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Section71
The Companies Act, 2013

Debentures

In force From 01 Apr 2014 Act 18 of 2013 As on 15 Oct 2026

Act 18 of 2013 Ministry Corporate Affairs Enacted 29 Aug 2013 In force 01 Apr 2014 Cited by 1 provision Instruments 10

Section 71 of the Companies Act, 2013 deals with debentures. A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption: Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at The Act came into force on 01 Apr 2014.

(1) A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption:

Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting.

(2) No company shall issue any debentures carrying any voting rights.

(3) Secured debentures may be issued by a company subject to such terms and conditions as may be prescribed.

(4) Where debentures are issued by a company under this section, the company shall create a debenture redemption reserve account out of the profits of the company available for payment of dividend and the amount credited to such account shall not be utilised by the company except for the redemption of debentures.

(5) No company shall issue a prospectus or make an offer or invitation to the public or to its members exceeding five hundred for the subscription of its debentures, unless the company has, before such issue or offer, appointed one or more debenture trustees and the conditions governing the appointment of such trustees shall be such as may be prescribed.

(6) A debenture trustee shall take steps to protect the interests of the debenture-holders and redress their grievances in accordance with such rules as may be prescribed.

(7) Any provision contained in a trust deed for securing the issue of debentures, or in any contract with the debenture-holders secured by a trust deed, shall be void in so far as it would have the effect of exempting a trustee thereof from, or indemnifying him against, any liability for breach of trust, where he fails to show the degree of care and due diligence required of him as a trustee, having regard to the provisions of the trust deed conferring on him any power, authority or discretion:

Provided that the liability of the debenture trustee shall be subject to such exemptions as may be agreed upon by a majority of debenture-holders holding not less than three-fourths in value of the total debentures at a meeting held for the purpose.

(8) A company shall pay interest and redeem the debentures in accordance with the terms and conditions of their issue.

(9) Where at any time the debenture trustee comes to a conclusion that the assets of the company are insufficient or are likely to become in sufficient to discharge the principal amount as and when it becomes due, the debenture trustee may file a petition before the Tribunal and the Tribunal may, after hearing the company and any other person interested in the matter, by order, impose such restrictions on the incurring of any further liabilities by the company as the Tribunal may consider necessary in the interests of the debenture-holders.

(10) Where a company fails to redeem the debentures on the date of their maturity or fails to pay interest on the debentures when it is due, the Tribunal may, on the application of any or all of the debenture-holders, or debenture trustee and, after hearing the parties concerned, direct, by order, the company to redeem the debentures forth with on payment of principal and interest due thereon.

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(12) A contract with the company to take up and pay for any debentures of the company may be enforced by a decree for specific performance.

(13) The Central Government may prescribe the procedure, for securing the issue of debentures, the form of debenture trust deed, the procedure for the debenture-holders to inspect the trust deed and to obtain copies thereof, quantum of debenture redemption reserve required to be created and such other matters.

Section 71, The Companies Act, 2013 (Act 18 of 2013).

Cross-references

Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.

Referred to by 1

  1. s. 384 Debentures, annual return, registration of charges, books of account and their inspection

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

  1. Sare Shelters Project Private Limited vs Union of India

    Supreme Court of India 09 Aug 2019 Binding (SC) Reportable (2019) 8 SCC 1

    Court's Decision & Legal Precedent

    Real estate allottees are financial creditors within the meaning of Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016 because amounts advanced by allottees are disbursed against consideration for time value of money and have the commercial effect of a borrowing. The amendments to the Code effected through the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, which explicitly clarify that allottees are financial creditors through an explanation to Section 5(8)(f) and provide representation mechanisms through Sections 21(6A) and 25A, do not violate Articles 14, 19(1)(g) read with 19(6), or 300-A of the Constitution of India. These amendments are constitutional as they satisfy the test of reasonable classification, are based on intelligible differentia having rational nexus with legislative object, do not constitute manifest arbitrariness, and represent a legitimate economic experiment to which legislature must be given play in the joints.

    On this section: Referenced for analogy with how debenture holders (individual financial creditors) are already numerous and represented through trustees on Committee of Creditors

    Read the full order on eCourts India

  2. Landmark Apartments Pvt. LTD vs Union of India

    Supreme Court of India 09 Aug 2019 Binding (Supreme Court) Reportable Pioneer Urban Land And Infrastructure Limited & Anr. v. Union Of India & Ors., (2019) 9 SCC 1

    Court's Decision & Legal Precedent

    Allottees of real estate projects are financial creditors under Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016, as they finance projects through advance payments having the commercial effect of borrowing. The amendments to the Code treating allottees as financial creditors do not violate Articles 14, 19(1)(g), or 300-A of the Constitution. The explanation to Section 5(8)(f) is clarificatory in nature and does not enlarge the scope of the original provision. Allottees have the right to trigger insolvency proceedings under Section 7 and to be represented on the Committee of Creditors through authorized representatives. The Code and RERA operate in complementary spheres with concurrent remedies available to allottees.

    On this section: Referenced regarding debenture trustee appointment for debenture holders.

    Read the full order on eCourts India

  3. Saha Infratech Pvt. LTD vs Union of India

    Supreme Court of India 09 Aug 2019 Binding (Supreme Court of India) Reportable 2019 (8) SCC 1

    Court's Decision & Legal Precedent

    Allottees of real estate projects are financial creditors under Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016 (as amended in 2018), as they advance money against consideration of the time value of money for disbursement toward their flats/apartments, which money is used to finance construction projects and is repayable in the form of apartments delivered or refunded with interest. The amendments treating allottees as financial creditors do not violate Articles 14, 19(1)(g), or 300-A of the Constitution because: (1) there exists an intelligible differentia between allottees (who finance projects they are vitally interested in) and operational creditors (who supply goods/services without stake in debtor's success); (2) rational nexus exists with the Code's object of maximizing asset value through stakeholder involvement and timely resolution; (3) the legislature's judgment regarding economic experimentation is entitled to deference under the Swiss Ribbons principle; (4) the amendments do not create new creditor categories but align individual allottees with other individual financial creditors such as debenture and fixed deposit holders already recognized under the Code; and (5) the amendments are neither manifestly excessive nor disproportionate given the documented history of mass project delays, substantial sums advanced by allottees, and multiple settlement opportunities available to developers before management removal. The explanation to Section 5(8)(f) is clarificatory of what the original text already encompassed and does not illegally enlarge the definition. The Insolvency Code and Real Estate (Regulation and Development) Act operate in complementary spheres and provide parallel remedies, with the Code's non-obstante clause conferring supremacy in cases of conflict.

    On this section: Appointment of debenture trustees and secured debenture issuance provisions, cited for comparison with authorized representative mechanism for home buyers

    Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.

Made under this section, and citing it

4 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.

Another 6 instruments name this provision in its title or its text without being made under it.

All subordinate legislation

Questions about Section 71

What have the courts held on Section 71 of the Companies Act?

Sare Shelters Project Private Limited vs Union of India (09 Aug 2019) is the leading judgment on this section among those set out below: Referenced for analogy with how debenture holders (individual financial creditors) are already numerous and represented through trustees on Committee of Creditors. Another 2 judgments on this section are set out below, all of them from the Supreme Court.

How do I find court cases under Section 71 of the Companies Act?

In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 71, section 71 Companies Act, section 71 of the Companies Act. People searching for it also type companies act 71 of 2008 and companies act 71 of 2008 section 76. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with Sare Shelters Project Private Limited vs Union of India (09 Aug 2019).

What should I read with Section 71 of the Companies Act, and has it changed?

1 other provision in this corpus refers back to it. The rules and notifications made under it are where it actually bites, and there are 4: most recently G.S.R. NO. 43(E) Companies share capital and debentures amendment rules 2023 dated 21.01.2023 (2023), then Commencement notification (2018), and 2 more.

When did Section 71 of the Companies Act come into force?

Section 71 of the Companies Act, cited as Companies Act 71, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.

Other sections of this Act

Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.