A statutory demand is a formal demand for payment of a debt served by a creditor on its debtor in a standard and prescribed form, under the Insolvency Act of 2009.

A statutory demand may be categorised as an extra-judicial process given that it is not issued by a court. However, a statutory demand will no longer be considered as an extra-judicial process as soon as a court comes into play. Some examples of when a statutory demand will no longer be considered as an extra-judicial process have been set out in the case of Morgan Philips Middle East vs Appavou Immobilier Ltee 2022 SCJ 393. The examples are as follows:

• When a debtor is served with a statutory demand, they may move for the court to set it aside within a statutory delay.
• When the creditor moves a court for the enforcement of the statutory demand by asking for leave of the court for a winding up process.

As per Section 180 of the Insolvency Act 2009, the prescribed amount for a debt, that is due, shall not be less than MUR 250 000 or such other amount as may be prescribed. The statutory demand shall be in a prescribed form. That prescribed form has been stated in the Fifth Schedule of the Insolvency (Prescribed Forms) Regulations 2012.

The debt must be certain, due and demandable. The validity of the statutory demand will depend on these conditions. In the case of Exelco International Ltd vs Frans Ghislen A de Roy 2025 SCJ 167, the Court concluded that the respondent (ie the party serving the statutory demand) failed to prove that the debt was certain, due and demandable inasmuch as the respondent’s submission was not supported by documentary evidence, that the report relied upon by the respondent had not been put as attachment and that the same report, which had been analysed by an expert, contained errors. The report was also ambiguous.

A statutory demand must be served on a company. It must be pointed out that the company must be a registered one. Section 2 of the Companies Act defines ‘company’ as a ‘company incorporated or registered under this Act and includes an existing company’. A statutory demand cannot be served on an unregistered corporation or a ‘société civile et particulière’ as clearly established in the case of Société du Cephage vs Travaux Techniques des Mascareignes Ltee 2016 SCJ 46.

It must also be emphasised that a statutory demand will be valid if the person, who is serving it, has the locus standi to do so. In the recent case of Apavou Hotels Ltd vs Appleby (JV) Ltd & Cie 2025 SCJ 342, a statutory demand was deemed to be invalid as the respondent (ie party who had served the statutory demand) did not have the locus standi to do so. The sum of money claimed in the demand was related to attorney’s commission pursuant to another judgment. The Master’s Court made an order granting the abovementioned sum of money to another party and not to the respondent. The Court stated that an order for costs was a matter that is allowed between party and party (ICAC vs Dabee-Bunjun 2015 SCJ 345). Since the respondent was not a party pertaining to the proceedings before the Master’s Court, then it did not have the locus standi to proceed with the recovery of the abovementioned sum of money.

As soon as a statutory demand is served on a debtor, the latter may:

• pay the debt;
• enter into a compromise under Part XVII or Part XVIII of the Companies Act;
• compound with the creditor; and
• give a charge over its property to secure the payment of the debt to the reasonable satisfaction of the creditor (Section 180(d) of the Insolvency Act 2009).

The debtor will be required to comply with a statutory demand within one month of the date of service or such longer period as a court may order (Section 180(d) of the Insolvency Act 2009). Section 181(1) of the Insolvency Act 2009 provides that a court may, on the application of the company, set aside a statutory demand.

As soon as the statutory demand is served on the debtor, the latter has 14 days to make and serve an application to set aside the statutory demand. The application is made by way of affidavit. No extension of time may be given for making or serving an application to have the statutory demand set aside. It must be pointed that it is crucial for the debtor to comply with that 14-day delay, otherwise the application will be rejected and will not be considered (Section 181(2) and section 181(3) of the Insolvency Act 2009).

In the recent case of Madagascar Oil Ltd vs Outrider Master Fund LP 2025 SCJ 196, the Court set aside an application made by the applicant to set aside a statutory demand on the ground that the applicant had failed to lodge the present application within the statutory delay of 14 days. The applicant’s failure to comply with the statutory delay was fatal to the application.

A court will grant an application to set aside a statutory demand in the following circumstances (Section 181(4) of the Insolvency Act 2009):

• when there is a substantial dispute, whether or not the debt is owing or is due;
• when the company appears to have a counterclaim, set-off or cross-demand and the amount specified in the demand less the amount of the counterclaim, set-off or cross-demand is less than the prescribed amount; or
• when the demand ought to be set aside on other grounds.

As it has been recently observed in the case of Millenium Outsourcing Ltd vs Cyber Properties Investment Ltd 2025 SCJ 159, that the Court granted an application to set aside a statutory demand on the ground that the applicant was able to establish the existence of a substantial dispute as to whether the debt was due.

In that case, the applicant was able to produce affidavit evidence, documents and an expert report to demonstrate that the sum claimed in the statutory demand was far from being ‘certaine et exigible’. In that case, the Court ascertained the existence of a substantial dispute between the parties and made the right decision of not embarking upon any extended enquiry to determine if there was a genuine dispute between the parties (Auto Décor Ltd vs Transhant 2019 SCJ 327).

On the other hand, an application to set aside a statutory demand was not granted in Minien Enterprise Ltd vs Premix Ltd 2025 SCJ 29, inasmuch as the applicant had already acknowledged the existence of a debt. Thus, there was no dispute between the parties pertaining to the existence of that debt. The applicant was not able to show a genuine and substantial dispute as to the existence of a debt.

Moreover, in Gryns Trading Co Ltd vs Drymix Ltd 2025 SCJ 142, the applicant did not specifically deny the debt claimed in the statutory demand, did not laid any foundation to dispute the claim and was contradictory in its averments in that it inadvertently stated that the respondent could have used another method to recover any amount due. That singly statement showed the existence of a debt due. Thus, the Court declared that the statutory demand was valid and the applicant’s application was set aside.

If a court is satisfied that there is a debt due by a company to the creditor that is not subject of a substantial dispute nor to a counterclaim, set-off or cross-demand, it may:

• order the company to pay the debt within a specified period and that, in default of payment, the creditor may make an application to put the company into liquidation; OR
• dismiss the application and forthwith make an order under section 102 of the Insolvency Act putting the company into liquidation, on the ground that the company is unable to pay its debts as they become due in the ordinary course of business (Section 181(6)(a) of the Insolvency Act 2009).

The presumption, when there is an application to put a company into liquidation, is that the company is unable to pay its debts, as they become due in the ordinary course of business where it failed to pay the debt within the specified period (Section 181(6)(b) of the Insolvency Act 2009).

Conclusion

The Insolvency Act 2009 provides a robust and effective legal framework when it comes to statutory demand and its various mechanisms. Recent decisions have shown that courts have adopted a firm and pragmatic approach pertaining to the applicability of statutory demand in the Mauritian context.

It is crucial to point out that the validity of a statutory demand will depend on whether the debt is certain, due and demandable. The party who is serving the statutory demand must have the necessary locus standi to proceed. Furthermore, compliance with the statutory delay of 14 days, for an application to set aside a statutory demand, is fundamental and crucial.

It is further to be noted that the failure of a party to comply with a statutory demand does not automatically result in the company being wound up. What it does, is it creates a presumption of inability to pay its debt, such presumption being a rebuttable one in the winding up process.

Finally, given the powers of a court under section 102 of the Insolvency Act, practitioners should be careful when advising as to the merits of moving to set aside the statutory demand.

Written by Dave Boolauky, Partner, Bertrand Cheung, Counsel and Ian Sobnack, Legal Executive, Bowmans Mauritius