#demand notice

NCLAT ruled that advance payments for undelivered goods qualify as operational debt under Section 9 of the IBC, and that a demand notice sent via FedEx meets procedural requirements if delivery is proven. The decision expands creditors ability to trigger insolvency proceedings and validates courier based notice service.

ITAT Mumbai rules that draft assessment orders under Section 144C of the IT Act cannot legally include demand notices or penalty initiation, setting a precedent for procedural compliance in transfer pricing assessments. The decision invalidates assessment orders that bundle these elements, impacting multinational corporations and tax authorities.

The Allahabad High Court has ruled that clerical mistakes in the date of a demand notice under Section 138 of the NI Act do not render a complaint invalid, provided the actual date is substantiated by independent documentary proof. This protects complainants from procedural defeat due to innocent drafting errors, reinforcing that substance must prevail over form in commercial dispute litigation.

NCLAT rules that a contractual obligation to pay minimum guaranteed royalty qualifies as operational debt under IBC Section 9, even in the absence of invoices, if the default is admitted and exceeds ₹1 lakh. This expands the scope of operational debt to include uninvoiced but contractually mandated payments, impacting creditors' rights in insolvency proceedings.

The NCLAT has clarified that the three-year limitation period under Section 95 of the IBC to initiate insolvency against a personal guarantor begins from the date the corporate debtor defaults, not from the date the creditor issues a demand notice under the guarantee. This resolves ambiguity affecting creditors and guarantors alike, ensuring consistency with the IBC’s statutory framework and preventing tactical delays.

The Punjab & Haryana High Court ruled that the two-year limitation period under Section 56(2) of the Electricity Act, 2003, for recovery of dues commences only upon issuance of a demand notice, not from the billing period. This interpretation protects consumers from time-barred claims and ensures statutory compliance by electricity providers.