SC: Bank Merger Without Landlord's Consent Still Triggers Eviction

The Supreme Court has ruled that a bank merger transferring tenancy rights to another entity, without the landlord's written consent, attracts eviction under Section 14(1)(b) of the Delhi Rent Control Act. Justices Sanjay Karol and Nongmeikapam Kotiswar Singh restored an eviction decree against PNB, holding that Hindustan Commercial Bank's 1986 amalgamation into PNB transferred tenancy and possession without the landlord's approval. The Court held the RBI-approved scheme could not override the Rent Act, and that voluntariness of transfer was immaterial. PNB must vacate the Connaught Place premises by January 31, 2027, ending a 40-year dispute.

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No Consent, No Tenancy: Supreme Court Evicts PNB From Connaught Place Premises Over 1986 Bank Merger

New Delhi: The Supreme Court has held that a bank merger which transfers tenancy rights to another entity, without the landlord's written consent, attracts eviction under the Delhi Rent Control Act — even when the merger was carried out under a statutory scheme. A Bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh restored an eviction decree against Punjab National Bank (PNB), bringing a nearly 40-year-old dispute to a close.

The case concerned commercial premises in Pratap Building, Connaught Circus, New Delhi, leased in 1947 by British Motor Car Company (1939) Ltd. to Hindustan Commercial Bank (HCB) for banking purposes. In December 1986, HCB was amalgamated with PNB under a scheme approved by the Central Government pursuant to Section 45 of the Banking Regulation Act. As a result, all of HCB's assets, liabilities and tenancy rights vested in PNB, which continued occupying the premises without ever seeking the landlord's written consent for the transfer.

The landlord initiated eviction proceedings under Section 14(1)(b) of the Delhi Rent Control Act, which permits eviction where a tenant has sublet, assigned, or otherwise parted with possession without the landlord's written consent. The case saw conflicting outcomes over the decades: the Additional Rent Controller dismissed the eviction plea in 1995, the Rent Control Tribunal reversed this and ordered eviction in 2001, and the Delhi High Court subsequently restored the Controller's order, holding that PNB had come into possession by operation of a statutory scheme rather than a voluntary act.

Setting aside the High Court's judgment, the Supreme Court, in a verdict authored by Justice Karol, held that Section 14(1)(b) requires only two ingredients to be satisfied: a transfer of tenancy rights and possession, and the absence of the landlord's written consent to that transfer. The Court rejected the argument that only voluntary transfers attract the provision, observing that whether the transfer was voluntary or involuntary is “wholly immaterial” to the applicability of the eviction clause.

The Bench further clarified that the RBI-approved amalgamation scheme could not be treated as a statutory enactment capable of overriding the Delhi Rent Control Act. Since HCB lost its separate identity upon merging into PNB, and possession of the tenanted premises passed to PNB without the landlord's written approval, the Court held that the ingredients of Section 14(1)(b) stood fully satisfied, rendering PNB liable to eviction.

Allowing the landlord's appeal, the Supreme Court directed PNB to hand over peaceful and vacant possession of the premises by January 31, 2027, closing out a legal battle that began with the eviction petition filed way back in 1987.