Arbitration clause does not bar winding up petitions based on insolvency where dispute is not under the contract.

A company petition for winding up predicated on inability to pay debts does not fall within a contractual arbitration clause limited to disputes arising out of the contract; the arbitration clause's preclusion of proceedings pending an award cannot convert an insolvency-based winding up claim into a referable contractual dispute. Because the petition's core question is the company's insolvency rather than a contractual dispute, it is not a matter agreed to be referred to arbitration and the sought stay under the Arbitration Act is refused.

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Issues: Whether a company petition under section 433(e) of the Companies Act seeking winding up on the ground of inability to pay debts falls within an arbitration clause in the parties' contract and whether the petition should be stayed under section 34 of the Arbitration Act.

Analysis: Clause 26 of the contract provided for arbitration of disputes arising out of or under the contract and contained a condition that no party shall bring legal proceedings until an award is obtained. Section 34 of the Arbitration Act permits stay of legal proceedings only where the proceedings are in respect of a matter agreed to be referred. The company petition before the Court sought winding up on the ground that the company was unable to pay its debts and did not seek relief arising out of or under the contract; the petition's core question is the company's insolvency/ability to pay rather than a dispute under the contractual terms. Consequently, the subject-matter of the company petition is not a matter agreed to be referred to arbitration and therefore does not qualify for a stay under section 34.

Conclusion: In favour of Respondent. The application for stay under section 34 of the Arbitration Act is dismissed and the company petition is not liable to be stayed as a matter agreed to be referred to arbitration.

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