Livein Aqua Solutions challenged the NCLT’s rejection of HDFC Bank’s Section 7 IBC application, which was dismissed due to a defective affidavit. The Supreme Court held that such procedural defects are curable and cannot justify outright rejection. It ruled that Section 7(5)(b) requires a specific rectification notice, not a general Registry posting. HDFC Bank was given seven days to correct the defect, and the NCLT must now hear the case on merits.

Issue of Law: 

Whether a Section 7 application under the Insolvency and Bankruptcy Code, 2016 (IBC), containing a procedural defect (such as a defective or ante-dated affidavit) can be rejected outright by the Adjudicating Authority (NCLT) without providing the mandatory notice to the financial creditor to rectify the defect, as required under the proviso to Section 7(5)(b) of the IBC.

Brief Facts:

The appeal arose from a loan facility of ?5.5 crores availed by the appellant, Livein Aqua Solutions Private Limited (Corporate Debtor), from HDFC Bank Limited (Financial Creditor). The account was classified as a Non-Performing Asset (NPA) on August 4, 2019.

Consequently, HDFC Bank filed an application under Section 7 of the IBC before the National Company Law Tribunal (NCLT), Ahmedabad Bench, seeking to initiate the Corporate Insolvency Resolution Process (CIRP).

The NCLT’s Registry noted defects, specifically that the affidavit supporting the application was deposed to on July 17, 2023, a date prior to the verification of the main application, which was dated July 26, 2023. The NCLT Joint Registrar issued a consolidated notice for the removal of defects in the petition. When the Bank failed to cure the defects within the specified time, the NCLT rejected the Section 7 application at the threshold.

The Financial Creditor (HDFC Bank) successfully appealed the rejection before the National Company Law Appellate Tribunal (NCLAT). The Corporate Debtor then filed the present appeal before the Supreme Court.

Judgment:

The Supreme Court upheld the NCLAT's decision to set aside the rejection, but corrected the subsequent direction, thereby allowing the appeal in part.

The core findings of the Supreme Court were:

1. Curable Defects: The Court held that a procedural defect in a Section 7 application, such as the filing of a defective or ante-dated affidavit, is not fatal and does not render the application non est (non-existent in law). Such defects are curable. The procedural law should not be allowed to defeat the ends of justice unless explicitly mandated.
2. Mandatory Notice under Section 7(5)(b): The Supreme Court emphasized that the proviso to Section 7(5)(b) of the IBC is mandatory. This provision obligates the Adjudicating Authority (NCLT) to give a specific notice to the applicant to rectify the defect in the application within seven days of the receipt of such notice, before rejecting the application.
3. Insufficiency of General Notice: The Court ruled that general notices issued by the NCLT Registry on a notice board or website for multiple defective petitions are insufficient to satisfy the statutory requirement of a specific notice under the proviso to Section 7(5)(b).

The Court disposed of the appeal with the following directions:

• Rectification Opportunity: HDFC Bank was directed to file a proper affidavit and cure the defects in its application within seven days from the date of the Supreme Court's order.
• Merits Hearing: After the defects are rectified, the NCLT, Ahmedabad Bench, must proceed to hear the Section 7 application on its merits in accordance with the law and procedure.

Subsequent Development:

The Supreme Court's judgment sets a binding precedent, clarifying that the NCLT cannot summarily reject Section 7 applications on account of minor or curable procedural defects without first issuing a specific, statutory rectification notice. The judgment specifically directed the Financial Creditor (HDFC Bank) to rectify the defects within seven days of the order for the matter to proceed on merits before the NCLT.

To access the offical order/judgement, click here

Case Title: Livein Aqua Solutions Private Limited Vs. HDFC Bank Limited (The appeal was filed by the Corporate Debtor, Livein Aqua Solutions Private Limited, challenging the NCLAT order.)

Neutral Citation: 2025 INSC 1349

Case No.: Civil Appeal No. 11766 of 2025

Bench: Hon’ble Mr. Justice Sanjay Kumar and Hon’ble Mr. Justice Alok Aradhe

Date: Pronounced on November 24, 2025