Identify which obligation has fallen due
Section 71(10) of the Companies Act, 2013 applies where a company fails to redeem debentures at maturity or fails to pay debenture interest when due. Any or all concerned holders or the debenture trustee can apply. After hearing the concerned parties, the Tribunal may direct the company to redeem the debentures forthwith on payment of principal and interest due. A missed coupon is an independent trigger; it does not mean the company’s principal was already contractually overdue on that date.
Read the applicable text: India Code: Companies Act, 2013, section 71(9)–(10) Gazette of India: NCLT Rules, 2016, Rule 73, Annexure B and Form NCLT.11.
Rebuild the holder-by-holder amount due
Use the issue terms and trust deed, certificates or depository records, coupon schedule, maturity dates and payments. Resolve record-date changes and transfers before assigning balances. Distinguish contractual interest, matured principal, not-yet-due principal, disputed default charges and amounts already paid. Determine whether any proposed amendment, waiver or rescheduling legally changed the relevant due date. A promise to pay later is not proof of payment or an effective change.
Prepare the Rule 73 application
Rule 73(1) of the National Company Law Tribunal Rules, 2016 prescribes Form NCLT.11 in duplicate for the section 71(10) application, with the documents specified in Annexure B. The rule requires the holder list with particulars including holder identity details, certificate number, date of maturity, amount due, amount already paid and total due at application. Verify the applicable Bench's filing directions and protect personal details when sharing drafts. Distinguish what the prescribed form asks for from how the registry currently accepts filing.
Distinguish the pre-default trustee route
Section 71(9) separately addresses a trustee's conclusion that the company's assets are insufficient or likely to become insufficient to discharge principal as it falls due. The Tribunal can impose restrictions on incurring further liabilities after hearing interested parties. This guide concerns actual payment failure and does not treat every security concern as a section 71(10) default.
Track what happens after filing
Rule 73(3) states a 60-day period from receipt of the application for an appropriate Tribunal order, with a reasonable opportunity of hearing. That period concerns the Tribunal’s order. Check the applicable limitation for filing separately. Rule 73(4) allows the Tribunal to set the time and conditions of repayment, taking into account the company’s financial condition and the relevant debenture and interest amounts. The date of an order and the date of recovery can therefore differ. Update the working for payments after the application, keep the ordered amount and settlement evidence separate, and review other applicable remedies and procedural limitations for the facts.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Missed coupon before maturity
A holder has ₹20 lakh principal not yet contractually due and a ₹1,20,000 due coupon, of which ₹40,000 was paid. Overdue interest is ₹80,000. Keep the ₹20 lakh separate while assessing the relief the Tribunal may order.
Illustrative example 2: Principal and coupon both due
At maturity, ₹12 lakh principal and ₹60,000 coupon are due. The company pays ₹8 lakh towards principal and nothing towards coupon. The documented outstanding amount is ₹4,60,000.
Illustrative example 3: Three holders and separate payment allocations
Holder A is due ₹3,00,000 and has received ₹1,20,000; B is due ₹2,00,000 and received ₹50,000; C is due ₹1,50,000 and received ₹1,50,000. The respective balances are ₹1,80,000, ₹1,50,000 and nil, totalling ₹3,30,000.
Illustrative example 4: Do not treat a rejected payment as discharge
Of ₹6,00,000 of matured principal, ₹4,70,000 is effectively settled. A separate attempted payment of ₹1,30,000 returns unpaid. The supported unpaid principal remains ₹1,30,000.
Illustrative example 5: Keep a disputed charge outside the supported subtotal
The holder reconciles ₹5,00,000 matured principal and ₹25,000 due coupon. A further ₹18,000 default-charge claim remains disputed and unsupported. Show ₹5,25,000 of supported amount and ₹18,000 separately disputed, rather than presenting ₹5,43,000 as agreed.
Illustrative example 6: Roll the balance forward after application
The supported balance at application is ₹9,10,000. Assume a later payment of ₹2,40,000 is applied to the same debt and no new amount accrues. Report the original balance and update the residual to ₹6,70,000.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the issuer and instrument | Offer terms and trust deed |
| 2 | Verify applicant entitlement | Holder or trustee authority evidence |
| 3 | Confirm each contractual due date | Coupon and redemption schedule |
| 4 | Check whether terms changed lawfully | Executed amendments or waivers |
| 5 | Match actual payments | Bank and paying-agent evidence |
| 6 | Reconcile supported and disputed amounts | Principal and interest ledger |
| 7 | Prepare the Rule 73 holder list | Required particulars and amounts at application |
| 8 | Check Form NCLT.11 and annexures | Annexure B and registry directions |
| 9 | Track later payments and hearing | Dated developments and revised reconciliation |
| 10 | Match the order and compliance | Order, recoveries and remaining balances |
Sixteen practitioner FAQs
1. Is the section triggered only on maturity?
No. A failure to pay interest when due can also trigger it.
2. Can a single affected holder apply?
Yes. Section 71(10) allows any or all debenture holders or the debenture trustee to apply.
3. Can an agent apply merely because it manages the register?
Check the statutory applicant and any proper authority to act for it.
4. What if the issuer paid some principal?
Show the payment and outstanding part by holder and instrument.
5. Does a failed bank transfer count as payment?
Confirm effective discharge; a rejected instruction alone is insufficient.
6. What if only interest is currently overdue?
Show it as overdue and list principal separately; do not relabel unmatured principal as already contractually overdue.
7. Does the Tribunal automatically order full payment?
No. Section 71(10) provides for a hearing and gives the Tribunal discretion. Rule 73(4) also addresses repayment timing and conditions.
8. Is a covenant breach alone a section 71(10) trigger?
Test whether maturity redemption or due interest was missed. Other concerns can require a different route.
9. How does section 71(9) differ?
It concerns a trustee's assessment of insufficient or likely insufficient assets for principal and restrictions on further liabilities.
10. Which form is prescribed for the actual default application?
Rule 73(1) specifies Form NCLT.11 for the section 71(10) route.
11. Which date drives the Rule 73(3) order period?
Receipt of the application under Rule 73(1), as stated in the rule.
12. Is that period a limitation period for applying?
No. Review applicable limitation and procedural requirements separately.
13. Can the same interest be counted as coupon and default charge?
Only claim supported distinct amounts and reconcile any overlap.
14. What if the holder changed after the record date?
Use the instrument terms and actual holding and payment records to establish entitlement.
15. Should later collections change the original amount stated at filing?
Preserve the original working and separately disclose the later movements and current residual.
16. Can a missed coupon affect other company approvals?
Review any independent statutory or contractual consequences separately; the application is only one part of the analysis.
Official sources
India Code: Companies Act, 2013, section 71(9)–(10) Gazette of India: NCLT Rules, 2016, Rule 73, Annexure B and Form NCLT.11