Practice: Drafting Section 7 and Section 9 IBC Applications

Applications under sections 7 and 9 often fail not on the law but on preparation: a wrongly stated date of default, a missing authority, a demand notice served at the wrong address, or no explanation of limitation. Judiciary exams increasingly test drafting and procedure as well. This note sets out the forms prescribed by the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the steps to follow, the documents to annex and the defects to avoid.

1. The Rules and Forms

• Rule 4 and Form 1. A financial creditor, alone or jointly, applies under section 7 in Form 1, and must dispatch a copy to the registered office of the corporate debtor by registered or speed post; an assignee must annex the assignment documents.
• Rule 5, Forms 3 and 4. An operational creditor first delivers a demand notice in Form 3, or a copy of the invoice with a notice in Form 4, to the registered office by hand, registered or speed post, or by email to a whole-time director, designated partner or key managerial personnel.
• Rule 6 and Form 5. The operational creditor then applies under section 9 in Form 5, dispatching a copy to the corporate debtor.
• Rule 9 and Form 2. Where an interim resolution professional is proposed, his written consent in Form 2 is annexed.
• Rule 10. The applicant must inform the NCLT of any winding up petition against the corporate debtor, and pay the fee prescribed in the Schedule.

2. Section 7 Step by Step

Figure 1: Preparing a section 7 application

• Part I. Particulars of the financial creditor: name, identification number, registered office, and the authorised representative, supported by a board resolution or power of attorney.
• Part II. Particulars of the corporate debtor: name, CIN, date of incorporation, capital and registered office, which also fixes the territorial jurisdiction of the NCLT.
• Part III. Name, address, email and registration number of the proposed interim resolution professional.
• Part IV. The financial debt: the total amount disbursed with dates, the amount in default and the date of default, with workings set out clearly.
• Part V. Evidence: security documents and charge registration, the record of default with an information utility, the loan agreement, statements of account certified under the Bankers' Books Evidence Act, any decree or recovery certificate, and acknowledgements of debt.
• Admission standard. After 2026, the NCLT shall admit if a default has occurred, the application is complete and no disciplinary proceedings are pending against the proposed professional (Topic 11)

3. Section 9 Step by Step

Figure 2: Preparing a section 9 application

• Demand notice. State the unpaid operational debt, the invoices or contract, and demand payment within 10 days; serve it at the registered office or by email to the specified officers, and keep proof of delivery.
• Waiting period. File only after 10 days have passed without payment or a notice of dispute; a reply raising a genuine pre-existing dispute will defeat the application (Mobilox Innovations, 2017; Topic 13)
• Information utility, 2026. Under the amended section 215(3), the operational creditor is to submit the financial information to an information utility before filing the section 9 application, and the debtor's failure to respond leads to deemed authentication (Topic 75)
• Form 5 annexures. The demand notice as served with proof of delivery, the invoices and contract, an affidavit that no notice of dispute was received, bank records showing non-payment if available, Form 2 if an IRP is proposed, and proof of fee.
• Bank certificate. A certificate from a financial institution is not mandatory; in Macquarie Bank v Shilpi Cable (2017), the Supreme Court held the requirement directory, and the provision now refers to such records only if available.

4. Points Common to Both

Figure 3: Checklist for both applications

• Threshold and limitation. Show a default of at least one crore rupees and that the application is within three years of default, pleading any acknowledgement under section 18 of the Limitation Act, part payment, or a recovery certificate that gives a fresh period (Topics 18 and 86)
• Date of default. Plead a single, clear date of default consistent with the documents; inconsistent dates invite rejection on limitation.
• Fees. The Schedule to the Rules, as last available in its 2019 form, prescribed twenty-five thousand rupees for applications by financial creditors and the corporate applicant, and two thousand rupees for operational creditors; the current Schedule should be checked before filing.
• Filing. Applications are filed electronically before the NCLT bench having jurisdiction over the registered office, with an index, synopsis, list of dates, verifying affidavit and vakalatnama.

5. Common Defects

Frequent reasons for rejection or delay include filing by a person without proper authority; a demand notice served at an outdated address or not in the prescribed form; a default below the threshold once disputed or time-barred amounts are excluded; reliance on unsigned or uncertified statements of account; failure to explain limitation; failure to disclose a pending winding up petition or earlier proceedings; and a proposed interim resolution professional whose authorisation for assignment has lapsed. A section 9 application that is really a recovery suit, filed despite clear evidence of a dispute, may also attract penalties under sections 64A and 67C after 2026 (Topic 76).

6. Frequently Asked Questions

Can a lawyer issue the demand notice under section 8 on behalf of an operational creditor?

Yes. The Supreme Court held in Macquarie Bank (2017) that a demand notice may be issued by an authorised agent, including a lawyer, on behalf of the operational creditor.

Which form does a financial creditor use?

Form 1 under Rule 4 of the Application to Adjudicating Authority Rules, 2016, with Form 2 for the consent of the proposed interim resolution professional.

Must an operational creditor annex a bank certificate showing non-payment?

No. The certificate is to be annexed only if available, as the requirement is directory and not mandatory.

How is the NCLT bench chosen?

By the location of the corporate debtor's registered office, under section 60(1).

Must a copy of a section 7 application be sent to the corporate debtor?

Yes. Rule 4 requires the financial creditor to dispatch a copy of the application to the registered office of the corporate debtor by registered or speed post, and proof of dispatch should be filed.

Can several financial creditors file a single section 7 application?

Yes. Section 7 allows financial creditors to apply jointly, and Rule 4 allows them to nominate one of them to act on behalf of all, with particulars and authorisation annexed to Form 1.

7. Related Topics

• Topic 11: Section 7. CIRP application by a financial creditor.
• Topic 13: Sections 8 and 9. Demand notice and pre-existing dispute.
• Topic 81: Section 7 vs Section 9. The two routes compared.