CS Executive · Company Law and Practice · Debt Instruments - Concepts
Himalaya Infra Ltd issued debentures that fell due on 31 March, but it neither redeemed them nor paid the interest then due. The debenture trustee wants to enforce the holders' rights. Which statement matches the Companies Act, 2013?
The Tribunal may, on the application of any or all debenture-holders or the debenture trustee, order the company to redeem the debentures forthwith with principal and interest due. Section 71(10) gives this remedy on failure to redeem or pay interest, without needing a three-fourths majority.
- AThe Tribunal may, on application of any or all debenture-holders or the trustee, direct the company to redeem the debentures forthwith on payment of principal and interest dueCorrect
- BOnly a majority of three-fourths in value of holders may approach the Tribunal
- CThe trustee must first obtain a civil court decree for specific performance of redemption
- DThe Tribunal can only impose restrictions on further liabilities, never order redemption
Explanation
Section 71(10) lets the Tribunal, on application of any or all holders or the trustee, direct redemption forthwith with principal and interest due. A three-fourths majority is not required. Restrictions on further liabilities under 71(9) relate to insufficient assets, a different situation.
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