Company Court disclaimer jurisdiction extends to affected parties, but only for property shown to be onerous in liquidation.
A Company Court may, in appropriate circumstances, entertain an application by an interested or aggrieved party seeking disclaimer of property, even though the usual power to seek disclaimer lies with the Official Liquidator. The court's jurisdiction under section 446(2) of the Companies Act, 1956 is not excluded on that ground. However, disclaimer is justified only where the property is shown to be onerous or burdensome to the company in liquidation. A leasehold property housing the company's factory, plant, machinery, furniture and finished goods was found not to be onerous, and immediate disclaimer would impede winding up. The request for disclaimer was therefore refused.
Issues: (i) Whether an application seeking disclaimer of property under section 535 of the Companies Act, 1956 could be entertained at the instance of an affected party and not only on an application by the Official Liquidator; (ii) whether the leased property had become onerous or burdensome to the company in liquidation so as to justify a direction to the Official Liquidator to disclaim it.
Issue (i): Whether an application seeking disclaimer of property under section 535 of the Companies Act, 1956 could be entertained at the instance of an affected party and not only on an application by the Official Liquidator.
Analysis: The power to seek disclaimer ordinarily lies with the Official Liquidator, but the Court held that this does not exhaust the jurisdiction of the Company Court. Where a part of the company's property has become onerous and no disclaimer is sought by the Official Liquidator, the Court is not powerless to direct disclaimer on the application of an interested or aggrieved party. The jurisdiction of the Company Court under section 446(2) of the Companies Act, 1956 extends to claims against the company in liquidation, and the objection that only the Official Liquidator could move the application was therefore rejected.
Conclusion: The objection to maintainability was overruled; an affected party could seek such relief in appropriate circumstances.
Issue (ii): Whether the leased property had become onerous or burdensome to the company in liquidation so as to justify a direction to the Official Liquidator to disclaim it.
Analysis: The Court found that the leasehold land housed the company's factory building, movable plant and machinery, furniture, fixtures, and finished containers. In those circumstances, immediate disclaimer would seriously hinder the winding up process. The property was therefore not shown to have become onerous, unprofitable, or burdensome to the company in liquidation. The applicant's remedy, if any, for rent and related dues could be pursued before the Official Liquidator.
Conclusion: The property was not fit to be disclaimed at that stage, and the prayer for disclaimer was refused.
Final Conclusion: The Court declined to direct disclaimer of the leased property and left the company's assets in the hands of the Official Liquidator for the purpose of completing the winding up process.
Ratio Decidendi: A Company Court may, in appropriate cases, direct disclaimer of property at the instance of an affected party, but only where the property is shown to be onerous and where disclaimer serves the interests of the company in liquidation and its creditors.
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