If Rights Under Debenture Deed Are Transferred Without Prior Approval From Holders, Liabilities Of Corporate Debtor Remain Undischarged: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) has held that when a debenture deed mandates prior approval of the Debenture Trustee for any transfer of rights or liabilities, any such transfer made through an Acquisition Agreement without obtaining the required approval is in contravention of the principal deed and, therefore, unenforceable. Consequently, the Corporate Debtor cannot claim that its liabilities towards the debenture holders stood discharged merely by entering into such an agreement.

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