Visa Coke Limited vs Mesco Kalinga Steel Limited 2025 INSC 597-S.8,9 IBC - Demand Notice
Insolvency and Bankruptcy Code 2016 - Section 8,9- Whether the notice served by the Operational Creditor upon the Key Managerial Personnel (KMP) of the Corporate Debtor at their registered office constitutes valid service of the statutory demand notice under Section 8 of the IBC, so as to maintain a section 9 petition for initiation of CIRP against the Corporate Debtor? SC held: It can be construed as a deemed service of demand notice as required under section 8 of the IBC. In such view of the matter, the approach of the NCLT and the NCLAT rejecting the section 9 petition on the technical ground that no notice was sent to the corporate debtor and the notice sent by the appellant to the KMP of the corporate debtor cannot be taken to be a notice issued under section 8 of the IBC, is incorrect and is unsustainable in law.(Para 14)
Insolvency and Bankruptcy Code 2016 - Section 8,9- An operational creditor must send a demand notice of unpaid operational debt to the corporate debtor as mandated under section 8 of the IBC, before initiating the proceedings under section 9 for CIRP and the failure to issue a proper demand notice can render the section 9 petition invalid- A section 9 petition can be filed only against the corporate debtor after giving prior notice under section 8 of the IBC to the corporate debtor; and the key requirements for filing the same are (i) demand notice under section 8 must be served on the corporate debtor; (ii) after 10 days, if the payment is not made or if there is no valid dispute, the application can be filed; (iii) application must be filed in Form 5 as prescribed by the Adjudicating Authority Rules, 2016; and (iv) supporting evidence such as invoices, bank statements, or written contracts must be attached. Further, a conjoint reading of section 8 of the IBC r/w Rule 5(2)(a) and (b) of the Adjudicating Authority Rules, 2016 would reveal that a demand notice under section 8 can be addressed and delivered to the corporate debtor through its KMP. (Para 8-8.1) [Context: The issue raised in this case was ]
Insolvency and Bankruptcy Code 2016 - Section 8,9- The trigger to initiate CIRP under section 9 of the IBC is occurrence of a “default” and not “mere existence of debt”. In other words, the operational creditor has to establish as to what is the actual date of default, failing which, the application filed under section 9 of the IBC is incomplete. (Para 15)
Procedural Laws - ‘Laws of procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice and not to foreclose even an adjudication on merits of substantial rights of citizen under personal, property and other laws. Procedure has always been viewed as the handmaid of justice and not meant to hamper the cause of justice or sanctify miscarriage of justice’. It is also a trite law that ‘the procedural defect may fall within the purview of irregularity, but it should not be allowed to defeat the substantive right accrued to the litigant without affording reasonable opportunity’. In other words, a substantive right should not be allowed to be defeated merely on technicality. (Para 14.1)
Supreme Court held that demand notice served by the Operational Creditor upon the Key Managerial Personnel (KMP) of the Corporate Debtor at their registered office can be can be construed as a deemed service of demand notice as required under section 8 of the IBC. https://t.co/4697mtitxE pic.twitter.com/jUzsSILvdl
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