In a significant ruling on tenancy rights under the Delhi Rent Control Act, the Supreme Court has held that the merger of a tenant bank with another banking institution amounts to a transfer of tenancy. If such a transfer takes place without the landlord’s written consent, it constitutes a valid ground for eviction.
A Bench comprising Justices Sanjay Karol and Nongmeikapam Kotiswar Singh directed Punjab National Bank (PNB) to vacate a commercial property in Delhi after concluding that it came into possession of the premises following the amalgamation of the original tenant, Hindustan Commercial Bank (HCB), without obtaining the landlord’s written approval.
The Court observed that once possession of rented premises, along with the accompanying tenancy rights, shifts to an entity other than the original tenant, and the original tenant ceases to retain its independent identity or control over the property, Section 14(1)(b) of the Delhi Rent Control Act is triggered if the landlord’s consent has not been secured in writing.
According to the Bench, the decisive considerations are whether tenancy rights and possession have passed to another entity and whether that transfer occurred without the landlord’s written consent. Once these conditions are met, the provision permitting eviction comes into operation.
Long-running dispute over Connaught Circus property
The litigation revolved around commercial premises in Pratap Building at Connaught Circus, New Delhi. The property had been leased in 1947 by British Motor Car Company (1939) Ltd. to Hindustan Commercial Bank for banking operations at a monthly rent of ₹585.
Following the statutory merger of Hindustan Commercial Bank with Punjab National Bank in 1986, all assets, liabilities and rights of HCB vested in PNB, which continued occupying the premises.
The landlord later initiated eviction proceedings under Section 14(1)(b) of the Delhi Rent Control Act, arguing that the tenancy had effectively been assigned or possession had been transferred to PNB without the mandatory written consent.
The Additional Rent Controller initially rejected the eviction plea. However, the Rent Control Tribunal overturned that decision and ordered eviction. The Delhi High Court subsequently restored the Controller’s ruling, holding that PNB’s possession arose by virtue of a statutory amalgamation rather than through a voluntary transfer by the tenant.
Supreme Court overturns High Court ruling
Allowing the landlord’s appeal, the Supreme Court disagreed with the High Court’s interpretation and clarified that the nature of the transfer—whether voluntary or brought about by statute—is irrelevant for the purpose of Section 14(1)(b).
The Bench held that where tenancy rights vest in another entity pursuant to an amalgamation under Section 45 of the Banking Regulation Act, and possession passes without the landlord’s written consent, the statutory ingredients for eviction stand satisfied.
In reaching its conclusion, the Court relied on its earlier decision in Bhairon Sahai v. Bishamber Dayal (2017), reaffirming that an unauthorized transfer of tenancy rights is sufficient to attract eviction under the Delhi Rent Control Act.
The appeal was accordingly allowed, and Punjab National Bank has been directed to hand over vacant possession of the premises on or before January 31, 2027.
Case: British Motor Car Company (1939) Ltd. v. M/s Hindustan Commercial Bank Ltd. (since merged with Punjab National Bank) & Another
