Yes. Paneer can be made from spoiled milk. just strain the spoilt milk using the muslin cloth. Tie it tightly for about 6 to 8 hours. After 8 hours, when you untie it, the paneer will be collected in the muslin cloth. You can cut it to any desired shape and use it in any dishes. This stays good for about 2-3 days when stored in the refrigerator.