Karnataka HC sets aside NCLT order regarding windmills on forest land

The Karnataka High Court has quashed the order of the National Company Law Tribunal (NCLT) that had passed an order allowing the operations of windmills on forest land in the state to a Mumbai-based company.

The HC said the tribunal did not have jurisdiction over the matter of setting aside a government order.

"The company could not have knocked at the doors of the Tribunal as it completely falls beyond the purview of the Code, being in the realm of public law, since the State has exercised its jurisdiction in drawing up the proceedings and directing forest clearances to be submitted by the corporate debtor, the petitioner, in exercise of powers conferred under the Statute. Therefore, they are in the realm of public law," Justice M Nagaprasanna said in his judgment.

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The tribunal had no jurisdiction to direct functioning/continuing of the windmill without the forest clearance, merely because the state had granted such permission at an earlier point in time, the court stated.

The Principal Chief Conservator of Forests and other senior officers of the Forest Department had approached the HC against the NCLT, Ahmedabad Division Bench's order in favour of Wind World (India), a Mumbai-based company.

The company had been granted a lease of 221.80 hectares of forest land for a period of 15 years in 2003. It applied for renewal of lease in 2020 which was pending. In the meantime, the company sought permission to start a windmill and the permission was given subject to the clearance of the Forest Department.

Since 2018, the company was before the tribunal for insolvency proceedings and the permissions were granted during this period.

The state government suspended operations of the windmill in May 2022 as the forest clearances were not placed before it. The company did not challenge these orders but, however, approached the tribunal.

The NCLT ordered the state government to permit functioning of the windmill "by holding that it was essential to resolve insolvency of the corporate debtor i.e., the Company."

The Forest Department approached the HC stating that the tribunal could not have acted as a constitutional court to suspend the order or the proceedings of the state government and permit functioning of the windmill.

"All these are powers vested in the constitutional courts and not on the Tribunal," the department said in the HC.

Allowing the Forest Department's petition and quashing the tribunal's order, the HC said: "None of the contentions of the learned senior counsel for the company would merit acceptance. It is open to the company to produce all the necessary clearances as is sought by the state if the company wants to continue with the operations."