Arbitration clause does not automatically bar winding up proceedings where no bona fide debt dispute exists.

Section 8 of the Arbitration and Conciliation Act, 1996 applies only where the proceeding before the court is itself a matter covered by the arbitration agreement. A winding up petition under the Companies Act, 1956 invokes the company court's special jurisdiction and is not displaced merely because the underlying contract contains an arbitration clause. Reference to arbitration is warranted only if there is a bona fide dispute requiring arbitral determination. Where the company has repeatedly acknowledged liability and shows no real dispute as to the debt, the winding up petition need not be stayed or referred to arbitration.

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Issues: Whether a winding up petition under the Companies Act could be referred to arbitration or stayed under section 8 of the Arbitration and Conciliation Act, 1996 merely because the contract contained an arbitration clause, and whether the absence of a bona fide dispute concerning the debt justified refusal of such reference.

Analysis: Section 8 of the Arbitration and Conciliation Act, 1996 applies only where the action before the judicial authority is itself a matter that is the subject of an arbitration agreement. A winding up petition under sections 433, 434 and 439 of the Companies Act, 1956 is not a simple adjudication of a private debt dispute but invokes the special jurisdiction of the company court. The existence of an arbitration clause does not, by itself, oust that jurisdiction. Reference to arbitration can be justified only where there is a bona fide dispute requiring determination by an arbitrator. On the facts, the company repeatedly acknowledged liability and did not show any real dispute regarding the amount due.

Conclusion: Section 8 did not require reference of the winding up proceedings to arbitration, and the company court was right in refusing to dismiss or stay the petition on that basis.

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