Arbitration clause cannot stay a winding-up petition where statutory company court jurisdiction falls outside the agreement.

A winding-up petition under the Companies Act, 1956 is a distinct statutory proceeding and cannot be treated as a money-recovery dispute referable to arbitration under a partnership deed. The arbitration clause covered disputes about construction of the deed, accounts, profits and losses, and rights and liabilities on dissolution, but it did not extend to the company court's jurisdiction to decide whether winding up should be ordered on statutory grounds. As the relief sought in the company petition fell outside the arbitration clause, section 34 of the Arbitration Act, 1940 could not be invoked to stay the winding-up proceedings.

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Issues: Whether a prayer under section 34 of the Arbitration Act, 1940, could be granted to stay a winding-up petition filed under sections 433, 434, 439, 582 and 583 of the Companies Act, 1956 and refer the dispute to arbitration.

Analysis: The arbitration clause in the partnership deed related to disputes between partners concerning construction of the deed, accounts, profits and losses, and rights and liabilities under the deed of dissolution. The winding-up petition, however, invoked the distinct statutory jurisdiction of the company court to determine whether the company should be wound up on the grounds available under the Companies Act. Proceedings for winding up are not proceedings for recovery of money and cannot be equated with disputes referable to arbitration under the partnership deed. Since the relief claimed in the company petition was outside the scope of the arbitration clause, section 34 of the Arbitration Act, 1940 could not be used to stay the winding-up proceedings.

Conclusion: The application for stay and reference to arbitration was rejected.

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