{"id":3475,"date":"2025-12-15T17:15:22","date_gmt":"2025-12-15T11:45:22","guid":{"rendered":"https:\/\/xpertslegal.com\/blog\/?p=3475"},"modified":"2025-12-15T17:15:22","modified_gmt":"2025-12-15T11:45:22","slug":"supreme-court-restores-ibc-proceedings-says-defects-are-curable","status":"publish","type":"post","link":"https:\/\/xpertslegal.com\/blog\/supreme-court-restores-ibc-proceedings-says-defects-are-curable\/","title":{"rendered":"Supreme Court Restores IBC Proceedings, Says Defects Are Curable"},"content":{"rendered":"

Livein Aqua Solutions Pvt. Ltd. v. HDFC Bank Ltd.<\/b><\/h1>\n

Civil Appeal No. 11766 of 2025<\/span><\/h1>\n

Alok Aradhe and Sanjay Kumar, JJ<\/span><\/h1>\n

Overview<\/b><\/p>\n

This appeal before the Supreme Court concerned a narrow but significant procedural issue under the Insolvency and Bankruptcy Code, 2016, namely, whether an application under Section 7 filed by a financial creditor is liable to be rejected outright if supported by a defective affidavit. While the NCLT had rejected HDFC Bank’s application as defective, the NCLAT reversed that rejection. The Supreme Court was called upon to examine the effect of procedural non-compliance and whether the mandatory notice under the provision of Section 7(5)(b) of the IBC had been properly issued.<\/span><\/p>\n

Facts of the case<\/b><\/p>\n

Livein Aqua Solutions Pvt. Ltd., the corporate debtor, availed a loan of \u20b95.5 crore from HDFC Bank, which was later classified as an NPA on 04.08.2019. Thereafter, the proceedings were initiated by filing a Section 7 application in Form 1 under Rule 4(1) of the IBC Rules by HDFC Bank.<\/span><\/p>\n

Although Form 1 by itself does not require an affidavit, Rule 34(4) of the NCLT Rules, 2016, requires that all petitions and applications filed before NCLT be supported by an affidavit in Form NCLT-6. While the Section 7 petition of HDFC Bank was verified on 26.07.2023, the supporting affidavit was dated earlier, i.e., 17.07.2023, leading the scrutiny section to raise defects.<\/span><\/p>\n

Despite notices from the NCLT Registry under Rule 28 of the NCLT Rules directing the removal of defects, the bank failed to refile with corrections. The Registrar consequently refused registration. An appeal by the bank under Rule 63 succeeded, and additional time was granted, which did not remedy the defects. Therefore, the NCLT finally rejected the Section 7 application on 18.06.2024.<\/span><\/p>\n

The HDFC Bank approached the NCLAT, which held that the defect was curable and restored the petition. An appeal was made to the Supreme Court by the corporate debtor.<\/span><\/p>\n

Legal Issues<\/b><\/p>\n

Whether the Section 7 application supported by a defective affidavit was non est and liable to be rejected outright.<\/span><\/p>\n

    \n
  • Whether the NCLT followed the mandatory requirement of the proviso to Section 7(5)(b) of the IBC to grant a notice to the applicant to rectify defects within seven days before rejecting the application.<\/span><\/li>\n
  • Whether procedural defects under NCLT Rules can override substantive compliance required under the IBC.<\/span><\/li>\n<\/ul>\n

    Decision<\/b><\/p>\n

    The Supreme Court held that a defective affidavit does not render the application non est. The defective affidavit is curable, not fatal. The Court held that the consolidated notices issued by the Registry under Rule 28 were not sufficient; they were not notices under Section 7(5)(b), nor were they addressed to the applicant directly or to its authorised representative in the manner required. Being a substantive statute, the IBC overrides the procedural rules. The court said that while NCLAT was right in setting aside the rejection, it erred in proceeding without curing defects. The NCLAT reinstated the petition. It should have directed the bank to file a corrected affidavit before remand.<\/span><\/p>\n

    The Supreme Court disposed of the appeal.<\/span><\/p>\n\n","protected":false},"excerpt":{"rendered":"

    Livein Aqua Solutions Pvt. Ltd. v. HDFC Bank Ltd. Civil Appeal No. 11766 of 2025 Alok Aradhe and Sanjay Kumar, JJ Overview This appeal before the Supreme Court concerned a narrow but significant procedural issue under the Insolvency and Bankruptcy Code, 2016, namely, whether an application under Section 7 filed by a financial creditor is […]<\/p>\n","protected":false},"author":1,"featured_media":3477,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-3475","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-judgement"],"_links":{"self":[{"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/posts\/3475","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/comments?post=3475"}],"version-history":[{"count":2,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/posts\/3475\/revisions"}],"predecessor-version":[{"id":3479,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/posts\/3475\/revisions\/3479"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/media\/3477"}],"wp:attachment":[{"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/media?parent=3475"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/categories?post=3475"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xpertslegal.com\/blog\/wp-json\/wp\/v2\/tags?post=3475"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}