Demand notice requirement bars insolvency initiation unless creditor complies with prescribed service and response conditions.

An operational creditor may, on default, deliver a demand notice or invoice in the prescribed form and manner and must serve it by the modes specified, with a copy filed with any information utility. The corporate debtor must, within ten days of receipt, notify the operational creditor of the existence of a dispute or pendency of suit/arbitration, or provide attested proof of payment by electronic transfer or cheque encashment. A genuine pre existing dispute bars initiation under the Code; the demand notice requirement is mandatory.

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