Demand notice under insolvency law need not always include invoices when contractual debt and default are otherwise proved.

A section 9 application could not be rejected merely because invoices were not annexed with the demand notice where the minimum royalty obligation arose from the contract itself and debt was otherwise supported by the agreement and correspondence. Rule 5 permits a demand notice in Form 3 or a copy invoice in Form 4, so invoices were not mandatory in every case. The correspondence reflected acknowledgment of liability, leaving at most a reconciliation dispute on quantum and not a substantive pre-existing dispute. The claim was contractual, not a mere unliquidated damages claim, and operational debt and default were established.

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Issues: Whether the section 9 application was liable to be rejected for non-annexing invoices with the demand notice and for the alleged pre-existing dispute, and whether debt and default stood established on the basis of the technical guidance agreement and correspondence between the parties.

Analysis: The minimum royalty liability arose from the technical guidance agreement itself, and the agreement did not require the operational creditor to raise invoices as a condition precedent for claiming the minimum royalty. Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 permits a demand notice in Form 3 or a copy of the invoice with Form 4, and does not make annexing invoices mandatory where the debt can otherwise be shown by the contract and supporting documents. The correspondence exchanged between the parties also reflected an acknowledgment of liability of about Rs. 63,00,000/-, leaving at most a reconciliation dispute on quantum and not a substantive dispute negating the debt. The contention that the claim was only for unliquidated damages was not accepted, as the claim was founded on a contractual payment obligation and not on a mere speculative claim for damages.

Conclusion: The rejection of the section 9 application was unsustainable. The demand notice could not be held defective for want of invoices, and the existence of operational debt and default was established.

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