Resolution Professional's Duty Is Limited To Taking Control of Assets, Not Improving Their Value: NCLT Mumbai

The National Company Law Tribunal (NCLT), Mumbai Bench, has recently clarified that a resolution professional's duties under the Insolvency and Bankruptcy Code are limited to taking custody and control of a corporate debtor's assets and do not extend to improving their value.

The tribunal said the duties under Section 18 “only include to take control and possession of the assets of the Corporate Debtor” and do not require any effort “to improve the quality of the assets.”

The observation was made while dismissing an application filed by the Resolution Professional of Bafna Motors Private Limited seeking the release of a bank account attached by GST authorities.

A bench of Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati noted that the corporate insolvency resolution process (CIRP) against Bafna Motors began on October 14, 2025.

The tribunal recorded that the company's current account with State Bank of India, Nanded, had been attached earlier by the GST Department through notices dated May 13, 2025, and September 9, 2025.

The Resolution Professional argued that once the moratorium came into force, the attachment could not continue and the account should be placed under his control.

The tribunal, however, noted that “It is further not the case that the GST Department is taking coercive action for recovery of the outstanding amount. Accordingly, provision of Section 14(1)(a) are not applicable in this case."

It observed that Section 14 of the Code bars the institution or continuation of proceedings during the moratorium and that no such proceedings were shown to be continuing in the present case.

The tribunal also recorded that Section 14 applies to the enforcement of security interests and that no such action was involved in this case.

In view of these findings, the tribunal dismissed the application.