Demand Notice to Company through KMP at Registered Office Constitutes Deemed Service, Supreme Court Remands Section 9 Petition for Reconsideration

A bench of Justices J.B. Pardiwala and R. Mahadevan heard an appeal by Visa Coke Limited challenging concurrent orders of the NCLT, Cuttack Bench and the NCLAT which had dismissed a petition under Section 9 of the Insolvency and Bankruptcy Code for initiation of CIRP against M/s Mesco Kalinga Steel Limited on the ground that the statutory demand notice was addressed to key managerial personnel (KMP) and not to the corporate debtor. The question before the Court was whether a demand notice sent to the KMP at the registered office satisfied Section 8 of the IBC and the Adjudicating Authority Rules.

The Court allowed the appeal, set aside the NCLT and NCLAT orders and remanded the matter to the NCLT to decide the Section 9 petition afresh on merits after permitting oral and documentary evidence. The Court held that a demand notice in Form 3 which was addressed to the KMP and delivered at the corporate debtor’s registered office “cannot be said that the appellant did not comply with the statutory requirement” and that such delivery could be treated as deemed service under Section 8 read with Rule 5 of the Rules. The Court, in its reasoning, observed: “Therefore, in our opinion, the notice dated 31.03.2021 issued by the appellant to the KMP of the Corporate Debtor and delivered at the registered office of the Corporate Debtor, can be construed as a deemed service of demand notice as required under section 8 of the IBC.” The Court further emphasized that procedural defects should not defeat substantive rights and quoted that “laws of procedure are meant to regulate effectively, assist and aid the object of doing substantial and real justice and not to foreclose even an adjudication on merits.”

Background The dispute arose from a sale contract dated 11.10.2019 for supply of Low Ash Metallurgical Coke, later amended, under which Visa Coke supplied 1,700 MT on credit following assurances from Mesco that a Letter of Credit would be opened. Payment remained due and a legal notice preceded a demand notice in Form 3 dated 31.03.2021, sent to three KMPs at Mesco’s registered office claiming over Rs. 4.19 crore (including penal interest). Mesco contested service, contending the demand notice was addressed to individuals and not to the corporate debtor, and raised account reconciliation and novation/contentions about the date of default.

The NCLT dismissed the Section 9 petition on 24.01.2023 on the ground that the demand notice was not addressed to the corporate debtor but to its KMP; the NCLAT affirmed that decision on 03.10.2024. Before the Supreme Court, Visa Coke submitted that Rule 5(2)(b) and Section 20 of the Companies Act permitted service on officers at the registered office and that the Form 3 clearly referred to the corporate debtor. Mesco relied on the strict text of Section 8, the requirement of service on the corporate debtor, and the need to avoid precipitous initiation of CIRP absent unequivocal compliance.

In reaching its decision the Court surveyed precedent, including Rajneesh Aggarwal (notice to director construed as notice to company), NCLAT authorities which treated service on directors as good service in appropriate cases, and other Supreme Court dicta on procedural rules being handmaid to justice. The Court concluded that the Form 3 notice sent to the KMP in their official capacities and delivered at the registered office satisfied the statutory requirement for issuance of the demand notice, but observed that contested mixed questions of fact and law — including the date of default and any novation of contract — required fresh adjudication by the NCLT. The appeal was therefore allowed, the impugned orders were set aside and the petition was remanded to the NCLT for fresh disposal on merits; no order as to costs was made and connected misc. applications were disposed of.

Case Details: Case No.: Civil Appeal No. 357 of 2025 (2025 INSC 597)
Case Title: Visa Coke Limited v. M/s Mesco Kalinga Steel Limited
Appearances:
For the Petitioner(s): [Advocates not specified in the reported judgment text]
For the Respondent(s): [Advocates not specified in the reported judgment text]