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Issues: Whether a demand notice under section 8 of the Insolvency and Bankruptcy Code, 2016 issued by an advocate or lawyer, without authority from the board of directors or without the person holding a position with or in relation to the operational creditor, is valid.
Analysis: The demand notice contemplated under section 8 read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 must be delivered by the operational creditor, or by a person duly authorised to act on its behalf and holding a position with or in relation to the operational creditor. The prescribed Form 3 and Form 4 indicate that the notice is not a mere lawyer's notice, but a statutory demand notice that informs the corporate debtor of the unpaid operational debt and the consequence of non-payment through commencement of the insolvency process. An advocate, lawyer, chartered accountant, or company secretary, in the absence of such authority and without a qualifying relationship with the operational creditor, cannot issue a valid section 8 notice.
Conclusion: The notice issued through a lawyer was invalid, the admission of the section 9 application could not stand, and the order admitting insolvency proceedings was set aside.
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