V. K. GUPTA, J. ( 1 ) THIS Appeal is directed against the judgment dated 2nd February, 1994 in Company Petition No. 191 of 1983 of a learned Single Judge of this Court whereby the application filed under section 34 of the Arbitration Act 1940 by the Company-Respondent in this Appeal in a winding up petition filed under sections 433, 434 and 439 of the Companies Act was allowed and the learned Single Judge accordingly stayed the winding up proceedings in the winding up petition and permitted the petitioning creditor in the winding up application to take appropriate proceedings in Arbitration for recovery of its dues. ( 2 ) THE Appellant M/s. Ram Kumar Radheshyam Kedia had filed a petition under sections 433, 434 and 439 of the Companies Act against the Respondent-Company M/s. Subrata Sasmal and Company Pvt. Ltd. for winding up of this Company alleging that one Tata Hitachi excavator, Model UM 0832lc Hydraulic Back HOE with 0. 91 Cu. Mtr Back Hoe Bucket had been let on hire to the Company and the Company agreed to take on hire the aforesaid machine complete with all accessories on the terms and conditions mentioned in the winding up application, including those relating to the payment of an amount of Rs. 6,19,418. 92 as initial payment by way of hire charges. An agreement is stated to have been executed on 1st February 1990 between the parties. It is the case of the Appellant that the Company paid Rs. 6,19,418. 92p. At the time of execution of the aforesaid Agreement whereupon the possession of the machine/vehicle was made over by and on behalf of the Appellants to the Respondent-Company. It is also alleged that first two sixth monthly hires and/or instalments charges were paid by the Respondent Company, but thereafter the Respondent Company neglected to pay to the Appellant hire charges. Details of the payments and the non-payments have been given in the winding up application. The following reliefs were claimed by the Appellant in the winding up application: -"the said Company being M/s. Subrata Sasmal Co. Details of the payments and the non-payments have been given in the winding up application. The following reliefs were claimed by the Appellant in the winding up application: -"the said Company being M/s. Subrata Sasmal Co. Pvt. Ltd. be wound up by this Hon'ble Court under the provision of Companies Act, 1956; Cost of the incidental to this application be paid to your petitioner out of the assets of the said Company; Such further or other order or orders be made and/or directions be given as your Lordship may be deem fit and proper. " ( 3 ) AFTER the Respondent Company was served a Notice of the Winding up application from the Court, it filed its affidavit-in-Opposition to the winding up application through one Subrata Sasmal, claiming to be Director of the Respondent Company. Even though in this affidavit-in-Opposition a reference was made to the existence of Arbitration Agreement between the parties allegedly covering the subject matter of disputes between the parties, the affidavit-in-Opposition went on to deal with all material questions and facts raised in the winding up application and appropriately attempted to reply various averments contained in the same. This affidavit-in-Opposition was affirmed on 21st July 1993. This was followed later on by the Respondent-Company by filing an application under section 34 of the Arbitration Act. It was in this application that the Order under Appeal was passed by the learned Single Judge. ( 4 ) MR. Jayanta Mitra, learned Senior Advocate appearing for the appellants has assailed the order of the learned single Judge on the ground that the learned Single Judge has wrongly held that a winding up application filed under sections 433, 434 and 439 of the Companies Act is per se liable to be stayed on an application made under section 34 of the Arbitration Act merely on the ground that an Arbitration Agreement exists between a petitioning creditor and the respondent-Company with respect to the subject matter of some inter se disputes between both of them. According to Mr. Mitra the learned Single Judge was incorrect in deciding this question because a winding up application is different and distinct from an arbitration dispute between the parties. According to Mr. Mitra the learned Single Judge was incorrect in deciding this question because a winding up application is different and distinct from an arbitration dispute between the parties. The jurisdiction to wind up a Company is a special jurisdiction conferred on the High Courts under the Companies Act and the reliefs claimed in a winding up application are such which do not fall within the jurisdiction of an Arbitrator under an Arbitration Agreement to adjudicate inter se disputes between two contesting parties. An order passed in a winding up application by the High Court is an order in rem and the winding up proceedings assume a representative character. ( 5 ) IN the latest judgment of the Supreme Court in the case of Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. reported in JT 1999 (4) SC 545 Their Lordships have held as under: -"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 petitioner herein filed the application 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. " ( 6 ) IN the case of Goetze India Ltd. v. Pure Drinks (New Delhi) Ltd. (No. 1) reported in Company Cases 340, a Division Bench of Punjab and Haryana High Court while dealing with the jurisdiction of a winding up the court with reference to stay of winding up proceedings in an application under section 34 of the Arbitration Act held as under: -"the right to get the dispute decided by a private forum of its own choice cannot by itself be used by the company as a shield for winding up nor can the fact of there being an arbitration clause between the petitioner and the respondent-company by itself be termed as a bona fide dispute. The substratum of the thought for staying the winding-up proceedings during the pendency of the arbitration proceedings is faught with grave consequences. There is no doubt that the court in the winding up proceedings does not decide the existence or validity of an arbitration agreement nor proceed to enforce it or modify it in any manner. The winding up, court can and may take a prima facie view of the matter and nothing more. Invoking of the arbitration clause cannot be used as a roost to abuse the proceedings. The winding up proceedings cannot be allowed to be used as an instrument of illegitimate pressure as observed above but at the same time the creditors cannot be compelled to the ordinary civil remedy of a suit which undoubtedly is not only costly and slow but often results in an illusionary decree which may be a beginning of the problems. There are no provisions ousting the jurisdiction of the company court with certainty in deciding the winding-up petition. The company court is clothed with all the jurisdiction. A court can go behind the decree. Mere counter-claims or arbitration clause does not by itself lead to mechanical or automatic dismissal of the petition. No provisions have been pointed out by which the right to file a winding up petition statutorily conferred can be obliterated by an agreement between the parties. The arbitration clause in itself is not a litmus test for bringing the winding-up proceedings to a halt. Mere arbitration agreement by itself is not sufficient to stay the winding-up proceedings. " ( 7 ) THE Division Bench went on to observe: -"it will be too much, rather the very object of the provisions for winding up would be frustrated if the proceedings for winding up are stayed mechanically under section 34 of the Indian Arbitration Act, when the application for winding up is still not heard and the court has not yet gone into to find out whether the debt is due and is payable. Mere arbitration clause itself is no justification for the stay of proceedings nor is it a complete defence in itself. The provisions of the company law being special provisions will override the general provisions. Since the arbitrator cannot grant a relief in a winding-up petition, it would be a futile exercise to try the lis piecemeal. Mere arbitration clause itself is no justification for the stay of proceedings nor is it a complete defence in itself. The provisions of the company law being special provisions will override the general provisions. Since the arbitrator cannot grant a relief in a winding-up petition, it would be a futile exercise to try the lis piecemeal. " ( 8 ) EARLIER in the judgment while dealing with various provisions of the Companies Act, the Division Bench held as under: -"from a skeletal scheme of the Act, summarised and referred to in brevity above and what has been expressly provided, the brief design from short exordium appears to be that winding up of a company is provided by specific and precise legislation. It is a case of insolvency of a corporate existence and I can safely venture to state that it can be equated with the bankruptcy of a person particularly when the company is sought to be would up through the agency of the court for its inability to pay its debts or where it is found to be just and equitable that the company should be wound up. At this stage, it may be noticed that section 434 defines the deeming provisions when the company would be deemed to be unable to pay its debts. I may further venture to state that the scheme and provisions of the Act obviously ensure that winding up of the company is for the benefit of all concerned with the affairs of the company particularly the creditors, shareholders and contributories, etc. Inspite of the fact that winding up might have been sought by a single creditor or a person enumerated in section 439 of the Act, it would be reasonable to infer that a petition for winding up would be deemed to be a representative action and is in public interest. It is a collective procedure. It is an accepted mechanism or methodology provided by the Act by which assets of the company are recovered, liabilities met, debts paid and if afterwards something is left, the same is distributed amongst the members. It is a collective procedure. It is an accepted mechanism or methodology provided by the Act by which assets of the company are recovered, liabilities met, debts paid and if afterwards something is left, the same is distributed amongst the members. In my considered view the predominant purpose of ordering the winding up of a company has deep roots in public policy and is a step not to permit the company to run its day to day business when it is unable to meet its commitments or has become sick or has meddled in its affairs to such an extent that it would not be in the interest of the public or the persons interested in it to permit the company to continue functioning. The winding up proceedings cannot be treated as an alternative remedy of a suit for recovery or as execution proceedings. It may be a legitimate means for seeking enforcement of payment of a debt but it cannot be used as a lever to exercise pressure on the company to pay off the debts to a creditor. It cannot be allowed to become an illegitimate pressure in spite of the fact that the creditor cannot be compelled to avail of his ordinary remedy of the recovery of his debts. An order passed in a winding up petition is an order in rem. As a necessary and natural consequence of the same, the court attains the custody and control of the assets of the company, which are released and distributed in the manner provided by the Act. The court is bound to keep in view the public interest. Primarily, the court is concerned not only with the interest of the petitioner or the creditors but it has to keep in view the interest of the company's shareholders, contributories, etc. , also. It is said that winding up is only a process of expediting the resultant effect of a creditor, which is pari passu and a collective procedure for the benefit of all (sic.)" ( 9 ) IN the case of S. N. Enterprises Pvt. Ltd. And Sanpaolo Hambro Nicco Finance Ltd. Shymal Kumar Sen, J. held as under: -"in my view, the proceeding for winding up of company comes within special jurisdiction which has been conferred only on the High Court. In fact the proceedings under the provisions of sections 433 and 434 read with section 439 of the Companies Act, 1956 are completely of a different jurisdiction than the one regarding which remedy can be sought by way of arbitration under the clause in question. It is fallacious to conceive that the proceedings for winding up under the provisions of sections 433, 434 and 349 of the Companies Act are by way of recovery of amount touching the various provisions of the scheme. Under the provisions of section 433 of the Companies Act, the Legislature codified the circumstances/grounds on which a company may be ordered to be wound up by the Court. Section 434 provides as to under what circumstances a Company may be deemed to be unable to pay its debts, whereas section 439 makes provision for an application for winding up. " ( 10 ) WHILE dealing with the specific question relating to the effect of section 34 of the Arbitration Act it was held as under: -"i respectfully agree with the view taken by the learned Judge of Madras High Court. In my view, the proceedings for winding up under section 434 of the Companies Act are of completely different nature than the one under which remedy or relief can be sought by arbitration. It is well settled that the Company Court is not a debt collecting Court and the claim for winding up is not meant only for payment in respect of the claim of the applicant or for adjudication of the dispute. Nature of proceeding for winding up ultimately result in liquidation of the company in solving taking into account, claims of different creditors as provided under the Companies Act. In any event, the proceedings for winding up under Companies Act cannot be said to be proceedings for winding up for recovery of the amount by way of adjudication of the dispute relating to the claim of the Company. So none of the disputes covered under the arbitration clause can fall within the purview or scope of the winding up proceedings. " ( 11 ) IN the case of In re: Thakur Paper Mills reported in AIR 1968 Patna 289 Untwalia, J (as he then was) held as under: -"i do not propose to dilate on this question any further as it is not necessary to do so. " ( 11 ) IN the case of In re: Thakur Paper Mills reported in AIR 1968 Patna 289 Untwalia, J (as he then was) held as under: -"i do not propose to dilate on this question any further as it is not necessary to do so. I may, however indicate that if the dispute raised by the Company being not bona fide, would not have stood in the way of the success of the application for winding up the arbitration clause contained in the distributorship agreement would have met the same fate. If the dispute is not bona fide, there was nothing for the arbitrator to arbitrate, and that clause by itself, as I have expressed the view in my order dated 17. 7. 67 would not have attracted any bar to the maintainability of this application because then there would have been nothing left for the arbitrator to arbitrate or the winding up proceeding could not be referred to arbitration. Learned counsel for the company stressed the argument that there was no clear admission of liability by the Company to pay the debt to the partnership firm and that being so, the dispute was there although the details of the dispute were not there. I am unable to follow this argument, in my opinion, the liability of the Company to refund the balance of the security money was not disputed on any ground whatsoever at any stage of the correspondence as is evident from the letters placed before me. It was not a case of lack of details in support of the dispute was ever raised by the Company prior to the one, which was raised in the affidavit in opposition. I may, however, conclude this point by stating that if the petitioner would not have failed on the first ground I am not quite sure as to whether he would have failed on the second ground of lack of statement of relevant facts and sufficient materials in his application for winding up, although as I have indicated above, in all probability on this ground alone he should not have failed. " ( 12 ) WE respectfully agree with the view taken by Shymal Kumar Sen, J in S. N. Enterprise Pvt. Ltd. , Calcutta Law Times 1997 (2) HC 60 (supra) and hold that the learned Single Judge was not correct in his decision that an application under section 34 of the Arbitration Act by itself would be a reason and cause for stay of an application for winding up of a Company under section 433, 434 and 439 of the Companies Act. If in answer to such an application filed by a petitioning creditor, the respondent company comes forth and raises a bonafide dispute and brings to the notice of the Court the existence of an Arbitration Agreement concerning such dispute and if the Court is satisfied and convinced that a bonafide dispute does exist between the petitioning creditor and the respondent-Company and that such dispute forms the subject matter of, and is covered, by an arbitration agreement, in exercise of the discretion vested under section 34 of the Arbitration Act, the Court can stay the winding up proceedings and send the parties to take recourse to arbitration proceedings. This does not however mean that merely because the party filed an application under section 34 of the Arbitration Act and shows to the Court that an arbitration agreement exists between the parties, the Court without considering whether the respondent-Company has established any bonafide dispute between itself and the petitioning creditor, and without examining the merits of such dispute, cannot order the stay of winding up proceedings and send the parties to take recourse to arbitration. The learned Single Judge therefore was not correct in his view and he by mis-interpretation of the provisions of law contained both in section 34 of the Arbitration Act, 1940 and sections 433, 434 and 439 of the Companies Act and by wrongly construing the scope of winding up proceedings stayed the same and sent the parties to arbitration. ( 13 ) WE have no doubt that the order passed by the learned Single Judge was within jurisdiction. We have therefore no hesitation in setting aside the order. ( 14 ) THE appeal accordingly is allowed. The order under Appeal is set aside. The winding up application is revived to its original position. ( 13 ) WE have no doubt that the order passed by the learned Single Judge was within jurisdiction. We have therefore no hesitation in setting aside the order. ( 14 ) THE appeal accordingly is allowed. The order under Appeal is set aside. The winding up application is revived to its original position. ( 15 ) BASED upon our aforesaid observations we leave it open to the Company Judge to examine, consider and decide whether an Arbitration Agreement exists between the parties, and if so, whether the Respondent-Company has been able to show and establish a bonafide dispute between itself and the appellant-petitioning creditor which is of such a nature that the winding up proceedings are liable to be stayed and to pass such orders thereupon as, in the light of the observations made hereinabove would be deemed just and appropriate in the facts and circumstances of the case. While considering such question and the scope of the application under section 34 of the Arbitration Act 1940 in the light of the aforesaid observations the learned Company Judge shall also take into consideration the objections of the Appellant-petitioning creditor with regard to the maintain-ability of the application under section 34 of the Arbitration Act 1940 on the ground as advanced by the appellant that the respondent-Company had taken steps in the proceedings in the winding up application by filing its affidavit-in-opposition to the same before filing the Application under section 34 of the Arbitration Act 1940 and had thus forfeited its right, of asking for the stay of winding up proceedings on the ground that it had taken steps in these proceedings. Since we have not gone into these questions raised at all, we refrain from expressing any views on them. Appeal accordingly allowed. No order as to costs. P. K. Sen, J.-I agree. Later: let a Xerox copy of this judgment, duly countersigned by the Assistant Registrar of this Court, be given to the parties upon their undertaking to apply for and obtain certified copy of the same upon usual undertaking. Appeal allowed.