Amalgamation Of Bank Under Statutory Scheme Without Landlord's Consent Ground For Eviction; Involuntary Transfer No Defence: Supreme Court

"The said provision does not distinguish between voluntary and involuntary transfers, nor does it carve out any exception in favour of transfers effected pursuant to a scheme of amalgamation or to secure compliance with law." Supreme Court, in a significant ruling dated July 09, 2026, held that the amalgamation of a banking company with another under Section 45 of the Banking Regulation Act, 1949, triggers the ground for eviction under Section 14(1)(b) of the Delhi Rent Control Act, 1958, if the landlord’s prior written consent is not obtained.

A bench comprising Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh observed that the statutory nature of a merger scheme does not exempt a tenant from the mandate of rent control laws regarding the parting of possession.

The appellant, British Motor Car Company (1939) Ltd., had let out premises in Connaught Circus, New Delhi, to Hindustan Commercial Bank (HCB) in 1947. In 1986, the Government of India issued a notification under Section 45(7) of the Banking Regulation Act, 1949, whereby HCB was amalgamated with Punjab National Bank (PNB). Following this merger, the appellant filed an eviction petition alleging that HCB had sublet or parted with possession of the premises to PNB without written consent, violating Section 14(1)(b) of the DRC Act.

The primary question before the court was whether the amalgamation of HCB with PNB, effected pursuant to a scheme framed under the Banking Regulation Act, attracts the ground of eviction under Section 14(1)(b) of the DRC Act. The court was also called upon to determine if a transfer of tenancy rights resulting from a statutory scheme of amalgamation constitutes an "involuntary transfer" that falls outside the ambit of the Rent Act.

Wide Amplitude Of Section 14(1)(b) Of The DRC Act

The Supreme Court emphasized that Section 14(1)(b) of the DRC Act is drafted in broad terms to protect landlords against unauthorized transfers of tenanted premises. The bench noted that the provision prohibits a tenant from sub-letting, assigning, or "otherwise parting with the possession" of the whole or any part of the premises without written consent. The court reiterated that the "parametric content" of this provision has been interpreted consistently to include any mode by which the tenant divests themselves of legal possession.

The bench referred to the decision in Jagan Nath v. Chander Bhan to clarify that parting with possession involves the vesting of possession in another person by divesting oneself of both physical possession and the right to possession. In the context of amalgamation, the court observed that since the transferor company ceases to exist and a new entity takes over the assets and occupancy, the ingredients of parting with possession are fundamentally met.

Involuntary Transfers Are Not Exempt From Eviction Grounds

A core contention raised by the respondent banks was that the merger was an "involuntary act" triggered by a statutory scheme over which the tenant had no control. Rejecting this, the Court relied on the ratio in Parasram Harnand Rao v. Shanti Parsad Narinder Kumar Jain, which held that the language of Section 14(1)(b) is wide enough to encompass even involuntary sales or transfers. The Court noted that the applicability of the section depends on a factual situation—the transfer of possession—rather than the circumstances necessitating it.

The bench further fortified this view by citing Singer India Ltd. v. Chander Mohan Chadha, observing that whether a transfer is voluntary or involuntary is wholly irrelevant. "The said provision does not distinguish between voluntary and involuntary transfers, nor does it carve out any exception in favour of transfers effected pursuant to a scheme of amalgamation or to secure compliance with law," the judgment stated.

"The reasons necessitating such transfer or whether it was voluntary or involuntary, are wholly immaterial for the purposes of attracting the said provision."

Amalgamation Schemes Under Banking Regulation Act Are Administrative

The Court addressed the legal status of the amalgamation scheme framed under Section 45 of the Banking Regulation Act. The respondents argued that such schemes are legislative in nature and should override the DRC Act. However, the bench invoked the precedent in K.I. Shephard v. Union of India to hold that the scheme-making process under Section 45 is administrative, not legislative. The mere requirement of laying the scheme before Parliament does not transform an administrative order into a statutory enactment.

The bench distinguished the present case from those involving the Esso (Acquisition of Undertakings in India) Act, 1974, where the vesting of tenancy was specifically provided for by a legislative Act. In the present case, the merger was a result of an administrative scheme which cannot override the specific protections granted to landlords under the Delhi Rent Control Act.

High Court’s Reliance On Asha Rohatgi Held Misplaced

The Supreme Court found that the Delhi High Court had erred in relying on the case of Asha Rohatgi v. New Bank of India. That decision pertained to an amalgamation under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, which this Court has previously held to be legislative in character. In contrast, schemes under the Banking Regulation Act do not share the same statutory pedigree and cannot be treated as pari materia.

The bench concluded that once HCB ceased to exist and PNB came to occupy the premises without the landlord's written consent, the ground for eviction was fully made out. The Court allowed the appeal and restored the eviction decree passed by the Additional Rent Control Tribunal. However, considering the long duration of possession, the Court granted the respondents time until January 31, 2027, to deliver vacant possession, subject to filing an undertaking and continued payment of rent.

Date of Decision: July 09, 2026