NCLT Delhi Holds Demand Notice Valid Despite Service At Unregistered Email, Cites Use In Prior Dealings

The National Company Law Tribunal (NCLT), New Delhi, has found that a demand notice under the Insolvency and Bankruptcy Code was valid despite being sent to an unregistered email ID, as it had been consistently used in prior dealings between the parties.

The order was passed by a bench of Judicial Member Jyotsna Sharma and Technical Member Anu Jagmohan Singh.

“with regard to the Demand Notice being served by the Operational Creditor on the unregistered email id of the Corporate Debtor, we note that the alleged unregistered email id is the one on which the Operational Creditor used to share invoices with the Corporate Debtor and the said fact has not been disputed/rebutted by the Corporate Debtor. Therefore, in light of the aforesaid observations, we are of the view that the Demand Notice was duly served on the Corporate Debtor.”

The plea was filed by Mangal Sales Corporation, through its proprietor Dharmender Kumar, seeking initiation of insolvency proceedings against Prolific Papers Private Limited.

Mangal Sales Corporation had been supplying waste paper to the company for over nine years for use in manufacturing writing and printing paper.

It claimed that 82 invoices raised between February 5, 2023 and November 25, 2023 remained unpaid.

The company opposed the plea, arguing that the demand notice was defective as it was not served at its registered office and was sent to a different address and an unregistered email ID.

Rejecting these objections, the tribunal noted that the address used for service appeared in invoices and was reflected in the company's MCA records, while the email ID had been consistently used for exchange of invoices and was not disputed.

On the issue of payments, the tribunal recorded that the outstanding debt stood at ₹1.69 crore on the date of filing and was reflected in the ledgers of both parties.

“It is a settled principle of law that the threshold of Rs. 1 crore is to be seen at the time of filing of the application and not subsequent thereto,” the tribunal said, adding that “any subsequent payments (on 23.09.2024 and 14.10.2024) made with intent to reduce the threshold amount would not hamper the maintainability of the present application.”

Finding that an operational debt existed, default was established, and no pre-existing dispute was raised, the tribunal admitted the plea and initiated the corporate insolvency resolution process against the company.