Case: Victorian Granites (Pvt.) Ltd Vs. P. Rama Rao

The appellant had filed a revision under Section 35-A of the A.P. Mines and Minerals Concession Rules, 1966 (for short, "the 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 lessee, to M/s Magam Inc. in respect of the leasehold interests in the four leases granted in various GOs for about 103 acres which facts are not inthe matter came up for hearing, this Court issued 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.

Court's reasoning:
It is true, as contended byShri K.R. Chowdhary, the 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 assignment or sub-lease of 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 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 7-10-1992 for assignment of the lease in favour of Magam Inc. and the next day, viz., 8-10-1992, the Deputy Director, promptly and willingly had ordered transfer to Magam Inc. of the leasehold rights had by P. Rama Rao. It does not appear that any publicity was given inviting objections from others.It is not in dispute that P. Rama Rao had applied for and obtained leases on various dates for quarrying granite in R.L. Puram in Chimokurthy Mandalam of Prakasam District for a period of ten years onis true that when the individuals have been granted lease of mining of the property belonging to the Government, the object of such transfer was to augment the economic empowerment of the transferee by himself or by a cooperative society or partnership composing persons to work out the mines to achieve economicwould be obviously in the negative. It is seen that the Government has amended the rules and given powers to the Director to grant assignment after the two years from the date of leave from one firm, in favour of another firm of the lease rights obtained by one, and if it is sought to be transferred within two years, prior permission of the Government is required to be obtained. The object is to have control in the hanky-panky and shady transactions done in collaboration and collusion with the lower level officers for illegal gratification and to prevent the depletion of the assets of the State for personal benefit of the vested interests, defeating the constitutional objective behind Article 39(b) of the Constitution, the preamble and fundamental rights enshrined in the Constitution. This system of transfer would encourage corruption and nepotism and official acts done in secrecy would sabotage the constitutional objectives. Big fish will always eat away small fish in diverse forms, so as to drive the latter away from the area. Legal form of action, if given primacy, the constitutional objective would be easily defeated, creating monopoly in the market by few vested interests controlling the economy.In this case, as rightly contended by Shri K.R. Chowdhary, there is a facade of compliance of law, but, as stated earlier, it is only a subterfuge to comply with the law and an attempt by a private company whose polishing centre is situated in Chittor District and Head Office in Madras to secure unjustifiable enrichment. We have got our own doubts with regard to the very constitution and genuineness of the partnership said to have been entered into between P. Rama Rao and other partners of Magam Inc. However, in this case, it is not necessary for us to go into that issue. Suffice it to state that the entire transaction is smacked of bona fides and would defeat the constitutional objectives. The Government should restructure their rules and contractual clauses consistent with constitutional philosophy. The Government, therefore, has rightly, though for different reasons, set aside the assignment of leases granted by P. Rama Rao and sub-lease in favour of Magam Inc. by exercising its suo motu