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by sayum
05 December 2025 8:37 AM
"Defective Affidavit Does Not Render IBC Petition Non Est", On 24 November 2025, the Supreme Court of India, in a significant decision in Livein Aqua Solutions Private Limited vs HDFC Bank Limited (Civil Appeal No. 11766 of 2025), addressed the contentious question of whether a procedural defect in the form of an incorrect affidavit accompanying a Section 7 IBC application would render the entire petition non est in law. The Court ruled that such defects are curable in nature and cannot be used as a ground to reject the application outright, especially when no notice under the statutory proviso to Section 7(5)(b) of the Insolvency and Bankruptcy Code, 2016, was served on the applicant bank.
The two-judge Bench of Justice Sanjay Kumar and Justice Alok Aradhe held that the failure to serve a proper notice under the proviso to Section 7(5)(b) of the IBC invalidated the NCLT’s rejection order. However, it found fault with the National Company Law Appellate Tribunal (NCLAT) for not directing the respondent-bank to cure the affidavit defect before remanding the matter for a hearing on merits.
“Mere filing of a ‘defective’ affidavit in support of an application would, however, not render the very application non est… it is neither an incurable nor a fundamental defect,” the Court firmly ruled.
Supreme Court Emphasises Mandatory Compliance With Proviso To Section 7(5)(b) IBC: Registry's Consolidated Notice Is Not Enough
The matter originated when HDFC Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Livein Aqua Solutions Pvt Ltd. The petition, though verified on 26.07.2023, was accompanied by an affidavit dated 17.07.2023, leading the NCLT Ahmedabad Bench to reject the application as non est for want of procedural compliance.
The procedural rejection came after the NCLT Registry, via a consolidated notice dated 10.10.2023, called upon multiple applicants, including HDFC Bank, to cure filing defects within seven days. The Bank did not comply, and the Joint Registrar passed an order on 18.10.2023, refusing to register the application. However, crucially, no individual statutory notice under the proviso to Section 7(5)(b) IBC was ever issued to HDFC Bank.
Setting aside this rejection, the NCLAT restored the petition but failed to insist on curing the affidavit defect. The company then approached the Supreme Court under Section 62 of the IBC, alleging that the defective affidavit rendered the entire petition non est.
How A Procedural Dispute Led To A Key Clarification On IBC Practice
The underlying facts revealed that Livein Aqua Solutions had availed a loan of ₹5.5 crores from HDFC Bank, which later classified the account as NPA on 04.08.2019. The bank initiated proceedings under Section 7 of the IBC before the NCLT in prescribed Form 1, but supported the application with an affidavit dated prior to the date of verification — a fact that triggered the procedural scrutiny.
When the Bank failed to cure the defect despite the consolidated notice, the Registrar of the NCLT declined to register the application. The Bank successfully appealed the Registrar's decision under Rule 63 of the NCLT Rules, but did not remove the defects even after another opportunity. Consequently, the NCLT finally rejected the application on 18.06.2024. HDFC Bank again appealed — this time successfully before the NCLAT — but Livein Aqua challenged that decision before the Supreme Court.
The apex Court identified the central issue as whether the defective affidavit — i.e., one not contemporaneous with the application’s verification — was fatal to the maintainability of the Section 7 IBC petition.
The appellant company contended that the defective affidavit violated Rule 10(1) and Rule 34(4) of the NCLT Rules, 2016, which require all petitions to be supported by a properly executed affidavit. However, the Court pointed out that Form 1 under IBC rules does not require an affidavit at all — the affidavit requirement stems only from the NCLT procedural rules, and as such, a discrepancy in the affidavit is not a jurisdictional defect.
Critically, the Court found that Section 7(5)(b) of the IBC mandates that before rejecting an application for incompleteness, the NCLT must issue a specific notice to the applicant and grant seven days to cure the defect. The consolidated registry notice on a website or notice board did not meet this requirement.
“Issuance of a notice to an authorized representative of the respondent-bank was not enough to satisfy the mandate of the proviso to Section 7(5)(b) of the IBC… Compliance with the Rules, independently framed for the National Company Law Tribunal, was not sufficient.”
Referring to its earlier judgment in Dena Bank (now Bank of Baroda) vs. C. Shivakumar Reddy, the Court reiterated that IBC overrides procedural rules when it comes to substantive requirements like giving applicants a fair chance to cure defects:
“There is no penalty prescribed for inability to cure the defects… and in an appropriate case, the adjudicating authority may accept the cured application even after expiry of seven days, for the ends of justice.”
Further relying on Vidyawati Gupta v. Bhakti Hari Nayak and Uday Shankar Triyar v. Ram Kalewar Prasad Singh, the Court stressed that procedure is meant to advance justice, and minor curable errors should never be allowed to defeat substantive rights.
Respondent to Cure Defects Within 7 Days, NCLT to Proceed on Merits
Finding partial fault with the NCLAT for not ensuring that the affidavit defect was actually cured before remanding the matter, the Supreme Court modified the NCLAT’s direction.
“The NCLAT ought to have asked the respondent-bank to cure the defective affidavit at least at that stage… To that extent, the NCLAT was in error.”
The Court, therefore, partly allowed the appeal, directing HDFC Bank to cure the defective affidavit within seven days from the date of the judgment and directed the NCLT, Ahmedabad Bench, to thereafter hear the matter on merits.
Date of Decision: 24 November 2025
