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TMI Blog2020 (11) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in dispute. While deciding an Application/Petition filed U/s 71(10) Companies Act, 2013 R/w 73 of NCLT Rules, 2016, the Tribunal has to consider financial status of Company, the interest of all stake holders etc., before ordering to repay the outstanding standing exclusively in respect of Petitioners. We are convinced with the reasons furnished by the Company for its failure to redeem debentures, pay interest of NCDs in question. Therefore, it would be just and proper to grant six months time tentatively to the Company to explore all possibilities of settlement of the claims of the Petitioners alongwith all similarly situated claimants. 7. In the result, by exercising powers conferred on this Tribunal, U/s. 71(10) of the Companies Act, 2013 R/w Rule 73 of the NCLT, Rule 2016, the Company Petition bearing C.P. No. 73/BB/2019 is hereby disposed of with the following directions: (1) The Respondent Company is hereby granted six months time, provisionally from today, so as to explore all possibilities of settlement of claims of Petitioners alongwith other similarly situated claimants. (2) No order as to costs. 2. Succinctly put, the facts in brief, are that M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the debentures. Right from the time, the interest payments were defaulted on, the Petitioners have addressed correspondence calling upon the Company, the Debenture Trustee and the Debenture Holders Representative to comply with the terms of the Debenture Trust Deed. The Petitioners have also been consistent in their demand for redemption of the debentures as stipulated under the terms of the Debenture Trust Deed. (6) As of the date of filing of this Application, the following amounts are due and payable. These amounts include the default interest payable, as well as the prepayment penalty (which is triggered if the early redemption is on account of the Company s default): a) Debenture Holder No. 1: a. Principal amount of Indian Rupees Forty Five Lakhs (INR 45,00,000/-). b. Interest of Indian Rupees Eight Lakhs Twenty Eight Thousand (INR 8,28,000/-) [payments due on 31.03.2018, 30.06.2018, 30.09.2018 and 31.12.2018] c. Default interest (as per clause 5.5 of the Debenture Trust Deed) as of January 2019: i. On the sum of Indian Rupees Two Lakh Seven Thousand (INR 2,07,000/-) due on 01.03.2018; Indian Rupees Twelve Thousand Four Hundred and Twenty (INR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and Forty (INR 4,140/-) (months 1-3) + Indian Rupees Two Thousand Seven Hundred and Sixty (INR 2,760/-) (month 4). iv. On the sum of Indian Rupees Sixty Nine Thousand (INR 69,000/-) due on 01.12.2018: Indian Rupees One Thousand Three Hundred and Eighty (INR 1,380/-) (month 1). v. Prepayment penalty (as per clause 5.9 of the Debenture Trust Deed): 3% of Indian Rupees Fifteen Lakhs (INR 15,00,000/-) + Indian rupees Forty-Five Thousand (INR 45,000/-) Total due as of date: Indian Rupees Eighteen Lakhs Seventy Four Thousand Eight Hundred and Twenty (INR 18,74,820/-). 3. The Appellants stated that despite being in default neither the Debenture Holders Representative nor the Debenture Trustee have responded to the Petitioners specific request for redemption of the debentures. Despite repeated correspondence between 19.04.2018 to 04.09.2018, vide various e-mails, the Debenture Holder Representative or the Debenture Trustee did not respond to the issue of non-payment of quarterly interest. On 05.09.2018, the Appellants sent an e-mail invoking this right under clauses 5 and 12 of the Debenture Trust Deed and finally on 31.10.2018, a legal notice was also issued for whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been considered by NCLT as the gospel truth, without any binding dictum, in the absence of which, the Appellants and the individual Debenture Holders would suffer. 5. The main issue which arises for consideration is whether the provisions under Section 71(10) of the Companies Act 2013 was adhered to by NCLT while disposing of the Petition. 6. It is the main contention of the Learned Counsel appearing for the Appellant 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. 7. Despite service of notice, there was no representation from the Respondent Company . Notice was issued on 12.02.2020 to the Respondent Company by Speed Post by this Tribunal and thereafter the matter was posted on 25.02.2020 and on 19.03.2020. Subsequently, the matter was adjourned to 13.10.2020 when the Counsel for the Appellant filed Affidavit of Service to establish that the Respondent Company was also served through e-mail. The matter was adjourned to 02.11.2020 for fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a decree for specific performance. 10. 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. In Mamta Kothari V/s. Bharat Hydro Power Corporation Ltd. (2015) 129 SCL, Section 117(4) of the 1956 Companies Act (equivalent to Section 71 of the Companies Act, 2016) has been discussed at length by CLB, Kolkata. Apart from holding that the Application was not barred by limitation, the Respondent Company was directed for redemption of the debentures covered by the Applications by Payment of the Principal amount and interest due thereon as per the terms and conditions of the issue of such debentures. 11. On a pointed quer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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