Corporate Restructuring, Valuation and Insolvency · Application for Corporate Insolvency Resolution Process

Demand Notice under Section 8 IBC and Debtor's Reply

Updated 11 October 2026 · Fact-checked

Under Section 8, an operational creditor, after a default, delivers a demand notice or a copy of the invoice to the corporate debtor. The debtor has ten days from receipt to disclose a dispute or a pending suit or arbitration, or prove payment. If it does neither, the creditor can file under Section 9.

Understand Demand Notice under Section 8 and Debtor's Reply

The Code treats operational creditors (those owed for goods or services) differently from financial creditors. Before an operational creditor can go to the Adjudicating Authority, it must first give the debtor a chance to pay or to object. That chance is the demand notice under Section 8.

Section 8(1) says that on the occurrence of a default the operational creditor may deliver a demand notice of the unpaid operational debt, or a copy of the invoice, demanding payment of the amount involved in the default. The notice goes to the corporate debtor in the form and manner prescribed. The Explanation says a demand notice is a notice demanding payment of the operational debt in respect of which default has occurred.

The debtor then has ten days from receipt of the notice or invoice. Under Section 8(2) it must bring to the creditor's notice either (a) the existence of a dispute, or the record of a suit or arbitration filed before the receipt of the notice or invoice in relation to that dispute, or (b) payment of the unpaid debt.

Payment must be shown with documents. That means an attested copy of the record of electronic transfer from the debtor's bank account, or an attested copy of the record that the creditor has encashed a cheque issued by the debtor. A bare statement that the debt was paid is not what the section describes.

The reply decides what happens next. If, after the ten days, the creditor gets neither payment nor a notice of dispute, Section 9(1) lets it file for CIRP. If a valid dispute notice was received, the Section 9 application is liable to be rejected under Section 9(5)(ii)(d). So the demand notice is the gateway step, and the exam tests whether you can read the facts against it.

Key rules to remember

Demand notice (Section 8(1)): Default occurs → operational creditor delivers demand notice or copy of invoice to corporate debtor; Notice demands payment of the unpaid operational debt in the form and manner prescribed.
Reply period (Section 8(2)): Corporate debtor must respond within 10 days of receipt of the notice or invoice; The period runs from receipt by the debtor.
Reply ground (a): dispute: Existence of a dispute, or record of pendency of a suit or arbitration filed before receipt of the notice or invoice, in relation to the dispute; The suit or arbitration must have been filed before the notice or invoice was received.
Reply ground (b): payment: Attested copy of record of electronic transfer from debtor's bank account, or attested copy of record that creditor encashed debtor's cheque; Payment must be evidenced by one of these two documents.
Gateway to Section 9: After 10 days, no payment and no notice of dispute → creditor may file Section 9 application; Section 9(1). Creditor may propose an interim resolution professional under Section 9(4).
Creditor's affidavit (Section 9(3)(b)): Affidavit that no notice of dispute has been given by the corporate debtor; Wilful concealment of a dispute or payment is punishable under Section 76: imprisonment of 1 to 5 years, or fine of ₹1,00,000 to ₹1,00,00,000, or both.

How to solve Demand Notice under Section 8 and Debtor's Reply questions

Use this order for any problem on the demand notice and the debtor's reply.

1Confirm the creditor is an operational creditor and that the debt is an operational debt for goods or services, and that a default has occurred.
2Check the notice: a demand notice or a copy of the invoice, demanding payment, delivered to the corporate debtor in the prescribed form and manner.
3Fix the date of receipt by the debtor and count ten days from it.
4Test the reply: was a dispute raised, or a suit or arbitration filed before receipt of the notice, or was payment shown by the permitted documents?
5If a reply was sent, ask if it is within ten days and of the kind Section 8(2) recognises.
6Conclude under Section 9(1): if no valid reply, the creditor may file; if a dispute notice exists, the application faces rejection under Section 9(5)(ii)(d).
7Add compliance points: documents under Section 9(3), the affidavit, and the Section 76 risk for concealment.

Quickest way: Notice, ten days, reply: three checks

When to use it: Short case-based questions asking whether the creditor can file under Section 9.

Check 1: was a proper demand notice or invoice delivered to the debtor?
Check 2: did the debtor reply within ten days with a dispute (or earlier suit or arbitration) or documented payment?
Check 3: if yes to a valid reply, the creditor cannot succeed; if no reply, it may file. State the section and conclude in one line.

Common mistakes in Demand Notice under Section 8 and Debtor's Reply

Treating any reply from the debtor as a valid dispute.
Students think the words 'we dispute' are enough.
Fix: Tie the reply to Section 8(2)(a): a real dispute, or a suit or arbitration filed before receipt of the notice. Apply this to the facts given.
Counting the ten days from the date the creditor sent the notice.
Sending and receiving are confused.
Fix: The text says ten days of the receipt of the notice or invoice. Count from receipt.
Accepting an oral or unsupported claim of payment.
Students overlook the documents required.
Fix: Payment is shown by an attested copy of the electronic transfer record from the debtor's bank account, or of the record that the creditor encashed the debtor's cheque.
Saying a suit filed after the demand notice amounts to a pre-existing dispute.
The word 'pre-existing' is not tied to the text.
Fix: Section 8(2)(a) speaks of a suit or arbitration filed before the receipt of the notice or invoice. Check the dates.
Ignoring the creditor's disclosure duty and Section 76.
Students only look at the debtor's side.
Fix: Mention the Section 9(3)(b) affidavit and that wilful concealment of a dispute or full payment is punishable under Section 76.

Worked examples

Example 1

Sharma Components Ltd supplied goods to Kaveri Motors Ltd and raised an invoice of ₹18,00,000 that remained unpaid. Sharma delivered a demand notice on 1 March, and Kaveri received it the same day. Kaveri sent no reply and made no payment. On 15 March, Sharma files a Section 9 application. Advise whether it can do so.

Show the solution

Sharma is an operational creditor and the debt is for goods supplied. Default has occurred, so a demand notice under Section 8(1) was available and was delivered.
Under Section 8(2), Kaveri had ten days from receipt, that is until 11 March, to show a dispute or payment.
Kaveri did neither within the period.
Section 9(1) allows the creditor to file after the ten days expire if it receives neither payment nor a notice of dispute. Filing on 15 March is after expiry.
Sharma must furnish the documents under Section 9(3), including the notice copy and an affidavit that no notice of dispute was given by the debtor.

Answer: Yes. The ten-day period expired on 11 March without payment or notice of dispute, so Sharma may file under Section 9(1) on 15 March, with the documents required by Section 9(3).

Example 2

Anand Textiles Ltd, an operational creditor, delivers a demand notice to Bhavani Fabrics Ltd for ₹7,50,000. On the sixth day, Bhavani replies that the goods were defective, and that it had filed a suit on this issue three months earlier. Anand files under Section 9 without mentioning the reply. Discuss.

Show the solution

Bhavani replied on the sixth day, within the ten days allowed by Section 8(2).
The reply raises a dispute and records a suit filed before the receipt of the notice, which is what Section 8(2)(a) recognises.
Because the creditor received a notice of dispute, Section 9(1) is not satisfied, and under Section 9(5)(ii)(d) the Adjudicating Authority is to reject the application.
Anand's affidavit under Section 9(3)(b) must state that no notice of dispute was given. Filing it while knowing of the reply would be concealment.
Section 76 punishes an operational creditor who wilfully or knowingly conceals the dispute, with imprisonment of one to five years or fine of ₹1,00,000 to ₹1,00,00,000, or both.

Answer: Anand cannot properly proceed. The valid dispute notice leads to rejection of the application under Section 9(5)(ii)(d), and concealing it exposes Anand and any person who authorised the concealment to punishment under Section 76.

Exam tips

Write the provision first, then apply the dates and the reply to the facts, then conclude. Use section numbers 8(2), 9(1) and 9(5)(ii)(d).
Always compute the ten-day deadline from the date of receipt and show the date.
Quote the two payment documents exactly: electronic transfer record and encashed cheque record, both attested.
If asked to draft a demand notice, include the creditor and debtor details, the invoice reference and amount, the date of default, a demand for payment, and a statement that the notice is given under Section 8.
Link to Section 76 whenever the facts hint at a creditor hiding a dispute or payment.

Practice questions from Application for Corporate Insolvency Resolution Process

Demand Notice under Section 8 and Debtor's Reply: frequently asked questions

How many days does the debtor get to reply to a Section 8 demand notice?

The corporate debtor has ten days from receipt of the demand notice or copy of the invoice. Within that time it must bring a dispute or payment to the creditor's notice.

What counts as a pre-existing dispute under Section 8?

Section 8(2)(a) refers to the existence of a dispute, or the record of a suit or arbitration filed before the receipt of the notice or invoice in relation to that dispute. Check the facts and dates against this wording.

How can the debtor prove payment?

By sending an attested copy of the record of electronic transfer from its bank account, or an attested copy of the record that the creditor encashed its cheque. These are the two modes named in Section 8(2)(b).

Can the creditor file under Section 9 straight after the notice?

No. It must wait until the ten days expire. It may file only if it has received neither payment nor a notice of dispute.