Section 8 IBC Demand Notice: Requirements, Format and Common Defects

What is a Section 8 Demand Notice?

Under Section 8(1) of the IBC, an operational creditor who has not received payment of an operational debt must deliver a demand notice to the corporate debtor before filing a Section 9 application. This is a mandatory pre-condition — a Section 9 application filed without a valid Section 8 notice is not maintainable.

Statutory Framework

Section 8(1) requires delivery of a demand notice of the unpaid operational debt, or a copy of an invoice demanding payment. Rule 5 of the IBC (Application to Adjudicating Authority) Rules, 2016 prescribes Form 3 for this purpose.

Essential Requirements

1. Identity of Parties

• Full legal name and registered address of the operational creditor
• Full legal name and registered address of the corporate debtor (verify on MCA portal)

2. Nature and Amount

• Amount of operational debt with clear breakdown
• Invoice numbers and dates
• GST components clearly stated

3. Date of Default

The date the debt became due must be specified. It determines the limitation period, is the basis for interest computation, and establishes when the default occurred.

4. Interest Calculation

If interest is claimed, state:

• Rate (contractual or statutory)
• Start date per invoice
• Total interest accrued as of notice date

The 10-Day Window

Once served, the corporate debtor has 10 days to either:

1. Pay the unpaid debt, or
2. Dispute the debt by notifying the creditor of a pre-existing dispute

If neither happens, the creditor may file a Section 9 application.

Common Defects

Wrong address for service — Must be the registered office on MCA records.

Vague interest computation — Each invoice has a different due date; compute separately.

Missing advocate credentials — Name, enrollment number and address must appear.

No invoice copies — Attach all unpaid invoices to the notice.

Pre-Existing Dispute

The Supreme Court in Mobilox Innovations v. Kirusa Software (2018) held that a real, bona fide dispute — even if not finally decided — is sufficient to reject a Section 9 application. Crucially, the dispute must be pre-existing, i.e., raised before receipt of the demand notice.

Checklist Before Dispatch

| Item | Done? | |---|---| | Registered address verified on MCA | ☐ | | Interest computed per invoice with start dates | ☐ | | All unpaid invoices attached | ☐ | | Advocate name and enrollment number stated | ☐ | | Notice in Form 3 format | ☐ | | Service via RPAD/speed post | ☐ |