Demand notice delivered by an Advocate duly instructed by the Operational Creditor is a valid demand notice for purposes of initiation of CIRP

Last updated: 22 January 2021

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Quick Summary

The National Company Law Appellate Tribunal (NCLAT) ruled that a demand notice sent by an advocate on behalf of an operational creditor is a valid notice for initiating Corporate Insolvency Resolution Process (CIRP). The Adjudicating Authority had previously dismissed the application, stating the notice lacked authority, but the NCLAT overturned this decision. This ruling clarifies the validity of demand notices served through legal representatives.

Court :
NCLT

Brief :
08.01.2021: Upon proof of service of notice on Respondent, its appearance was awaited on the last date of hearing. Even today, nobody has turned up to defend the appeal on behalf of Respondent. In the given circumstances, we proceed to hear learned counsel for the Appellant and dispose off the appeal.

Citation :
Company Appeal (AT) (Insolvency) No. 905 of 2020

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Company Appeal (AT) (Insolvency) No. 905 of 2020

In the matter of:
Mohit Minerals Ltd.
....Appellant

Vs.

Nidhi Impotrade Pvt. Ltd.
....Respondent

Present:
Appellant:
Mr. Mritunjay Tiwary, Advocate.
Respondent:
None

ORDER
(Through Virtual Mode)

08.01.2021: Upon proof of service of notice on Respondent, its appearance was awaited on the last date of hearing. Even today, nobody has turned up to defend the appeal on behalf of Respondent. In the given circumstances, we proceed to hear learned counsel for the Appellant and dispose off the appeal.

2. Application filed by the Appellant- Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“I&B Code” for short) came to be dismissed at the hands of the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad, Court No.II, in terms of the impugned order dated 4th September, 2020 holding the same to be not maintainable for the reasons that the demand notice was issued without any authority.

To know more in details find the attachment file

FAQ :

The case concerns whether a demand notice for CIRP, delivered by an advocate instructed by the operational creditor, is legally valid.

The Adjudicating Authority dismissed the application for CIRP, holding that the demand notice was issued without proper authority.

The NCLAT ruled that a demand notice delivered by an advocate duly instructed by the operational creditor is a valid demand notice for initiating CIRP.

This ruling clarifies that operational creditors can validly issue demand notices for CIRP through their legal representatives, such as advocates.