Demand Notice Served On Registered Email Address Of Corporate Debtor Sufficient To Satisfy Requirement U/S 8 Of IBC: NCLAT

Brief Facts:

An agreement was entered into between S.R. Garments and the Government of Uttar Pradesh for the supply of socks. M/s Rameshwar Textiles Mills Pvt. Ltd. (Corporate Debtor) engaged Sadhna Dye Chem (Operational Creditor) as a sub-contractor, who in turn engaged AOV Clever Knit LLP as its sub-contractor.

The Operational Creditor supplied socks to the Corporate Debtor and raised six invoices totaling Rs.1,65,97,750. Upon non-payment, a Section 8 demand notice was sent by post on 24.04.2023, but delivery was unsuccessful. A follow-up email notice was sent on 02.05.2023, which the Corporate Debtor claimed was not received.

On 07.07.2023, the Operational Creditor filed a Section 9 application claiming an operational debt of Rs.4,29,14,887 and purportedly served an advance copy by email. The Adjudicating Authority issued notice on 21.08.2023 and listed the matter for hearing on 12.09.2023. The Corporate Debtor was informed by email but failed to appear.

On continued non-appearance, the Adjudicating Authority proceeded ex-parte, admitted the petition, and initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Aggrieved by the order, the suspended Director filed an appeal.

Contentions:

The Appellant submitted that Section 9 application had been admitted ex-parte by the Adjudicating Authority without giving the Appellant a meaningful opportunity to be heard thereby violating the principles of natural justice.

It was further submitted that the Operational Creditor had failed to validly serve and deliver the Demand Notice under Section 8(1) of the Code. This led to ex-parte admission of the Section 9 petition without the Corporate Debtor getting a fair hearing before the Adjudicating Authority and therefore the impugned order deserves to be set aside.

Per contra, the Respondent submitted that the alleged dispute raised by the Corporate Debtor with respect to supply of defective socks have no nexus with the six invoices which formed the subject matter of the present Section 9 petition.

It was further contended that the Corporate Debtor was informed about the issuance of the Section 8 Demand Notice and the hearing dates through emails sent to its registered email address. The appellant's claim that the email ID was non-operational is a weak and frivolous defence, as the Corporate Debtor had continued to use the same email account even after November 2021.

Observations:

The Tribunal at the outset observed that the Operational Creditor is required to deliver a demand notice on the occurrence of default on the Corporate Debtor and that a demand notice under Section 8 is a forerunner to the commencement of insolvency proceedings against a Corporate Debtor.

After perusing the relevant materials, it held that The registered email address used to communicate with the Corporate Debtor was the same as that disclosed on the Company Master Data. The Appellant's claim that the email was non-operational due to the departure of the employee managing it after July 2021 is unfounded.

It further added that Public records continued to reflect the same email address even after that date. Specifically, Form MGT-7 for FY 2020–21, the MCA Company Master Data as of 20.07.2024, and a Board Resolution dated 30.11.2021 all listed the same email. Therefore, the Corporate Debtor was bound by its public representation regarding its registered email address.

Based on the above, it held that there is no violation of the principles laid down in the Shailendra Sharma and Sunil Sanghavi judgments, as the Operational Creditor complied with the statutory requirements under the IBC. After the postal delivery of the demand notice failed, the notice was duly served on the registered email address of the Corporate Debtor, fulfilling the legal mandate.

The Tribunal also observed that in Naresh Kumar Aggarwal v. CFM Asset Reconstruction Pvt. Ltd. & Anr, the NCLAT held that service of notice via email to the address registered with the MCA satisfies the requirement of proper service.

The Appellate Tribunal in the above case also held that any doubts raised by the Corporate Debtor regarding the authenticity of the email ID used by the Operational Creditor are untenable, as the email address was the registered one and consistently reflected in multiple documents issued by the Corporate Debtor.

The Supreme Court in Mobilox Innovations Pvt Ltd. Vs Kirusa Software Pvt Ltd. in (2018) held that the notice must inform the operational creditor of an existing dispute or ongoing legal proceedings. At this stage, the Adjudicating Authority only needs to determine whether there is a plausible dispute requiring investigation, not assess its merits.

The Apex Court also held that spurious, illusory, or unsupported defences must be rejected, but a genuine, factual dispute mandates dismissal of the application.

While applying the above law to the facts of the present case, the Tribunal held that there is no credible evidence to support the existence of a pre-existing dispute. If the Corporate Debtor truly believed there was a dispute based on the letter dated 05.07.2018, it is unclear why payments totaling ₹40,00,000 were made to the Operational Creditor in December 2021. Moreover, the absence of any debit notes or follow-up actions further weakens the claim of a genuine dispute.

Accordingly, the present appeal was dismissed.

Case Title: Vinita Pramod Devkar Versus Shri Kailash Shah and Anr.

Case Title: Company Appeal (AT) (Insolvency) No. 364 of 2024

Judgment Date: 09/05/2025

For Appellant : Mr. Palash S. Singhai, Mr. Pragya Prakash Upadhyay and Mr. Harshal Sareen, Advocates.

For Respondent : Mr. Gaurav Mitra, Sr. Advocate, Mr. Ravi Raghunath and Ms. Aarushi Mishra, Advocates for R-2.

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