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Informist, Thursday, Jul. 9, 2026

 

NEW DELHI – The Supreme Court Thursday ruled that a merged entity or company can be evicted from the rented premises if the original tenant had not sought the permission from landlord for subletting, transferring or assigning the premise to the amalgamated entity. It is immaterial whether such mergers were voluntarily or non-voluntarily, said the court. Ending a litigation which spanned almost four decades, the top court ordered the eviction of Punjab National Bank from the rented premises in Delhi by British Motor Car Co. Ltd., as original tenant Hindustan Commercial Bank Ltd., which had merged into PNB, had not taken the landlord's consent for assigning the premises.

 

Once the possession of the rented premises, together with the accompanying rights, passes to an entity other than the original tenant without the written consent of the landlord, and the tenant losing its identity and control of possession of the tenanted premises, Section 14(1)(b) of the Delhi Rent Control Act, 1958, stands automatically attracted, said the court. Therefore, what is material is that there is a transfer of tenancy rights and possession of the tenanted premises and such transfer is done without the written consent of the landlord, said the court. 

 

Section 14(1)(b) states that a tenant can be evicted if it has sublet, 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 apex court rejected Punjab National Bank's argument that since the amalgamation in the present case was effected pursuant to a gazette notification and a scheme prepared by the Reserve Bank of India under the Banking Regulation Act, 1949, the transfer of tenancy rights and possession must be regarded as involuntary and falling outside the ambit of Section 14(1)(b). 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, said the bench of Justice Sanjay Karol and Justice N.K. Singh. 

 

Punjab National Bank had argued that since the tenancy rights stood vested in it pursuant to the operation of a statutory scheme, the said transfer could not be equated with assignment or parting with the possession within the meaning of Section 14(1)(b) of the Delhi Rent Control Act. Terming Punjab National Bank's submission as misconceived, the top court said that the amalgamation scheme framed by the Reserve Bank of India, in exercise of power under Section 45(4) of the Banking Regulation Act, cannot be accorded the status of a statutory enactment so as to override the operation of Section 14(1)(b) of Delhi Rent Control Act. 

 

Since Punjab National Bank has been in possession of the tenanted premises for a long time, the top court granted it time till Jan. 31, 2027, to deliver a peaceful and vacant possession of the tenanted premises to British Motor Car. Punjab National Bank will furnish an undertaking regarding this within a period of four weeks, said the court. Further, Punjab National Bank shall continue to pay the rent on contractual terms fixed by the courts below, it said. In case Punjab National Bank failed to do so, British Motor Car will be at liberty to proceed for taking possession in accordance with law, said the court.

 

In 1947, the British Motor Car had rented the premises in Connaught Circus, New Delhi to Hindustan Commercial Bank at a monthly rent of INR 585 per month for non-residential purposes. In 1986, the government issued a gazette notification under Section 45(7) of the Banking Regulation Act, pursuant to which Hindustan Commercial Bank was amalgamated with Punjab National Bank. In light of such a scheme, all rights and liabilities of Hindustan Commercial Bank stood vested with Punjab National Bank, as a consequence whereof, the latter got possession of the rented premises.

 

Thereafter, British Motor Car in 1987 filed an eviction petition seeking eviction of Punjab National Bank from the tenanted premises. The contention of the landlord was that Hindustan Commercial Bank had sublet or assigned or parted with possession of the tenanted premises in favour of Punjab National Bank without obtaining their written consent, hence, the latter being an unauthorised subtenant is liable to be evicted.

 

At 1309 IST, shares of Punjab National Bank were up 2.5% at INR 103.45 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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