Bank Merger Amounts To Parting With Possession, Attracts Eviction Under DRC Act: SC

The Supreme Court has held that where tenancy rights and possession of tenanted premises pass from one bank to another pursuant to a statutory amalgamation scheme framed under Section 45 of the Banking Regulation Act, 1949, without the landlord's written consent, the ground of eviction under Section 14(1)(b) of the Delhi Rent Control Act stands squarely attracted, irrespective of whether the transfer was voluntary or involuntary.

Court Restores Eviction Decree, Sets Aside Delhi High Court Order

A Bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh allowed the appeal filed by British Motor Car Company (1939) Ltd. against Hindustan Commercial Bank Ltd., since merged into Punjab National Bank, setting aside the Delhi High Court's 2012 judgment and restoring the eviction decree passed by the Additional Rent Control Tribunal in 2001.

The Court held that once possession of tenanted premises, along with accompanying tenancy rights, passes from the original tenant to another entity without the landlord's written consent, and the original tenant loses its identity and control over the premises, Section 14(1)(b) of the DRC Act is automatically attracted.

Background: Amalgamation Led PNB Into Possession Without Landlord's Consent

The landlord had let out premises in Pratap Building, Connaught Circus, New Delhi, to Hindustan Commercial Bank (HCB) in 1947 for non-residential use. In 1986, the Government of India issued a Gazette Notification under Section 45(7) of the Banking Regulation Act amalgamating HCB with Punjab National Bank (PNB), pursuant to which all rights and liabilities of HCB, including the tenancy, vested in PNB.

The landlord filed an eviction petition contending that HCB had parted with possession of the premises in favour of PNB without written consent, attracting Section 14(1)(b) read with Section 14(1)(j) of the DRC Act. The Additional Rent Controller dismissed the petition, holding the amalgamation scheme to be a statutory one binding on the landlord. On appeal, the Additional Rent Control Tribunal reversed this finding and decreed eviction, holding that the DRC Act, being a special and later enactment, prevailed over the Banking Regulation Act and that prior written consent was mandatory regardless of the statutory amalgamation. The Delhi High Court, however, set aside the eviction decree, relying on Asha Rohatgi v. Erstwhile New Bank of India, holding the merger to be an involuntary statutory act outside the scope of subletting.

Provision Does Not Distinguish Between Voluntary And Involuntary Transfers

The Court held that Section 14(1)(b) of the DRC Act is wide enough to cover subletting, assignment or any other mode of parting with possession, and does not carve out any exception for transfers effected pursuant to a scheme of amalgamation. Relying on its earlier decisions in Parasram Harnand Rao v. Shanti Parsad Narinder Kumar Jain and Singer India Ltd. v. Chander Mohan Chadha, the Court reiterated that the applicability of the provision depends on the factual occurrence of parting with possession, and that whether such transfer was voluntary or involuntary, and the reasons for it, are wholly irrelevant.

RBI Scheme Under Section 45 Is Administrative, Not Legislative: Court

The Court rejected the respondents' argument that the scheme framed by the Reserve Bank of India under Section 45 of the Banking Regulation Act was legislative in character and therefore could override the DRC Act. Relying on K.I. Shephard v. Union of India, the Bench held that the scheme-making process under Section 45 is administrative in nature, notwithstanding the requirement that it be sanctioned by the Central Government and placed before Parliament, and cannot be accorded the status of a statutory enactment so as to exclude the operation of Section 14(1)(b).

The Court also distinguished the High Court's reliance on Asha Rohatgi, noting that the said decision arose from an amalgamation under Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, a scheme this Court has previously held to be legislative in nature, unlike schemes under Section 45 of the Banking Regulation Act, making the ratio inapplicable to the present facts.

Time Granted To Hand Over Possession

Having found both ingredients of Section 14(1)(b) satisfied, transfer of tenancy rights and possession without the landlord's written consent, the Court restored the eviction decree. Considering the respondents' long possession of the premises, the Court granted time until January 31, 2027, to hand over peaceful and vacant possession, subject to an undertaking to be filed within four weeks and continued payment of rent on existing terms.

Case Title: British Motor Car Company (1939) Ltd. v. M/s Hindustan Commercial Bank Ltd. (since merged into Punjab National Bank) & Anr. Case No.: Civil Appeal No. 5714 of 2012 Citation: 2026 INSC 671 Bench: Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh Judgment Date: July 9, 2026 Counsel for Appellant: Mr. Shyam Divan and Mr. Shyam Mehta, Senior Advocates Counsel for Respondents: Mr. Rajesh Kumar Gautam, Advocate