Winding-up petition and arbitration clause: statutory winding-up rights were not stayed where no bona fide dispute was shown.

A winding-up petition based on an alleged admitted debt was held not to be stayed under section 34 of the Arbitration Act, 1940 merely because the underlying agreement contained a wide arbitration clause. The court treated the right to seek winding up as a statutory right, distinct from a contractual claim capable of arbitration. It also noted that no bona fide dispute or arbitration-referable controversy was shown in relation to repayment of the admitted trade deposit balance. Because the petition was not a proceeding in respect of a matter agreed to be referred to arbitration, section 34 could not be used to stay the company proceeding.

---

---

Issues: Whether a company petition for winding up, founded on an alleged admitted debt, could be stayed under section 34 of the Arbitration Act, 1940 on the basis of an arbitration clause in the agreement between the parties.

Analysis: The arbitration clause was wide enough to cover disputes arising out of the contract, but the relief sought in the company petition was not a contractual claim. The right to apply for winding up was treated as a statutory right and not a contractual matter. The Court found that the applicant had not shown any bona fide dispute regarding repayment of the admitted balance of trade deposit, nor any particulars of a dispute referable to arbitration. Since the winding up proceeding was not a proceeding in respect of a matter agreed to be referred, section 34 could not be invoked to stay it.

Conclusion: The application for stay was not maintainable and was dismissed.

---