NCLT Lacks Jurisdiction in Directing Corporate Debtor to Allow Windmill Operation without Forest Clearances: HC

Case Details: Principal Chief Conservator of Forests v. Wind World (India) Ltd. - [2023] 149 taxmann.com 289 (HC-Karnataka)

Judiciary and Counsel Details

• • M. Nagappasanna, J.
  • Dhyan Chinnappa & Shwetha Krishnappa for the Petitioner.
  • K.G. Raghavan, Sr. Adv. & Ajay J. Nandalike, Adv. for the Respondent.

Facts of the Case

In the instant case, the corporate debtor was granted a lease by an authority to conduct windmill operations on forest land. The respondent had applied for the renewal of the lease, which was pending consideration before the competent authority.

Later, the state granted permission to the respondent to start windmill operations subject to clearance from the forest department, which was not obtained for a long time.

Despite the lack of forest clearance, the state directed that the windmill operations be continued by placing the relevant documents before the government. Meanwhile, since 2018, the respondent declared insolvency and approached the Tribunal invoking section 14 of the IBC.

Although, the respondent did not challenge the state’s orders before any competent forum, however, they knocked at the doors of the Tribunal in a pending case by filing a section 60(5) application before the Tribunal for passing an interim order.

The Tribunal directed the state government to permit the functioning of the windmill, considering it necessary to resolve the insolvency of the respondent.

However, the state challenged this order before the High Court, arguing that the Tribunal could not have acted as a constitutional court to suspend the order or proceeding of the state and permit the functioning of the windmill.

High Court Held

The High Court observed that since the state had exercised its jurisdiction in drawing up proceedings and directing forest clearances to be submitted by the respondent, it was in the realm of public law and completely beyond the purview of the IBC and the jurisdiction of the Tribunal.

The High Court held that the Tribunal had no jurisdiction to direct the functioning or continuing of the windmill without forest clearances, merely because the state had granted such permission at an earlier point in time. As a result, the impugned order by the Tribunal was to be quashed.