The Supreme Court of India has ruled that the amalgamation of a banking company under the Banking Regulation Act, 1949, constitutes parting with possession of tenanted premises. The court held that such a transfer attracts eviction proceedings under the Delhi Rent Control Act, 1958, if executed without the written consent of the landlord. A Bench comprising Justice Sanjay Karol and Justice N. Kotiswar Singh allowed the appeal filed by the landlord, British Motor Car Company (1939) Ltd., setting aside a Delhi High Court order and restoring the eviction decree against Punjab National Bank.
Background of the Case
The dispute traces back to 1947, when the landlord, British Motor Car Company (1939) Ltd., let out a non-residential commercial space in Pratap Building, N-Block, Connaught Circus, New Delhi, to Hindustan Commercial Bank (HCB). The tenancy comprised 2,443.75 square feet on the ground floor and 1,150.25 square feet on the mezzanine floor at a monthly rent of Rs. 585.
On December 18, 1986, the Government of India issued a Gazette Notification under Section 45(7) of the Banking Regulation Act, 1949, amalgamating HCB with Punjab National Bank (PNB). The scheme took effect on December 19, 1986, vesting all assets, rights, liabilities, and tenancies of HCB into PNB, which subsequently took physical possession of the premises.
In 1987, the landlord filed an eviction petition under Section 14(1)(b) of the Delhi Rent Control Act, 1958, contending that HCB had sublet, assigned, or parted with possession of the premises to PNB without obtaining prior written consent.
The Additional Rent Controller dismissed the petition in 1995, concluding that the statutory amalgamation was binding on the landlord and did not amount to subletting. However, on appeal, the Additional Rent Control Tribunal reversed this decision in 2001 and passed an eviction decree, ruling that the special provisions of the Delhi Rent Control Act overridden other agreements and mandated written consent.
PNB challenged this before the Delhi High Court under Article 227 of the Constitution. In 2012, the High Court allowed PNB’s petition and set aside the eviction decree, finding that the merger was an involuntary statutory act of a third party (the Central Government) over which the tenant had no control. The landlord then appealed to the Supreme Court.
Arguments of the Parties
Representing the appellant-landlord, Senior Advocates Shyam Divan and Shyam Mehta argued that Section 14(1)(b) of the Delhi Rent Control Act makes no distinction between voluntary and involuntary transfers of tenanted premises. Once HCB ceased to exist and PNB took possession without the landlord’s written consent, the legal elements of unauthorized parting with possession were fully met. They relied on the Supreme Court judgments in Singer India Ltd. v. Chander Mohan Chadha and Parasram Harnand Rao v. Shanti Prasad Narinder Kumar Jain. They further submitted that an amalgamation scheme framed under Section 45 of the Banking Regulation Act is administrative, not legislative, in nature, as established in K.I. Shephard v. Union of India, and thus cannot override rent control legislation.
Conversely, counsel for the respondent-bank, Rajesh Kumar Gautam, argued that the vesting of tenancy rights was not the result of any voluntary assignment by the tenant, but a statutory operation under Section 45 of the Banking Regulation Act. Citing cases like G. Sridharamurti v. Hindustan Petroleum Corpn. Ltd. and Hindustan Petroleum Corpn. Ltd. v. Shyam Coop. Housing Society, the respondent asserted that transfers occurring via statutory operation do not constitute voluntary acts of assignment inter-vivos and should fall outside the mischief of the rent control law.
The Court’s Analysis
The Supreme Court focused on whether the amalgamation of HCB with PNB under the Banking Regulation Act attracted Section 14(1)(b) of the Delhi Rent Control Act, which bars tenants from subletting, assigning, or parting with possession of premises without the landlord’s written consent.
Citing Vaishakhi Ram v. Sanjeev Kumar Bhatiani, the Court identified the two essential ingredients of Section 14(1)(b): first, the tenant must have sublet, assigned, or parted with possession, and second, this must have occurred without the landlord’s written consent. The Court noted that upon amalgamation, the transferor bank (HCB) ceased to exist as a corporate entity and surrendered entire control of the premises to PNB without obtaining written consent from the landlord.
The Bench rejected PNB’s defense that the transfer was involuntary and statutory. Drawing from Parasram Harnand Rao, the Court reiterated:
“The language of Section 14(1)(b) is wide enough not only to include any sublease but even an assignment or any other mode by which possession of the tenanted premises is parted. In view of the wide amplitude of Section 14(1)(b) we are clearly of the opinion that it does not exclude even an involuntary sale.”
This principle was supported by the ruling in Singer India Ltd., where the Supreme Court previously observed that:
“Whether it is a voluntary act of the tenant or otherwise and also the reasons for doing so are wholly irrelevant and can have no bearing.”
The Bench also noted that:
“the Act does not make any exception in favour of a lessee who may have adopted such a course of action in order to secure compliance with law.”
Addressing the nature of the amalgamation scheme, the Bench relied on K.I. Shephard to hold that the scheme-framing process under Section 45 of the Banking Regulation Act is administrative, not legislative. Therefore, the scheme cannot be treated as a statutory enactment capable of overriding the Delhi Rent Control Act.
The Court distinguished the present case from G. Sridharamurti and Shyam Coop. Housing Society, noting those rulings concerned the Esso Act, which was a direct legislative enactment. It further clarified that the High Court’s reliance on Asha Rohtagi v. Erstwhile New Bank of India was misplaced. Asha Rohtagi dealt with an amalgamation under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, which is legislative in character, unlike schemes prepared under Section 45 of the Banking Regulation Act.
To finalize its position on parting with possession, the Court cited Bhairon Sahai v. Bishamber Dayal, reiterating that:
“Parting with the possession of the premises without consent of the landlord was sufficient for eviction of the tenant without getting into the question of subletting or assignment.”
The Decision
Finding that both conditions of Section 14(1)(b) of the Delhi Rent Control Act were satisfied, the Supreme Court allowed the appeal and set aside the Delhi High Court’s judgment. The Court restored the eviction decree passed by the Additional Rent Control Tribunal on May 21, 2001.
Recognizing the bank’s long-standing occupancy, the Supreme Court granted PNB time until January 31, 2027, to deliver peaceful and vacant possession of the premises, subject to filing a written undertaking within four weeks and continuing to pay the regular rent.
Case Details:
Case Title: British Motor Car Company (1939) Ltd. v. M/S Hindustan Commercial Bank Ltd.
Since Has Been Merged Into Punjab National Bank & Anr.
Case No.: Civil Appeal No. 5714 of 2012
Bench: Justice Sanjay Karol and Justice N. Kotiswar Singh
Date: July 09, 2026
