👉 More and more contracts are now incorporating two different categories of ‘excepted matters’ in the Arbitration clause.

👉 The first category of ‘Excepted Matters’ clauses is those wherein as per the clause the concerned authority’s decision on the issue/dispute raised by either of the parties is final and binding upon them.

👉 The second category is the more common containing a proviso that the claims are not capable of being raised or adjudged by employing the language “shall not be payable”, “no claim whatsoever will be entertained by the Authority”, or “no claim will/shall be entertained”.

Hon’ble Supreme Court enumerated the same in the following cases:

First Category:

👉 The Division Bench of the Hon’ble Supreme Court in the case of Vishwanath Sood v. Union of India (AIR 1989 SC 952(SC) construed the expression ‘The Superintending Engineer’s decision shall be final’ in clause 2 of the conditions of contract in respect of quantification of claims stating that reference is made only to finality by a specified official in the department; in other words, this clause only constituted a declaration that no officer in the department can determine the quantification and that the quantum of compensation levied by the Superintending Engineer shall not be changed without the approval of the Government. In view of the same, the Court opined that the phrase ‘Superintending Engineer’s decision shall be final’ used in clause 2 meant that certain types of disputes shall be left for adjudication by the administrative authorities concerned.

Second Category :

👉 General Manager Northern Railways & Anr. v. Sarvesh Chopra 2002 AIR 1272 – SC held that a bare reading of Clause 63 (which was the Dispute Resolution clause) showed that it consisted of three parts. The Court observed that one of the three parts was a proviso, having an overriding effect on the earlier parts of the clause, that all ‘excepted matters’ shall stand specifically excluded from the purview of the Arbitration Clause and hence shall not be referred to arbitration. The Court went on to observe that the source of controversy is the expression “matters for which provision has been made in any clauses of the Special Conditions of the contract shall be deemed as ‘excepted matters’ and decisions thereon shall be final and binding on the contractor.”

👉 The Apex Court held that those claims which are covered by several clauses of the Special Conditions of the Contract can be categorized into two. One category is of such claims which are just not leviable or entertainable. Each of these clauses provides for such claims being not capable of being raised or adjudged by employing such phraseology as “shall not be payable”, “no claim whatsoever will be entertained by the Railway”, or “no claim will/shall be entertained”. These are ‘no claim’, ‘no damage’, or ‘no liability’ clauses.