My Debentures Have Matured but the Company Will Not Redeem Them

If your debentures have matured and the company has not paid, you can seek a redemption order from the NCLT under section 71(10) of the Companies Act, 2013. A missed interest payment can also trigger that provision. Start with the instrument, the amount due and a dated payment ledger, because a debenture redemption default is proved certificate by certificate, not by collecting general complaints about the issuer.

Part of the corporate and commercial law practice at S Jain & Attorneys, Bangalore.

The useful first document is a demand schedule with six entries: your holding, certificate or ISIN details, contractual maturity, interest due, payments already received and the balance sought. Send it to the issuing company's registered office and the debenture trustee, where one was appointed. Ask for a written explanation of any disputed entry and a definite payment date. A complaint to a platform that sold the investment does not by itself establish a claim against that platform.

Does a debenture redemption default need a group of investors?

No. Section 71(10) permits an application by any or all debenture holders, or the debenture trustee. You do not need to assemble the shareholding threshold used for an oppression petition. The provision concerns payment on debt securities, so being a small investor is not itself a reason to wait for the largest holder to act.

The applicant still has to prove a holding in the relevant instrument. A bank transfer to an intermediary, a payment acknowledgement and a debenture allotment are different records. If the money never reached the issuer or no debentures were allotted, the legal claim may be for a failed investment transaction rather than redemption. Identify that distinction before adopting a form headed section 71.

Where several holders apply together, each person's entitlement should remain intelligible. A single grand total cannot show whether one investor received two coupons, another sold part of the holding, and a third acquired the securities after the record date. Use a separate row for every certificate or holding, with the supporting document identified against it. Grouping can reduce duplication in the papers, but it cannot cure a missing proof of ownership.

An informal messaging group is also not a substitute for authority to litigate. Record who is an applicant, who will affirm facts, who may instruct the representative and who may negotiate. A trustee has a statutory role. An enthusiastic investor who created a group does not acquire the same role merely because other people follow the group.

Is my investment really a debenture?

The issue documents and allotment records matter more than the sales description. Section 2(30) includes bonds and other company instruments evidencing a debt within the statutory definition, subject to the applicable exclusions. The document may be called a bond, secured non-convertible debenture or privately placed debenture. A product's branding cannot decide its legal treatment on its own.

Read the issuing entity's name carefully. The app, group company, arranger, guarantor and issuer may be five different legal persons. Match the issuer's name and corporate identity to the certificate, statement and offer document. If a guarantee exists, keep it separately. A guarantee claim may have its own trigger, demand requirement and dispute mechanism.

Check conversion terms before describing the entire amount as immediately redeemable in cash. A convertible security may carry an option or a scheduled conversion that affects what becomes payable. The article's direct route is a company debenture with an established obligation to pay interest or redeem that has fallen due. It does not decide whether a disputed instrument is debt, equity or a different contractual investment.

Likewise, the words secured and guaranteed do not answer who owns the security, whether a charge was perfected or whether the collateral covers the outstanding debt. Ask for the trust deed and security description. A brochure showing a large asset value is not evidence that you can seize that asset personally.

Key takeaway. An individual debenture holder can seek the statutory payment remedy. Prove the instrument and the due date before arguing about the issuer's wider financial condition.

The first review should identify the instrument, the deadline and the person who owes payment.

What if the company has missed interest but maturity is months away?

Section 71(10) expressly covers failure to pay interest when due as well as failure to redeem at maturity. Do not let a customer-care response saying that principal is not yet payable end the enquiry. Identify the coupon that fell due and the term fixing its date.

There are two separate calculations. One is the interest instalment already unpaid. The other is the principal and interest relief that the Tribunal may direct under the provision after hearing the parties. Plead the relief on the statutory text and the instrument instead of assuming every future coupon is already an accrued debt. A contractual acceleration clause may matter, but its notice and cure requirements must also be read.

A cumulative instrument needs special care. If the terms provide for interest to accumulate until redemption, the absence of a monthly bank credit may not be a default. Conversely, an instrument promising periodic interest cannot be treated as cumulative merely because the company stops paying. Preserve the original repayment schedule and any communication purporting to change it.

The same exercise prevents inflated claims. State the contracted coupon, the accrual period, the payment received and the unpaid amount. Keep additional damages or disputed default interest in separate columns with their claimed legal basis. That allows the Tribunal to identify what is admitted even if another component needs adjudication.

What should I ask the debenture trustee to do?

Ask the trustee for a written account of the default, the steps already taken and the proposed action under the trust deed. Section 71(6) requires a debenture trustee to protect holders' interests and redress grievances in accordance with the prescribed rules. Section 71(10) also gives the trustee standing to seek a redemption order.

Your request should identify the issue, your holding and the overdue obligation. Ask whether the issuer has acknowledged default, whether the trustee has issued a demand, whether security enforcement or a court proceeding has begun, and whether investors are being asked to approve any change. Request copies or access through the applicable investor process rather than relying on a short status message.

There is a further protective provision in section 71(9). If the trustee concludes that the company's assets are insufficient, or likely to become insufficient, to discharge principal when due, it may petition the Tribunal. The Tribunal can, after hearing interested parties, impose restrictions on further liabilities. That is a trustee route with its own statutory condition. It should not be described as an automatic asset freeze available on any holder's email.

If the trustee says it represents only a different series, check the series number and trust deed. Similar product names do not make distinct issues interchangeable. Where you allege a trustee's breach, keep that allegation and supporting evidence separate from the issuer's non-payment. The fact that the issuer defaulted does not by itself establish that every intermediary breached a duty.

Can a majority extend the maturity against my wishes?

Read the amendment machinery before accepting or rejecting the proposal. A company email announcing a new date does not establish that the original terms were validly changed. Equally, a holder cannot assume that every collective decision under a valid trust deed or applicable securities regime requires unanimous personal consent.

Obtain the exact resolution, the notice sent to holders, the voting rule relied on, the voting results and the amended document. Identify whether the proposal changes interest, maturity, security, guarantors, enforcement rights or all of them. An extension that preserves the stated interest rate can still materially weaken recovery if it releases collateral.

When responding, distinguish receipt from consent. A message acknowledging the proposal should not accidentally say that you accept the revised redemption date. If you are willing to discuss payment by instalments, state whether your original claim remains reserved until a binding settlement is completed. The validity and effect of a reservation depend on the final instrument, so read the settlement as a whole.

Avoid voting on a document that has blanks for dates, security releases or the company that will pay. Ask for the final version before giving instructions. Preserve the version circulated at the time of your vote, not merely the later version uploaded by the issuer. A dispute about what was approved is much harder to resolve when every participant has kept a different attachment.

Which papers belong in a section 71(10) application?

The NCLT Rules, 2016, rule 73 uses Form NCLT-11 for the repayment application and calls for holder-specific particulars and supporting documents. The rule expressly covers debenture holders and the trustee. Current filing directions determine how the papers are uploaded, served and presented before the relevant bench.

Build the file around proof rather than volume. Include the issue terms, certificate or holding statement, investment payment trail where relevant, maturity and coupon schedule, demand, delivery proof, replies and a reconciliation of payments. If documents use different names because of a merger or name change, include the record connecting them. Explain discrepancies rather than expecting a registry clerk or the Tribunal to infer the answer.

Rule 73 asks for particulars including the holder's identity, certificate number, maturity date, amount due, amount already paid and total outstanding at filing. Keep sensitive identity documents in the filing channel required for the case. Circulating them through a large investor group can create an avoidable privacy problem without helping prove the company's default.

For electronic statements, retain the original downloaded files and their source details. A screenshot with a cropped account number may help explain the chronology but may not be sufficient to establish the entire holding. Your filing adviser should decide what authentication is required for contested electronic records. Do not alter the source statement to make its figures match a preferred claim.

Will NCLT order payment in sixty days?

Rule 73 contains a sixty-day period for an appropriate order, but it is not a guarantee that money will reach your account by that date. The company and other interested persons must receive a reasonable opportunity of hearing. Defects, service disputes, contested holdings and the bench's listing position can affect progress.

The same rule allows an order directing repayment forthwith or within a specified time and subject to conditions. It requires consideration of the company's financial condition and the sums payable. A statutory remedy therefore does not justify promising every holder immediate recovery in full, even where the underlying non-payment is clear.

Prepare for the first hearing to answer the questions that can be answered now: what became due, why you are the holder, what has been paid and what exact order is sought. Where the issuer admits principal but disputes interest, make that distinction visible. An application that mixes a clear debt with speculative accusations can make a straightforward issue look less straightforward.

Do not treat administrative acknowledgements as judicial relief. A filing number, a hearing listing and an order directing repayment are different stages. Obtain the actual order and read its operative paragraphs. If repayment is conditional or staggered, the compliance diary must follow those conditions rather than the demand date you originally proposed.

Common mistake. A proposed repayment timetable is not the same as payment. Check whether signing it releases claims, changes security or substitutes a new debtor before treating it as a harmless acknowledgement.

What if insolvency starts while my payment case is pending?

Obtain the admission order and identify the proceeding before taking another enforcement step. The fact that a creditor has filed an insolvency application is different from its admission. An admitted corporate insolvency process can change who controls the company and how claims must be pursued.

This article does not offer a shortcut around an insolvency moratorium. Tell the advocate handling the repayment application immediately, preserve the debt documents and take advice on the claim process applicable to the admitted case. Do not assume that a pending NCLT-11 application automatically files your claim with an insolvency professional.

The Insolvency and Bankruptcy Code was amended in 2026, with specified provisions brought into force from 26 May 2026. Old internet checklists may therefore be wrong for a current case. The correct response is to check the operative admission order, current Code and regulations, and the actual public announcement. The issuer's statement that it is in NCLT does not identify any of those things.

A debenture payment application and an insolvency application serve different purposes. One seeks the statutory payment order discussed here. The other invokes a collective insolvency regime subject to its own conditions. Do not choose the second simply because someone presents it as a stronger demand notice. The consequences concern all creditors and the company, not just your investment.

How should I assess a part-payment or settlement offer?

Reconcile the offer against the original ledger before deciding whether to accept it. Ask which amounts are principal, ordinary interest, disputed interest and deductions. Where payment will be made to a bank account, verify that the account and holder details match the securities record and that the payment reference identifies the relevant issue.

A sensible settlement document should specify who pays, the amounts, dates, consequences of default and treatment of proceedings. If security is to remain until final payment, the release clause must say so. If the issuer proposes substitution by a group company, assess that company's obligation and the effect on the original debtor. A more impressive group name does not itself improve enforceability.

Consider whether accepting one payment is being presented as acceptance of the entire settlement. A covering letter can identify a credit as part-payment, but it does not erase contradictory terms you expressly sign. Read any declaration attached to the payment request, including digital checkboxes that say full and final discharge.

The application should preserve the link between money received and liability discharged. An acknowledgement should identify the specific payment. A comprehensive release should only reflect the compromise you actually intend to make. Do not let a receipt for one instalment quietly become a release of the remaining principal, interest and security.

The settlement and application files should produce the same balance when read together.

What happens if a payment order is ignored?

Read the order's due date and conditions, then obtain a calculation of what remains unpaid. Section 424(3) of the Companies Act permits enforcement of Tribunal orders as if they were decrees and also provides for sending orders to the specified civil court for execution. The appropriate application depends on the order, assets and subsequent proceedings.

Do not copy the old criminal sanction in section 71(11) from an unamended statute download. That subsection was omitted by the Companies (Amendment) Act, 2020. This is a concrete reason to distinguish enforcing an order from threatening directors with an obsolete provision.

Where there is an appeal, establish whether a stay was actually granted and what it covers. An issuer saying it intends to appeal does not show the terms of any judicial protection. At the same time, avoid proceeding on a stale order without checking later directions. The current procedural position belongs in the execution brief.

Keep the requested recovery realistic and documented. An order against the company is not, merely by its existence, a personal payment order against each director. If another person signed a guarantee or is subject to a separate finding, that requires its own analysis. The company's failure to pay should not be used to invent a liability the order never imposed.

What can I do today without prejudicing the claim?

Prepare the ledger and obtain the controlling documents before sending a demand that makes legal threats. The objective is a clear record of an overdue security, your holding and a request for the payment actually due.

1. Download the current holding statement and save the original issue terms and any amendments.
2. Build a coupon and maturity ledger that credits every payment already received.
3. Identify the issuer, trustee and any separate guarantor from executed documents.
4. Send the reconciled demand and request copies of any claimed restructuring approval.
5. Check for an actual insolvency admission or other order affecting the recovery route.
6. Take the complete file for advice on a section 71(10) application, settlement or another appropriate remedy.

A useful demand can say: "The attached schedule records the debentures held by me, the contractual due dates and all credits received. Please identify any disputed entry with supporting records and confirm payment of the outstanding amount. Receipt of a proposal for revised terms will not itself be treated as my acceptance."

Keep the original demand factual. It can be firm without alleging fraud on evidence that establishes only default. If the issuer supplies a genuine discrepancy, correct the schedule. If it supplies only another promise, your file should show that plainly. That is the difference between an escalating exchange of complaints and a payment case that can be assessed on documents.

Frequently Asked Questions

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

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