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CS Executive · Company Law and Practice · Debt Instruments - Concepts

Anand Motors Ltd failed to redeem its debentures on the maturity date. Which remedy is available to the debenture-holders under the Companies Act, 2013?

Debenture-holders or the trustee may apply to the Tribunal, which, after hearing the parties, may direct the company to redeem the debentures forthwith on payment of principal and interest due. Section 71(10) provides this remedy, not automatic conversion or winding up by the Registrar.

  1. AApply to the Tribunal, which may direct redemption forthwith with principal and interest dueCorrect
  2. BAutomatic conversion of debentures into equity shares
  3. CImmediate winding up by the Registrar
  4. DForfeiture of the company's debenture redemption reserve

Explanation

Under Section 71(10), on failure to redeem or pay interest when due, the Tribunal may on application of any or all debenture-holders or the trustee, after hearing parties, direct the company to redeem forthwith with principal and interest. No automatic conversion or Registrar winding up is provided.

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