M/S. VICTORIAN GRANITES (P) LTD. versus P. RAMA RAO AND ORS.

Citation: [1996] SUPP. 5 S.C.R. 692 · Decided: 09-09-1996 · Supreme Court of India · Bench: K. RAMASWAMY, G.B. PATTANAIK · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
M/S. VICTORIAN GRANITES (P) LTD. 
v. 
P. RAMA RAO AND ORS. 
SEPTEMBER 9, 1996 
,[K. RAMASWAMY AND G.B. PATTANAIK, JJ.) 
A.P. ·Mines & Mineral Concession Rules, 1966. 
Rule 31-Leasehold lights-Original Lessee transfening to another 
C Jinn-Prohibition contained in clause (8) of Appendi.x to the lease and clause 
(ix) of Rule 31 against transfer or assig11me11t or sub-lease except with prior 
pennissio11 of competent autho1ity after two years-Next day Deputy Director 
ordering transfer-No publicity given-No objections invited-After notice, 
Governm'ent setting aside the transfer--Held: There is a facade of complia11ce 
of law, but it is only a subterfuge to comply with the law and an attempt by 
D a private company to secure unjustifiable enrichment-The entire transaction 
is smacked of ma la fides and would defeat constitutional objectives-Govern-
- mellt had rightly set aside the assignment of leases granted to petitioner and 
sub-lease in favour of another fimi--Restrnctwing of Rides and contractual 
clauses consistent with co11stitutio11al philosoph~Suggestio11 to Govem-
E rne11t--Constillltio11 of India, Art. 39(b ). 
CIVIL APPELLATE JURiSDICTION : Civil Appeal No. 12368 of 
1996. 
From the Judgment and Order dated 4.12.95 of the Andhra Pradesh 
F 
High Court in W.P. No. 6592 of 1994. 
K. Parasaran and K. Swami for the Appellant. 
KR. Chowdhary for the Respondents. 
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The following Order of the Court was delivered : 
Leave granted. 
This appeal by special leave arises from the judgment and order of 
the Division Bench of the Andhra Pradesh High Court made on December 
H 14,1995 in W.P. 6592/94. The appellant had filed a revision under Section 
692 
VICTORIAN GRANITES (P) LlU. v. P. RAMA RAO 
693 
35-A of the A.P. Mines & Mineral Concession Rule, 1966 (for short, the A 
"Rules"). The Government after issuance of notice, set aside the -transfer 
of the leasehold rights had by the first respondent, P. Rama Rao, who was 
the original Jessee, to M/S. Magam Inc. in respect of the leasehold interests 
in the four leases granted in various G.Os. for about 103 acres which facts 
are not in dispute. When the matter came up for hearing, this Court issued B 
notice as to how and under what circumstances P. Rama Rao came to 
transfer these leasehold interests to the second respondent, and whether 
they are sustainable in law? the respondents have filed their counter-
affidavits. We have heard the learned counsel on both sides. 
It is not in dispute that P. Rama Rao had applied for and obtained C 
leases on various dates for quarrying granite in R.L. Puram in Chimokurthy 
Mandalam of Prakasam District for a period of ten years on October 7, 
1989. Subsequently, on October 8, 1990, he had executed the lease deed. 
He transferred the leases in favour of Magam Inc. on October 8, 1992. The 
question is : whether the transfer of the leasehold right is valid and D 
sustainable in law? It is true, as contended by Shri K.R. Chowdhary, 
learned counsel for the respondents, that clause (8) of Appendix to the 
Lease and clause (ix) of Rule 31 of the Rules, prohibit transfer or assign-
ment or sub-lease or the leasehold interests in the mining lease, granted in 
favour of the lessee, except with prior permission by the competent 
authority after expiry of two years. At the relevant time, the competent E 
authority was the Deputy Director. Exactly on expiry of 2 years from the 
date of the grant of the lease, P. Rama Rao had applied on October 7, 
1992 for assignment of the lease in favour of Magam Inc. and the next day, 
viz., October 8, 1992, the Deputy Director, promptly and willingly had 
ordered transfer to Magam Inc. of the leasehold rights had by P. Rama F 
Rao. It does not appear that any publicity was given inviting objections 
from others. The question, therefore, is : whether the action taken by the 
Deputy Director is valid in law? 
It is true that a facade of compliance of law has been done by P. 
Rama Rao and Magam ·Inc. for having the· transfer of the leasehold G 
interests had by P. Rama Rao made in favour of the letter. The best of the 
legal brains will be available to escape the clutches of law and transactions 
would be so shown to be in compliance of semblance of Jaw. In that pursuit, 
payment of royalty and permits remained in the name of P. Rama Rao. 
The court has to pierce through the process, lift the veil and reach the H 
694 
SUPREME COURT REPORTS [i996) SUPP. 5 S.C.R. 
A 
genesis and effect. Article 39(b)
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