# In the matter of Cheema Spintex Ltd.

> NCLT judgment dated 2023-08-17. Citation: TCN-2023-NCLT-02001. The application IA No. 1883/2023 was filed by the applicant-IRP under Section 12A of the Code…

- **Court:** NCLT
- **Order date:** 17 Aug 2023
- **Citation:** TCN-2023-NCLT-02001
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/cheema-spintex-ltd-9d6d803c

## Summary

### Background

The application IA No. 1883/2023 was filed by the applicant-IRP under Section 12A of the Code read with Regulation 30A of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Rule 11 of NCLT Rules, 2016, seeking withdrawal of CIRP and clarification on whether the IRP should proceed with the constitution of the COC during the pendency of the application. The petition was filed as Form-FA, and emails exchanged/received from the operational creditors are on record. The COC has not been constituted yet.

## Facts

M/s. Cotton Impex filed a petition against Cheema Spintex Ltd., initiating CIRP. The applicant-IRP filed IA No. 1883/2023 under Section 12A of the Code, seeking withdrawal of the CIRP. The application was supported by the fact that the operational creditors had exchanged emails and Form-FA was filed. The COC had not been constituted. The Senior Counsel for the Suspended Board of Directors stated that the entire claimed amount had been settled, which was corroborated by the applicant-IRP's counsel. IDBI Bank, another financial creditor, orally objected due to a pending Section 7 application, but no formal objection was filed. The court allowed the withdrawal, discharged the corporate debtor, and restored the Board of Directors.

## Issues and analysis

### Issue 1: Whether the application for withdrawal of CIRP under Section 12A of the Code should be allowed …

**Ratio:** Section 12A of the Code allows for the withdrawal of CIRP with the approval of 90% of the

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**Reasoning:** The court considered the fact that the entire claimed amount had been settled, as stated

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**Interpretation:** Section 12A provides a mechanism for withdrawal of CIRP when a settlement is

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**Application:** In this case, the settlement of the claimed amount and the absence of a

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## Parties

- **Judges:** SUBRATA KUM…; Harnam Singh…
- **Appellants:** M/s. Cotton…
- **Respondents:** Cheema Spintex…

## Timeline

- **2019-01-01 — CP(IB) No. 2/CHD/Chd/201…**: CIRP initiated against…
- **2023-07-25 — CIRP Initiati…**: CIRP initiated vide…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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