NCLT ruled that absence of separate postal receipt or acknowledgement does not invalidate a demand notice under IBC if other proof of service exists.
No Separate Postal Receipt Needed to Validate Demand Notice: NCLT Rules
The National Company Law Tribunal (NCLT) held that the absence of a separate postal receipt or acknowledgment does not invalidate a demand notice issued under Section 8 of the Insolvency and Bankruptcy Code, 2016 (IBC), provided there is sufficient corroboration of service. The tribunal accepted evidence such as speed post logs, delivery reports, and statutory declarations as adequate proof.
The corporate debtor had objected to the maintainability of a Section 7 application on grounds that the demand notice was not properly served. The NCLT rejected this, citing the Supreme Court’s decision in Innoventive Industries Ltd. v. ICICI Bank, which emphasized substantial compliance over technical defects. The tribunal noted that if the contents of the notice demonstrate an intention to enforce the debt and reach the debtor, the purpose of Section 8 is fulfilled.
Practitioners should ensure that creditors maintain proper dispatch records and use traceable delivery methods. While formal receipts are ideal, they are not fatal if alternative evidence proves delivery. This liberal approach promotes efficiency in IBC filings and prevents frivolous objections based on procedural minutiae.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 8
- Innoventive Industries Ltd. v. ICICI Bank (2017) 1 SCC 407
