S. 7(5)(b) IBC | Defective affidavit in financial-creditor application is curable; NCLT must give specific notice to rectify defects : Supreme Court
This is a judgment delivered by the Supreme Court of India on November 24, 2025, concerning a procedural issue in an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).
Key Facts and Procedural History
- Parties The Appellant is Livein Aqua Solutions Private Limited (the Corporate Debtor/Company) , and the Respondent is HDFC Bank Limited (the Financial Creditor/Bank).
- Original Application The Respondent-Bank filed an application under Section 7 of the IBC against the Appellant-Company.
- The Defect The core issue was whether the Section 7 application, verified on July 26, 2023, but supported by an affidavit deposed to earlier on July 17, 2023, was liable to be rejected at the threshold.
- NCLT Order The National Company Law Tribunal, Ahmedabad Bench (NCLT) rejected the Bank’s application on this procedural ground, via an order dated June 18, 2024.
- NCLAT Order The Bank appealed to the National Company Law Appellate Tribunal (NCLAT) , which, by an order dated August 27, 2025, allowed the appeal, restored the application, and remanded the matter to the NCLT to be decided on merits.
- Supreme Court Appeal The Company (Appellant) filed the present appeal under Section 62 of the IBC against the NCLAT’s order.
Core Legal Issue
The short issue for consideration was whether a Section 7 IBC application, supported by an affidavit deposed to on a date earlier than the application’s verification date, should be rejected at the threshold, and what was the effect of not giving notice under the proviso to Section 7(5)(b) of the IBC.
Supreme Court Analysis and Findings
- On Non-Compliance with IBC Proviso: The Court found that the NCLT failed to adhere to the mandate of the proviso to Section 7(5)(b) of the IBC. This proviso obliges the Adjudicating Authority (NCLT) to give notice to the applicant itself to rectify the defect within seven days of receiving the notice, before rejecting the application.
- The consolidated notice issued by the Joint Registrar on October 10, 2023, under Rule 28 of the NCLT Rules, dealing with 26 petitions/applications, and posted on the NCLT website, was deemed insufficient. The IBC, being the substantive legislation, requires the notice to cure defects to be given under its specific provision.
- On the Defective Affidavit: The Court rejected the Appellant-Company’s argument that the defective affidavit rendered the entire Section 7 application ‘non est’ (non-existent).
- The Court held that filing a ‘defective’ affidavit is not an incurable or fundamental defect and does not render the application non est.
- Citing prior precedents, the Court reaffirmed that procedural rules are intended to further the cause of justice, and curable defects should not defeat substantive rights or cause injustice.
- On the NCLAT Error: The NCLAT was correct in holding that the application should not have been rejected due to the NCLT’s failure to issue the requisite notice under the IBC proviso.
- However, the NCLAT committed an error by immediately restoring the Company Petition and remanding it for a decision on merits without requiring the defective affidavit to be cured.
Supreme Court Conclusion and Directions
- The Supreme Court disposed of the appeal.
- It directed the Respondent-Bank to cure the defects in its Section 7 application (C.P.(IB)/97(AHM)2024), including the defective affidavit, within seven days from the date of the judgment (November 24, 2025).
- The NCLT, Ahmedabad Bench, was then directed to take up the matter for hearing in accordance with law and due procedure.
- The stay on proceedings issued by the Supreme Court on September 15, 2025, is effectively lifted upon compliance with this direction.
Livein Aqua Solutions Private Limited versus HDFC Bank Limited, decided on 24-11-2025