Case: Haryana Telecom Ltd Vs. Sterlite Industries (India) Ltd

2. The Single Judge dismissed the application and the same was upheld by the Division Bench. While dismissing the appeal the High Court referred to similar cases relating to applications which have been filed under the provisions of the Indian Arbitration Act, 1940 where the consistent view of the High Courts was that the question regarding the winding up of a company could not be referred to an arbitrator.

Reasoning: n (1) of Section 8 provides that where the judicial authority before whom an action is brought in a matter, will refer the parties to arbitration the said matter in accordance with the arbitration agreement. This, however, postulates, in our opinion, that what can be referred to the arbitrator is only that dispute or matter which the arbitrator is competent or empowered to decide5. The claim in a petition for winding up is not for money. The petition filed under the Companies Act would be to the effect, in a matter like this, that the company has become commercially insolvent and, therefore, should be wound up. The power to order winding up of a company is contained under the Companies Act and is conferred on the Court. An arbitrator, notwithstanding any agreement between the parties, would have no jurisdiction to order winding up of a company. The matter which is pending before the High Court in which the application was filed by the petitioner herein was relating to winding up of the company. That could obviously not be referred to the arbitration and, therefore, the High Court, in our opinion was right in rejecting the application.