Interim Replies to Demand Notices: Are You Bound to Give More Time?

When an operational creditor issues a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016, the corporate debtor has 10 days to:

  1. Repay the amount due, or

  2. Bring to notice the existence of a dispute.

Sometimes, the real issue arises when a reply is sent — but instead of being a genuine dispute, it is a tactic to stall or avoid insolvency proceedings, or instead of a full reply, the corporate debtor sends an “interim reply” within those 10 days — saying something like “We are in the process of preparing a detailed response to the Demand Notice. Meanwhile, we request you to kindly treat this communication as our interim/ holding response”. 

Now, the question which arises here is: does this obligate the creditor to wait further before filing an application under Section 9?

The Legal Framework

  • Statutory Timeline: The Code strictly prescribes 10 days from receipt of the Section 8 notice. There is no provision for extending this timeline merely because a debtor sends a partial or interim reply.

  • Creditor’s Right: Once the 10-day period lapses, the creditor is legally entitled to file a Section 9 application.

  • No “Deemed Extension”: An interim reply does not create any obligation on the creditor to grant more time. The law does not recognize “reply shortly” as compliance with Section 8.

  • Legal position: Unless a dispute is clearly raised within 10 days, the debtor cannot later claim protection by sending a vague placeholder reply.

  • The judgment of Mobilox Innovations v. Kirusa Software AIR 2017 SC 4532 emphasizes substance over form — the debtor must show a “plausible contention” of dispute within the statutory window.

  • Also See: Chemical Suppliers India Private Limited vs. GLS Films Industries Private Limited (NCLAT, decided on 11 February, 2025)

Practical Takeaway

  • A reply to your demand notice does not automatically defeat your rights — only a real, pre-existing dispute can.

  • You are not legally bound to give more time just because the debtor sent an interim reply.

  • For commercial reasons, you may choose to wait if a settlement discussion is ongoing — but this is a strategic choice, not a legal requirement.

  • Once the statutory window closes, you can proceed under Section 9 if the debt remains unpaid and no valid dispute exists.

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