Rule 162 of Companies (Winding-up) Rules, 2020: Vesting of disclaimed property

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The Companies (Winding-up) Rules, 2020 were published by the Ministry of Corporate Affairs in 2020. While the Insolvency and Bankruptcy Code, 2016 covers 'voluntary winding up' and 'winding up on the grounds of inability to pay debts,' the Winding Up Rules outline the procedure for winding up following Section 271 of the Companies Act, which specifies when the NCLT may wind up a company.

Rule 156 to Rule 162 discusses the procedure to deal with the disclaimer application filed at Tribunal by the company liquidator. Application for leave to disclaim any party of a company's property is mentioned under subsection (1) of section 333 (Disclosure of Onerous Property).

Rule 162 where the property is a leasehold interest and an application is made under sub-section (6) of section 333 for an order vesting the property in any person and it appears that there is an under- lessee or mortgagee or holder of a charge by way of demise in respect of such property, the Tribunal may direct that notice shall be given to such under-lessee. If he does not apply for a vesting order, he will be excluded from all interest in and security upon the property. The Tribunal may adjourn the application for such notice to be given.

An order vesting lease and excluding persons who have not elected to apply, shall be in Form WIN 88 and Form WIN 87 respectively. An order requiring parties interested in a disclaimed lease to apply for a vesting order or to be excluded from all interest in the lease is in form WIN 87.