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

Himalaya Infra Ltd defaulted on redemption of its debentures on the maturity date. The debenture trustee wants the company compelled to pay. Which course is available under the Companies Act, 2013?

The Tribunal may, on application of any or all debenture-holders or the debenture trustee, direct the company to redeem the debentures forthwith on payment of principal and interest due. This is under Section 71(10); conversion is not automatic and Central Government has no such role.

  1. AOnly the Central Government may order redemption
  2. BOnly a civil suit for specific performance is available
  3. CThe Tribunal, on application of any or all debenture-holders or the trustee, may direct immediate redemption on payment of principal and interest dueCorrect
  4. DThe debentures automatically convert into equity shares

Explanation

Section 71(10) lets the Tribunal, on application of any or all debenture-holders or the debenture trustee, after hearing the parties, direct the company to redeem forthwith on payment of principal and interest due. Section 71(12) on specific performance concerns a contract to take up and pay for debentures, not redemption default. Automatic conversion is not provided.

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