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A mistake in a 'Demand Notice' does not necessarily mean that it is defective

Cause Title : Credberg Advisors India Private Limited vs Platinum Holdings Private Limited, CP(IB)/46 (CHE) /2022, National Company Law Tribunal, Chennai Bench

Date of Judgment/Order : 01.02.2023

Corum : Dr. Deepti Mukesh, Member (Judicial) & Sameer Kakar, Member (Technical)

Citied: 

  1. Ramesh Kymal Vs. M/s. Siemens Gamesa Renewable Power Pt Ltd [ (2021) 3 SCC 224]
  2. Rajendra Bhai Panchal Vs. Jay Manak Steels and Ors [MANU/NL/0387/2020]

Background

An application under Section 9 of the the Insolvency and Bankruptcy Code, 2016 was filed by the Applicant / Operational Creditor. The sole objection of the Respondent / Corporate Debtor was with respect to the maintainability of the present Application. It argued that case of the Operational Creditor with respect to the date of default as per the statutory notice in 'Form 3' read with the present Application in 'Form 5' is 27.11.2020, thus is clearly hit by the period covered under Section 10A of the Code and in support they referred to judgment in Ramesh (supra).

The Operational Creditor by way of an 'Additional Affidavit' dated 03.01.2023 submitted that the date (27.11.2020) as originally mentioned under the present Application was only a typographical error and due to sheer oversight on the part of the Operational Creditor and the correct date would be 24.02.2020.

Judgment

The NCLT while admitting the application and rejecting the objection of the Respondent referred to the judgment in Rajendra (supra) wherein it was decided that a mistake in a 'Demand Notice' does not necessarily mean that it is defective. If a 'Corporate Debtor' wants to question the validity of the demand it is for it to show that the prejudice was suffered by it as a result of defect. If there is a mistake in the demand but the creditor is clearly owed the statutory minimum figure or more, the fact that the debt is mis stated may not automatically invalidate the demand as per decision 'Cardiff Preserved Coal & Coke Co.' V. 'Norton 36 LJ Ch 451. Further, the Court will take into account whether any injustice was caused to the 'Debtor' and even a grossly overstated statutory demand may not automatically be set aside as per decision Re a Debtor (No 490 / SD / 1991), (1992) 2 All ER 664 (ChD).

Therefore, the Corporate Debtor has not and would not be prejudiced by fact that Operational Creditor has mentioned the wrong date of default due to its inadvertence.

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