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2.11. Aggrieved by the aforesaid order of the NCLAT, the appellant – Operational Creditor is before us with the present appeal.

3. The primary contention of the learned counsel for the appellant is that Section 8(1) of the IBC requires the operational creditor, i.e., appellant herein, on occurrence of a default, to deliver a demand notice of unpaid operational debt or a copy of the invoice demanding payment. The demand notice is required to be in the form and manner as prescribed, and it is clear that the demand notice is to be delivered on the corporate debtor. The learned counsel also submitted that instead of a demand notice, the operational creditor can also deliver on the corporate debtor, a copy of an invoice, demanding payment of the defaulted amount. Therefore, once the demand notice, in the prescribed form, is delivered at the registered office of the corporate debtor, via any of the modes referred to in Rule 5(2)(a) or (b), the condition precedent for instituting a section 9 action stands completed. In the present case, the demand notice was duly delivered to the registered address of the respondent through its Director, Chief Financial Officer, and Manager, Commercial and accordingly, the condition precedent for initiation of CIRP against the respondent, has been complied with by the appellant. 3.1. It is further submitted that Rule 5(2)(a) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 7 provides that a demand notice under Section 8 of the IBC can be served upon the corporate debtor through its Key Managerial Personnel8. If the statute and its accompanying regulations allow for service of a demand notice upon the KMP of an entity, it follows that the corporate debtor may lawfully be addressed through its KMP. Moreover, Section 20(1) of the Companies Act, 2013 also states that a company can be served through its officer at the registered address. In the present case, even the 'subject' and paragraph 1 of the demand notice sent by the appellant stated that the notice was indeed addressed to the Corporate Debtor. However, the NCLT and NCLAT without properly appreciating that the demand notice had been addressed to the KMP of the Corporate Debtor in the capacity of the positions they were holding in the respondent company – corporate debtor and not in their personal capacity, dismissed the section 9 petition filed by the appellant merely on the basis of an alleged procedural irregularity that no notice was addressed to the corporate debtor through its KMP.

3.2. It is further submitted that Section 9(1) of the IBC confers a right on the operational creditor to file an application for initiating CIRP, if, after expiry of ten (10) days of the date of delivery of the demand notice issued under Section 8(1), For short, “the Adjudicating Authority Rules, 2016” For short, “KMP” either no payment is received or there is failure to serve the notice of demand, as adverted to in Section 8(2), is not served on the corporate debtor by the operational creditor. The plain language, object and purpose of the above-referred provision is to bring to the notice (and thus, to make the corporate debtor aware) that an operational debt is due from it which remains unpaid. As long as notice in that behalf is delivered at the registered office of the corporate debtor, the condition precedent would stand fulfilled enabling the operational creditor to trigger a section 9 petition. In this case, the appellant - Operational Creditor has done exactly this. The demand notice would clearly show that it is the Corporate Debtor who has been called upon to pay the amount and not its “KMP”. Though both the NCLT and the NCLAT found that the demand notice was delivered at the registered office of the Corporate Debtor seeking payment of unpaid operational debt, they erroneously dismissed the section 9 petition. 3.3. The learned counsel also submitted that no ground was raised by the respondent at the initial stage that they had not received the demand notice under Section 8 of the IBC. During the pendency of the section 9 petition, the respondent approached the appellant to settle the matter, as could be seen from the orders dated 20.04.2022, 02.05.2022, 10.06.2022, 05.07.2022, 22.07.2022, 01.08.2022, 30.08.2022 and 06.12.2022 of the NCLT. However, no settlement was arrived at before the NCLT. Thereafter, final arguments were heard on 03.01.2023 and 10.01.2023, in which the respondent had raised certain arguments for the first time, which were not borne out of pleadings. The appellant vehemently objected to such arguments. However, the NCLT erred in dismissing the section 9 petition by order dated 24.01.2023, based on the contentions which were not pleaded in their reply. Regarding the principles of the necessity of pleadings, reliance was placed on the decision of this Court in Union of India v. Ibrahim Uddin & Another 9. Therefore, the learned counsel prayed to allow this appeal by setting aside the order impugned herein.

4. On the contrary, the learned counsel for the respondent submitted that as per the accounts of the respondent, the appellant’s Group of Companies owes a sum of Rs. 75,44,461.52 to Mid-East Integrated Steel Ltd (MISL), the parent company of the respondent, therefore requiring a reconciliation of accounts between the parties. Without waiting for a reconciliation of accounts, the appellant issued an alleged statutory demand notice dated 31.03.2021 purportedly under section 8 of the IBC, in the names of the KMP of the respondent viz., (1) Mr. Sameer Singh, Director, (2) Mr. Bibhuti Bhushan Rath, CFO and (3) Mr. S. Subudhi, Manager, Commercial. Whereas, Section 8(1) of the IBC states that notice has to be issued to the corporate debtor. Thus, it is clear that the alleged demand notice has been addressed to the KMP of the Corporate Debtor and not to the Corporate Debtor and (2012) 8 SCC 148 the same was not in consonance with Section 8 of the IBC r/w Rule 5(2) of the Adjudicating Authority Rules, 2016 r/w the statutorily prescribed Form 3 and Form 5 of the Adjudicating Authority Rules, 2016. Hence, the alleged demand notice having not been issued to the respondent being the Corporate Debtor, was not valid in the eyes of law.

1. This letter is a Demand Notice/invoice demanding payment in respect of unpaid operational debt due from MESCO Kalinga Steel Limited under the Code.
2. Please find the particulars of the unpaid operational debt below:
………"
10.1. On a perusal of Form 3 notice dated 31.03.2021 issued by the appellant, it is revealed that the same was addressed to the names of the KMP and delivered to the registered office of the respondent - Corporate Debtor viz., MESCO Kalinga Steel Limited. Even the ‘subject’ and paragraph 1 of the notice clearly demonstrate that as per the IBC, demand notice / invoice demanding payment in respect of unpaid operational debt due from the corporate debtor was issued and thereby, the appellant called upon the Corporate Debtor to pay the operational debt within a period of ten days from the date of receipt of the notice, failing which, CIRP be initiated in respect of the Corporate Debtor. Notably, the said notice dated 31.03.2021 was served on the KMP in their official capacities at the registered office address of the corporate debtor. The contents of the notice clearly establish that the same was issued to the Corporate Debtor in respect of the operational debt due and payable by them. As such, it cannot be said that the appellant did not comply with the statutory requirement of sending demand notice in Form 3 to the respondent - Corporate Debtor as provided under section 8 of the IBC, before filing the section 9 petition seeking initiation of CIRP against the respondent in respect of the unpaid operational debt.