Winding-up stay on enforcement of arbitral awards without company court leave bars post-award execution against liquidation assets.

Once a winding-up petition is presented, legal proceedings continued against the company after the winding-up order without leave of the company court, including arbitration-related execution, are void and unenforceable against the company in liquidation. The award itself was not disturbed on merits, but post-award enforcement could not proceed because section 446(1) of the Companies Act, 1956 requires leave for such proceedings and the official liquidator is entitled to take charge of the assets. A third party's challenge was not governed by section 34(3) of the Arbitration and Conciliation Act, 1996, because it was not a party-arbitration challenge but one based on the company court's jurisdiction.

---

---

Issues: (i) Whether arbitral proceedings and the resulting award, initiated during the pendency of winding-up proceedings without leave of the company court, could be acted upon or enforced against the company in liquidation. (ii) Whether an application by a third party to challenge such award was barred by limitation under the Arbitration and Conciliation Act, 1996.

Issue (i): Whether arbitral proceedings and the resulting award, initiated during the pendency of winding-up proceedings without leave of the company court, could be acted upon or enforced against the company in liquidation.

Analysis: Section 441(2) of the Companies Act, 1956 treats winding up by court as commencing from the date of presentation of the winding-up petition. Section 446(1) bars the commencement or continuation of suit or other legal proceedings against the company after the winding-up order, except with leave of the court, and the expression extends to arbitration and execution proceedings. The award was made before the winding-up order, but further execution steps were pursued without leave after the winding-up order, and the company court alone had power to grant such leave. Once the winding-up order was made, the official liquidator became entitled to take charge of the company's assets. In the absence of leave, the post-award execution proceedings could not be sustained.

Conclusion: The arbitral award itself was not set aside on merits, but all further proceedings in execution of the award were held void and unenforceable against the company in liquidation.

Issue (ii): Whether an application by a third party to challenge such award was barred by limitation under the Arbitration and Conciliation Act, 1996.

Analysis: The limitation under section 34(3) applies to an application by a party to the arbitration seeking to set aside an award under the Arbitration and Conciliation Act, 1996. The applicant before the company court was not invoking that remedy as a party to the arbitration; the challenge was founded on the company court's jurisdiction under the Companies Act to declare proceedings void for want of leave. That challenge was therefore not controlled by the limitation period in section 34(3).

Conclusion: The limitation objection was rejected.

Final Conclusion: The company court's protective jurisdiction prevailed for post-winding-up legal proceedings, the liquidator was entitled to take charge of the assets, and the award could not be enforced through execution without leave of the company court.

Ratio Decidendi: Once a winding-up petition is presented, legal proceedings against the company that are continued after the winding-up order without leave of the company court, including arbitration-related execution proceedings, are void and unenforceable against the company in liquidation.

---