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A demand notice is a legal settlement of debt owed and the last request to repay the amount failing which legal consequences follow.
With the advent of the Code, the Demand notice has assumed manifest importance particularly if you are an Operational Creditor (OC) under the Code. The Code under section 8(1) mandates that an OC may, on the occurrence of default, deliver a demand notice of unpaid debt or a copy of the unpaid invoice in the form and format as prescribed thereunder. Thus, effective delivery of the demand notice to the Corporate Debtor (CD) is the sine qua non. Further, it's
Several people are receiving demand notices from the tax department for tax arrears, despite having paid all their dues on time. Why is this happening? We learn that this went on because the Assessing Officers (AOs) are uploading the tax demands on the web site of the tax Central Processing Unit (CPU), which automatically because of sending notices and causes panic among taxpayers. The outstanding tax demand within the notice could also be inaccurate for various reasons. A common one is non-reporting or delayed reporting of TDS by deductors resulting in mismatch between the claim and data available with the I-T department. Reasons behind are: non-posting of non-disposal of rectification applications and incorrect details of income or pre-paid taxes reported by taxpayer. Since the demand notice is issued, the taxpayer has no option but to reply thereto without fail.
Insolvency means when one is unable to pay the debt Insolvency proceeding
before National Company Law Tribunal. Insolvency law states that, a financial
creditor and operational creditor can file insolvency proceedings against a
defaulter company after establishing that a dispute exists between the parties.
The first step is to send a requirement notice (Form 3 ) to the company defaulter
for recovery of operational debt under the insolvency code. For creditors who
aren't financial creditors and operational creditors, for example, homebuyers, a
“Form F” is required to be submitted so as to file a claim. A good lawyer will
draft a demand notice on your behalf based on the details of the operational debt
to be recovered.
Form 3 of the Insolvency and Bankruptcy Code, 2016 is essentially an invoice demanding payment in respect of the unpaid operational debt due from the company debtor. The notice pertains to details like the entire amount of debt, the small print of transactions, go back to which the debt begin accruing, the amount claimed by the creditor, securities (if any), certificate of incorporation just in case of a corporation, records of previous defaults (if any), legal provisions under which the debt has arisen, documents supporting the claim filed by the creditor, etc. The demand notice gives a deadline of ten days to the debtor to repay the debt. If the debtor fails to try to do so, then insolvency proceedings shall be initiated against him. A copy of the said demand notice by the financial creditor is additionally sent to the relevant Adjudicating Authority. For sending the notice consult a corporate lawyer online.
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