Can NCLT Reject a Section 7 IBC Application for a Wrong Affidavit Date? SC Clarifies

The Supreme Court on November 24, 2025 held that a defective affidavit filed in support of an insolvency application under Section 7 of the Insolvency and Bankruptcy Code does not render the application non est, directing HDFC Bank to cure all defects in its petition against Livein Aqua Solutions Pvt Ltd within seven days before the National Company Law Tribunal, Ahmedabad Bench takes it up for hearing.

A bench of Justices Sanjay Kumar and Alok Aradhe clarified that such a defect is neither incurable nor fundamental and, therefore, cannot be a ground to reject a Section 7 petition at the threshold.

HDFC Bank filed an application initiating corporate insolvency resolution proceedings against Livein Aqua Solutions over a loan of Rs. 5.5 crore that turned into a non-performing asset in August 2019. The bank filed the Section 7 application in Form-1, which does not require an affidavit under the IBC Rules. However, Rule 34(4) of the NCLT Rules mandates that every application be verified by an affidavit, and the bank’s affidavit was dated earlier than the verification, leading the scrutiny section of the NCLT to mark defects.

A consolidated notice was issued by the Joint Registrar on October 10, 2023 listing 26 defective matters, including the bank’s petition, and requiring correction within seven days. When the defects were not rectified, the Registrar refused to register the petition under Rule 28(4) on October 18, 2023. Though HDFC Bank succeeded in an internal appeal under Rule 63 and was granted another opportunity to cure the defects, the NCLT eventually dismissed the Section 7 petition on June 18, 2024, as the affidavit deficiency remained.

The NCLAT, in an appeal filed by the bank, set aside the dismissal, holding that the NCLT had not complied with the proviso to Section 7(5)(b) of the IBC, which requires giving a specific notice to the applicant to cure defects before rejecting an application as incomplete. The tribunal relied on the Supreme Court’s earlier judgment in Dena Bank v. C. Shivakumar Reddy, which emphasises that procedural defects must be given an opportunity for rectification.

Before the Supreme Court, Livein Aqua argued that the defective affidavit rendered the application itself non est, and therefore incapable of being revived. Court rejected the argument outright, pointing out that even the company had earlier described the petition only as “defective” in its affidavit before the NCLT. Reiterating that procedural requirements cannot be used to defeat substantive rights, the bench held that a defective supporting affidavit does not extinguish the application.

Court, however, found fault with the NCLAT for restoring the Section 7 petition without requiring the bank to cure the affidavit defect at that stage. It noted that the tribunal was correct in holding the dismissal unsustainable for want of a Section 7(5)(b) notice, but it should have insisted that the defect be cured before remand. A consolidated notice uploaded on the NCLT’s website or notice board, court held, cannot substitute for the mandatory statutory notice required under the IBC.

Disposing of the appeal, the Supreme Court directed HDFC Bank to cure the defects in the application, including the affidavit defect, within seven days and directed the NCLT Ahmedabad Bench to thereafter take up the matter for hearing in accordance with law. The parties were directed to bear their own costs.

Case Title: Livein Aqua Solutions Private Limited Vs HDFC Bank Limited

Order Date: November 24, 2025

Bench: Justices Sanjay Kumar and Alok Aradhe