IBC Section 25: Duties of resolution professional

Section 25 of Insolvency and Bankruptcy Code, 2016: Duties of resolution professional

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business operations of the corporate debtor.

(2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:-

(a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate debtor;

(b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings;

(c) raise interim finances subject to the approval of the committee of creditors under section 28;

(d) appoint accountants, legal or other professionals in the manner as specified by Board;

(e) maintain an updated list of claims;

(f) convene and attend all meetings of the committee of creditors;

(g) prepare the information memorandum in accordance with section 29;

(h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans..

(i) present all resolution plans at the meetings of the committee of creditors;

(j) file application for avoidance of transactions in accordance with Chapter III, if any; and

(k) such other actions as may be specified by the Board.

Legal Commentary & Landmark Judgments: Section 25

Section 25 sets forth the affirmative statutory duties of the Resolution Professional to take custody and control of corporate debtor assets, represent the corporate debtor, maintain operations as a going concern, and investigate avoidance transactions.

Custody and Asset Control: The RP must immediately take custody and control of all tangible and intangible assets, business records, title deeds, and bank accounts of the corporate debtor.
Going Concern Management: Mandated to maintain the corporate debtor as a going concern, managing commercial contracts, client relationships, and employee operations during the CIRP.
Avoidance Investigation (Section 25(2)(j)): Statutorily obligated to file avoidance applications before the Adjudicating Authority in respect of preferential, undervalued, extortionate, or fraudulent transactions.
Invitation of Resolution Plans: Prepares the Information Memorandum, issues Form G, invites Expression of Interest (EOI), and submits compliant resolution plans to the Committee of Creditors.

Key Landmark Precedents:

ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta (2019) 2 SCC 1: The Supreme Court held that the Resolution Professional is an officer of the court and a facilitator who must ensure compliance with Section 29A and statutory requirements before placing plans before the CoC.
Anuj Jain v. Axis Bank Ltd. (2020) 8 SCC 401: The Supreme Court underscored that the RP has an affirmative statutory duty under Section 25(2)(j) to rigorously investigate past asset alienations and file clawback applications before the NCLT.

Courtroom Practice & Strategic Litigation Guidance:

The Resolution Professional must not assume an adjudicatory role when screening resolution plans; his statutory remit under Section 25 is administrative and facilitative. However, failure to examine avoidance transactions can attract personal disciplinary proceedings by the IBBI.