Service of demand notices under the Insolvency Code: defective compliance with prescribed modes vitiated proceedings and prompted remittal.

Validity of a demand notice under the Insolvency Code depended on compliance with Rule 5's prescribed modes and recipient particulars; the tribunal found that service at the registered office by hand/registered/speed post and electronic service to a whole-time director or designated KMP are required, and discrepancies in addresses, incorrect email records and admitted failure to effect registered-post service meant the corporate debtor was denied the mandated opportunity to receive and contest the demand. For those reasons the defective service vitiated the order and the matter was remitted for fresh proceedings after effective service in accordance with law.

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Issues: Whether the notice of demand under Section 8 of the Insolvency and Bankruptcy Code, 2016 read with Rule 5 of the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 was validly served on the corporate debtor such that the Section 9 petition could be properly entertained.

Analysis: The decision examines the mode and particulars of service required by Rule 5 for delivering a demand notice or invoice to the corporate debtor, including service at the registered office by hand, registered post or speed post, and service by electronic mail to a whole-time director or designated key managerial personnel. The record discloses discrepancies between the addresses and the email used for service and the actual registered office details and the email of the whole-time director, and an admission that registered post service was not effected. On the established facts the prescribed modes and recipient particulars under Rule 5 were not satisfactorily complied with, thereby denying the corporate debtor the mandated opportunity to receive and contest the demand prior to initiation of proceedings under Section 9.

Conclusion: The non-compliance with the service requirements under Section 8 read with Rule 5 rendered the service defective and vitiated the impugned order; the impugned order dated 20.09.2024 is quashed and the matter is remitted for fresh proceedings after effective service in accordance with law.

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