Demand Notice under Section 8 of IBC, 2016

Introduction

An operational creditor's entry into the IBC machinery begins with a Section 8 demand notice. Statutory in form, strict in timing (10 days to either pay or raise a dispute), and central to admissibility — if the corporate debtor raises a pre-existing dispute within 10 days, the Section 9 application is liable to be rejected under Mobilox Innovations v. Kirusa Software, (2018) 1 SCC 353.

When to Use This Prompt

• Operational creditor with an undisputed debt of at least Rs. 1 crore.
• Default has occurred and date is identifiable from invoices and contract terms.
• No pending arbitration, suit or other dispute on record.
• You intend to follow up with a Section 9 application.

Statutory & Case-Law Backdrop

Section 8(1) requires delivery of a demand notice on occurrence of default. Section 8(2) gives the debtor 10 days to either pay or bring to notice the existence of a dispute or pending suit/arbitration. The threshold was raised to Rs. 1 crore by notification dated 24 March 2020. Mobilox controls what amounts to a pre-existing dispute — genuine, not spurious.

The Prompt

Paste into ChatGPT, Claude or Gemini. Replace every bracketed placeholder with your specific facts before generating.

You are an insolvency lawyer. Draft a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 in Form 3 with invoice schedule in Form 4 on behalf of operational creditor [NAME] to corporate debtor [NAME, CIN].

Inputs:
- Nature of operational debt: [GOODS / SERVICES]
- Invoice particulars: [NUMBERS, DATES, AMOUNTS]
- Total amount in default: Rs. [AMOUNT] (principal + contractual interest)
- Date of default: [DATE]
- Any pending dispute or arbitration: [NONE / DETAILS]

Structure: Form 3 covering letter with statutory demand for payment within 10 days, Form 4 invoice schedule, no-dispute averment, mode of dispatch to registered office (registered post and MCA-registered e-mail), and reservation of right to file Section 9 application.

Anatomy of the Draft

Why the prompt is built the way it is — section by section.

Common Mistakes to Avoid

• ×Issuing where a pre-existing dispute is visible from prior correspondence.
• ×Inflating interest beyond the contractual rate.
• ×Serving on a stale address rather than the registered office.
• ×Combining Section 8 with Section 138 notice in one document.
• ×Treating 10-day window as 10 working days — it is 10 calendar days.

Frequently Asked Questions

Final Thoughts

The Section 8 notice decides whether the corporate debtor folds or fights. Get the form right, get the timing right, document service obsessively — the rest is leverage.