Dispatch Of Statutory Demand Notice to Last Known Address Constitutes Valid Service: NCLT Hyderabad

The Hyderabad National Company Law Tribunal (NCLT) held that sending a statutory demand notice to the last known address of a personal guarantor constitutes valid service under the Insolvency and Bankruptcy Code, 2016, even if the notice is returned unserved.

A Bench comprising Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri admitted a petition filed by Punjab National Bank under Section 95 of the Code to initiate the Personal Insolvency Resolution Process (PIRP) against Smt. Kotimreddy Anitha, the personal guarantor of Variegate Projects Pvt. Ltd.

The Tribunal observed:

“The legal position laid down in Paresh Rastogi v. Omkara Assets Reconstruction Pvt. Ltd. and the judgment of the Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed further support the presumption of valid service where notice is sent by registered post to the last known address. Accordingly, the requirement of issuance of a statutory demand notice stands satisfied in the present case.”

PNB sanctioned credit limits of Rs. 65 crore to the corporate debtor on 13 February 2012. The corporate debtor defaulted, leading the bank to classify the accounts as Non-Performing Assets on 24 March 2016.

Anitha had executed a Deed of Personal Guarantee on 1 March 2012 to secure these facilities. Following the default, PNB recalled the outstanding amounts in May 2016 and filed a recovery application with the Debts Recovery Tribunal (DRT), which issued a Recovery Certificate on 5 April 2019 for Rs. 59.73 crore. The total debt, including interest, had grown to Rs. 113,79,71,902.50.

The Tribunal observed that One-Time Settlement proposals submitted by the corporate debtor, including the last on 22 August 2023, constituted an acknowledgment of debt binding on the personal guarantor and extended the limitation period for filing the insolvency petition.

PNB issued a statutory demand notice (Form B) to the Respondent on 26 December 2024. Although the notice was returned undelivered with the postal remark “addressee left without instructions,” the Tribunal held it validly served under the deemed-service clause in the Guarantee Agreement, which provides that any notice sent by post to the address provided by the guarantor is deemed served within 24 hours of dispatch. The Tribunal emphasised that such contractual stipulations are binding and enforceable.

The Bench relied on judicial precedents, including Paresh Rastogi v. Omkara Assets Reconstruction Pvt. Ltd. and the Supreme Court's ruling in C.C. Alavi Haji v. Palapetty Muhammed, to reiterate that service must be presumed when a notice is sent by registered post to the correct address, even if the addressee is unavailable or the notice is returned.

On the merits, the Tribunal found that the corporate debtor defaulted on repayment, and recovery proceedings culminated in the issuance of a recovery certificate. Acknowledgment of debt through OTS proposals extended the limitation period, rendering the 2025 petition timely.

On 12 March 2026, officially initiated the PIRP against Anitha, declared a moratorium under Section 101 staying all legal proceedings in respect of the debt for 180 days, and appointed Mr. Anup Kumar Singh as the Resolution Professional.

Accordingly, the NCLT admitted the petition.