Case at a Glance
In 1947 a landlord let premises in Pratap Building, Connaught Circus, New Delhi to Hindustan Commercial Bank at ₹585 a month. When the bank was amalgamated with Punjab National Bank in 1986 under a scheme framed under Section 45 of the Banking Regulation Act, PNB took over the premises, and the landlord sought eviction for parting with possession without written consent. The Supreme Court held that Section 14(1)(b) of the Delhi Rent Control Act does not distinguish between voluntary and involuntary transfers, that a Section 45 scheme is administrative and cannot override it, and restored the eviction decree, giving PNB until 31 January 2027 to vacate.
The landlord let 2,443.75 sq. ft. on the ground floor and 1,150.25 sq. ft. on the mezzanine of Pratap Building, N-Block, Connaught Circus to Hindustan Commercial Bank (HCB) in 1947 for non-residential use. By a notification of 18 December 1986 under Section 45(7) of the Banking Regulation Act, 1949, HCB was amalgamated with Punjab National Bank (PNB) with effect from 19 December 1986, and PNB took possession.
In 1987 the landlord filed an eviction petition under Section 14(1)(b) of the Delhi Rent Control Act, 1958, alleging subletting or parting with possession without written consent. The Additional Rent Controller dismissed it in 1995, holding the statutory scheme bound the landlord. The Rent Control Tribunal decreed eviction on 21 May 2001, but on 12 March 2012 the Delhi High Court set that aside under Article 227, relying on Asha Rohatgi v. Erstwhile New Bank of India, (2005) 04 DEL CK 0103.
The Key Question Before the Court
Does the amalgamation of a tenant bank with another bank under a Section 45 Banking Regulation Act scheme amount to parting with possession under Section 14(1)(b) of the Delhi Rent Control Act?
Voluntary or Involuntary, Transfer Without Consent Attracts Section 14(1)(b)
The Court held that Section 14(1)(b) requires subletting, assignment or parting with possession, without the landlord’s written consent, and that parting with possession means the tenant has divested itself of both physical possession and the right to possession. Applying Saraswati Industrial Syndicate Ltd. v. CIT, (1990) 09 SC CK 0016, it held that on amalgamation HCB lost its identity and its tenancy rights vested in PNB. Following Parasram Harnand Rao v. Shanti Parsad Narinder Kumar Jain, (1980) 04 SC CK 0016 and Singer India Ltd. v. Chander Mohan Chadha, (2004) 08 SC CK 0092, it held that the provision “does not distinguish between voluntary and involuntary transfers” and “does not carve out any exception” for amalgamation schemes; it “is wide enough to encompass every mode” of transfer without written consent.
Relying on K.I. Shephard v. Union of India, (1987) 09 SC CK 0047, the Court held that Section 45 schemes are administrative, not legislative, even though sanctioned by the Central Government and laid before Parliament, so they cannot override Section 14(1)(b). It distinguished G. Sridharamurti v. Hindustan Petroleum Corporation Ltd., (1995) 09 SC CK 0054, which arose under an acquisition statute that expressly vested tenancy rights, and held that the High Court erred in applying Asha Rohatgi, because schemes under Section 9 of the 1980 Acquisition Act are legislative while Section 45 schemes are not. The amalgamation “rendered PNB liable to be evicted.”
What the Court Actually Held
- Section 14(1)(b) of the Delhi Rent Control Act covers every mode of transfer of tenancy rights without the landlord’s written consent, voluntary or involuntary.
- A Section 45 Banking Regulation Act amalgamation scheme is administrative, not legislative, and cannot override Section 14(1)(b).
- The High Court wrongly applied Asha Rohatgi; the amalgamation rendered PNB liable to eviction.
- The High Court’s judgment of 12.03.2012 was set aside and the Tribunal’s eviction decree of 21.05.2001 restored; PNB has until 31.01.2027 to vacate, must file an undertaking within four weeks and keep paying rent, failing which the landlord may take possession in accordance with law.
Why This Judgment Matters
- Banks and companies occupying old rent-controlled premises cannot rely on mergers to carry tenancies across without the landlord’s consent.
- It clarifies that the legal character of the scheme — administrative or legislative — decides whether it can displace rent control law.
- It ends a Connaught Place tenancy dispute that began in 1987.
What Should Advocates Take Away From the Judgment?
For Landlords and Corporate Tenants
- A merger or amalgamation can amount to parting with possession under rent control law.
- Corporate tenants should seek the landlord’s written consent when restructuring involves tenanted premises.
- Eviction may be given with time to vacate and a continuing obligation to pay rent.
For Counsel
- Check whether the scheme under which the transfer occurred is legislative or administrative.
- Acquisition statutes that expressly vest tenancy rights are distinguishable.
- Involuntariness of the transfer is irrelevant under Section 14(1)(b).
Key Takeaways
- Bank amalgamation without consent attracts eviction under the DRC Act.
- Section 45 schemes cannot override rent control law.
- Eviction decree of 2001 restored.
- PNB must vacate by 31 January 2027.
Frequently Asked Questions
Does a merger of a tenant company count as subletting or parting with possession?
Under Section 14(1)(b) of the Delhi Rent Control Act, the Court held that it can, since the provision covers every mode of transfer without written consent, whether voluntary or involuntary.
Why did the bank’s amalgamation scheme not protect PNB?
Because a scheme under Section 45 of the Banking Regulation Act is administrative, not legislative, and so cannot override the Delhi Rent Control Act.
When must PNB vacate?
By 31 January 2027, subject to filing an undertaking within four weeks and continuing to pay rent.
Conclusion
British Motor Car Company applies the plain text of Section 14(1)(b): the landlord’s consent is needed whoever the new occupant is and however the transfer came about. A statutory-looking bank merger did not change that.
Practical takeaway: Before a merger or restructuring, corporate tenants of rent-controlled premises should secure the landlord’s written consent to avoid an eviction claim for parting with possession.
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