NCLAT Declares Transfer of Debenture Rights Invalid Without Debenture Holders’ Consent

The National Company Law Appellate Tribunal (NCLAT) held that transferring rights under a debenture deed without the prior approval of debenture holders is invalid.

The tribunal emphasized that such unauthorized transfer cannot discharge the liabilities of the corporate debtor. 

The decision came in a case involving non-compliance with debenture terms, where debenture holders were not consulted before rights were assigned. 

NCLAT stated that the corporate debtor remains responsible for its obligations, and such procedural violations render the transaction ineffective in law.