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2020 (11) TMI 359 - AT - Companies LawRedemption of Debentures - main contention of the Appellant is that NCLT did not specifically address to ‘the prayer for repayment’ but rather gave a direction to explore all possibilities of settlements of claims of Petitioners and granted six months’ time, which is ultra vires to Section 71(8) and Section 71(10) of the Companies Act, 2013 - Whether the provisions under Section 71(10) of the Companies Act 2013 was adhered to by NCLT while disposing of the Petition? HELD THAT:- It is significant to mention that Section 71(11) of the Companies Act, 2013 speaks of ‘Penalty for Default’. Section 71(12) provides ‘a contract with a Company to take up & pay for any debentures of the Company may be enforced by a decree of ‘Specific Performance’ ’. As a matter of fact, Section 73 of the NCLT Rules, 2016 relates to ‘Applications’ under Section 71(9), 71(10), 73(4) and Section 74(2) & Section 76(2) of the Companies Act, 2013. It is relevant to mention that the relief for ‘Specific Performance’ is allowed as a ‘rule’ when there is no other relief which would meet the circumstances of the given case. A perusal of the Reply filed by the ‘Respondent Company’ in the Company Petition before the Tribunal shows that there is a clear admission by the ‘Respondent Company’ in paras 12 to 18 that there is a default of payment of interest on the ‘Non-Convertible Debentures’ and that they proposed to settle the dues and that the matter was under due process. It is relevant to mention that in para 17 of their Reply, the ‘Respondent Company’ had averred that there is an Arbitration proposal pending between the Parties, but the material on record does not evidence any such initiation of ‘Arbitration proceedings’ - A perusal of the record shows that the Tribunal had taken into consideration the ‘Financial Status of the Company’, the interest of all ‘Stake Holders’ and has given a direction for settlement. However, the fact remains that the ‘Respondent Company’ did not make any effort to settle the matter nor was there any representation on their behalf before this Tribunal, despite service of notice. Section 71(10) provides a clear mechanism for issue and repayment of debentures, including the enforcement of repayment obligations. Section 71(10) provides that the Tribunal may hear the Parties concerned and direct, by Order, the Company to redeem the debentures forthwith on payment of principal and interest due thereon. Having regard to the provisions of Section 71(8) read with Section 71(10) of the Companies Act 2013 and also the fact that no concerted efforts have been made by the ‘Respondent Company’ to explore the possibilities of settlement and also the fact that the time of six months’ granted by the National Company Law Tribunal has lapsed, though this Tribunal is of the considered view that Section 71(10) of the Companies Act 2013, ought to have been strictly adhered to, keeping in view the facts and circumstances of the attendant case on hand, this Appeal is disposed of with a specific direction to the ‘Respondent Company’ to repay the amounts ‘due and payable’ to the Appellants herein within a period of two months from today.
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