BCD Limited has been incurring losses and has been defaulting in payment of interest and instalments of loans and an amount of ₹ 30 crore is outstanding and due to consortium of banks. The consortium of banks have mooted

The provisions of Section 53 of the Companies Act, 2013 (the Act) for issue of shares at discount provide as under: Except as provided in Section 54 (i.e. issue of sweat equity shares), a company shall not issue shares at a discount. Any share issued by a company at a discount shall be void. However, a company may issue shares at a discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan or debt restructuring scheme in accordance with any guidelines or directions or regulations specified by the Reserve Bank of India under the Reserve Bank of India Act, 1934 or the Banking (Regulation) Act, 1949. Where any company fails to comply with the provisions of this section, such company and every officer who is in default shall be liable to a penalty which may extend to an amount equal to the amount raised through the issue of shares at a discount or ₹5 lakhs, whichever is less, and the company shall also be liable to refund all monies received with interest at the rate of 12% per annum from the date of issue of such shares to the persons to whom such shares have been issued. In view of the above provisions of the Act, the contention of BCD Limited is not tenable and the equity shares at the discount of 10% of the face value will be required to be issued by the company to the consortium of banks as per the debt restructuring plan.