Section 663 CAMA 2020

Section 663 Companies and Allied Matters Act is about Disclaimer of onerous property. It is under Chapter 24 (Provisions applicable to every mode of winding-up) of the Act.

(1) Where any part of the property of a company which is being wound up consists of—

(a) unprofitable contracts ; or

(b) any other property that is unsaleable, or not readily saleable, or is such that it may give rise to the performance of any onerous act or a liability for the payment of any sum of money,the liquidator, notwithstanding that he has endeavoured to sell it or has taken possession of the property or exercised any act of ownership in relation thereto,may, with the leave of the Court, and subject to the provisions of this section,in writing signed by him, within 12 months after the commencement of the winding-up or such extended period as may be allowed by the Court, disclaim the property :Provided that, where the property has not come to the knowledge of the liquidator within one month after the commencement of the winding-up, the power under this section of disclaiming the property may be exercised at anytime within 12 months after he has become aware thereof or such extended period as may be allowed by the Court.

(2) A disclaimer under this section shall operate to determine, as from the date of the disclaimer, the rights, interest and liabilities of the company, in or in respect of the property disclaimed, but shall not, except it is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person.

(3) The Court, before or on granting leave to disclaim under subsection(1), may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter as the Court deems just.

(4) The liquidator is not entitled to disclaim any property under this section in any case where an application in writing has been made to him by any person interested in the property requiring him to decide whether or not he will disclaim, and the liquidator has not, within 28 days after the receipt of the application or such further period as may be allowed by the Court, give notice to the applicant that he intends to apply to the Court for leave to disclaim, and,in the case of a contract, if the liquidator, after such an application, does not within that period or further period disclaim the contract, the company is deemed to have adopted it.

(5) The Court may, on the application of any person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract 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 deems just, and any damages payable under the order to that person may be proved by him as a debt in the winding-up.

(6) The Court may, on an application by any person who claims any interest in any property disclaimed under this section, or is under any liability not discharged by this Act in respect of any disclaimed property, and on hearing any such persons as it thinks fit, make an order for the vesting of the property in or the delivery of the property to any persons entitled thereto, or to whom it may seem just that the property should be delivered by way of compensation for such liability, or a trustee for him, and on such terms as the Court deems just and on any such vesting order being made, the property comprised therein shall vest in the person therein named in that behalf without any conveyance or assignment for the purpose.

(7) 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 an under- lessee or as a mortgagee by demise, a mortgage by way of legal charge or mortgage, as the case may be, except upon the terms of making that person—

(a) object 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 deems fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date, and in either event if the case so requires, as if the lease had comprised only the property comprised in the vesting order, and any mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property, and if there is no person claiming under the company who is willing to accept an order upon such terms, the Court shall have power to vest the estate and interest of the company in the property in any person liable, either personally or in a representative character, and either alone or jointly with the company, to perform the lessee’scovenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the company.