The Supreme Court has ruled that the merger of a tenant bank with another bank amounts to a transfer of tenancy rights. If the tenancy is transferred without the landlord’s written consent, the tenant can face eviction under the Delhi Rent Control Act.
A Bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh restored an eviction order against Punjab National Bank (PNB) from a rented commercial property in New Delhi.
Hindustan Commercial Bank’s Tenancy Transferred to PNB
The Supreme Court said that the original tenant, Hindustan Commercial Bank Ltd. (HCB), lost its identity after merging with Punjab National Bank. The Hindustan Commercial Bank (HCB) was amalgamated with Punjab National Bank (PNB) on December 19, 1986.
As a result of the merger, HCB’s tenancy rights and possession of the rented premises were transferred to PNB. However, the landlord’s written consent was not obtained for this transfer.
The Court held that this attracted Section 14(1)(b) of the Delhi Rent Control Act and made PNB liable for eviction.
Case Related to Commercial Property in Connaught Circus
The dispute involved a commercial property in Pratap Building at Connaught Circus in New Delhi.
In 1947, British Motor Car Company (1939) Ltd. leased the property to Hindustan Commercial Bank for banking activities. The monthly rent of the premises was ₹585.
Hindustan Commercial Bank Merged With PNB in 1986
In 1986, Hindustan Commercial Bank merged with Punjab National Bank. Following the merger, all assets, liabilities and rights of HCB were transferred to PNB.
PNB also continued to occupy the rented commercial property after the merger.
The landlord later started eviction proceedings under Section 14(1)(b) of the Delhi Rent Control Act. The landlord argued that HCB had transferred or handed over possession of the property to PNB without obtaining written consent.
Lower Courts Gave Different Decisions
The Additional Rent Controller initially dismissed the landlord’s eviction petition. However, the Rent Control Tribunal later reversed the decision and ordered the bank’s eviction.
The Delhi High Court again changed the decision and restored the Rent Controller’s order. The High Court held that PNB had taken possession of the property because of a statutory merger scheme and not through a voluntary transfer by the original tenant.
The landlord then challenged the Delhi High Court’s decision before the Supreme Court.
Reason for Tenancy Transfer Is Not Important
The Supreme Court set aside the Delhi High Court’s judgment. The Court explained that Section 14(1)(b) of the Delhi Rent Control Act applies when a tenant sublets, assigns or transfers possession of a rented property without the landlord’s written consent.
The Court said that when tenancy rights and possession are transferred to another entity after a bank merger, the conditions for eviction are fulfilled if the landlord has not given written consent.
According to the Supreme Court, it does not matter whether the transfer was voluntary or happened because of a statutory merger.
Landlord’s Written Consent Required for Tenancy Transfer
The Supreme Court said the important factors are whether tenancy rights and possession were transferred to another entity and whether the transfer took place without the landlord’s written consent.
In this case, Hindustan Commercial Bank merged with PNB and lost its separate identity. The tenancy rights and possession of the rented property were transferred to PNB without the landlord’s written approval.
Therefore, the Court held that PNB was liable for eviction under the Delhi Rent Control Act.
PNB Ordered to Vacate Premises by January 31, 2027
The Supreme Court allowed the landlord’s appeal and restored the eviction order against Punjab National Bank. PNB has been directed to vacate the rented premises by January 31, 2027.
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