Case Note & Summary
The case involves an appeal by Livein Aqua Solutions Private Limited (the corporate debtor) against HDFC Bank Limited (the financial creditor) concerning the rejection of the bank's application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by the National Company Law Tribunal (NCLT), Ahmedabad Bench. The NCLT had dismissed the application on the ground that the application was verified on 26.07.2023 but the supporting affidavit was deposed to on 17.07.2023, creating a discrepancy in dates. The bank appealed to the National Company Law Appellate Tribunal (NCLAT), which allowed the appeal and remanded the matter for decision on merits. The corporate debtor then appealed to the Supreme Court under Section 62 of the IBC. The Supreme Court examined the procedural requirements under the IBC and the NCLT Rules. It noted that neither Rule 4(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 nor Form 1 requires an affidavit; the requirement for an affidavit arises from Rule 34(4) of the NCLT Rules. The Court observed that the discrepancy in dates is a curable defect and that the NCLT should have followed the procedure under Rule 28 of the NCLT Rules, which allows for scrutiny and return of defective documents for compliance, rather than rejecting the application at the threshold. The Court also referred to Section 7(5)(b) of the IBC, which provides for giving notice to rectify defects. The Supreme Court held that the NCLAT was correct in setting aside the NCLT's order and remanding the matter. The appeal was dismissed, and the NCLT was directed to decide the application on merits, giving the bank an opportunity to cure the defect if necessary.
Headnote
A) Insolvency and Bankruptcy Code - Section 7 Application - Procedural Defect - Affidavit Date Discrepancy - The issue was whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, verified on 26.07.2023 but supported by an affidavit deposed to on 17.07.2023, is liable to be rejected at the threshold. The Supreme Court held that such a procedural defect is not fatal and the application should not be rejected without giving an opportunity to cure the defect under Rule 28 of the NCLT Rules, 2016. (Paras 1-10)
B) National Company Law Tribunal Rules, 2016 - Rule 34(4) - Verification by Affidavit - Rule 34(4) requires every petition or application to be verified by an affidavit in Form NCLT.6. However, the Court noted that neither Rule 4(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 nor Form 1 requires an affidavit. The defect in the affidavit date is a curable procedural irregularity. (Paras 4-6)
C) Insolvency and Bankruptcy Code, 2016 - Section 7(5)(b) - Incomplete Application - Section 7(5)(b) provides that if an application is found to be incomplete, the adjudicating authority may give notice to the applicant to rectify the defect within seven days. The Court emphasized that the NCLT should follow this procedure rather than rejecting the application outright. (Paras 6-8)
Issue of Consideration
Whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, verified on 26.07.2023 but supported by an affidavit deposed to on 17.07.2023, is liable to be rejected at the threshold on that ground.
Final Decision
The Supreme Court dismissed the appeal, holding that the NCLAT was correct in setting aside the NCLT's order and remanding the matter. The NCLT is directed to decide the Section 7 application on merits and in accordance with law, after giving the bank an opportunity to cure the defect if necessary.
Law Points
- Procedural defect
- affidavit date discrepancy
- Section 7 IBC
- Rule 34(4) NCLT Rules
- Rule 28 NCLT Rules
- Form 1
- Form NCLT.6
- verification
- defect removal
- opportunity to cure
Case Details
Civil Appeal No. 11766 of 2025
Livein Aqua Solutions Private Limited
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Civil appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 against an order of the National Company Law Appellate Tribunal allowing an appeal and remanding a Section 7 application for consideration on merits.
Remedy Sought
The appellant (corporate debtor) sought to set aside the NCLAT order and uphold the NCLT's rejection of the Section 7 application filed by the respondent-bank.
Filing Reason
The respondent-bank filed an application under Section 7 of the IBC to initiate corporate insolvency resolution process against the appellant-company for default in repayment of a loan of ₹5.5 crores, which was classified as a non-performing asset on 04.08.2019.
Previous Decisions
The NCLT, Ahmedabad Bench, by order dated 18.06.2024 in C.P.(IB)/97(AHM)2024, rejected the bank's Section 7 application on the ground that the application was verified on 26.07.2023 but the supporting affidavit was deposed to on 17.07.2023. The NCLAT, by order dated 27.08.2025 in Comp. App. (AT) (Ins) No. 1534 of 2024, allowed the bank's appeal and remanded the matter for decision on merits.
Issues
Whether an application under Section 7 of the IBC, verified on 26.07.2023 but supported by an affidavit deposed to on 17.07.2023, is liable to be rejected at the threshold on that ground.
Whether the NCLT was correct in rejecting the application without following the procedure for defect removal under Rule 28 of the NCLT Rules.
Submissions/Arguments
The appellant argued that the discrepancy in dates between the verification and the affidavit renders the application defective and liable to be rejected.
The respondent-bank contended that the defect is curable and the NCLT should have given an opportunity to rectify it under Rule 28 of the NCLT Rules.
Ratio Decidendi
A procedural defect such as a discrepancy between the date of verification and the date of affidavit in a Section 7 application under the IBC is not fatal and does not warrant rejection at the threshold. The adjudicating authority should follow the procedure under Rule 28 of the NCLT Rules, which allows for scrutiny and return of defective documents for compliance, and Section 7(5)(b) of the IBC, which provides for giving notice to rectify defects.
Judgment Excerpts
The short issue that arises for consideration in this appeal is whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, verified on 26.07.2023 but supported by an affidavit deposed to on 17.07.2023 would be liable to be rejected at the threshold on that ground.
Significantly, neither Rule 4(1) nor Form 1 requires the said application to be supported by an affidavit. It is Rule 34(4) of the National Company Law Tribunal Rules, 2016, that prescribes that every petition or application made before the National Company Law Tribunal shall be verified by an affidavit in Form No. NCLT.6.
Procedural History
The respondent-bank filed an application under Section 7 of the IBC before the NCLT, Ahmedabad Bench. The NCLT rejected the application by order dated 18.06.2024 on the ground of a discrepancy between the date of verification and the date of the affidavit. The bank appealed to the NCLAT, which allowed the appeal by order dated 27.08.2025 and remanded the matter for decision on merits. The corporate debtor then appealed to the Supreme Court under Section 62 of the IBC.
Acts & Sections
- Insolvency and Bankruptcy Code, 2016: Section 7, Section 7(2), Section 7(5)(b), Section 62
- National Company Law Tribunal Rules, 2016: Rule 20, Rule 21, Rule 22, Rule 23, Rule 24, Rule 25, Rule 26, Rule 27, Rule 28, Rule 28(1), Rule 28(2), Rule 28(3), Rule 28(4), Rule 34, Rule 34(4)
- Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016: Rule 4(1)
