Demand notice filing procedure clarified for lawyers

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The Supreme Court had the opportunity to settle the law on important questions arising under the Insolvency and Bankruptcy Code, 2016 (IBC), which have impaired operational creditors from enforcing their rights under the IBC.

In Macquarie Bank Limited v Shilpi Cable Technologies, Macquarie Bank, Singapore, issued a demand notice under section 8 of the IBC through its lawyers calling upon Shilpi Cable Technologies to pay an outstanding debt. Shilpi failed to pay the amount and the bank initiated insolvency proceedings before the National Company Law Tribunal (NCLT). The bank’s petition was dismissed on the grounds that it had not complied with section 9(3)(c) of the IBC. On appeal, the National Company Law Appellate Tribunal (NCLAT) upheld the NCLT’s order holding that the demand notice under section 8 cannot be issued by a lawyer on behalf of the operational creditor. The bank accordingly approached the Supreme Court by way of a special leave petition.

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The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.

 

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