Delhi Rent Act | Tenancy Transfer Without Landlord's Consent Attracts Eviction : Supreme Court Orders Eviction Of Merged Bank

The Supreme Court on Thursday (July 9) held that the amalgamation of a tenant bank with another bank amounts to a transfer of tenancy, and if such a transfer takes place without the landlord's written consent, it attracts eviction under the Delhi Rent Control Act.

A Bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh restored the eviction order of the Punjab National Bank from the rented premise, holding that the tenancy rights of the original tenant, Hindustan Commercial Bank Ltd., stood transferred to PNB upon its amalgamation without obtaining the landlord's written consent, thereby attracting eviction under the Delhi Rent Control Act.

“Once the possession of the tenanted premises, together with the accompanying rights, passes to an entity other than the original tenant without the written consent of the landlord, and the tenant losing its identity and control of possession of the tenanted premises, Section 14(1)(b) of the DRC Act stands automatically attracted. Therefore, what is material is that – (a) there is a transfer of tenancy rights and possession of the tenanted premises; and (b) such transfer is done without the written consent of the landlord…we hold that the amalgamation of the original tenant HCB with PNB rendered PNB liable to be evicted from the tenanted premises under Section 14(1)(b) of the DRC Act.”, the Court observed.

The dispute concerned commercial premises in Pratap Building at Connaught Circus, New Delhi, which had been leased in 1947 by British Motor Car Company (1939) Ltd. to Hindustan Commercial Bank (HCB) for banking purposes at a monthly rent of ₹585.

Later in 1986, the Hindustan Commercial Bank merged with Punjab National Bank (PNB). As a consequence, all the assets, liabilities, and rights of HCB vested in PNB, which continued to occupy the leased premises.

The landlord subsequently initiated eviction proceedings under Section 14(1)(b) of the Delhi Rent Control Act, contending that HCB had assigned or otherwise parted with possession of the premises in favour of PNB without obtaining its written consent.

While the Additional Rent Controller dismissed the eviction petition, the Rent Control Tribunal reversed that decision and ordered eviction. The Delhi High Court, however, restored the Controller's order, holding that PNB had entered into possession by operation of a statutory scheme rather than through a voluntary act of the tenant.

The landlord challenged the High Court's decision before the Supreme Court.

Setting aside the impugned High Court judgment, the judgment authored by Justice Karol referred to Section 14(1)(b) of the Delhi Rent Control Act, stating that the provision is attracted once the tenant has sublet, assigned, or otherwise parted with possession without obtaining the landlord's written consent.

“…where, upon amalgamation effected under Section 45 of the Banking Regulation Act, the tenancy rights vest in another entity and possession qua tenanted premises passes to it without the written consent of the landlord, the ingredients of Section 14(1)(b) shall stand fully satisfied. The reasons necessitating such transfer or whether it was voluntary or involuntary, are wholly immaterial for the purposes of attracting the said provision.”, the Court observed, relying on Bhairon Sahai v. Bishamber Dayal, (2017) 8 SCC 492.

Resultantly, the appeal was allowed, and the Respondent-PNB was ordered to evict the premises by January 31, 2027.

Headnote

Delhi Rent Control Act, 1958 – Section 14(1)(b) – Protection of tenant against eviction – Sub-letting, assignment, or parting with possession without written consent of the landlord – Statutory Amalgamation of Banks – Banking Regulation Act, 1949 – Section 45 – i. Factum of Parting with Possession via Amalgamation: The appellant-landlord leased premises to Hindustan Commercial Bank (HCB) - a Gazette Notification issued under Section 45(7) of the Banking Regulation Act, 1949, HCB was amalgamated with the Punjab National Bank (PNB), whereby the original tenant (HCB) ceased to exist and all its rights, liabilities, and assets including the tenancy rights vested in PNB without the written consent of the landlord; ii. Irrelevance of Voluntary vs. Involuntary Transfer: Section 14(1)(b) of the Delhi Rent Control Act, 1958 is of wide amplitude and encompasses every mode by which possession or tenancy rights are transferred from the original tenant to another entity - The provision does not draw any distinction between voluntary and involuntary transfers, nor does it carve out an exception for transfers executed pursuant to a scheme of amalgamation or to secure compliance with law - The reasons necessitating such a transfer are wholly immaterial; iv. Nature of Amalgamation Scheme under the Banking Regulation Act: The scheme-making process under Section 45 of the Banking Regulation Act, 1949 is strictly administrative in nature and not legislative - Merely because a scheme framed by the Reserve Bank of India (RBI) is sanctioned by the Central Government and placed before both Houses of Parliament does not elevate it to a statutory enactment capable of overriding the non-obstante provisions of Section 14(1)(b) of the Delhi Rent Control Act, 1958. [Paras 11-18]

Distinction from the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980: An essential distinction exists between Section 45 of the Banking Regulation Act, 1949 and Section 9 of the Acquisition Act, 1980. Under the latter, a scheme becomes effective only after being placed before Parliament and undergoing potential modifications, making it legislative in character - a scheme under Section 45 of the Banking Regulation Act is merely placed before Parliament and remains administrative - judicial precedents governing legislative bank mergers do not apply to schemes under Section 45 of the Banking Regulation Act - Held: The components of Section 14(1)(b) of the Delhi Rent Control Act, 1958 stood fully satisfied as the original tenant parted with possession and ceased to exist, and PNB occupied the premises without the written consent of the landlord - The judgment of the High Court setting aside the eviction decree was set aside, and the eviction decree passed by the Additional Rent Control Tribunal was restored. [Relied on Parasram Harnand Rao v. Shanti Parsad Narinder Kumar Jain, (1980) 3 SCC 56; Singer India Ltd. v. Chander Mohan Chadha, (2004) 7 SCC 1; Bhairon Sahai v. Bishamber Dayal, (2017) 8 SCC 492; Paras 13 - 21]

Cause Title: BRITISH MOTOR CAR COMPANY (1939) LTD. Versus M/S HINDUSTAN COMMERCIAL BANK LTD. SINCE HAS BEEN MERGED INTO PUNJAB NATIONAL BANK & ANR.

Citation : 2026 LiveLaw (SC) 660

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Appearance:

For Appellant(s) : Mr. Shyam Divan, Sr. Adv. Mr. Shyam Mehta,, Sr. Adv. Mr. Bhargava V. Desai, AOR Mrs. Manjula Gandhi, Adv. Mr. Shyam Sharma, Adv. Mr. Harsh Narwal, Adv. Mr. Sudipto Sircar, Adv. Mr. Shaishir Divatia, Adv. Mr. Rahul Dubey, Adv. Mr. Amar Kumar Yadav, Adv. Mr. S K Gandhi, Adv. Mr. Shivam Makkar, Adv.

For Respondent(s) :M/S. Mitter & Mitter Co., AOR