Colourable transfer of mining leasehold rights can be invalid where it evades lease restrictions and common good policy.

A transfer of mining leasehold rights that merely satisfies the formal timing requirement, but is otherwise arranged to evade restrictions on transfer, assignment or sub-lease, may be treated as invalid. Where the surrounding circumstances show colourable compliance rather than a genuine permitted transfer, the Government may look beyond the form of the transaction and cancel the assignment in exercise of its supervisory authority. The stated rationale is consistency with the constitutional policy that material resources should be distributed to subserve the common good.

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Issues: Whether the transfer of mining leasehold rights within the restricted period, though formally complying with the procedural requirement, was valid in law and whether the Government was justified in setting aside the assignment.

Analysis: The lease conditions and the relevant rule prohibited transfer, assignment or sub-lease of the leasehold interest except with prior permission after expiry of two years. The transfer was effected immediately on expiry of two years, without apparent publicity or invitation of objections, and the surrounding circumstances showed only a formal compliance. The arrangement was treated as a device to evade the legal restrictions and to defeat the constitutional objective of securing distribution of material resources to subserve the common good. The Government was entitled to look beyond the form of the transaction and to cancel the assignment as part of its supervisory authority.

Conclusion: The transfer was not valid in law. The Government's order setting aside the assignment and sub-lease was upheld.

Final Conclusion: The appeal succeeded formally, but the substantive relief went against the appellant because the governmental cancellation of the lease assignment was confirmed.

Ratio Decidendi: A transfer of mining leasehold rights that is only a colourable compliance with the governing restrictions and is inconsistent with the constitutional policy of common good may be treated as invalid and set aside by the competent authority.

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