NCLAT Dismisses Section 9 Application for Non-Service of Demand Notice u/s 8 [Read Order]
NCLAT affirmed that the Adjudicating Authority was correct in rejecting the Section 9 application on the grounds of non-compliance with statutory requirements, while also observing that the appellant could file a fresh application after properly serving the Section 8 notice in accordance with law
The National Company Law Appellate Tribunal (NCLAT) , principal bench, New Delhi has dismissed an appeal challenging the rejection of a Section 9 application filed under the Insolvency and Bankruptcy Code (IBC), holding that the statutory requirement of serving a Section 8 demand notice on the corporate debtor was not fulfilled.
The appellant had filed the Section 9 application seeking initiation of corporate insolvency resolution proceedings (CIRP), relying initially on postal service of the Section 8 notice, which was returned undelivered.
During the proceedings before the Adjudicating Authority , the appellant filed an affidavit claiming that the notice had also been served via email. However, the NCLT observed that the affidavit was filed after the conclusion of the hearing, noting that the email claim was introduced only in response to objections raised during the hearing.
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The Tribunal held that this constituted an afterthought, lacking procedural propriety and credibility, and could not cure the fundamental defect in the original application.
In its detailed analysis, the bench comprising Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) noted that the appellant had failed to demonstrate valid service of the Section 8 notice either to the registered office of the corporate debtor or to any of its directors.
The Tribunal relied on the statutory mandate under Section 8 of the IBC read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, emphasizing that strict compliance with these preconditions is mandatory before a Section 9 application can be entertained.
The appellate bench further clarified that procedural lapses cannot be remedied by post-hearing submissions or belated affidavits, and that such attempts do not establish maintainability of the application.
The Tribunal affirmed that the Adjudicating Authority was correct in rejecting the Section 9 application on the grounds of non-compliance with statutory requirements, while also observing that the appellant could file a fresh application after properly serving the Section 8 notice in accordance with law.
By upholding the NCLT’s decision, the appellate tribunal reinforced the principle that the statutory demand notice under Section 8 is a precondition for initiation of CIRP, and any deviation from this process renders the application premature and non-maintainable.
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