Second Demand Notice under IBC is Valid: What NCLAT Ruled
The second demand notice under Section 8 of the IBC can be treated as a fresh notice — this recent ruling by the National Company Law Appellate Tribunal (NCLAT) clears the air for many operational creditors who fear technical rejections in insolvency applications.
If you’ve ever sent a demand notice under the Insolvency and Bankruptcy Code (IBC) and didn’t get a timely reply or if the earlier application was dismissed, here’s why the second notice might still work in your favour.
What is a Demand Notice under Section 8 of IBC?
Under the Insolvency and Bankruptcy Code, 2016, an operational creditor must first issue a demand notice under Section 8 before initiating insolvency proceedings against a corporate debtor.
- It acts as an official intimation that debt is due
- The debtor has 10 days to either pay or dispute the claim
- If no satisfactory response is received, the creditor may file a case under Section 9 before the NCLT
Key Issue: Can a Second Demand Notice Be Sent?
Many creditors wonder — if the first notice fails or is dismissed, is sending a second demand notice legally valid? Can it restart the process?
This was addressed in a July 2024 case before the NCLAT in Deepak Cables (India) Ltd vs. Tulsyan NEC Ltd, where the tribunal clarified that:
“The second demand notice under Section 8 is not barred by law. It can be treated as a fresh cause of action, provided the claim is still within limitation and remains unpaid.“
What the NCLAT Ruling Means
Fresh Notice Allowed
The second demand notice does not amount to res judicata. It is not hit by any bar under the IBC or the Civil Procedure Code.
Helps When Earlier Notice Was Dismissed on Technical Grounds
If your earlier application was rejected not on merits (e.g. due to procedural defects or incomplete documents), you can send a new notice and file afresh.
Limitation Clock Resets
As long as the new notice is based on a continuing default and within the three-year limitation under the Limitation Act, it is valid.
Legal Angle: Case Law Reference
- Case Name: Deepak Cables (India) Ltd vs. Tulsyan NEC Ltd
- Date: July 2024
- Bench: NCLAT Chennai
- Key Citation: “A second notice can be issued for a continuing cause of action. Section 8 does not restrict issuance of subsequent notices.”
This ruling follows the earlier ratio in Dena Bank vs. C. Shivakumar Reddy, where the Supreme Court clarified that a fresh application is valid if default continues and is within limitation.
Practical Takeaways for Creditors
- Don’t give up after a dismissed IBC case — you may have a second chance
- Ensure limitation period is still running — 3 years from default or last acknowledgment
- Second notice must be complete and compliant — include all required invoices and documents
- Maintain correspondence records — useful in proving continued default
Expert View
“This ruling gives operational creditors breathing space. One technical error in filing shouldn’t shut the door permanently. But creditors must act quickly — timelines still matter,” says CS and IBC professional Ananya Rao.
FAQs
Q1. Can I send multiple demand notices under Section 8 of IBC?
Yes, if the previous one was not decided on merits, and the claim is within limitation.
Q2. Will the NCLT accept a new Section 9 application after a previous rejection?
Yes, provided the new notice and application are complete and the debt remains unpaid.
Q3. Does the limitation period restart with the second notice?
No — limitation runs from the date of default or last acknowledgment, not from the notice date.
Conclusion: Use the Law, But Use It Right
The NCLAT’s clarity on second demand notices under Section 8 of IBC is a welcome relief for creditors. It reinforces that insolvency law is meant to resolve genuine disputes — not punish procedural lapses.
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Summary
NCLAT ruled that a second demand notice under Section 8 of the IBC is valid and can act as a fresh notice if the debt remains unpaid. Creditors can reinitiate insolvency proceedings if the earlier notice or application was dismissed on non-merit grounds and within limitation.