Explain briefly the powers of liquidator to disclaim onerous property

Disclaimer to be in Writing. The disclaimer shall be in writing and shall be made within 12 months after the commencement of the winding-up.

However, where any onerous property has not come to the knowledge of the liquidator within one month after the commencement of the winding-up, the power of disclaiming the property may be exercised at any time within twelve months after he has become aware thereof or such extended period as may be allowed by the Court.

The disclaimer shall operate to determine in respect of the property disclaimed, the right, interest and liabilities of the company as from the date of disclaimer. It shall also release the company and the property from liability, but it shall not affect the rights or liabilities of any other person in respect of that property.

Liquidator to Decide Disclaimer Within 28 Days. The liquidator shall not be entitled to disclaim any property when he has not taken any action on the application of any person interested in the property within 28 days requiring the liquidator to decide whether he will or will not disclaim [Sec. 535(4)].

Powers of the Court. The court, before or on granting leave to disclaim, may require notices to be given to persons interested in the property and may impose such conditions, as it thinks fit [Sec. 535(3)].

The court may also, on the application of any person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract. The rescission shall be on such terms as to payment, by or to either party, of damages for the non-performance of the contract, or otherwise, as the court thinks just. Any damages payable under the order to any such person may be proved by him as a debt in the winding-up [Sec. 535(5)].

Further, the court may, on application by any person who claims any interest in any disclaimed property, make an order for the vesting of the property in the person entitled thereto [Sec. 535(6)]. However, where the property disclaimed is of a leasehold nature, the court shall not make a vesting order in favour of any person claiming under the company, whether as under-lessee or as mortgagee or holder of a charge except upon the terms of making that person

(a) subject to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property at the commencement of the winding-up; or

(b) if the court thinks fit, subject only to the same liabilities and obligations as if

the lease had been assigned to that person at that date.

Injured Party Deemed to be a Creditor. Any person injured by the operations of a disclaimer under Section 535 shall be deemed to be a creditor of the company to the amount of the compensation or damages payable in respect of the injury and may accordingly prove the amount as a debt in the winding-up [Sec. 535(7)].