Curable defect in Section 7 insolvency application cannot justify rejection without notice to rectify the affidavit error.

A Section 7 insolvency application cannot be rejected as defective without first giving the applicant an opportunity to cure a curable defect in the supporting affidavit. The Tribunal treated the defect as one of sequencing and verification, noting that the affidavit had been sworn before the petition was signed and notarised, but held that the statutory scheme under Section 7(5)(b) requires notice to rectify defects before rejection. It also referred to the verification requirements in the relevant insolvency and tribunal rules and Order XIX Rule 3 CPC. The dismissal was therefore unsustainable, the order was set aside, and the matter was remanded for decision on merits.

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Issues: Whether the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 could be dismissed as defective without first granting the applicant an opportunity to rectify the defect in the supporting affidavit.

Analysis: The defect related to the sequencing and verification of the affidavit supporting the Section 7 application. The Tribunal held the petition defective because the affidavit was sworn before the petition was signed and notarised. The appeal turned on the proviso to Section 7(5)(b) of the Insolvency and Bankruptcy Code, 2016, which requires notice to be given to the applicant to cure defects before rejection. The Tribunal also noted the procedural framework under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, including the verification requirements under the National Company Law Tribunal Rules, 2016 and Order XIX Rule 3 of the Code of Civil Procedure, 1908. The defect was treated as curable, and the absence of notice to rectify it was held to be inconsistent with the statutory scheme.

Conclusion: The dismissal of the Section 7 application as defective without affording an opportunity to remove the defect was unsustainable. The appeal was allowed, the impugned order was set aside, and the matter was remanded for decision on merits.

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