The Supreme Court has clarified that the amalgamation of a tenant bank under the Banking Regulation Act, 1949, without the landlord's written consent, satisfies the ingredients of Section 14(1)(b) of the Delhi Rent Control Act, 1958, leading to eviction. This judgment reinforces that involuntary transfers of tenancy rights, including those effected through statutory schemes, do not escape the ambit of the provision if the landlord's consent is absent.
Background & Facts
The Dispute
The appellant, British Motor Car Company (1939) Ltd., leased non-residential premises measuring 2443.75 sq. ft. on the ground floor and 1150.25 sq. ft. on the mezzanine floor at Pratap Building, Connaught Circus, New Delhi, to Hindustan Commercial Bank (HCB) in 1947. The monthly rent was Rs. 585. On 18.12.1986, 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). As a result, all rights and liabilities of HCB, including the tenancy of the premises, vested in PNB.
Key Facts
Lease Agreement: Executed in 1947 between the appellant (landlord) and HCB (tenant) for non-residential purposes.
Amalgamation: HCB was amalgamated with PNB pursuant to a Gazette Notification dated 18.12.1986 under Section 45 of the Banking Regulation Act, 1949.
Effect of Amalgamation: All assets, rights, and liabilities of HCB, including tenancy rights, vested in PNB by operation of law.
Eviction Petition: The appellant filed E-161/1987 before the Additional Rent Controller, Delhi, alleging unauthorized subletting/assignment under Section 14(1)(b) of the Delhi Rent Control Act, 1958.
Procedural History
03.11.1995: Additional Rent Controller dismissed the eviction petition, holding that the amalgamation was binding on the landlord under Section 45(8) of the Banking Regulation Act.
21.05.2001: Additional Rent Control Tribunal allowed the appeal (RCA No. 22/2000) and passed a decree of eviction, holding that the amalgamation constituted a transfer without the landlord's consent.
12.03.2012: Delhi High Court set aside the eviction decree in CM (M) No. 485 of 2001, relying on Asha Rohtagi v. Erstwhile New Bank of India through General Manager PNB, which held that statutory amalgamations do not attract Section 14(1)(b).
09.07.2026: Supreme Court allowed the present appeal, restoring the eviction decree.
Relief Sought
The appellant sought eviction of PNB from the tenanted premises under Section 14(1)(b) of the Delhi Rent Control Act, 1958, on the ground that the amalgamation constituted an unauthorized transfer of possession without written consent.
The Legal Issue
The central question was whether the amalgamation of HCB with PNB, effected pursuant to a scheme under Section 45 of the Banking Regulation Act, 1949, attracts Section 14(1)(b) of the Delhi Rent Control Act, 1958, even though the transfer was involuntary and statutorily mandated.
Arguments Presented
For the Appellant
Section 14(1)(b) does not distinguish between voluntary and involuntary transfers. The provision is attracted if the tenant parts with possession without the landlord's written consent.
The scheme under Section 45 of the Banking Regulation Act is administrative, not legislative, and cannot override Section 14(1)(b). Reliance was placed on K.I. Shephard v. Union of India and Singer India Ltd. v. Chander Mohan Chadha.
The High Court erred in relying on Asha Rohtagi, as it arose under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, which is legislative in nature, unlike Section 45 of the Banking Regulation Act.
For the Respondent
The amalgamation was involuntary and statutorily mandated, falling outside the ambit of Section 14(1)(b).
The scheme under Section 45 of the Banking Regulation Act is legislative, and the vesting of tenancy rights in PNB occurred by operation of law. Reliance was placed on G. Sridharamurti v. Hindustan Petroleum Corpn. Ltd. and Hindustan Petroleum Corpn. Ltd. v. Shyam Coop. Housing Society.
The Court's Analysis
The Court examined the scope of Section 14(1)(b) of the Delhi Rent Control Act, 1958, which prohibits subletting, assignment, or parting with possession without the landlord's written consent. The provision reads:
"14. Protection of tenant against eviction. - (1) Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant: Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely : - … … … (b) that the tenant has, on or after the 9th day of June, 1952, sub-let, assigned or otherwise parted with the possession of the whole or any part of the premises without obtaining the consent in writing of the landlord;"
The Court held that Section 14(1)(b) requires two ingredients:
The tenant has sublet, assigned, or parted with possession of the premises.
Such transfer occurred without the landlord's written consent.
The Court relied on Jagan Nath v. Chander Bhan to clarify that "parting with possession" means divesting oneself of both physical and legal possession. The tenant must lose control over the premises for the provision to apply.
The Court then analyzed the effect of amalgamation on tenancy rights. In Singer India Ltd. v. Chander Mohan Chadha, it was held that amalgamation results in the transferor company ceasing to exist, and its rights vesting in the transferee company. The Court emphasized that Section 14(1)(b) applies irrespective of whether the transfer is voluntary or involuntary, as the provision does not carve out exceptions for statutory schemes.
"The applicability of the section depends upon occurrence of a factual situation, namely, sub-letting or assignment or otherwise parting with possession of the whole or any part of the premises by the tenant. 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 Court distinguished the present case from G. Sridharamurti and Shyam Coop. Housing Society, which involved the Esso (Acquisition of Undertakings in India) Act, 1974, a legislative enactment expressly vesting tenancy rights in the Central Government. Here, the scheme under Section 45 of the Banking Regulation Act was held to be administrative, not legislative, as clarified in K.I. Shephard v. Union of India.
The Court also rejected the respondent's reliance on Asha Rohtagi, noting that it arose under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, which is legislative in nature, unlike Section 45 of the Banking Regulation Act.
The Verdict
The Supreme Court allowed the appeal, setting aside the Delhi High Court's order dated 12.03.2012 in CM (M) No. 485 of 2001. The eviction decree passed by the Additional Rent Control Tribunal on 21.05.2001 in RCA No. 22/2000 was restored. The respondents were granted time until 31.01.2027 to vacate the premises, subject to furnishing an undertaking within four weeks and continuing to pay rent on contractual terms. Failure to comply would entitle the appellant to take possession in accordance with law.
What This Means For Similar Cases
Amalgamation Does Not Exempt Tenants from Section 14(1)(b)
Section 14(1)(b) applies to all transfers of possession, whether voluntary or involuntary, including those effected through statutory schemes.
Tenants cannot rely on the involuntary nature of amalgamation to escape liability under the provision.
Administrative Schemes Cannot Override Rent Control Laws
Schemes framed under Section 45 of the Banking Regulation Act, 1949, are administrative, not legislative, and do not override Section 14(1)(b) of the Delhi Rent Control Act.
Landlords can challenge unauthorized transfers even if they result from statutory amalgamations.
Landlord's Consent Is Non-Negotiable
The written consent of the landlord is a mandatory requirement under Section 14(1)(b).
Tenants must obtain consent before any transfer, including those mandated by law, to avoid eviction.
