NCLAT: Technical And Procedural Deficiencies Have No Bearing On The Admission Of An Application Under Section 7 Of The Code

The National Company Law Appellate Tribunal, Principal Bench (“NCLAT”), in its judgment dated February 6, 2026 in Vinodkumar Nihalchand Parmar v. Anuj Bajpai (IRP), Company Appeal (AT) (Insolvency) No. 1395 of 2025, upheld the order of the National Company Law Tribunal, Mumbai Bench (“Adjudicating Authority”), admitting an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code”) against Dee Plone Polyster Private Limited (“Corporate Debtor”/ “Appellant”). In doing so, the NCLAT clarified that curable procedural defects, such as issues relating filing of information utility records, stamping of loan documents, or compliances for admissibility of evidence, cannot defeat admission of an application for commencing a corporate insolvency resolution process (“CIRP”) of the Corporate Debtor where debt and default are clearly established.

Factual Background

Pegasus Assets Reconstruction Private Limited (“Respondent No. 2”) had filed an application under Section 7 of the Code before the Adjudicating Authority in CP (IB) No. 141/MB/2024 (“Company Petition”), seeking initiation of CIRP against the Corporate Debtor. Subsequent to the matter being reserved for orders, Respondent No. 2 filed an additional affidavit before the Adjudicating Authority in support of its case, however, the said affidavit was not served upon the Corporate Debtor. By order dated September 2, 2025 (“Impugned Order”), the Adjudicating Authority admitted the Company Petition and initiated CIRP against the Corporate Debtor.

The suspended director and shareholder of the Appellant preferred the present appeal under Section 61 of the Code before the NCLAT, challenging the Impugned Order on the grounds of certain technical deficiencies.

Appellant's Contentions

The Appellant contended that defects in an application under Section 7 can be cured only in accordance with the proviso to Section 7(5)(b) of the Code, i.e., within 7 (seven) days from receipt of notice from the Adjudicating Authority, and not after reservation of orders through an additional affidavit. It was argued that the alleged non-compliance with Rule 4(3) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (“Application to AA Rules”) (which requires dispatch of a copy of the application to the corporate debtor) and Section 65B of the Indian Evidence Act, 1872 (now Section 63 of the Bharatiya Sakshya Adhiniyam, 2023 (“BSA”)) (which mandates that a certificate be provided for electronic records) could not be rectified post-hearing of the application. It was further submitted that non-compliance with Regulation 20(1A) of the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 (which requires filing of information of default with an information utility prior to initiating CIRP) remained uncured. Relying on the rulings made in GLAS Trust Co. LLC v. BYJU Raveendran, (2025) 3 SCC 625 and OPTO Circuits (India) Limited v. Axis Bank, (2021) 6 SCC 707, the Appellant argued that statutory procedures must be strictly followed. Lastly, it was contended that the unstamped loan agreements were inadmissible in evidence and could not be relied upon to establish a financial debt.

Respondent No. 2's Contentions

Respondent No. 2 submitted that the Adjudicating Authority had correctly held that the requirements of a “financial debt” under Section 5(8) and “default” under Section 3(12) of the Code had been established. It was contended that the objections raised by the Appellant were purely technical and curable. Respondent No. 2 contended that the non-filing of an information utility record was not fatal in view of clear acknowledgments of debt, and that the alleged deficiencies relating to stamping and absence of a certificate accompanying electronic records did not bar admission of an application under Section 7 of the Code at the threshold stage. Similarly, the lapse under Rule 4(3) of the Application to AA Rules, having been subsequently rectified, did not vitiate the proceedings.

NCLAT's Decision

At the outset, the NCLAT observed that there were clear findings of the existence of a financial debt and default, and that the application filed under Section 7 of the Code was complete and within limitation. The only issue was whether the Impugned Order warranted interference on the grounds of the technical objections that have been raised by the Appellant. In this respect, the NCLAT held that the non-filing of a record of default with an information utility was not fatal, as the requirement is directory and the debt and default were otherwise established through documentary evidence and acknowledgments. The objection regarding insufficient stamping was also rejected by the NCLAT, and it was held that inadequate stamping is a curable defect and would not bar admission of an application for initiation of CIRP under the Code, where the inquiry is confined to the existence of a ‘debt' and ‘default'. Similarly, the absence of a certificate accompanying electronic records under Section 65B of the Indian Evidence Act, 1872 (now Section 63 of the BSA) was not fatal in summary proceedings. Further, non-compliance with Rule 4(3) of the Application to AA Rules was, likewise, treated as a rectifiable procedural lapse that would not vitiate the proceedings under Section 7 of the Code.

Conclusion

The NCLAT, in dismissing the appeal, has held that admission of an application for initiation of a CIRP under the Code cannot be defeated by curable or technical defects. This approach is consistent with the legislative shift proposed to be brought about by the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 (“Amendment Bill”). The Amendment Bill proposes to substitute Section 7(5) of the Code, such that the adjudicating authority “shall” be bound to admit an application for CIRP within a period of 14 (fourteen) days if it is satisfied that (i) a default has occurred, (ii) the application is complete, and (iii) there is no disciplinary proceeding pending against the proposed resolution professional, thereby eliminating the scope for judicial discretion. It may however be noted that presently, Section 7(5) of the Code uses the word “may”, which has been interpreted by the Supreme Court in Vidarbha Industries Power Limited v. Axis Bank Limited, (2022) 8 SCC 352 as conferring a discretion on the adjudicating authority to consider all relevant factors before admitting an application for CIRP.

Please find attached a copy of the judgement, here.

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