Chapter II - Corporate Insolvency Resolution Process
Section 8
Section 8: insolvency resolution by operational creditor
Before an operational creditor can use the Section 9 application route, Section 8 provides for a demand notice or invoice demanding payment after default. The corporate debtor has ten days from receipt to notify the creditor of a dispute or payment.
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Need advice on Section 8?
This article is for general information. Refer to the Insolvency and Bankruptcy Code, 2016 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debt or copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.
(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor—
(a) existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;
(b) the payment of unpaid operational debt—
(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or
(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor.
Explanation.—For the purposes of this section, a “demand notice” means a notice served by an operational creditor to the corporate debtor demanding payment of the operational debt in respect of which the default has occurred.
Introduction
The notice stage gives the corporate debtor an opportunity to identify an existing dispute or show that the claimed operational debt was paid. Section 8 is followed by Section 9 if the statutory conditions for an application are met. The amount of default must also meet the Section 4 threshold.
Key takeaways
Notice follows default
The operational creditor may deliver a demand notice for unpaid operational debt or a copy of an invoice demanding payment.
Ten days from receipt
The corporate debtor is directed to bring any dispute or payment to the creditor's notice within ten days after receiving the notice or invoice.
Existing dispute matters
Section 8(2)(a) identifies an existing dispute or a pending suit or arbitration filed before receipt of the notice or invoice. The facts and timing need careful review.
Prepare and deliver the demand notice
Identify the operational debt, the amount involved in default and the corporate debtor. Send the demand notice or invoice demanding payment in the prescribed form and manner, and preserve evidence of delivery.
Assess a dispute response
A corporate debtor should identify an existing dispute, if any, or point to a suit or arbitration already filed before receipt of the notice or invoice. Whether a dispute is genuine may need adjudication; Section 8 is not a mechanism for resolving the underlying commercial dispute.
Record payment and the next stage
The section specifies records of electronic transfer or an encashed cheque to show payment. If payment or a notice of dispute is not received, the creditor's possible next step is governed by Section 9 and its separate requirements.
Practical checklist
Do
- Confirm the debt is operational and identify the default before issuing notice.
- Keep a copy of the notice or invoice and proof of when the corporate debtor received it.
- Preserve any earlier correspondence showing the nature and timing of a dispute or payment.
Avoid
- Do not treat Section 8 as the application itself; Section 9 governs the petition.
- Do not assume that silence conclusively proves the absence of a genuine earlier dispute.
Glossary
- Operational creditor
- A person to whom an operational debt is owed, as defined by Section 5(20).
- Demand notice
- The notice defined in the Explanation to Section 8 seeking payment of an operational debt in default.
Frequently asked questions
When does the ten-day response period begin?
Section 8(2) measures it from the corporate debtor's receipt of the demand notice or invoice mentioned in subsection (1).
Does no reply automatically allow admission of a Section 9 petition?
No. Section 9 has its own conditions, and the tribunal may have to consider evidence of a genuine pre-existing dispute even if no response arrived within ten days.
Need help applying this provision to your situation?
Contact BizeneedLast updated 9 October 2026