Supreme Court rules that defective affidavit filed with Section 7 IBC application is curable defect - procedural irregularities shouldn't defeat substantive rights. Court emphasizes procedure is handmaiden to justice, not hindrance.
If your Section 7 IBC application has a defective affidavit, can the NCLT reject it outright without giving you a chance to fix it?
No, the NCLT cannot reject your application outright.
The Supreme Court has ruled that procedural defects like a defective affidavit are curable and do not render the application non est (non-existent). The NCLT must give you proper notice under Section 7(5)(b) proviso of the IBC to cure the defects before rejecting your application.
Loan Facility: Livein Aqua Solutions availed ₹5.5 crores loan facility from HDFC Bank
NPA Classification: Loan classified as Non-Performing Asset
IBC Application: HDFC Bank filed Section 7 IBC application with affidavit deposed on July 17, 2023
Defect Notice: Joint Registrar issued consolidated notice for 26 petitions to remove defects
Registration Refused: Joint Registrar refused to register application under NCLT Rule 28(4)
Application Rejected: NCLT rejected HDFC Bank's Section 7 application
NCLAT Order: NCLAT allowed appeal and restored application for hearing on merits
Supreme Court Ruling: "Defective affidavit is curable defect" - directed curing defects within 7 days
| Legal Provision | What It Means | Application in This Case |
|---|---|---|
| Section 7(5)(b) IBC | NCLT can reject incomplete application after giving notice | Proper notice under this section was not given to HDFC Bank |
| Section 7(5)(b) Proviso | Mandatory 7-day notice to cure defects before rejection | Consolidated notice to multiple parties was insufficient |
| NCLT Rule 34(4) | Requires verification of petition by affidavit | Defective affidavit filed but was curable defect |
| NCLT Rule 28 | Procedure for scrutiny and removal of defects | Used for defect notice but didn't satisfy IBC requirements |
Latin term meaning "it is not." A legal document or application is non est if it is so fundamentally defective that it is considered non-existent in the eyes of law.
Provision in Insolvency and Bankruptcy Code that allows financial creditors to initiate corporate insolvency resolution process against corporate debtors.
A procedural irregularity or deficiency that can be corrected or remedied without affecting the substantive rights of parties.
Rights that create, define or regulate legal rights, as opposed to procedural rights that prescribe methods of enforcing substantive rights.
Legal principle that procedural rules should assist in delivering justice, not become obstacles that prevent justice from being served.
"Procedure, a handmaiden to justice, should never be made a tool to deny justice or perpetuate injustice, by any oppressive or punitive use. Rules of procedure are made to further the cause of justice and not to prove a hindrance thereto."
This judgment reinforces that technical procedural defects should not defeat substantive legal rights. It ensures that IBC applications are decided on their merits rather than being dismissed on hyper-technical grounds, promoting access to justice and efficient dispute resolution.
This content is for informational purposes only and does not constitute legal advice. Consult a qualified legal professional for specific legal guidance. The information provided is based on judicial interpretation and may be subject to changes in law.
Making Supreme Court judgments accessible and actionable for every Indian citizen navigating legal challenges.
This analysis decodes a complex IBC judgment to help businesses and individuals understand their rights when facing procedural defects in insolvency applications and how to ensure their cases are heard on merits.