SC asks judges to be cautious in winding-up petitions

The Supreme Court today asked company judges in the country to be cautious while ordering publication of winding up proceedings in newspapers, as it might damage the reputation of the company concerned.

“A creditor’s winding up petition implies insolvency and is likely to damage the company’s creditworthiness, or its financial standing with its creditors and even among the public,” the judgment delivered by a Bench headed by Chief Justice S H Kapadia said. Publication in newspapers may damage the financial standing of the company, which may also have other economic and social ramifications.

The judges set aside the judgment of the Karnataka high court, which had ordered a publication in local newspapers, even when there was a bonafide dispute between the companies involved – IBA Health and Info-Drive Systems Sdn Bhd.