In the matter of Lokmangal Sugar Ethanol and Co-generation Industries Limited
- CitationIA (I.B.C)/5892 (MB)2025 in C.P. (IB)/84(MB)2024
Ratio decidendi
The rule this decision rests on
Where a financial creditor has filed Form FA under Regulation 30A of the CIRP Regulations 2016 within the prescribed period, and the corporate debtor has settled the claim and paid the full outstanding dues, an application for withdrawal under section 12A of the Code may be allowed without the approval of a 90% voting share of the Committee of Creditors where the Committee has not yet been constituted, falling within Regulation 30A(1)(a). Once the adjudicating authority is satisfied on the strength of Form FA that the application is made within time and the corporate debtor has discharged the outstanding dues and borne the CIRP costs, it may permit the withdrawal of the section 7 proceedings, and the corporate debtor stands released from the moratorium.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
NAME OF THE PARTIES: IFCI LIMITED VS LOKMANGAL SUGAR ETHENOL & COGENERATION INDUSTRIES LIMITED Appearance For Applicant /RP : Adv. Rohit Gupta i/b Adv. Aditya Dubey For Respondent : None SECTION 7 OF THE IBC ORDER IA (I.B.C)/5892 (MB)2025 (12A) 1. This application has been filed by the RP under section 12A of the IBC seeking withdrawal of the CP No. 84/2024.
2. Ld. Counsel for the RP has brought our attention to the order passed by NCLAT dated 07.07.2025 which is reproduced below:
“07.07.2025: Heard counsel for the appellant and Counsel for the Union Bank of India.
2. This appeal has been filed against the order dated 15.10.2025 admitting section 7 application filed by the IFCI Ltd. (the Respondent no.1 herein) and affidavit has been filed by Respondent No. I stating that the settlement between the parties have taken place on 18.03.2025. 3. Ld. Counsel appearing for the Union Bank of India also submits that an OTS dated 13.06.2025 has already been accepted by the Union Bank of India. 4. Ld. Counsel for the Respondent No.1 seeks liberty to file a Section 12A application for withdrawal of the CIRP. 5. The fact that the parties have acknowledged the debt and has come with a settlement for clearing the dues clearly prove the existence of debt and default. We thus see no reason to keep the appeal pending, liberty is given to the financial creditor to file an application within two weeks from today which may be considered and decided by the Adjudicating Authority in accordance with law. The direction that no further steps shall be taken in the CIRP in pursuance of the order dated 15.10.2024 shall continue till the disposal of the application; 6. The Ld. Counsel appearing for the IRP submits that IRP has incurred the cost in CIRP proceedings it shall be open for the IRP to bring it to notice of the Adjudicating Authority for issuing a direction for payment of the cost if required. Ld. Counsel for the IRP submits that the application shall be filed after Form 'FA' is given by the financial creditor as per the rules. 7. In event any adverse ·order is passed in 12A application parties shall be at liberty to take such proceeding as permissible in law. Appeal is disposed of accordingly. 3. It is submitted that before the constitution of CoC, the Hon’ble NCLAT had directed that no steps be taken in the CIRP in pursuance of the admission order dated 15.10.2024. Thereafter, the corporate debtor has settled the matter with the financial creditor and made full payment of the outstanding dues. Accordingly, in view of the liberty granted by Hon’ble NCLAT, the present application through RP has moved under section 12A of the Code. We also note that the Hon’ble NCLAT has directed that “the direction that no further steps shall be taken in the CIRP in pursuance of the order dated 15.10.2024 shall continue till the disposal of the application”.
4. As per Regulation 30A of CIRP Regulations 2016, application for withdrawal shall be submitted within three days of receipt of FA. The present application has been filed on 18.12.2025 and Form FA dated 15.12.2025 duly signed by original petitioner is annexed to the application.
5. As the present case falls under regulation 30A(1)(a), wherein CoC was not constituted, the question of approval of 90% voting share of CoC does not arise.
6. The RP further confirms that the entire CIRP cost has been paid by the corporate debtor.
7. Having considered the facts and circumstances and having perused Form FA, we are inclined to allow the present application. The insolvency proceedings under section 7 of IBC against the corporate debtor are permitted to be withdrawn and the Corporate Debtor is released from all rigours of moratorium.
8. In result, IA (I.B.C)/5892 (MB)2025 is allowed and stands disposed of.
9. C.P. (IB)/84(MB)2024 along with pending IAs, if any, stands disposed of.
Files to be consigned to record.
Sd/- Sd/- HARIHARAN NEELAKANTA IYER LAKSHMI GURUNG Member (Technical) Member (Judicial) ---Rajeev---
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