Rights and liabilities of debenture trustee

Rights and liabilities of debenture trustee

(1) If the company violates any of the terms mentioned in the agreement concluded under Section 36, the debenture trustee may instruct such company to fulfill such terms as soon as possible or to make repayment of the principals and interest of the debenture-holder within a time limit as specified by him.

(2) If it is required to take the financial transaction of the company under control or to possess the security as referred to in the agreement by reason of the repayment made under Sub-section (1) or for any other reason, the debenture trustee may, subject to the prevailing law, take the assets, properties or securities of such company under his/her control and hold the assets or properties so possessed in his own or sell such assets or properties by auction or otherwise or deal with the same in other manner.

(3) Following the possession of the assets of the company under Sub-section (2), the amount of a debenture-holder shall be repaid out of the proceeds of the sale of the assets. If any amount remains surplus after repayment of the amount payable to the debenture- holder, the debenture trustee shall return that amount to the concerned company

(4) Notwithstanding anything contained elsewhere in this Act, except in cases where the debenture trustee himself buys the assets taken by the debenture trustee as the security, if the proceeds of sale of the property which the debenture trustee has taken as security or possessed be not sufficient to repay all the amounts to debenture holders, the debenture trustee shall pay the amounts to debenture-holders on pro rata; and such shortfall amounts shall not be recovered from the debenture trustee’s property.

(5) Any debenture-holder holding more than fifty percent debentures may be showing the ground of failure of a debenture trustee to act in the interest of debenture-holders, make an application to the Securities Board to remove such debenture trustee.

(6) If on examining the application made pursuant to Sub-section (5), the contents appear to be reasonable, the Securities Board may remove such debenture trustee and arrange for another debenture trustee.