Case Details

Case Name: Chandra Prakash Lohia & Basanti Devi Lohia vs West Bengal Agro Textile Corporation Ltd. & Anr.

Court/Authority: National Company Law Appellate Tribunal, Principal Bench, New Delhi

Case Numbers: Company Appeal (AT) (Insolvency) No. 1668 of 2025 & I.A. No. 7897 of 2025, 2025 of 2026; Company Appeal (AT) (Insolvency) No. 1749 of 2025

Date of Impugned Order: 27.08.2025

Date of Judgment: 25th May, 2026

Presiding Officers: Justice Ashok Bhushan (Chairperson), Indevar Pandey (Member (Technical))

Parties Involved

Appellants:

  • Chandra Prakash Lohia @ Nitesh Lohia
  • Basanti Devi Lohia

Respondents:

  • West Bengal Agro Textile Corporation Ltd. (100% Government of West Bengal owned entity)
  • Another respondent (not specifically named)

Legal Representatives:

  • For Appellants: Mr. Akshay Jain, CA, Mr. Rishabh Jain, Mr. A Kumar, Ms. Kavya, Ms. Shruti Jain and Ms. Ashika Jain, Advocates
  • For Respondents: Mr. Shounak Mitra and Mr. Vivek Gautam, Advocates

Other Relevant Parties:

  • Jitendra Jain (Operational Creditor who filed original Section 9 application)
  • Mr. Pratap Mukherjee (Interim Resolution Professional appointed by NCLT)

Issues / Allegations / Violations

The appeals challenged the NCLT Kolkata Bench order dated 27.08.2025 that allowed withdrawal of Corporate Insolvency Resolution Process (CIRP) under Section 12A of the Insolvency & Bankruptcy Code, 2016. The key issues were:

  • Whether the adjudicating authority could allow withdrawal under Section 12A without considering claims of other creditors (appellants) who had filed separate Section 9 applications
  • Whether the proceeding, being in rem after admission of Section 9 application, required hearing all stakeholders before allowing withdrawal
  • Whether the procedure under Regulation 30A of CIRP Regulations, 2016 was properly followed
  • The appellants claimed they had filed Section 9 applications (C.P. (IB) No.2347/KB/2024 and C.P. (IB) No. 353/KB/2024) which were pending consideration

Findings & Observations

The NCLAT made several key findings:

  • The Settlement Agreement between West Bengal Agro Textile Corporation Ltd. and operational creditor Jitendra Jain was dated 18.08.2025 for Rs. 1.5 crore, before the admission order on 22.08.2025
  • The IRP received Form-FA under Regulation 30A on 23.08.2025, immediately after his appointment
  • No public announcement was made by the IRP as he received withdrawal request before any publication
  • No Committee of Creditors (CoC) was constituted at any point
  • The IRP filed the Section 12A application on 25.08.2025, within 3 days as required by Regulation 30A(3)
  • No objections were filed before the adjudicating authority by any creditor including the appellants
  • The case falls under Scenario 63.2 identified in GLAS Trust Company LLC judgment - after admission but before CoC constitution
  • The facts are fully covered by the Supreme Court judgment in Abhishek Singh vs Huhtamaki PPL Ltd. which was affirmed in GLAS Trust Company LLC
  • When no CoC is constituted, the only parties concerned are operational creditor, corporate debtor and IRP

Penalties / Settlements / Directions

  • The original settlement amount between corporate debtor and operational creditor Jitendra Jain was Rs. 1.5 crore
  • The operational creditor's original claim was Rs. 1,19,36,635/- for unpaid invoices
  • No monetary penalties were imposed in this proceeding
  • The NCLT had directed the operational creditor to deposit Rs. 2,00,000/- with the IRP for CIRP expenses, but this was returned as the process was withdrawn

Corrective Actions & Future Obligations

  • The IRP complied with all requirements of Regulation 30A of CIRP Regulations, 2016
  • The IRP verified receipt of settlement payment and obtained settlement agreement before filing withdrawal application
  • No ongoing compliance measures were required as the CIRP was completely withdrawn

Final Ruling & Enforcement

  • Both appeals (Comp. App. (AT) (Ins.) Nos. 1668 & 1749 of 2025) were dismissed
  • The impugned order dated 27.08.2025 passed by NCLT Kolkata Bench was upheld
  • All pending IAs were disposed of
  • The withdrawal of CIRP in C.P. (IB) No.207/KB/2023 was confirmed as valid and proper
  • The appellants' subsequent Section 9 applications were noted to have been rejected by NCLT on 24.03.2026 and their appeals dismissed by NCLAT on 07.05.2026