Will sublet tenant's license rejection affect the lease ?

There is a property which has been leased from corporation of chennai, in my grandfather's name(since 1970). We have been paying the lease rent to corporation on a regular basis and has been sub letting this property. Now , there is a new tenant who has been using the premise, for the past 2 years, in order to setup a bakery. But, when he applied for license to the corporation, corporation has declined it , saying that only the lessee, can apply for license. So, he has requested my grandfather to apply lease for bakery in my grandfather's name. The corporation has again declined it, saying that there is a case going in court regarding the lease rent payment between my grandfather and corporation(around one month back , there was a notice from corporation asking us to pay arrears lease amount, although we have paying the lease rent without any default). If the sublet tenant gets the license denial letter from corporation, will my grandfather face any legal issue ?