The NCLT ruled that absence of a separate postal receipt or acknowledgement does not invalidate a demand notice under Section 8 of the IBC, provided other proof of service exists. Service via registered post with postal indices suffices.
Absence of Postal Acknowledgement Does Not Invalidate Demand Notice
The National Company Law Tribunal (NCLT) has held that a demand notice issued under Section 8 of the Insolvency and Bankruptcy Code, 2016 remains valid even in the absence of a separate postal receipt or signed acknowledgement. The ruling arose in a petition where the corporate debtor challenged the initiation of insolvency proceedings due to alleged defective service.
The NCLT found that the financial creditor had dispatched the notice via registered post and produced postal indices showing date of posting and expected delivery. The tribunal relied on Section 27 of the General Clauses Act, 1897, and judicial precedents such as Electrosteel Steels Ltd. v. ICICI Bank (2016) to conclude that such evidence creates a presumption of service. The applicant had also demonstrated that the Principal Borrower failed to adhere to sanction terms, leading to irregularities in the loan account.
This decision provides clarity for financial creditors initiating IBC proceedings. It reduces procedural vulnerability in service of notices, emphasizing substance over technical defects. Practitioners should ensure dispatch through traceable means and retain postal records as prima facie proof of compliance with Section 8.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 8
- General Clauses Act, 1897, Section 27
- Electrosteel Steels Ltd. v. ICICI Bank (2016)
