NEW DELHI: In a landmark ruling, the Supreme Court declared on Thursday that the merger of a tenant bank with another entity does not relieve the transferee bank from eviction under the Delhi Rent Control Act without the landlord’s written consent.
Ending a nearly 40-year legal dispute, a bench comprising Justices Sanjay Karol and K Kotiswar Singh ordered Punjab National Bank (PNB) to vacate the tenanted premises at Connaught Circus by January 31, 2027, and return it to the owner, the British Motor Car Company Ltd.
The court approved the eviction request from British Motor Car Company, which filed a plea in local court back in 1987.
The origins of the dispute trace back to 1947 when British Motor Car Company Ltd leased a prominent commercial space in Pratap Building, Connaught Circus, to Hindustan Commercial Bank (HCB).
In December 1986, HCB merged into PNB following a scheme backed by the Reserve Bank of India, allowing PNB to take possession of the premises.
The landlord initiated eviction proceedings, arguing that transferring possession to PNB constituted an assignment or parting with possession without written consent, which violates Section 14(1)(b) of the Delhi Rent Control (DRC) Act.
This provision stipulates that a tenant can be evicted if they sublet, assigned, or otherwise relinquished possession of the premises “without obtaining the landlord’s consent in writing.”
The bench deliberated whether the merger of HCB with PNB fell under Section 14(1)(b) of the DRC Act.
Justice Karol, who authored the judgment, asserted that even if the merger was “involuntary” or mandated by government regulations, it still requires the successor bank to secure the landlord’s authorization under the DRC Act.
“A straightforward interpretation of this provision indicates that two criteria must be met before an eviction order can be issued under Section 14(1)(b): (1) The tenant has sublet, assigned, or parted with possession of the whole or any part of the premises; and (2) This action has been undertaken without the landlord’s documented consent,” the ruling stated.
The bench clarified that the amalgamation scheme from the Reserve Bank of India does not hold legislative authority that would supersede the provisions of the DRC Act.
“We conclude that the amalgamation of HCB with PNB made PNB liable for eviction from the premises under Section 14(1)(b) of the DRC Act,” the ruling emphasized.
The case experienced conflicting judicial interpretations for four decades; in 1995, a rent controller dismissed the eviction plea, seeing the merger as a binding statutory “law” for the landlord.
In 2001, the Rent Control Tribunal overturned this decision, ruling that rent laws take precedence over banking regulations.
The Delhi High Court later annulled the eviction in 2012, labeling the merger as an “involuntary act” devoid of tenant control, leading to the final ruling issued by the Supreme Court on Thursday.
