitted by Shri Sudesh Verma. learned GA for Appellant, that the arbitrator erred in law in not adjusting the amount which was incurred by the State by getting the work done through debital agency, penalty clause also attracted, penalty was also required to be levied, without examining the counter claim raised an award has been passed by the arbitrator in favour of the contractor, thus, arbitrator has committed misconduct. There was reference of the dispute and differences as per Clause 4.3.29.1. As per the aforesaid clause the "disputes and differences" between the parties were required to be settled by arbitrator not only the claim of the contractor, thus, the arbitrator has adjudicated upon only the claim of the contractor without looking into the adjustment aspect, thus, the decision is not as per Clause 4.3.29.1 of the agreement. He has further submitted that there was no escalation clause and to pay the minimum wages as fixed time to time, was the duty of the contractor, in the absence of escalation clause and specific provision made in Clause 4.3.24.1 as to fair wages also contractor could not have claimed the amount of escalated wages, thus, arbitrator has committed misconduct; no reasons have been mentioned in the award, for this reason also the award passed is liable to be set aside. It was contended by Shri V.R. Rao, learned Senior Advocate with Shri S. Rao, Advocate for Respondent that reference made by the Court on an application u/s 20 of the Arbitration Act was limited to the claims raised by the contractor, thus, arbitrator could not have looked into the adjustment aspect raised by the State of M.P. The jurisdiction of arbitrator was confined to the disputes referred to him for adjudication, thus, arbitrator did not commit any illegality while rejecting the counter-claim raised by the State of M. P. There is difference between claim raised by the State of M.P. There is difference between fair wage and the minimum wages. Contractor had claimed the fair wages not difference of minimum wages, he was liable to pay the minimum wages, statutory minimum wages could not have been claimed, however, in the instant case fair wage was claimed. Contractor was supposed to take into consideration the fair wages prevailing at the time of execution of agreement not subsequent escalation of fair wages time to time made for which Department had insisted, thus, award in that regard is proper. It is not necessary to pass the reasoned award, hence, no illegality has been committed by the learned District Judge while making it rule of the Court and passing a decree in accordance therewith. First I come to the requirement of mentioning the reason in the award. It is not the case that agreement required mentioning the reason by the arbitrator. First I come to the requirement of mentioning the reason in the award. It is not the case that agreement required mentioning the reason by the arbitrator. In the absence of such a requirement in the arbitration agreement it cannot be said that award is bad in law on this ground. The Apex Court in Rajendra Construction Company Vs. Maharashtra Housing and Area Development Authority and Others, , has held that there is difference between the new and the old Act. Present award was passed under the old Act. The Apex Court has held thus: 22. In our opinion, the ratio in Chokhamal applies to the case on hand. The law laid down in that case has been reiterated by this Court in many cases. [See Tamil Nadu Electricity Board Vs. M/s. Bridge Tunnel Constructions and others, ; M/s. Kundale and Associates Vs. M/s. Konkan Hotels (P) Ltd., ; Build India Construction System Vs. Union of India (UOI), ]. In T.N. Electricity Board, this Court considered the old Act as well as new Act and particularly Sub-section (3) of Section 31 of the new Act which provides for recording of reasons by Arbitrator in support of the award unless (a) the parties have agreed that no reasons are to be given, or (b) the award is an arbitral award on agreed terms u/s 30. The Court noted that Parliament had expressed the legislative judgment that the award must state reasons upon which it is passed unless the parties have agreed otherwise or the award is on agreed terms. The present awards are not under the new Act but under the old Act. It is, therefore, obvious that they could not have been set aside by the High Court on the ground that they were not supported by reasons and were not speaking awards. Coming to the submission that arbitrator has committed an illegality in not considering the adjustment to be made out of the final bill on account of employment of debital agency, as the contracted work had to be completed through debital agency due to its non-completion within the extended period and contractor had made himself liable for payment of penalty as per Clause 4.3.29.1 of the agreement. The reference was made for deciding the disputes and the differences as contemplated under the agreement Clause 4.3.29.1. Same is quoted below: 4.3.29.1. The reference was made for deciding the disputes and the differences as contemplated under the agreement Clause 4.3.29.1. Same is quoted below: 4.3.29.1. Except where otherwise specified in the contract for contracts costing upto Rs. 50.00 lacs the decision of the Superintending Engineer of the circle for the time being in respect of all questions and disputes relating to the meaning of the specifications, designs, drawing and instructions hereinbefore mentioned and as to the quality of workmanship or material used on the work or as to any other question, claim right matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instructions, orders, or these conditions or otherwise concerning the work of execution or failure of execute the same whether arising during the progress of the work or after the completion or abandonment thereof, shall be final provided that the Superintening Engineer before giving the decision in the matter given an opportunity of being heard to the parties to the contract. If any party to the contract is dissatisfied with the final decision of the Superintending Engineer in respect of any matter, he may within 28 days after receiving notice of such decision give notice in writing to the Superintending Engineer requiring that the matter may be referred to arbitration and furnishing detailed particulars of the dispute of difference and specifying clearly the point as issue. If any party fails to give such notice within the period of 28 days, as stipulated above the decision of the Superintending Engineer already given shall be conclusive, final and binding on the parties. In case an arbitration is to be held it shall be affected by an arbitrator to be appointed by the State Government whose decision shall be conclusive, final and binding on all the parties. If the work under the contract has not been completed when a dispute is referred to arbitration, work shall continue during the arbitration proceeding if it is reasonably possible and no payment due to contractor should be withheld on account of arbitration proceedings unless it is required by the arbitrator. Note:- The arbitration to be appointed shall not be an Officer of Madhya Pradesh, Irrigation Department. Reading of the aforesaid clause makes it clear that decision of Superintending Engineer was final. After the decision of Superintending Engineer party dissatisfied was entitled to seek arbitration within 28 days. Note:- The arbitration to be appointed shall not be an Officer of Madhya Pradesh, Irrigation Department. Reading of the aforesaid clause makes it clear that decision of Superintending Engineer was final. After the decision of Superintending Engineer party dissatisfied was entitled to seek arbitration within 28 days. Claim was not decided as per Clause 4.3.29.1 of the agreement. For the delay in completion of work the stand of the State of M.P. was that contractor was responsible, thus, he was not entitled for the amount claimed by him. In the instant case arbitrator was appointed by the Court. The dispute or difference which the parties to an arbitration agreement agree to refer must be of justifiable issue triable civilly. A fair test is whether the difference can be compared lawfully by way of accord and satisfaction. In the instant case the claim raised by the contractor included loss of labour advance Rs. 10,000/-, loss on account of extra cost of labour due to delay in completion of work, claim of anticipated profit, loss on account of interest. It was necessary to go into the question who was responsible for the delay and the claim of the Appellant State with respect to the delay by contractor and thereby invocation of the penalty clause. It was necessary considering the nature of the claim raised by the contractor to go into the question whether termination of the contract was proper and as a consequence thereof it was necessary for the arbitrator to go into the question whether the debital agency was rightly employed by the State of M.P. and whether amount difference arising thereupon was rightly claimed by the State of M.P. without deciding into the other side of coin, the award of the claim of contractor by the arbitrator cannot be said to be justified at all. There was forfeiture of earnest money and security deposit also by State. There was forfeiture of earnest money and security deposit also by State. There was assertion to claim certain amount and there was denial of those facts and consequent liability, thus, it was necessary to the arbitrator to go into the stand of the State of M.P. before awarding the amount claimed by the contractor, there was assertion of a right by one party and repudiation thereof by another, there was invoking certain clauses of agreement, there was clearly a dispute that ought to have been considered within the purview of arbitration clause, as without negating the claim of the State it was not possible to award the amount claimed by contractor, thus, it was necessary to go into the claims raised by the State of M.P. The submission raised by Shri V.R. Rao. Senior Advocate for Respondent that in reply to the application u/s 20 the State did not raised the claim, as such it was not open to the arbitrator to go into the claim raised by the State in reply to the statement of claimant filed before the arbitrator. In this regard para 9 of the order passed by the District Judge is relevant. Same is quoted below: 9. The panel of 3 persons has been filed by the non-applicants through their Executive Engineer for appointment of an arbitrator to settle the dispute and differences. The applicant also has filed a panel of 4 persons for appointment of arbitrators but it was expressed by the learned Counsel for the applicant that any person from the panel filed by the non-applicants shall be agreeable to him for being appointed as arbitrator in this matter. I therefore appoint Shri B.V. Subbarao, Retired Chief Engineer (Irrigation), Quarter No. E2/101, Near Old Campion School, T. T. Nagar, Bhopal to act as an arbitrator in this matter. It is directed that the arbitrator so appointed shall make an award as regards the dispute and differences within 4 months from che date he enters upon the reference or such further extended time as may be allowed by the Court. It is directed that the arbitrator so appointed shall make an award as regards the dispute and differences within 4 months from che date he enters upon the reference or such further extended time as may be allowed by the Court. No doubt about it in para-8 of order of District Judge dated 24-12-1985 the claims raised by the contractor were mentioned, however, in para 9 the reference was to the disputes and differences between the parties; disputes and differences between the parties clearly covered in its ambit, the claims that may be raised by the State of M. P. and plea of adjustment, difference of final bill and certain claim raised by the contractor were integrally with the claims raised by the State. The Apex Court in Dilip Construction Company Vs. Hindustan Steel Ltd., has laid down that existence of a difference or dispute is an essential condition for the arbitrator's jurisdiction to act under an arbitration clause in an agreement; secondly the jurisdiction of an arbitrator depends not upon the existence of a claim or the accrual of a cause of action, but upon the existence of a dispute. A dispute implies an assertion of a right by one party and repudiation thereof by another; merely failure to pay is not a difference, difference is the basis of payment or the time or manner of payment. In The State of M.P. v. M/s Continental Construction (P) Ltd. New Delhi, 1978 MPLJ 474 : AIR 1978 NOC 134 (M.P.), the contractor had spent extra expenditure on labour charges, claim for compensation was dismissed by the Superintending Engineer, an application was filed by the contractor u/s 20 for appointment of arbitrator. It was held that an arbitration clause conferred authority on the arbitrator to assess damages. It was held that the Court was not concerned in dealing with an application u/s 20 to deal with the question whether the claim of a party to the arbitration agreement was barred by the limitation, it was to be considered and decided by arbitrator to whom the dispute was referred. In M/s Punj Sons Private Limited v. National Aluminium Company Ltd. and Anr. 1998 Arb.W.L.J. 306, it has been held that in case counter-claim put forward by the owner intrinsically connected with claim of the contractor counter-claim cannot be brushed aside in the absence of mandatory prohibition in the agreement. In M/s Punj Sons Private Limited v. National Aluminium Company Ltd. and Anr. 1998 Arb.W.L.J. 306, it has been held that in case counter-claim put forward by the owner intrinsically connected with claim of the contractor counter-claim cannot be brushed aside in the absence of mandatory prohibition in the agreement. Repudiation of claim has to be considered by the conduct of the parties. The question as to the arbitrability of the claim is a jurisdictional issue. In Renusagar Power Co. Ltd. Vs. General Electric Company and Another, , the Apex Court has laid down that expressions "Arising out of or "in respect of contract are of widest amplitude, thus, disputes and differences between the parties arising out of contract ought to have been decided by the arbitrator within the Clause 4.3.2.9.1. Thus, arbitrator has committed an illegality, as such award passed is liable to be set aside. Coming to the submission as to the escalation, the question raised is that the escalation was on account of minimum wages not of the fair wages, the arbitrator has awarded the amount treating it as fair wages whereas Shri Sudesh Verma. OA has claimed that it was on account of statutory minimum wages fixed time to time, thus, contractor was not entitled. As to fair and minimum wages decision of the Apex Court in M/s Tarapore and Co. v. State of M.P., 1994 A.T.L.R. 286, is clear. The Apex Court has laid down distinction between minimum wages and fair wages, minimum wages are statutory and cannot be claimed under the escalated cost as contractor is supposed to know the statutory-obligation and with respect to fair wages, when fair wage has been paid without provision in the agreement the Apex Court held that it was permissible to allow a claim on account of fair wages, the claim was allowed by Apex Court only to the extent of difference of minimum wages and fair wages prevailing time to time and case was remitted back to examine the aforesaid question of difference. Since the award has been set aside on other grounds, let arbitrator look into this aspect also. Since the award has been set aside on other grounds, let arbitrator look into this aspect also. Award has been set aside on other grounds and case is remitted back to the arbitrator to consider the claim raised by the State of M.P. and to decide the claims of the contractor afresh, this aspect of difference shall also be considered by Arbitrator as observed by the Apex Court. Resultantly, appeal is partly allowed. judgment and decree passed by the Court below is set aside. The award passed by the arbitrator is also set aside. Case is remitted back to the arbitrator to pass fresh award in accordance with the direction made in this order. No order as to costs. Appeal partly allowed. Final Result : Allowed