In short. Reply to a section 8 IBC demand notice within 10 days of receiving it. Point to a genuine dispute about the debt, the quality of goods or services, or a breach of warranty that existed before the notice, or to a suit or arbitration filed earlier, and attach the documents that prove it. If a real pre-existing dispute is shown, the NCLT must reject the section 9 petition.
This post is for the company at the receiving end: the buyer, the employer or the project owner that has been served with a Form 3 or Form 4 notice by a supplier, contractor or service provider. It explains how to check whether the notice is valid, what counts as a pre-existing dispute, how to write the reply and what to attach. The creditor's side of the same process, including when to file, is covered in our post on section 9 petitions by operational creditors.
A section 8 notice comes only from an operational creditor. If the notice or petition comes from a bank, an NBFC or another lender, no demand notice is required and the pre-existing dispute defence does not apply; see section 7 petitions by financial creditors instead. For the full range of our insolvency work for companies, see bankruptcy and insolvency advice.
- Law
- Section 8(2), Insolvency and Bankruptcy Code 2016
- Time to reply
- 10 days from receipt of the notice
- What to show
- Pre-existing dispute, earlier suit or arbitration, or payment
- Legal test
- Plausible, genuine dispute (Mobilox, 2017)
- If you stay silent
- Creditor can file under section 9 at the NCLT
- Threshold for a petition
- Default of ₹1 crore or more
How many days do you have to reply to a section 8 demand notice?
Ten days from the date the company receives the notice (section 8(2)). The period runs from receipt, not from the date printed on the notice or the date it was posted. Note down the date of delivery at the registered office, the date of any email to directors, and keep the envelope with the postal markings. If the notice reached the company by email on one date and by speed post on another, assume the earlier date unless you have a strong reason not to.
The 10 days are short and do not stop for weekends or holidays in any way you should rely on. Treat day one as the day after receipt and plan to send the reply by day seven or eight, so that there is time to deliver it by speed post and email before the period ends. A reply sent on the eleventh day is not fatal in every case, as explained below, but it moves the argument onto weaker ground.
Within those 10 days, section 8(2) gives the company two answers. It can bring to the creditor's notice the existence of a dispute, or the record of a suit or arbitration filed before the notice was received. Or it can show that the unpaid debt has been paid, by an attested copy of the record of electronic transfer or of an encashed cheque. Anything else, including a promise to pay later, does not stop the creditor from filing.
What is a pre-existing dispute under the IBC?
A pre-existing dispute is a genuine disagreement about the debt that existed before the company received the demand notice. Section 5(6) of the Code says a dispute includes a suit or arbitration relating to the existence of the amount of debt, the quality of goods or services, or a breach of a representation or warranty. The Supreme Court held in Mobilox Innovations v Kirusa Software (2017) that the word "includes" means a dispute does not have to be pending in a court or arbitration. A dispute raised in correspondence, before the notice, is enough if it is real.
The Mobilox test has two parts. The NCLT must see whether there is a plausible contention that requires further investigation, and whether the dispute is a patently feeble legal argument or an assertion of fact unsupported by evidence. The tribunal does not decide who is right. It separates the grain from the chaff: a dispute with evidence behind it defeats the petition, while spurious defences, mere bluster and disputes manufactured after the notice do not.
The timing matters as much as the content. The dispute must exist before the notice was received. A detailed list of defects sent for the first time in the reply to the notice is, on its face, an afterthought. The same list, with emails from the site engineer raising those defects months earlier, is a pre-existing dispute. The reply's job is to bring those earlier documents to the creditor's notice, in an organised way, within the 10 days.
What counts as evidence of a pre-existing dispute?
NCLT benches look for documents created before the notice that show the company was contesting the debt, not merely delaying payment.
| Evidence | Usually helps? | Why |
|---|---|---|
| Emails or letters complaining about defects, delay or short supply, sent before the notice | Yes | Shows the dispute existed and was communicated |
| Rejection notes, inspection reports or test certificates showing failure | Yes | Objective record of a quality issue |
| Debit notes raised and communicated before the notice | Yes, if communicated | Shows a contested amount; less weight if never sent to the creditor |
| Suit or arbitration filed, or arbitration invoked, before the notice | Yes | Expressly covered by section 8(2)(a) |
| Pending section 34 challenge to an arbitral award on the debt | Yes | The debt is still under adjudication |
| Minutes of meetings recording disputes about quantities or rates | Yes | Especially if signed by both sides |
| Internal emails never sent to the creditor | Little weight | A dispute must be brought to the creditor's notice |
| Complaints first raised in the reply to the notice | Rarely | Looks like an afterthought unless backed by earlier records |
| Balance confirmations or payment plans signed by the company | Hurts the defence | Shows the debt was admitted |
| General financial difficulty or delayed receivables | No | Inability to pay is not a dispute |
How does the NCLT apply the Mobilox test in practice?
The bench reads the demand notice, the reply and the documents attached to both, and asks whether there is a real dispute or a defence made up to avoid payment. It does not hold a trial or weigh evidence the way a civil court would. A dispute that would need witnesses and expert evidence to resolve is, for that very reason, a dispute that defeats a section 9 petition. The creditor is left to file a suit or invoke arbitration.
A partial dispute raises a further question. If the company disputes ₹20 lakh of a ₹1.5 crore claim, the undisputed balance of ₹1.3 crore still exceeds the threshold, and the petition may proceed on that balance. If the dispute brings the undisputed amount below ₹1 crore, or goes to the root of the contract, such as a claim that the entire installation failed, the petition is likely to fail. So the reply should be precise about what is disputed and why, rather than vague about everything.
Benches also look at conduct. A company that accepted goods without protest, used them in production, signed balance confirmations and proposed instalments will struggle to persuade the NCLT that it had a quality dispute all along. A company that raised complaints at the time, withheld payment with stated reasons and asked for replacement is in a far stronger position. The reply cannot create that history; it can only present it.
First check whether the notice itself is valid
Before drafting a word about the dispute, check whether the notice can found a petition at all. A section 9 petition lies only against a corporate debtor, so the notice must be addressed to a company or LLP. It must come from an operational creditor, meaning someone who supplied goods or services or whose dues arise from employment or statute, not a lender. It should be in Form 3, or be a copy of the invoice demanding payment in Form 4, and be delivered at the registered office or by email to a whole-time director or key managerial person.
Then check the amount and the dates. The default must be at least ₹1 crore for a petition to be filed, so a notice for a smaller sum is a warning but not an insolvency threat. Check whether the invoices relied on are within three years of their due dates, since Article 137 of the Limitation Act applies. Check whether any of the invoices were already paid, and whether the notice includes interest or charges that the contract does not provide for.
Defects in the notice belong in the reply, stated briefly and without relying on them alone. Tribunals tend not to dismiss petitions on technical points if the substance is clear, and a reply that argues only about form while ignoring the debt looks evasive. Raise the defects, then deal with the debt on its merits.
The first 48 hours after the notice arrives
Most of the work that decides the outcome happens in the first two days.
- Record the exact date and mode of receipt, and keep the envelope and email headers.
- Diarise day 10 and set an internal deadline of day 7 for sending the reply.
- Pull the contract, purchase orders, invoices, delivery and acceptance records for every invoice in the notice.
- Ask the operations, quality, site and purchase teams for every email or letter to the creditor that raised a complaint, with dates.
- Check for any arbitration notice, legal notice or suit about this contract, and its date.
- Reconcile the creditor's figures with your ledger, including payments, credit notes and debit notes.
- Find any balance confirmations or payment plans your company signed, because the creditor will rely on them.
- Decide who will sign the reply and confirm their authority by board resolution or letter.
How to draft and send the reply to a demand notice
The reply should read like the first chapter of a defence the company is prepared to prove, not a holding letter.
Open with the date of receipt and the answer
State when the notice was received and that the company disputes the claim, in whole or in specified part, under section 8(2)(a). If part of the claim has been paid, say so and annex the proof of payment.
Set out the history of the dispute by date
Describe, in date order, when the problem arose and how and when the company raised it with the creditor. Refer to each earlier email, letter, inspection report or meeting by its date and annexure number. This chronology is the heart of the reply.
Deal with the figures invoice by invoice
Give a short table or paragraph showing which invoices are disputed, on what ground, and which are paid or not yet due. Where the company claims damages or set-off, quantify it and explain the basis. Vague claims of loss carry little weight.
Raise defects in the notice briefly
Point out any defect in form, service, limitation or the creditor's status in a short paragraph. Do not let these points crowd out the substance.
Mention any suit or arbitration
If a suit or arbitration about the debt was filed or invoked before the notice, give its particulars and annex the papers. If the contract has an arbitration clause and none has been invoked, the company may say it intends to invoke it, but that alone does not create a pre-existing dispute.
Send it properly and keep proof
Send the reply to the address given in the notice and to the creditor's registered office by speed post, and by email to the signatory and the creditor's directors, within the 10 days. Keep tracking reports and email delivery records, because the company may need to prove the reply was received.
Where the creditor has recorded the debt with an information utility, the company should also record its dispute there, since section 9(5) treats a record of dispute in an information utility as a ground for rejection. Ask the creditor or check with the utility whether such a record exists.
Documents to annex to the reply
Annex copies, not originals, and number them so that the reply can refer to each one by annexure.
The contract
- Agreement, purchase order or work order
- Technical specifications and quality standards
- Clauses on inspection, acceptance, warranty, retention and liquidated damages
- Arbitration clause, if any
The dispute
- Complaint emails and letters sent before the notice
- Rejection notes, inspection and test reports
- Photographs with dates, where relevant
- Minutes of meetings and site records
- Debit notes and the covering letters sending them
- Any third-party report, such as from a consultant or lab
Payments and proceedings
- Ledger extract for the creditor's account
- Proof of payments by bank transfer or encashed cheque
- Arbitration notice, statement of claim or plaint filed before the notice
- Any section 34 petition challenging an award on this debt
- Board resolution or authority for the signatory
What should the reply avoid saying?
Do not admit the debt in passing. Phrases such as "we acknowledge the outstanding but are facing cash flow issues" or "we will clear the dues shortly" are admissions that the creditor will quote at the hearing, and they may also extend limitation. If the company genuinely owes part of the amount, identify that part precisely and either pay it or say how it will be dealt with.
Do not overstate the dispute. A reply claiming that every invoice is disputed, when the company's own ledger shows several were paid without complaint, damages credibility on the points that matter. NCLT benches read many of these replies and recognise the pattern of a general denial with no dates and no documents. A narrower dispute that is fully documented is more persuasive than a broad one that is not.
Do not threaten or abuse. A measured reply that sets out the history, the figures and the documents reads well when the bench looks at it months later. A reply that accuses the creditor of extortion without evidence reads as a substitute for a defence.
Should you pay the undisputed part?
Often, yes. If the company accepts that some invoices are due and only others are disputed, paying the undisputed amount within the 10 days removes the strongest part of the creditor's case. If the payment brings the remaining claim below ₹1 crore, the creditor cannot file a section 9 petition at all on that debt, whatever it thinks of the dispute.
Payment must be proved in the way section 8(2)(b) contemplates: by an attested copy of the record of electronic transfer from the company's bank account, or by proof that a cheque issued by the company was encashed. A cheque merely issued, or a promise of payment, does not count. Pay from the company's own account so that the money is clearly traceable to it.
When Advocate B.K. Singh advises a company on a demand notice, he usually asks the finance team for a simple reconciliation first: what was supplied, what was paid, what is disputed and why. More often than people expect, that exercise shows that part of the claim is plainly due. Paying that part and defending the rest firmly is usually a stronger position than disputing everything.
What if the 10 days have already passed?
Missing the 10 days does not mean the petition will be admitted automatically. If the creditor files a section 9 petition, the company will receive notice from the NCLT and can file a reply to the petition. Benches have looked at whether a dispute existed before the demand notice even where it was not raised in a formal reply within 10 days, provided the earlier documents show it clearly. The question remains whether the dispute was real and pre-existing.
The position is weaker, though. The creditor's affidavit under section 9(3)(b) will say that no notice of dispute was received, and the company starts by explaining its silence. If you are past the 10 days, send a reply anyway, as soon as possible, setting out the earlier dispute with documents. Then prepare the reply to the petition on the same lines, so that the bench sees the same consistent history twice.
Arbitration, suits and the timing trap
A suit or arbitration filed before the demand notice is expressly a ground of dispute under section 8(2)(a). One started after the notice is not, by itself, a pre-existing dispute, though it may rest on correspondence that is. Companies sometimes rush to invoke arbitration on day nine and rely on that alone. The bench will look past the arbitration notice to the earlier record, and if the earlier record is empty, the arbitration notice will not save the company.
Where an arbitral award on the same debt has already been made and the company has challenged it under section 34 of the Arbitration and Conciliation Act, the Supreme Court held in K. Kishan v Vijay Nirman Company (2018) that the operational creditor cannot use the IBC to enforce the disputed award. Our posts on challenging an arbitral award under section 34 and the arbitration practice page explain that process.
The provisions behind the defence
Section 5(6), IBC
Defines dispute to include a suit or arbitration about the existence of the amount of debt, the quality of goods or services, or a breach of representation or warranty.
Section 8(2), IBC
Within 10 days of receipt, the company may bring to the creditor's notice an existing dispute or a suit or arbitration filed before receipt, or show payment by electronic transfer record or encashed cheque.
Section 9(5), IBC
The NCLT must reject the petition if a notice of dispute has been received by the creditor or there is a record of dispute in an information utility.
Rule 5, Application to Adjudicating Authority Rules 2016
Prescribes Forms 3 and 4 for the demand notice and the modes of delivery to the company.
Mobilox Innovations v Kirusa Software (2017)
The NCLT asks only whether there is a plausible, genuine dispute that existed before the notice; it does not decide the merits.
Civil penalty on the creditor
After the 2026 amendment, an operational creditor that conceals a notified dispute or a full and final settlement in its section 9 application faces a civil penalty imposed by the NCLT, replacing the earlier criminal provision in section 76.
A made-up example: the hospital and the HVAC contractor
Here's a made-up example. A hospital company registered in Delhi engages a contractor to supply and install the air conditioning system for a new wing in Dwarka. The contract value is ₹3.2 crore, with 10% retention until a performance test. The hospital pays ₹1.9 crore and stops. Over the following months its facilities manager sends six emails complaining that operating theatres are not holding the required temperature, and a consultant's report records that two chillers are undersized. The contractor replies to some emails, promising to look into it.
Eight months later the contractor serves a Form 3 notice demanding ₹1.3 crore. The hospital records the date of receipt and, on day six, sends a reply. It sets out the six emails by date, annexes the consultant's report, explains that the performance test has not been passed so the retention is not due, and quantifies the cost of replacing the chillers. It identifies one invoice of ₹18 lakh for ductwork that it accepts, and pays that invoice by bank transfer the same day, annexing the transfer record.
The contractor files under section 9 anyway. At the hearing, the bench sees a dispute about the quality of the work raised repeatedly before the notice, supported by a third-party report. It also sees that, once the paid invoice is removed, the claim stands at ₹1.12 crore, of which ₹32 lakh is retention not yet due under the contract, leaving less than ₹1 crore in default even before the quality dispute is considered. The petition is dismissed, leaving the contractor to pursue arbitration under the contract. In a real case, the bench's view would depend on the actual documents and how clearly they show the dispute.
Mistakes companies make with demand notices
- Ignoring the notice because the amount is "too small to matter". If the default is ₹1 crore or more, silence lets the creditor file with a clean affidavit.
- Sending a holding reply. A letter saying "we deny everything and will reply in detail later" does not bring a dispute to the creditor's notice.
- Inventing complaints. A dispute that appears for the first time in the reply, about goods accepted long ago, is treated as an afterthought.
- Admitting the debt while disputing it. Cash-flow explanations and promises to pay undo the dispute in the same letter.
- Sending the reply to the wrong place, or late. Use the address in the notice and the creditor's registered office, by speed post and email, within 10 days.
- Forgetting the information utility. If the debt is recorded there, record the dispute too.
- Treating the reply as the end. Keep the file ready; if a petition follows, the reply to it must tell the same story with the same documents.
Should the company settle anyway?
Sometimes the commercial answer differs from the legal one. Even a company with a respectable dispute may decide that the risk of admission is not worth taking. If a section 9 petition is admitted, the board is suspended, an interim resolution professional takes control, a moratorium begins and every creditor is invited to claim. Promoters' personal guarantees to banks may then be called. Our posts on the section 14 moratorium and director liability after insolvency explain what follows.
Settling before admission is far simpler than after it. Before admission, the creditor can withdraw its petition with the bench's leave. After admission, withdrawal needs 90% of the Committee of Creditors under section 12A, within the narrower window the 2026 amendment allows; see settling through section 12A. If the company is admitted despite a genuine dispute, an appeal lies to the NCLAT within 30 days, extendable by 15, as described in our post on NCLAT appeals.
What to do today if the notice has just arrived
Note the date of receipt, count ten days and set your own deadline three days earlier. Collect the contract, the invoices, the delivery and acceptance records, the payment history and every message your people sent the creditor about problems. Reconcile the figures. Decide what is genuinely disputed and what is not, and whether paying the undisputed part brings the claim below ₹1 crore.
Then draft the reply around the dated record, invoice by invoice, and send it by speed post and email with proof of delivery. If you would like an advocate to read the notice and your documents before the 10 days run out, the team of Advocate B.K. Singh can look at the papers and tell you where the company stands; you can reach us through the online enquiry form or read about our NCLT practice in Delhi.
Frequently asked questions
What is the time limit to reply to an IBC section 8 demand notice?
Ten days from the date the company receives the notice. The period runs from receipt, not from the date on the notice. Aim to send the reply by day seven so that it is delivered within time.
What happens if I do not reply to a section 8 demand notice?
The creditor can file a section 9 petition before the NCLT after the 10 days, with an affidavit that no dispute was raised. The company can still argue a pre-existing dispute in its reply to the petition, but it starts from a weaker position. Silence is the single most common reason petitions are admitted.
Does a dispute have to be pending in court to count as pre-existing?
No. Mobilox Innovations v Kirusa Software (2017) held that a dispute raised in correspondence before the notice is enough if it is genuine. A suit or arbitration filed before the notice is expressly covered, but it is not required.
Can I raise a dispute for the first time in my reply to the notice?
You can, but the NCLT is likely to treat it as an afterthought unless earlier documents support it. The law asks whether the dispute existed before the notice was received. The reply should point to those earlier records.
Will starting arbitration after the demand notice stop the IBC petition?
Not by itself. An arbitration invoked after the notice is not a pre-existing dispute, though the bench will look at whether earlier correspondence shows a real dispute. Arbitration filed before the notice is a recognised ground under section 8(2)(a).
Can I pay part of the amount to avoid insolvency?
Yes. Paying the undisputed part removes it from the claim, and if the balance falls below ₹1 crore, no section 9 petition can be filed on that debt. Pay by bank transfer from the company's account and annex the transfer record to the reply.
Is a quality complaint enough to defeat a section 9 petition?
It can be, if it was raised before the notice, is backed by records and affects a substantial part of the claim. A minor complaint about a small part of the supply may leave an undisputed balance above ₹1 crore. Complaints about goods accepted and used without protest carry little weight.
Does a demand notice from a lawyer have to be answered?
Yes. The Supreme Court has held that an advocate can send a demand notice on behalf of an operational creditor. Treat it exactly like a notice signed by the creditor and reply within 10 days.
Can a bank send a section 8 demand notice?
No. Section 8 notices are sent only by operational creditors. A bank or other financial creditor files directly under section 7 without any demand notice, and the pre-existing dispute defence does not apply to it.
What if the demand notice was sent to our old office?
Delivery at the registered office shown in the MCA records is generally treated as valid. If the notice went to an address that is not the registered office and did not reach anyone, say so in the reply or in your reply to any petition, but also deal with the debt on its merits.
Can the NCLT decide who is right in the dispute?
No. At the section 9 stage the NCLT only checks whether a real dispute exists, not who would win it. If a genuine dispute exists, the petition is rejected and the creditor must go to a civil court or arbitration.
What happens if the petition is admitted despite our dispute?
The company enters the insolvency process, the board is suspended and a moratorium begins. The company or its directors can appeal to the NCLAT within 30 days, extendable by 15. Settling with the creditor before admission is far easier than after.
Written and reviewed at B.K. Singh & Associates
Advocate B.K. Singh
Founder of B.K. Singh & Associates. MCA, LL.B., LL.M., with more than twenty years of practice before the Supreme Court, the Delhi High Court, district courts and tribunals across Delhi NCR. This article explains the general law as of 24 October 2026; it is not legal advice on your facts.