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.

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