New Delhi, Nov 24 - A brief but engaging hearing at the Supreme Court on Monday revolved around what might seem like a small technicality, yet carried significant implications for insolvency cases. The bench of Justices Sanjay Kumar and Alok Aradhe examined whether a Section 7 Insolvency and Bankruptcy Code (IBC) plea can be thrown out just because its supporting affidavit was sworn earlier than the application itself.
The courtroom environment was calm, but lawyers on both sides were visibly alert -after all, the dispute involved corporate insolvency, timelines, and procedural compliance.
Background
The case began when HDFC Bank filed a petition before the National Company Law Tribunal (NCLT), Ahmedabad, seeking initiation of insolvency proceedings against Livein Aqua Solutions Private Limited over unpaid dues stemming from a ₹5.5 crore loan that became a non-performing asset in 2019.
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However, the NCLT rejected the bank’s application in June 2024, holding that the affidavit supporting it was defective because it had been signed on July 17, 2023, while the application was verified later on July 26.
The National Company Law Appellate Tribunal (NCLAT) reversed that decision in August 2025, calling the defect curable and restoring the petition. This prompted the company to approach the Supreme Court under Section 62 of the IBC.
Court’s Observations
The Supreme Court made it clear that procedural rules should not overshadow substantive justice. Justice Kumar noted that neither Rule 4(1) nor Form 1 under the IBC expressly requires an affidavit to accompany a Section 7 application, but Rule 34(4) of the NCLT Rules mandates verification through an affidavit.
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Yet, the larger question was whether the NCLT followed statutory procedure before dismissing the application. The bench pointed out that the Tribunal failed to issue a specific notice under the proviso to Section 7(5)(b) of the IBC, which requires giving the applicant seven days to fix defects.
The bench observed, ‘A defective affidavit does not make the application non est, particularly when the law allows the defect to be cured.’
The judges also said procedural rules exist to “further the cause of justice, not hinder it,” and referenced earlier Supreme Court rulings underscoring that technical lapses should not automatically derail litigation.
At one point, the bench firmly stated that a consolidated registry notice uploaded on the NCLT website wasn’t enough. “The proviso mandates notice to the applicant itself,” Justice Kumar remarked, indicating that due process cannot be satisfied through generic postings.
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Decision
Ultimately, the Court agreed with the NCLAT’s conclusion - the petition should not have been dismissed purely on affidavit timing - but partially corrected the appellate tribunal.
The Supreme Court directed HDFC Bank to cure defects in its Section 7 application, including filing a proper affidavit, within seven days. Only then can the NCLT proceed to hear the insolvency plea on merits. “The appeal is accordingly disposed of,” the order concluded, leaving both sides to bear their own costs.
And with that, the matter returns to the NCLT - this time, with clearer procedural guidance.
Case Title: Livein Aqua Solutions Private Limited vs. HDFC Bank Limited
Case No.: Civil Appeal No. 11766 of 2025
Case Type: Civil Appeal under the Insolvency and Bankruptcy Code (IBC)
Decision Date: November 24, 2025
