However, for debenture holders facing defaults below this threshold, Section 71(10) of the Companies Act, 2013, read with Rule 73 of the National Company Law Tribunal (NCLT) Rules, 2016, offers a less explored yet effective avenue for redressal. This Section also imposes a penalty of not less than ₹2 lakhs but which may extend to ₹5 lakh rupees, or imprisonment for a term which may extend to three years which makes it compelling case for a debenture holder to utilize this provision.
By leveraging this provision, debenture holders can expedite debt recovery, reduce costs, and ensure timely redressal. It is imperative for legal practitioners and debenture holders to be aware of this often-overlooked remedy. By utilizing these provisions, they can not only protect their financial interests but also contribute to a more efficient and balanced debt recovery ecosystem.
Source: Barandbench
