2020 (1) TMI 1436 - HC - Indian Laws

Extension of Mining Lease - Jurisdiction - power of NCLT to entertain an application against the Government of Karnataka for a direction to execute Supplemental Lease Deeds for the extension of the mining lease - HELD THAT - Issue decided in the case of M/S EMBASSY PROPERTY DEVELOPMENTS PVT. LTD. VERSUS STATE OF KARNATAKA OTHERS 2019 (12) TMI 188 - SUPREME COURT where it was held that though NCLT and NCLAT would have jurisdiction to enquire into questions of fraud they would not have jurisdiction to adjudicate upon disputes such as those arising under MMDR Act 1957 and the rules issued thereunder especially when the disputes revolve around decisions of statutory or quasi-judicial authorities which can be corrected only by way of judicial review of administrative action. Hence the High Court was justified in entertaining the writ petition. Petition allowed.

Summary

Issues:
Challenge to order rejecting proposal of deemed extension of mining lease; Challenge to NCLT order directing execution of Supplement Deeds; Validity of order dated 26th September 2018; Jurisdiction of NCLT to entertain application against Government of Karnataka; Setting aside of NCLT order by High Court; Revival of Government order dated 26th September 2018.

Analysis:
The case involved a challenge to the order rejecting the proposal of deemed extension of a mining lease, issued by the State of Karnataka. The petitioners, including the State of Karnataka and its officers, contested the directions contained in a National Company Law Tribunal (NCLT) order dated 3rd May 2019. The NCLT order required the execution of Supplement Deeds extending the mining lease period, which was challenged by the petitioners. Additionally, the petitioners disputed the finding in the NCLT order that the State's order dated 26th September 2018 was null and void. The NCLT order was based on an application made during the Corporate Insolvency Resolution Process initiated against the first respondent.

The High Court referred to a judgment by the Apex Court dated 3rd December 2019, which held that the NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for direction on mining lease extension. The Apex Court emphasized that such disputes involving statutory or quasi-judicial authorities should be corrected through judicial review of administrative action. Consequently, the High Court found the NCLT order to be illegal and set it aside, reviving the State's order dated 26th September 2018.

In light of the Apex Court's decision and the High Court's analysis, the finding by the NCLT that the State's order was null and void was deemed unsustainable. The High Court allowed the writ petition, quashed the NCLT order, and dismissed the related application. It further clarified that the first respondent could challenge the State's order through available legal remedies. The High Court ultimately set aside the NCLT order, revived the State's order, and granted the first respondent the option to challenge the State's order through lawful means.