SC expounds: NCLT and NCLAT have no jurisdiction to adjudicate upon disputes which requires judicial review of administrative action. Read Judgment

Supreme Court in a recent judgment has enunciated that NCLT and NCLAT have no jurisdiction to adjudicate upon disputes which require judicial review of administrative action.

The judgement was delivered by Bench comprising of Justice Rohinton Fali Nariman, Justice Annirudha Bose and Justice V. Ramasubramanian in case of M/s Embassy Property Developments Pvt. Ltd. v. State of Karnataka & Ors. on 3^rd December 2019.

The Brief facts of case were as follows, a company by name Udhyaman Investments Pvt. Ltd., (Financial Creditor), moved an application before the NCLT Chennai, under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Tiffins Barytes Asbestos & Paints Ltd. (Corporate Debtor); the same was admitted by NCLT Chennai by an Order dated 12.03.2018.

The Corporate Debtor held a mining lease granted by the Government of Karnataka, which was to expire by 25.05.2018. The Interim Resolution Professional filed a writ petition in High Court of Karnataka, seeking a declaration that the mining lease should be deemed to be valid upto 31.03.2020.

During the pendency of the writ petition, the Government of Karnataka passed an Order dated 26.09.2018, rejecting the proposal for deemed extension,

The Resolution Professional then moved the application, before the NCLT, Chennai praying for setting aside the Order of the Government of Karnataka, and seeking a declaration that the lease should be deemed to be valid upto 31.03.2020.

By an Order dated 11.12.2018, NCLT, Chennai allowed the Miscellaneous Application setting aside the Order of the Government of Karnataka.

Now, question arose Whether NCLT had power of judicial review over the order of rejection. Supreme court held that, “NCLT did not have jurisdiction to entertain an application against the Government of Karnataka for a direction to execute Supplemental Lease Deeds for the extension of the mining lease.”

Bench further added that, “NCLT and NCLAT, being a creature of a special statute to discharge certain specific functions, cannot be elevated to the status of a superior court having the power of judicial review over administrative action”.

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