Debenture redemption default under Companies Act Section 71(10) requires repayment of principal and interest, not mere settlement talks.

Section 71(10) of the Companies Act, 2013 is discussed as requiring a company that defaults on debenture interest to repay the principal and interest due and redeem the debentures in accordance with their terms. The text notes that the NCLAT criticised an NCLT direction giving time for settlement instead of issuing a specific repayment direction, and states that the tribunal considered itself bound to grant only the relief contemplated by Section 71(10). It further records that the respondent company had admitted default, failed to participate effectively, and did not produce material showing settlement efforts.

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Issues: Whether the Tribunal, while dealing with a petition under Section 71(10) of the Companies Act, 2013, could defer repayment by granting time to explore settlement instead of directing immediate redemption of debentures and payment of principal and interest due.

Analysis: The petition concerned admitted default in payment of interest on secured non-convertible debentures. Section 71(8) requires a company to pay interest and redeem debentures according to their terms, while Section 71(10) empowers the Tribunal, on application by debenture-holders or the debenture trustee, to direct the company to redeem the debentures forthwith on payment of principal and interest due thereon. The order of the Tribunal had proceeded on the company's financial distress and granted time to explore settlement, but the statutory scheme did not confer power to substitute that relief with a settlement-oriented direction. The record also showed no effective steps toward settlement or arbitration, and the company did not appear before the Appellate Tribunal.

Conclusion: The Tribunal ought to have acted strictly under Section 71(10) and directed repayment of the amounts due and payable; the direction granting time for settlement was unsustainable, and the appellants were entitled to an order for payment within a fixed time.

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