Insolvency resolution by operational creditor
Section 8 of the Insolvency and Bankruptcy Code, 2016 deals with insolvency resolution by operational creditor. An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor 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. The Act was enacted on 28 May 2016.
(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor 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, 1 [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 2 [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 2[payment] of the operational debt in respect of which the default has occurred.
Section 8, The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Macquarie Bank Limited v. Shilpi Cable Technologies Ltd.
Court's Decision & Legal Precedent
Judgement of Main Case order-4.pdf 2017-12-15. CA 15135/2017 (with CA 15481/2017 and 15447/2017). R.F. Nariman J. REPORTABLE. Digitally signed 2017.12.15 17:00:32 IST. DATE-CHECK false positive (supply-agreement/invoice dates 2015 in the facts); body is the named reportable. Isolates IBC 8 (a lawyer authorised by the operational creditor may issue the s.8 demand notice) and IBC 9(3)(c) (the financial-institution certificate is directory, not a mandatory threshold, especially for a foreign operational creditor). Distinctive from Mobilox’s existence-of-dispute isolate. Map insolvency-bankruptcy-code-2016 8 and 9 cited. Do not pad IBC 7.
On this section: An IBC 8 demand notice may be issued by a lawyer authorised by the operational creditor; ‘person authorised to act’ is not confined to an insider (Macquarie Bank).
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Mobilox Innovations Private Limited v. Kirusa Software Private Limited
Court's Decision & Legal Precedent
Judgement of Main Case order-6.pdf 2017-09-21 DATE VERIFIED (get_order_ai_analysis). CA 9405/2017. R.F. Nariman / S.K. Kaul. REPORTABLE. Isolates IBC 8/9 operational-creditor trigger: s.8(2)(a) ‘and’ is read as ‘or’; ‘dispute’ in s.5(6) is inclusive; the AA must reject a s.9 application if a plausible contention requiring investigation exists and is not spurious, hypothetical or illusory — the court need not be satisfied the defence will succeed. NDA-breach correspondence was a genuine dispute. Map insolvency-bankruptcy-code-2016 8 and 9 cited. Do not pad IBC 7 (already filled by Innoventive/Swiss Ribbons/Vidarbha).
On this section: IBC 8(2)(a) ‘existence of a dispute … and record of pendency’ is read as ‘or’; a pre-existing dispute without a pending suit still bars the operational-creditor trigger (Mobilox).
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Vidarbha Industries Power Limited vs Axis Bank Limited
Court's Decision & Legal Precedent
Section 7(5)(a) of the Insolvency and Bankruptcy Code 2016 confers discretionary power on the Adjudicating Authority (NCLT) to admit or reject an application for Corporate Insolvency Resolution Process filed by a financial creditor, even when default is established and the application is complete. The NCLT must apply its mind to relevant factors including the feasibility of initiating CIRP against the corporate debtor, the impact of pending regulatory appeals and awards, and the overall financial health and viability of the corporate debtor under its existing management. The existence of a financial debt and default in payment thereof only gives the financial creditor the right to apply for initiation of CIRP; it does not mandate automatic admission. The NCLT may exercise its discretion to keep the admission of the application in abeyance or reject it if the corporate debtor demonstrates that a substantial award or decree in its favor is pending, which if realized would exceed the debt claimed by the financial creditor.
On this section: Initiation of CIRP by operational creditor - compared with Section 7 to show legislative differentiation
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… On 12.02.2018, summons were issued by the ACMM to the company and the appellants in both the criminal complaints. 4. Meanwhile, as a statutory notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 [" IBC "] had been issued on 21.03.2017 by the respondent to the company, and as an order dated 06.06.2017 was passed by the Adjudicating Authority admitting the application under Section 9 of the IBC and directing commencement of the corporate insolvency resolution …
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… On 12.02.2018, summons were issued by the ACMM to the company and the appellants in both the criminal complaints. 4. Meanwhile, as a statutory notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 [" IBC "] had been issued on 21.03.2017 by the respondent to the company, and as an order dated 06.06.2017 was passed by the Adjudicating Authority admitting the application under Section 9 of the IBC and directing commencement of the corporate insolvency resolution …
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… On 12.02.2018, summons were issued by the ACMM to the company and the appellants in both the criminal complaints. 4. Meanwhile, as a statutory notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 [" IBC "] had been issued on 21.03.2017 by the respondent to the company, and as an order dated 06.06.2017 was passed by the Adjudicating Authority admitting the application under Section 9 of the IBC and directing commencement of the corporate insolvency resolution …
Made under this section, and citing it
4 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
- The Insolvency and Bankruptcy (Application to Adjudicating Authority) (Amendment) Rules, 2020Rule 2020
- The Insolvency and Bankruptcy (Application to Adjudicating Authority) Amendment Rules, 2019Rule 2019
- The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (upto 19-03-2019)Rule 2019
- Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016Rule 2016
Another 16 instruments name this provision in its title or its text without being made under it.
- The Companies (Registered Valuers and Valuation) Rules, 2017 (upto 13-11-2018)Rule 2018
- The Companies (Registered Valuers and Valuation) Rules, 2017 (upto 14-06-2018)Rule 2018
- The Insolvency and Bankruptcy Code (Second Amendment) Act, 2018Statute 2018
- Insolvency and Bankruptcy Board of India (Advisory Committee) Regulations, 2017Regulation 2017
- Insolvency and Bankruptcy Board of India (Engagement of Research Associates and Consultants) Regulations, 2017Regulation 2017
- Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017Regulation 2017
- Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017Regulation 2017
- Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017Regulation 2017
- Insolvency and Bankruptcy Board of India (Procedure for Governing Board Meetings) Regulations, 2017Regulation 2017
- Insolvency and Bankruptcy Board of India (Voluntary liquidation Process) Regulations, 2017Regulation 2017
- The Companies (Registered Valuers and Valuation) Rules, 2017Rule 2017
- IBBI (Insolvency Professional Agencies) Regulations, 2016Regulation 2016
- IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016Regulation 2016
- IBBI (Liquidation Process) Regulations, 2016Regulation 2016
- IBBI (Model Bye- Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016Regulation 2016
- IBBI(Insolvency Professionals) Regulations, 2016Regulation 2016
Questions about Section 8
What have the courts held on Section 8 of the Insolvency and Bankruptcy Code?
Macquarie Bank Limited v. Shilpi Cable Technologies Ltd. (15 Dec 2017) is the leading judgment on this section among those set out below: An IBC 8 demand notice may be issued by a lawyer authorised by the operational creditor; ‘person authorised to act’ is not confined to an insider (Macquarie Bank). Another 2 judgments on this section are set out below, all of them from the Supreme Court. They run from 2017 to 2022.
How do I find court cases under Section 8 of the Insolvency and Bankruptcy Code?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Insolvency and Bankruptcy Code 8, section 8 Insolvency and Bankruptcy Code, section 8 of the Insolvency and Bankruptcy Code. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with Macquarie Bank Limited v. Shilpi Cable Technologies Ltd. (15 Dec 2017).
What should I read with Section 8 of the Insolvency and Bankruptcy Code, and has it changed?
2 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there are 4: most recently The Insolvency and Bankruptcy (Application to Adjudicating Authority) (Amendment) Rules, 2020 (2020), then The Insolvency and Bankruptcy (Application to Adjudicating Authority) Amendment Rules, 2019 (2019), and 2 more.
When was Section 8 of the Insolvency and Bankruptcy Code enacted?
Section 8 of the Insolvency and Bankruptcy Code, cited as Insolvency and Bankruptcy Code 8, was enacted on 28 May 2016 as Act 31 of 2016. It is in force as at the date shown on this page.
Other sections of this Act
- 240. Power to make regulations2349 words
- 5. Definitions2326 words
- 3. Definitions1381 words
- 29A. Person not eligible to be resolution applicant1152 words
- 239. Power to make rules963 words
- 196. Powers and functions of Board942 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.