2025 (11) TMI 1637

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....pellant-company ['the company']. Disgruntled therewith, the respondent-bank filed an appeal in Comp. App. (AT) (Ins) No. 1534 of 2024 before the National Company Law Appellate Tribunal, Principal Bench, New Delhi ['the NCLAT']. By order dated 27.08.2025, the NCLAT allowed the appeal and restored C.P.(IB)/97(AHM)2024 to its original number. The matter was remanded to be decided on merits and in accordance with law. Aggrieved thereby, the company is in appeal under Section 62 of the IBC. 3. As only the ambit and effect of the aforestated procedural aspect needs to be addressed and we are not concerned with the merits of the matter, we need not advert to the facts in extenso. Suffice it to state that the company availed a loan facility from the respondent-bank to the tune of Rs. 5.5 crores and the same came to be classified as a non-performing asset on 04.08.2019. Ultimately, the respondent-bank filed an application under Section 7 of the IBC. This application was filed in Form 1 appended to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, in consonance with Rule 4(1) therein, titled 'Application by financial creditor'. Rule 4(1) requires a financi....

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.... Rule 34(4) reads as follows: '34. General Procedure. - (1) to (3)...... (4) Every petition or application including interlocutory application shall be verified by an affidavit in Form No. NCLT.6. .......' 6. Notably, Section 7(5)(b) of the IBC also provides that if an application for initiation of corporate insolvency resolution process by a financial creditor made under Section 7(2) thereof is found to be incomplete, the National Company Law Tribunal may, by order, reject such application. However, the proviso thereto states that the National Company Law Tribunal shall, before rejecting the application under Section 7(5)(b), give a notice to the applicant to rectify the defect in his application within seven days of the receipt of such notice. 7. In the case on hand, the scrutiny section of the NCLT conveyed the defects/objections in the filing of petitions/applications, including the application of the respondent-bank, but as the same were not removed/rectified, the Joint Registrar issued Notice dated 10.10.2023 in respect of 26 petitions/applications, including the application of the respondent-bank, calling upon all concerned to remove the defe....

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....ght of the law laid down by this Court in Dena Bank (now Bank of Baroda) vs. C. Shivakumar Reddy and another (2021) 10 SCC 330, the rejection of the application filed by the respondent-bank could not be sustained. In that regard, the NCLAT held that when an application is filed with a defective affidavit it would not be non est on that ground as the defect can be cured. However, having said so, the NCLAT chose to restore the company petition straightaway and remanded the matter to the NCLT for decision on merits, without requiring the defective affidavit to be cured. 12. Aggrieved thereby, the company is in appeal before us. By order dated 15.09.2025, this Court stayed further proceedings in C.P.(IB)/97(AHM)2024 on the file of the NCLT. 13. Admittedly, no notice was given to the respondent-bank under the proviso to Section 7(5)(b) of the IBC. The notice dated 10.10.2023 was a consolidated notice issued by the Joint Registrar of the NCLT in relation to 26 petitions/applications, calling upon all concerned to take notice and to remove the defects therein within a period of seven days, failing which all such cases would be dealt with under Rule 28(3) of the NCLT Rules. This noti....

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....y to cure the defects in an application within seven days from the date of receipt of notice, and in an appropriate case, the adjudicating authority may accept the cured application, even after expiry of seven days, for the ends of justice.' Therefore, 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. The IBC, being the substantive legislation relating to the application filed by the respondent-bank under Section 7 thereof, the notice to cure the defects therein necessarily had to be given under the said provision and compliance with the Rules, independently framed for the National Company Law Tribunal, was not sufficient. 17. Further, we are not persuaded to accept the argument of the learned senior counsel for the company that the defective affidavit filed in support of the respondent-bank's application under Section 7 of the IBC was sufficient to hold the application itself liable to be rejected on the ground of being non est. Perusal of the objection raised by the company itself, in para 4 of its additional affidavit dated 02.04.2024 filed before the NCLT, indicat....