Transfer restrictions and corporate veil doctrine upheld in challenge to resumption of an allotted site

The allotment conditions and Rules barred transfer of the allotted site for the stipulated period without permission, and the Court treated the shareholding and control changes, together with the undisclosed Teledata-linked arrangement, as evidence of concealment and evasion. It applied the principle of lifting the corporate veil where corporate entities were used to mask the real nature of the transaction, and held that the transfer restrictions had been breached. The resumption order was therefore valid, and interference by the High Court was found to be unwarranted.

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Issues: Whether the resumption of the allotted site for breach of the transfer restriction in the allotment conditions and the Rules was valid, and whether the corporate structure and share-transfer arrangements could be treated as a device to evade those restrictions.

Analysis: The allotment conditions prohibited transfer for the stipulated period and the Rules similarly restricted transfer without permission. The material on record showed that the allottee's shareholding and control had been altered through transactions involving another company, and the respondent failed to disclose the full facts regarding the arrangement and the subsequent Teledata-linked transaction. The concealment of material facts, coupled with the apparent use of corporate entities to mask the real nature of the deal, justified looking beyond the formal structure and applying the principle of lifting the corporate veil. On that basis, the Court found that the Rules and allotment conditions had been violated and that the High Court had erred in interfering with the resumption order.

Conclusion: The resumption of the allotment was held to be valid and proper, and the challenge to the cancellation failed.

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