The bench, comprising Chief Justice Ashok Bhushan and Justice A M Shafique, granted one year time to remove the encroachments.
The government submitted that 7,000 hectares of forest land have been occupied by encroachers.
The court gave its verdict after completing hearing on a PIL filed by Nature Lovers Movement of Thiruvankulam, seeking restoration of forest land from illegal occupants.
The PIL was filed in 2002.
The HC also directed government to issue notice to the ecroachers under Land Conservance Act and Forest Act.
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