P. VISHWANATHA SHETTY, J. ( 1 ) IN this application filed under Section 446 (1) of the Companies Act, 1956 (hereinafter referred to as "the act"), the applicant has prayed for leave to proceed with the arbitration proceedings pending before the arbitrator. ( 2 ) FEW facts which may be relevant for the disposal of this application, may be stated as hereunder: (a) the applicant, in this application, is a company registered under the Provisions of the act and it claims that it is engaged in the manufacture and production of pure and blended woollen fabrics. According to the assertion made in the application, the applicant-company had placed orders with the respondent-company on 12th June, 1986 and 2nd December, 1987 for supply of 32 numbers of tfo twister machines; and towards the value of the said 32 twisted machines, the applicant-company had paid an advance of Rs. 11,60,808-00 on 31st July, 1986 and another sum of Rs. 24,89,448-00 on 3rd December, 1987. It is the further case of the applicant that out of the orders placed for supply of 32 machines in respect of which the amounts were advanced, as stated earlier, the respondent-company had supplied only 28 tfo (two for one) twister machines valued at Rs. 33,44,067-65. It is also the case of the applicant that the respondent had made a demand for increased payment for supply of 4 machines on the ground of escalation of price; and since, as per the terms of the contract, the applicant-company was not liable to pay the escalated price, the applicant-company refused to pay the price; and consequently, the applicant-company was constrained to cancel the orders for 4 machines and demanded refund a sum of Rs. 3,06,188-00 from the respondent-company with interest at 24 per cent, which was paid to the respondent-company as advance; and since the respondent-company refused to refund the said amount and the dispute having arisen between the parties, in terms of the contract dated 2nd December, 1987 entered into between the parties, the dispute was referred by the applicant-company to upper India chamber of commerce, kanpur, and Sri b. r. mansingh, ll. m. (london), barrister-at-law, 15/96, civil lines, kanpur, was appointed as the sole arbitrator; and the proceedings are now pending before the arbitrator. Therefore, it is the case of the applicant-company that the applicant has made a claim in all for Rs. m. (london), barrister-at-law, 15/96, civil lines, kanpur, was appointed as the sole arbitrator; and the proceedings are now pending before the arbitrator. Therefore, it is the case of the applicant-company that the applicant has made a claim in all for Rs. 11,88,890-00 along with interest at 24 per cent before the sole arbitrator; and since the proceedings are pending before the arbitrator and has made substantial progress, it would be in the interest of Justice to permit the applicant to proceed with the arbitration proceedings pending before the arbitrator. (b) however, the prayer made by the applicant to grant leave to the applicant to proceed with the arbitration proceedings, is resisted by the official liquidator. It is the case of the official liquidator that the applicant is an ordinary unsecured creditor and it is required to file its claim with the official liquidator as provided under Section 528 of the act read with rules 148 to 179 of the companies (court) rules, 1959 (hereinafter referred to as "the rules"); and for any reason, if the official liquidator disallows the claim of the applicant, the applicant has a right of appeal provided under Rule 164 of the rules; and therefore there is absolutely no justification to allow the application. ( 3 ) SRI krishnamurthy, learned counsel appearing for the applicant, submitted that having regard to the facts and circumstances of the case, a lawyer, who is a barrister-at-law possessing a post-graduation qualification, has already been appointed as an arbitrator in terms of the arbitration clause provided in the contract entered into between the applicant and the respondent-company; and the respondent-company has already filed its objections, it would be in the interest of Justice to permit the applicant to proceed with the arbitration proceedings. He pointed out that if the arbitration proceedings are allowed to be pro- ceeded with, no prejudice or injustice will be caused to the respondent and any one who is interested in the affairs of the respondent-company. In support of his contention that in a matter like this, the proceedings should be allowed to be proceeded with before the arbitrator, he relied upon a decision of the Allahabad High Court in the case of hazi raunak all khan v uco bank limited and another. In support of his contention that in a matter like this, the proceedings should be allowed to be proceeded with before the arbitrator, he relied upon a decision of the Allahabad High Court in the case of hazi raunak all khan v uco bank limited and another. Sri krishnamurthy further submitted that since the claim made by the applicant against the respondent-company has not yet been crystallised, it would be more appropriate that the dispute now pending before the arbitrator should be allowed to be completed by him and thereafter, the applicant may be permitted to make its claim before the official liquidator in the light of the award that may be passed by the arbitrator. ( 4 ) HOWEVER, Sri thomas peter, learned counsel appearing for the official liquidator, strongly countering the contention of the learned counsel for the applicant, submitted that this is not a fit case where this court should exercise its discretion and permit the applicant to proceed with the arbitration proceedings. He pointed out that admittedly, the applicant is an unsecured creditor and the arbitration proceedings is only at the initial stage and if the arbitration proceedings are allowed to go on, the official liquidator will have to go to khanpur and spend substantial money for conducting the proceedings; and the official liquidator has no funds for the said purpose. It is his further contention that no prejudice or injustice will be caused to the applicant if the applicant is not allowed to proceed with the arbitration proceedings as the applicant has an equal and efficacious remedy of making a claim before the official liquidator; and in the event of the said claim being disallowed by the official liquidator for any reason, the applicant has a tight of appeal before this court (company court) under Rule 164 of the rules. Therefore, he submitted that the applicant has not made out any special circumstances in this case to permit it to proceed with the arbitration proceedings. Sri thomas also relied upon a decision of the punjab and haryana high court in the case of Smt. Gian devi and another v bachan motor financiers (private) limited. Therefore, he submitted that the applicant has not made out any special circumstances in this case to permit it to proceed with the arbitration proceedings. Sri thomas also relied upon a decision of the punjab and haryana high court in the case of Smt. Gian devi and another v bachan motor financiers (private) limited. ( 5 ) IN the light of the rival contentions advanced by the learned counsel appearing for the parties, the only question that would arise for consideration is, whether, having regard to the facts and circumstances of the case, the applicant should be allowed to proceed with the arbitration proceedings pending before the arbitrator? ( 6 ) SUB-SECTION (1) of Section 446 of the act provides that when a winding order has been made or the official liquidator has been appointed as a provisional liquidator, no suit or other legal proceedings shall be commenced; or if pending on the date of the winding up Order, shall be proceeded with, against the company except by the leave of the court and subject to such terms as the court may impose. From the reading of sub-section (1) of Section 446 of the Act, it is clear that unless the company court grants permission to the parties, no suit or other legal proceedings can either be commenced or if pending, can be proceeded with. Therefore, there is a statutory bar either to institute legal proceedings or proceed with the legal proceedings, if it had already been instituted, in respect of a company to which an order for winding up has been made or official liquidator has been appointed as a provisional liquidator unless the court grants leave. Therefore, when a request is made for grant of leave, this court will have to examine the prayer made for grant of leave keeping in mind the interest of the company i. e. , all its creditors, shareholders and others who may be interested in the affairs of the company and also the person who has instituted the proceedings against the company. No doubt, a discretion is conferred on the company court to grant leave or to reject the prayer made seeking leave. However, it is needless to observe that the said discretion has to be exercised reasonably, fairly and as noticed by me earlier, keeping in mind the interest of the company under liquidation. No doubt, a discretion is conferred on the company court to grant leave or to reject the prayer made seeking leave. However, it is needless to observe that the said discretion has to be exercised reasonably, fairly and as noticed by me earlier, keeping in mind the interest of the company under liquidation. Keeping that principle in mind, now let me examine as to whether, in the facts and circumstances of the case, leave sought for by the applicant is required to be granted? Admittedly, the applicant is an unsecured creditor. The proceeding is pending before the arbitrator and not before any court. The place of sitting of the arbitrator is at kanpur in the state of Uttar Pradesh. The proceedings before the arbitrator is, as rightly pointed out by Sri thomas, learned counsel for the official liquidator, is at the preliminary stage. The respondent-company has been notified and has only filed its objections. The evidence has not yet commenced. It is the case of the official liquidator that he has no funds available with him to go over to kanpur and contest the litigation. The claim made against the company is for more than Rs. 11,00,000-00. Section 528 of the act provides that in every winding up proceedings, all debts payable on a contingency, and all claims against the company, - present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company. A detailed procedure as to how the debts are to be proved is provided in the rules from Rule 147 on wards. Against the decision of the liquidator, an appeal is competent to the court under Rule 164. After the dismissal of the claims, the official liquidator is required to settle a list of the creditors under Rule 167 which is submitted to the court for approval. The list of the creditors once settled cannot be varied except under the order of the court. It is, therefore, evident that a special procedure has been provided in the act and the rules for proof of the debt against the company by the creditors. Under these circumstances, I am of the view that no prejudice or injustice will be caused to the applicant if the leave sought for seeking permission to continue the proceedings before the arbitrator is not granted. Under these circumstances, I am of the view that no prejudice or injustice will be caused to the applicant if the leave sought for seeking permission to continue the proceedings before the arbitrator is not granted. The applicant can still make a claim before the official liquidator. Admittedly, the official liquidator has not yet invited claims from the creditors. As soon as the official liquidator invites the claims, it will be open to the applicant to make its claim before the official liquidator. It is admitted by the learned counsel for the applicant that the dispute was referred to the arbitrator on 15th October, 1999 i. e. , after the order for winding up was made by this court. The company was ordered to be wound up by this court by its order dated 10th December, 1998 made in company petition No. 111 of 1998, and the official liquidator attached to this court became the liquidator of the company by virtue of the Provisions contained in Section 449 of the act. It is also admitted that the notice claiming the amount, was issued to the respondent-company on 5th July, 1999. Therefore, it is clear that the claim was made against the company after the order for winding up came to be made by this court. Under these circumstances, I am of the view that there is absolutely no justification to permit the applicant to proceed with the arbitration proceedings. The arbitration proceedings could not have been initiated without the leave of this court. The proceedings referred to under sub-section (1) of Section 446 includes the arbitration proceedings. The very initiation of the arbitration proceedings and reference of the same to the arbitrator after the winding up proceedings, made without the leave of this court, is wholly without the authority of law and it must be held as a nullity. Therefore, the question of permitting the applicant to continue the proceedings which has no legs to stand, would not arise for consideration and it cannot be permitted. Therefore, the question of permitting the applicant to continue the proceedings which has no legs to stand, would not arise for consideration and it cannot be permitted. I am of the view that the prayer of the applicant to permit him to continue with the arbitration proceedings must be rejected both on the ground that the application filed is not competent as the initiation of the arbitration proceedings and the reference to the arbitrator was made subsequent to the winding up order made by this court, without the leave of this court and also on the ground that the facts and circumstances of this case, do not entitle the applicant to grant leave of this court to permit it to proceed with the arbitration proceedings. ( 7 ) BEFORE parting with the Order, it is necessary to refer to the decision relied upon by the learned counsel for the applicant in the case of hazi raunak ali khan, supra. In my view, the said decision has no application to the facts of the case. In the said case, the applicant was a bank and a suit had already been filed before the winding up order came to be made. Having regard to the circumstances of that case, the court had granted leave to proceed with the suit, which was filed before the winding up order came to be made. In my view, the facts of that case are distinguishable from the facts of the present case. Therefore, the learned counsel for the applicant cannot derive any assistance from the principle laid down in the case of hazi raunak ali khan, supra. The case of Smt. Gian devi, supra, relied upon by Sri thomas, in my view, has also no application to the facts of the present case. In the said case, the question that came up for consideration was whether the proceedings under Section 446 (2) (b) of the act was maintainable. The Punjab and Haryana High Courthas taken the view that a petition by an unsecured creditor against the company would not be competent under Section 446 (2) (b) of the act. That is not the position in the present case. ( 8 ) IN the light of the discussion made above, this application is liable to be rejected and accordingly, it is rejected. --- *** --- .