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CS Professional · Drafting, Pleadings and Appearances · Appearance before other Regulatory and Quasi-judicial Authorities

Gangotri Textiles Ltd is undergoing a corporate insolvency resolution process before the NCLT. A supplier has filed a recovery suit against the company in a civil court, and the resolution professional (RP) wants to defend it. Under section 25 of the Insolvency and Bankruptcy Code, 2016, what is the RP's position?

The resolution professional may represent and act for the corporate debtor with third parties and exercise rights for its benefit in judicial, quasi-judicial or arbitration proceedings, because section 25(2)(b) expressly gives this power. It is not limited to the NCLT and does not depend on the board.

  1. AThe RP may represent and act on behalf of the corporate debtor with third parties and exercise rights for its benefit in judicial, quasi-judicial or arbitration proceedingsCorrect
  2. BThe RP must wait for the erstwhile board of directors to appoint counsel, since only the board can act in judicial proceedings
  3. CThe RP can act only in proceedings before the NCLT and not in any other forum
  4. DThe RP can appear only in arbitration proceedings and not in judicial proceedings

Explanation

Section 25(2)(b) makes it a duty of the RP to represent and act on behalf of the corporate debtor with third parties and to exercise rights for its benefit in judicial, quasi-judicial or arbitration proceedings. The restriction to NCLT or arbitration only is not found in the text, so those options are wrong.

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