The Bench of Justice M. Nagaprasanna, Karnataka High Court was hearing a petition on insolvency law and held that the National Company Law Tribunal's jurisdiction is limited to matters directly related to the insolvency of a corporate debtor and does not extend to issues outside the scope of insolvency proceedings.
In the present case, the Principal Chief Conservator of Forests, Government of Karnataka, filed a petition in the Karnataka High Court challenging an order issued by the National Company Law Tribunal (NCLT) regarding an application filed under Section 60 of the Insolvency and Bankruptcy Code, 2016. The respondent, M/s Wind World (India) Limited, had obtained a lease for forest land to operate a windmill, which expired in 2018. The company requested permission to continue operating the windmill while the lease renewal was pending, which was granted subject to forest clearance. However, when forest clearance was not obtained, the State suspended the windmill's operations and requested documents for further consideration. The company did not challenge these orders but instead filed an application with the NCLT under Section 60(5) of the Code, seeking an interim order to permit the windmill's functioning. The NCLT directed the State Government to allow the windmill's operations, citing the resolution of the company's insolvency as essential. The State Government appealed this order in the Karnataka High Court, arguing that the NCLT had exceeded its jurisdiction by suspending the State's order and allowing the windmill to operate. The court heard arguments from both parties and considered the relevant provisions of the Insolvency and Bankruptcy Code. It examined previous judgments of the Supreme Court, including the Embassy Property Developments Private Limited v. State of Karnataka and Others, REED 2019 SC 12501, to determine the jurisdiction of the NCLT. Ultimately, the court's main consideration was whether the NCLT had exceeded its jurisdiction in issuing the impugned order based on grounds unrelated to the insolvency of the corporate debtor. Therefore, the NCLT's jurisdiction cannot be invoked in such cases.
Considering the above judgments, it is clear that the Tribunal's jurisdiction is limited to matters arising solely from or relating to the insolvency of the corporate debtor. Any issue that falls outside the realm of insolvency proceedings cannot be entertained by the Tribunal.
In the present case, the dispute revolves around the forest clearances and the permission to operate the windmill. These matters are not directly related to the insolvency of the corporate debtor but rather pertain to statutory clearances and permissions governed by public law. Therefore, the Tribunal has exceeded its jurisdiction by passing the impugned order.
The contention raised by the learned senior counsel for the Company, relying on the Embassy Property Developments Private Limited v. State of Karnataka and Others, REED 2019 SC 12501, is not applicable here as that case dealt with disputes arising from the insolvency resolution process itself. In contrast, the present dispute concerns matters beyond the scope of insolvency proceedings.
Consequently, the impugned order passed by the Tribunal was without jurisdiction and, therefore, a nullity in law. The State is not required to approach the Appellate Tribunal against the said order.
In conclusion, the Karnataka High Court held that the Tribunal has exceeded its jurisdiction by passing the impugned order, as the matters in question fall outside the purview of insolvency proceedings. The order of the Tribunal was declared null and void.
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