The Supreme Court has held that where, upon amalgamation under Section 45 of the Banking Regulation Act, the original tenant ceases to exist and the tenancy rights and possession of the rented premises vest in another entity without the landlord’s written consent, Section 14(1)(b) of the Delhi Rent Control Act is attracted. The Court clarified that the provision does not carve out any exception for involuntary or statutory transfers under an administrative scheme.
What matters is the factual transfer of tenancy rights and possession to a different entity without written consent, not the reason or manner in which that transfer occurred. Accordingly, the Supreme Court set aside the Delhi High Court’s judgment and restored the eviction decree passed by the Additional Rent Control Tribunal. At the same time, considering that the respondents had been in possession for a long period, the Court granted them time till Jan 31, 2027 to hand over peaceful and vacant possession of the premises to the landlord.
A Two-Judge Bench comprising Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh said the core issue was whether amalgamation of HCB with PNB under the Banking Regulation Act attracted Section 14(1)(b) of the Delhi Rent Control Act. The Bench reproduced Section 14(1)(b) and noted that eviction can follow if two elements are satisfied: first, the tenant has sub-let, assigned, or otherwise parted with possession of the whole or part of the premises; and second, this has happened without the landlord’s written consent. The Bench also reiterated that “parting with possession” means the tenant has divested itself not only of physical possession but also of the right to possession.
According to the Bench, Section 14(1)(b) covers every mode by which tenancy rights or possession pass from the original tenant to another entity, including involuntary transfers. It reiterated that the law does not distinguish between voluntary and involuntary transfers, and that the reasons behind the transfer are irrelevant once the factual situation of assignment or parting with possession is established.
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Applying that principle, the Bench found that once the amalgamation took effect on Dec 19, 1986, HCB ceased to exist and all its rights, liabilities, assets, and interests, including tenancy rights in the premises, stood vested in PNB. As a result, HCB had parted with possession and PNB had come to occupy the premises. Since this transfer admittedly took place without the landlord’s written consent, both ingredients of Section 14(1)(b) stood satisfied. The Bench therefore rejected the respondents’ argument that a transfer under a banking amalgamation scheme should be treated differently merely because it was not voluntary.
The Bench also rejected the argument that a scheme framed under Section 45 of the Banking Regulation Act should be treated as having overriding statutory force. Rather, it held that the scheme-making process under Section 45 is administrative in nature, not legislative. Therefore, such a scheme cannot be treated as a statutory enactment capable of overriding Section 14(1)(b) of the Delhi Rent Control Act.
Briefly, the issue relates to a landlord-tenant dispute concerning commercial premises in Pratap Building, Connaught Circus, New Delhi, which had originally been let out in 1947 by British Motor Car Company to Hindustan Commercial Bank (HCB) for non-residential use at a monthly rent of Rs. 585. Later, by a Gazette Notification dated Dec 18, 1986 issued under Section 45(7) of the Banking Regulation Act, 1949, HCB was amalgamated with Punjab National Bank (PNB), and with effect from Dec 19, 1986 all rights and liabilities of HCB stood vested in PNB, which thereafter came into possession of the tenanted premises. The landlord then filed an eviction petition under Section 14(1)(b) read with Section 14(1)(j) of the Delhi Rent Control Act, 1958, alleging that HCB had sub-let, assigned, or parted with possession in favour of PNB without written consent.
The Additional Rent Controller dismissed the eviction petition, holding that the amalgamation scheme under Section 45 of the Banking Regulation Act was binding on the landlord and that PNB had become tenant by operation of that statutory scheme, so there was no subletting, assignment, or parting with possession. However, the Additional Rent Control Tribunal reversed that view and passed an eviction decree, holding that Section 14(1)(b) of the Delhi Rent Control Act had been breached because the tenant had parted with possession without prior written consent of the landlord. The High Court later set aside the eviction decree, holding that the merger was an involuntary statutory consequence and therefore the ground of subletting was not available to the landlord.
