Winding-up petition for inability to pay debts is not stayed by arbitration clause where the issue is statutory, not contractual.

A winding-up petition alleging inability to pay debts was not a proceeding in respect of a matter agreed to be referred to arbitration, even though the contract contained a wide arbitration clause. Section 34 of the Arbitration Act applies only where the legal proceeding concerns arbitrable contractual disputes; a statutory winding-up issue under the Companies Act is outside that scope. The stay application was therefore not maintainable and was rightly dismissed.

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Issues: Whether a winding-up petition under the Companies Act could be stayed under section 34 of the Arbitration Act on the basis of an arbitration clause covering disputes arising out of or under the contract.

Analysis: The arbitration clause was wide enough to cover contractual disputes, but the winding-up petition did not seek relief in respect of any contractual claim. The immediate question in the petition was whether the company was unable to pay its debts, which was a statutory issue under the Companies Act and not a matter agreed to be referred to arbitration. Section 34 applies only where the legal proceeding is in respect of a matter agreed to be referred, and a petition for winding up on inability to pay debts was not such a proceeding.

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

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