Supreme Court of India
BRITISH MOTOR CAR COMPANY (1939) LTD.versusM/S HINDUSTAN COMMERCIAL BANK LTD. SINCE HAS BEEN MERGED INTO PUNJAB NATIONAL BANK & ANR.
- Citation
- 2026 INSC 671
- Decided
- 9 July 2026
- Disposal
- Appeal(s) allowed
- Bench
- N KOTISWAR SINGH
Holding
Amalgamation of the original tenant under a scheme of the Banking Regulation Act transfers tenancy rights without the landlord’s consent and therefore attracts Section 14(1)(b) of the Delhi Rent Control Act, making the transferee liable to eviction.
Summary
British Motor Car Company (1939) Ltd., the landlord, leased premises to Hindustan Commercial Bank (HCB). In 1986 HCB was amalgamated into Punjab National Bank (PNB) under a scheme framed by the RBI pursuant to Section 45 of the Banking Regulation Act, 1949, causing HCB to cease to exist and its tenancy rights to vest in PNB. The landlord sought eviction of PNB under Section 14(1)(b) of the Delhi Rent Control Act, 1958, alleging unauthorized sub‑letting/assignment without written consent. The Supreme Court held that the amalgamation effected a transfer of possession and tenancy rights without the landlord’s consent, satisfying the ingredients of Section 14(1)(b) irrespective of whether the transfer was voluntary or involuntary, and that the scheme under Section 45 is administrative, not legislative, and cannot override the DRC Act. Consequently, PNB is liable to be evicted, the High Court’s order setting aside the eviction decree was reversed, and the original eviction decree was restored.
Issues considered
- Does an amalgamation of a tenant bank with another bank under Section 45 of the Banking Regulation Act, 1949 attract Section 14(1)(b) of the Delhi Rent Control Act, 1958?
- Whether the scheme framed under Section 45 of the Banking Regulation Act is legislative in nature such that it can exempt the transferee from the provisions of the DRC Act?
- Does the distinction between voluntary and involuntary transfer of possession affect the applicability of Section 14(1)(b)?
Legislation cited
- Banking Regulation Act, 1949s. 45, s. 45(11), s. 45(4), s. 45(7)
- Companies Act, 1956
- Delhi Rent Control Act, 1958s. 14(1)(b), s. 14(1)(j)
Headnote
Issue for Consideration Whether the amalgamation of Hindustan Commercial Bank- Respondent No.1 with Punjab National Bank-Respondent No.2, effected pursuant to the scheme framed under the Banking Regulation Act, of the Delhi Rent Control Act 1958 or not. Headnotes† Delhi Rent Control Act 1958 – s.14(1)(b) – Banking Regulation Act, 1949 – Effect of amalgamation on tenancy rights – s.14(1)(b), 1958 Act, if attracted – Original tenant-Hindustan Commercial Bank
Subjects
Section 14(1)(b)Delhi Rent Control Act 1958AmalgamationBanking Regulation Act 1949Section 45Transfer of tenancy rightsUnauthorized sub‑tenantOriginal tenant ceased to existAdministrative scheme vs legislative enactmentVoluntary vs involuntary transferEviction under rent control
Judgment
[2026] 7 S.C.R. 581 : 2026 INSC 671
British Motor Car Company (1939) Ltd.
v.
M/s Hindustan Commercial Bank Ltd.
Since Has Been Merged Into
Punjab National Bank & Anr.
(Civil Appeal No. 5714 of 2012)
09 July 2026
[Sanjay Karol* and Nongmeikapam Kotiswar Singh, JJ.]
Issue for Consideration
Whether the amalgamation of Hindustan Commercial Bank-
Respondent No.1 with Punjab National Bank-Respondent No.2,
effected pursuant to the scheme framed under the Banking
Regulation Act, 1949, attracts s.14(1)(b) of the Delhi Rent Control
Act 1958 or not.
Headnotes†
Delhi Rent Control Act 1958 – s.14(1)(b) – Banking Regulation
Act, 1949 – Effect of amalgamation on tenancy rights – s.14(1)(b),
1958 Act, if attracted – Original tenant-Hindustan Commercial
Bank (HCB-Respondent No.1) was amalgamated with Punjab
National Bank (PNB-Respondent No.2), consequently, all
assets, rights, liabilities and obligations of HCB stood vested
in PNB which came into possession of the tenanted premises –
Appellant-landlord sought eviction of the respondents from the
tenanted premises u/s.14(1)(b) r/w s.14(1)(j), DRC Act contending
that HCB had sublet/assigned/parted with possession of the
tenanted premises in favour of PNB without obtaining their
written consent, hence PNB being an unauthorized subtenant
is liable to be evicted u/s.14(1)(b), DRC Act – Eviction petition
dismissed by Additional Rent Controller – Appeal filed by
appellant, decree of eviction passed by Rent Control Tribunal –
Revision Petition filed by respondents, eviction decree set
aside by High Court – Interference with:
Held: ‘Amalgamation’ denotes the fusion of two or more companies
into one by merger or by one taking over the other – When two
companies amalgamate and merge into one, the transferor company
ceases to exist as a separate entity – s.14(1)(b) of the DRC Act
is wide enough to encompass every mode by which possession
* Author
582 [2026] 7 S.C.R.
Supreme Court Reports
or tenancy rights of the demised premises are transferred from
the original tenant to another entity – Once the possession of the
tenanted 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, s.14(1)(b) of the DRC Act
stands automatically attracted – 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 – Undisputedly, upon the amalgamation
taking effect, the original tenant-HCB ceased to exist and all its
rights, liabilities, assets and interests, including the tenancy rights
qua the tenanted premises stood vested in PNB – Thus, HCB
parted with the possession of the tenanted premises and PNB
came to occupy the same – Such a transfer took place without the
written consent of the landlord – Therefore, both the ingredients of
s.14(1)(b) of the DRC Act stood fully met – Amalgamation of the
original tenant-HCB with PNB rendered PNB liable to be evicted
from the tenanted premises u/s.14(1)(b) of the DRC Act – Impugned
judgment set aside – Judgment passed by the Rent Control Tribunal
whereby the suit for eviction was decreed, restored – Companies
Act 1956. [Paras 10, 12, 13, 21]
Delhi Rent Control Act 1958 – s.14(1)(b) – Banking Regulation
Act, 1949 – s.45 – Plea of the respondent(s) that since the
amalgamation was effected pursuant to a Gazette Notification
and a scheme prepared by RBI u/s.45 of the BR Act, the
transfer of tenancy rights and possession must be regarded
as involuntary and falling outside the ambit of s.14(1)(b):
Held: Contention not agreed with, unsustainable in law – Applicability
of s.14(1)(b) depends upon the occurrence of a factual situation,
namely, sub-letting or assignment or otherwise parting with
possession of the whole or any part of the premises by the tenant –
It 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 – Therefore, where, upon amalgamation effected u/s.45 of the
BR Act, the tenancy rights vest in another entity and possession qua
tenanted premises passes to it without the written consent of the
landlord, the ingredients of s.14(1)(b) shall stand fully satisfied – The
reasons necessitating such transfer or whether it was voluntary or
involuntary, are wholly immaterial for the purposes of attracting the
[2026] 7 S.C.R. 583
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
said provision – The ground of eviction u/s.14(1)(b) of the DRC Act
is clearly made out in the facts of the present case. [Paras 14, 15]
Words and Phrases – ‘amalgamation’ – Meaning:
Held: ‘amalgamation’ denotes the fusion of two or more companies
into one by merger or by one taking over the other – When two
companies amalgamate and merge into one, the transferor company
ceases to exist as a separate entity – The true effect and character
of an amalgamation largely depends on the terms of the merger
scheme. [Para 10]
Banking Regulation Act, 1949 – s.45 – Delhi Rent Control
Act 1958 – s.14(1)(b) – Respondent(s) contended that the
amalgamation in the present case was triggered pursuant to
a scheme framed by RBI in exercise of its ‘statutory power’
u/s.45 of the BR Act and such a scheme-framing process is
legislative in nature – It was thus, submitted that since the
tenancy rights stood vested in PNB 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 s.14(1)(b) of the DRC Act:
Held: Contention is misconceived – The scheme-making process
u/s.45 of the BR Act is administrative in nature and not legislative –
Merely because a scheme framed u/s.45 of the BR Act is required
to be sanctioned by the Central Government and placed before
both the Houses of Parliament, it does not become legislative in
nature – Thus, the amalgamation scheme framed by the Reserve
Bank of India, in exercise of power u/s.45(4) of the BR Act, cannot
be accorded the status of a statutory enactment so as to override
the operation of s.14(1)(b) of the DRC Act. [Paras 16, 17]
Case Law Cited
G. Sridharamurti v. Hindustan Petroleum Corpn. Ltd. [1995] Supp.
3 SCR 634 : (1995) 6 SCC 605; Hindustan Petroleum Corpn.
Ltd. v. Shyam Coop. Housing Society [1988] Supp. 3 SCR 44 :
(1988) 4 SCC 747 – distinguished.
Singer India Ltd. v. Chander Mohan Chadha [2004] 3 Supp. 3
SCR 535 : (2004) 7 SCC 1; Parasram Harnand Rao v. Shanti
Parsad Narinder Kumar Jain [1980] 3 SCR 444 : (1980) 3 SCC
565 – relied on.
584 [2026] 7 S.C.R.
Supreme Court Reports
K.I. Shephard v. Union of India [1988] 1 SCR 188 : (1987) 4 SCC
431; New Bank of India Employees’ Union v. Union of India [1996]
3 SCR 322 : (1996) 8 SCC 407; Vaishakhi Ram v. Sanjeev Kumar
Bhatiani [2008] 3 SCR 377 : (2008) 14 SCC 356;Jagan Nath v.
Chander Bhan [1988] Supp. 1 SCR 325 : (1988) 3 SCC 57; Shalimar
Tar Products Ltd. v. H.C. Sharma [1988] 1 SCR 1023 : (1988) 1 SCC
70; Celina Coelho Pereira v. Ulhas Mahabaleshwar Kholkar [2009]
15 SCR 558 : (2010) 1 SCC 217; Cox & Kings Ltd. v. Chander
Malhotra [1996] Supp. 10 SCR 1 : (1997) 2 SCC 687; General
Radio & Appliances Co. Ltd. v. M.A. Khader [1986] 2 SCR 607 :
(1986) 2 SCC 656; Speedline Agencies v. T. Stanes & Co. Ltd.
[2010] 7 SCR 46 : (2010) 6 SCC 257; Bhairon Sahai v. Bishamber
Dayal (2017) 8 SCC 492; Ganesh Bank of Kurundwad Ltd. v. Union
of India [2006] 5 SCR 437 : (2006) 10 SCC 645 – referred to.
Asha Rohtagi v. Erstwhile New Bank of India through General
Mananger PNB, 2005 SCC OnLine Del 464 – referred to.
List of Acts
Delhi Rent Control Act 1958; Banking Regulation Act, 1949;
Companies Act 1956.
List of Keywords
Section 14(1)(b), Delhi Rent Control Act 1958; Amalgamation;
Amalgamation under Section 45 Banking Regulation Act, 1949;
Amalgamation of original tenant; Effect of amalgamation on
tenancy rights; Sub-letting, assignment or parting with possession
of tenanted premises; Sublet/assigned/parted with possession of
tenanted premises; Without obtaining written consent of landlord;
Unauthorized sub-tenant; Unauthorized sub-tenant to be evicted;
Original tenant ceased to exist; All rights, liabilities, assets and
interests, including tenancy rights qua tenanted premises stood
vested; Transfer took place without written consent of landlord;
Ingredients of Section 14(1)(b) of , Delhi Rent Control Act 1958
met; Suit for eviction decreed; Eviction decree passed; Transferor
company ceases to exist as a separate entity.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5714 of 2012
From the Judgment and Order dated 12.03.2012 of the High Court
of Delhi at New Delhi in CM No. 485 of 2001
[2026] 7 S.C.R. 585
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
Appearances for Parties
Advs. for the Appellant(s):
Shyam Divan, Shyam Mehta,, Sr. Advs., Bhargava V. Desai,
Mrs. Manjula Gandhi, Shyam Sharma, Harsh Narwal, Sudipto
Sircar, Shaishir Divatia, Rahul Dubey, Amar Kumar Yadav, S K
Gandhi, Shivam Makkar.
Adv. for the Respondent(s):
M/s Mitter & Mitter Co.
Judgment / Order of the Supreme Court
Judgment
Sanjay Karol, J.
1. The present appeal arises out of the impugned judgment and order
dated 12.03.2012 passed by the High Court of Delhi at New Delhi
in CM (M) No.485 of 2001, whereby the High Court allowed the
petition filed by the respondents herein and set aside the decree of
eviction passed by the Rent Control Tribunal1.
2. Brief facts, shorn of unnecessary details, are as follows:
2.1. The present appellant, British Motor Car Company Limited2, in
1947, let out an area of 2443.75 sq. ft. on the ground floor and
1150.25 sq. ft. on the mezzanine floor in the property known
as Pratap Building N-Block, Connaught Circus, New Delhi3, to
Hindustan Commercial Bank4 (Respondent No.1 herein) at a
monthly rent of Rs.585/- per month, for non-residential purposes.
2.2. On 18.12.1986, the Government of India issued a Gazette
Notification under Section 45(7) of the Banking Regulation Act,
19495, pursuant to which HCB was amalgamated with Punjab
National Bank (Respondent No.2 herein)6. The Notification
1 In RCA No.22/2000.
2 Hereinafter referred to as the ‘landlord’.
3 Hereinafter referred to as the ‘tenanted premises’.
4 ‘HCB’ for short.
5 Hereinafter referred to as ‘BR Act’.
6 ‘PNB’ for short.
586 [2026] 7 S.C.R.
Supreme Court Reports
prescribed 19.12.1986 as the date on which the amalgamation
Scheme, prepared by the Reserve Bank of India, in exercise of
the powers conferred under Section 45(4) of the BR Act, would
take effect. In light of such a scheme, all rights and liabilities of
HCB stood vested with PNB, as a consequence whereof, the
latter came into possession of the tenanted premises.
2.3. The appellant filed an Eviction Petition, being E-161/1987,
seeking eviction of the respondents herein from the tenanted
premises under Section 14(1)(b) r/w Section 14(1)(j) of the
Delhi Rent Control Act 19587. The contention of the landlord
was that HCB had sublet/assigned/parted with possession of
the tenanted premises in favour of PNB without obtaining their
written consent, hence PNB being an unauthorized sub-tenant
is liable to be evicted u/s 14(1)(b) of the DRC Act.
2.4. The Additional Rent Controller, Delhi8, vide judgment and order
dated 03.11.1995, dismissed the eviction petition, observing
as under:
“11. … Here in the case provisions of sub-section
(8) of Section 45 of the Banking Regulation Act-1949
makes it clear that the scheme or any provisions
thereof shall be binding on the Banking Company
or, as the case may be, on the transferee bank
and any other banking company concerned in
the amalgamation and also on all the members,
depositors and other creditors and employees of
each of those companies and of the transferee
bank and on any other person having any right
or liabilities in relation to any those companies.
(emphasis supplied). Thus it is clear that the scheme
of amalgamation shall be binding on the petitioner
since it falls within the category of any other person
having any right or liability in relation to the transferor
bank. The petitioner certainly has a right to sue and
the transferor bank in respect of its obligation relating
7 Hereinafter referred to as ‘DRC Act’.
8 In E-161/87.
[2026] 7 S.C.R. 587
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
to the terms of tenancy, under the terms of the Act
as well as general Civil Law. Thus, it falls within the
category of any other person as contemplated by
the aforesaid sub-section. Hence, there is no two
opinion that the scheme of amalgamation is binding
upon the petitioner. In these situations the petitioner
is bound by the scheme, which is law providing for
·amalgamation of the two banking companies in
public interest and is, therefore, protected under
Article 31-A(l)(c) of the Constitution of India. The
aforesaid scheme being the statutory one, is law
and is binding on the petitioner, leaving no room for
him to invoke the provision of Section 14(1)(b) of
the Act. By the law, in the shape of the scheme of
amalgamation referred above, the respondent no.l
has become a tenant under the petitioner.
12. … Herein the case the scheme was sanctioned
by the Central Government when the same was
placed before it at the instance of Reserve Bank on
being sanctioned, the scheme got the status of a
Statute itself. Sub-Section (8) of Section 45 of the
Banking Regulations Act-1949 makes it clear that the
scheme was a law and binding upon all the parties.
Therefore, the act of sanctioning the said scheme
by the Central Government was an act of enacting
a statute. Thus the proposition handed down in M/s
Parsh Ram Harnand Rao (supra) are not applicable
to the present controversy.
13. … The involuntary act of amalgamation exists in
the present controversy, never existed in M/s General
Radio and Appliances Company (supra). Therefore,
the legal proposition laid in the said case does not
come to the rescue of the petitioner. Even otherwise
the scheme of amalgamation being a statutory one,
is binding on the petitioner, Hence, I find that Punjab
National Bank is successor-in-interest, in pursuance
of scheme referred above and there is neither sub-
letting nor assignment, nor parting with possession
588 [2026] 7 S.C.R.
Supreme Court Reports
of the demised. premises in its favour. Resultatingly
the petition under reference deserves dismissal.
The same is hereby dismissed with costs. File be
consigned to record room.”
(emphasis supplied)
2.5. The appellant carried the matter in appeal, which was allowed
by the Additional Rent Control Tribunal in RCA No.22/2000, vide
order dated 21.05.2001, and a decree of eviction was passed
against the respondent(s). It was held that:
“9. … I am of the firm view that the case of the
landlords (appellant or respondent as per the two
appeals) is just every clear and simply simple that the
tenant (original) did breach the provisions of Section
14(1)(b) of the Act and the tenant’s defence that it was
either no transfer or assignment of tenancy rights or
that, at best, it was an involuntary transfer under a
statute - seems to be just unjust and totally contrary
to law as laid down u/s 14(1)(b) of the Act and also
so pronounced by several landmark decisions of the
Hon’ble Supreme Court -referred by Ld. Counsels
for the landlords.
10. The Banking Regulation was formulated and
brought in action in 1949 whereas the Delhi Rent
Control Act was promulgated and put in force in 1958
what stood contained in Section 45 of the Banking
Regulation Act, 1949 stood good till the time this
special enactment i.e. Delhi Rent Control Act, 1958
came in, but, after the coming into operation of
DRC Act, while the Regulation Act, 1949 still stood -
Section 14 of the DRC Act made it crystal clear in
its opening lines that “Notwithstanding anything to
the contrary contained in any other law or contract..
....... “· and, thus, all other laws and Acts, any ways
concerning with the rights or liabilities of persons in
the capacity as landlords or tenants, were silenced
and made ineffective as and when these were to
be seen and compared in relation to the rights
[2026] 7 S.C.R. 589
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
or liabilities or landlords and tenants vide various
sub-clauses of Section 14(1) of the Act. Delhi Rent
Control Act - being a special Act and having come
into operation subsequent to the already existing
Banking Regulation Act, 1949, thus, was to prevail
over any issue which seemed to be regulating any
right or liability of a person specially specified under
sub-clause (b) of Section. 14(1) of the DRC Act. It is
here that scheme of amalgamation and merger having
been notified by Notification of the Government could
not violate the rights of the concerned landlords until
compliance of the requirements of Section 14(1)(b) of
the Act had been duly made. Prior written consent of
the landlord was, thus, a must before any subletting,
assignment or parting with possession was proposed
to be made irrespective of the fact that the banking
merger and amalgamation scheme was brought into
effect vide the concerned banking statute. It is true that
consent or even simple consultation from individual
citizen is not possible while enacting a new law, but,
then, there ought to be a new statute - speaking very
vividly that rights or liabilities earlier protected under
a law stood waived and such rights or liabilities will
now be governed under the new Act. No such order,
law or any amendment to this effect was brought in,
hence, provisions of the special DRC Act were only
to prevail.
... ... ...
11. … The gist of the discussion and observations
made above clearly lead to a sole conclusion that the
tenant/alleged sub-tenant did breach the provisions
of Section 14(1)(b) of the Act by assigning or parting
with possession of the demised premises without
obtaining the written consent from the landlords.”
(emphasis supplied)
2.6. Challenging the eviction decree, the respondents herein filed a
Revision Petition under Article 227 of the Constitution of India,
590 [2026] 7 S.C.R.
Supreme Court Reports
being CM (M) No.485 of 2001, before the High Court. The said
petition was allowed by the High Court, vide impugned judgment
and order dated 12.03.2012, and the eviction decree passed
by the Additional Rent Control Tribunal was set aside. Relying
on Asha Rohtagi v. Erstwhile New Bank of India through
General Mananger PNB9, the Court held as under:
“8. … it is clear that the merger of HCB with PNB
was the consequence of a statutory step which was
taken by a third party i.e. by the Central Government
although admittedly pursuant to a recommendation
of the RBI. This merger was thus an involuntary act
on the part of the tenant; it was no voluntary act
on his part by virtue of which the PNB came to be
operating from the suit premises; it was a merger
consequent to a Gazette Notification issued by the
Central Government over which the tenant had no
control; banking business which was carried out by
HCB was now being carried by PNB as all the rights
and liabilities of the transferor company i.e. HCB
had now vested with the transferee bank which was
the PNB. The Gazette notification dated 18.12.1986
specifically postulates that the Central Government
has sanctioned the scheme under Section 45(7)
of the Banking Regulation Act, 1949 and all rights,
powers, claims, interests, authorities, privileges
including movable and immovable properties including
premises subject to all incidents of tenure, of the
transferor bank (HCB) shall stand transferred and
become properties/ assets of the transferee bank
(PNB). 9. In these circumstances, the ground of
subletting was rightly held to be not available to the
landlord. The impugned judgment holding otherwise
thus suffers from an illegality. Petition is allowed.
Eviction petition stands dismissed.”
(emphasis supplied)
9 2005 SCC OnLine Del 464.
[2026] 7 S.C.R. 591
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
2.7. Aggrieved thereof, the landlord has preferred the present appeal.
SUBMISSIONS:
3. Mr. Shyam Divan and Mr. Shyam Mehta, learned senior counsel(s),
appearing on behalf of the appellant, have raised the following
grounds for challenge:
(a) Section 14(1)(b) of the DRC Act does not draw any distinction
between voluntary and involuntary transfer of possession of
the tenanted premises. The provision merely contemplates a
situation where the tenant ‘sub-let, assigned or otherwise parted
with the possession of the whole or any part of the premises
without obtaining the consent in writing’. It was, thus, contended
that upon the amalgamation of HCB with PNB, the original
tenant, i.e., HCB, ceased to exist and the possession along
with the tenancy rights stood vested in PNB. Consequently,
the ingredients of Section 14(1)(b) were satisfied. In support
thereof, reliance was placed on Singer India Ltd. v. Chander
Mohan Chadha10 and Parasram Harnand Rao v. Shanti
Parsad Narinder Kumar Jain11.
(b) Scheme framed by the Reserve Bank of India12 under Section 45
of the BR Act is administrative in nature. Reliance was placed
on K.I. Shephard v. Union of India13 to contend that such a
scheme cannot be accorded the status of a statutory enactment
so as to exclude the operation of Section 14(1)(b) of the DRC Act.
(c) The High Court erred in placing reliance upon Mrs Asha
Rohatgi (supra) while setting aside the eviction decree. It was
contended that the ratio of Asha Rohatgi (supra) would not
be applicable to the facts of the present case since it arose
in the context of an amalgamation effected under Section 9
of the Banking Companies (Acquisition and Transfer of
Undertakings Act, 1980. Reliance was placed on New Bank
of India Employees’ Union v. Union of India14, wherein
10 (2004) 7 SCC 1.
11 (1980) 3 SCC 565.
12 ‘RBI’ for short.
13 (1987) 4 SCC 431.
14 (1996) 8 SCC 407.
592 [2026] 7 S.C.R.
Supreme Court Reports
this Court clearly distinguished the schemes framed under
Section 9 of the Banking Companies (Acquisition and Transfer
of Undertakings Act and Section 45 of the BR Act, holding the
former to be legislative and the latter to be administrative in
nature. Therefore, the ratio of Asha Rohatgi (supra) cannot
be applied to the facts of the present case.
4. Per contra, Mr. Rajesh Kumar Gautam, learned counsel appearing
for the respondent(s) has submitted that:
(a) The amalgamation of HCB with PNB was not the result of any
voluntary act, agreement or assignment entered into by the
tenant. Rather, the same was executed pursuant to a scheme
framed by RBI and sanctioned by the Government of India in
exercise of their statutory power under Section 45 of the BR
Act. Therefore, the vesting of tenancy rights in PNB occurred
as a consequence of a statutory scheme.
(b) In support of the aforesaid contention, reliance was placed
on G. Sridharamurti v. Hindustan Petroleum Corpn. Ltd.15;
Hindustan Petroleum Corpn. Ltd. v. Shyam Coop. Housing
Society16 and Mrs Asha Rohatgi (supra), wherein it was
held that where tenancy rights stand vested in another entity
by virtue of a statute, such vesting constitutes a transfer by
‘statutory operation’ and not by a ‘voluntary act of assignment
of interest intra-vivos’.
OUR VIEW
5. We have heard the senior learned counsel(s) for the appellant and
learned counsel for the respondent(s) and carefully perused the
written submissions placed on record. The short question that falls
for our consideration is whether the amalgamation of HCB with PNB,
effected pursuant to the scheme framed under the BR Act, attracts
Section 14(1)(b) of the DRC Act or not?
6. For ready reference, it would be apposite to reproduce Section
14(1)(b) of the DRC Act, which reads as under:
15 (1995) 6 SCC 605.
16 (1988) 4 SCC 747.
[2026] 7 S.C.R. 593
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
“14. Protection of tenant against eviction.—
(1) Notwithstanding anything to the contrary
contained in any other law or contract, no order or
decree for the recovery of possession of any premises
shall be made by any court or Controller in favour
of the landlord against a tenant:
Provided that the Controller may, on an application
made to him in the prescribed manner, make an order
for the recovery of possession of the premises on
one or more of the following grounds only, namely:—
... ... ...
(b) that the tenant has, on or after the 9th day of
June, 1952, sub-let, 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;”
(emphasis supplied)
7. A plain reading of this provision shows that the following ingredients
must be satisfied before an order of eviction can be passed under
Section 14(1)(b):
(1) The tenant has sub-let or assigned or parted with the possession
of the whole or any part of the premises; and
(2) Such sub-letting, assignment or parting with possession has
been done without obtaining the written consent of the landlord.
[See: Vaishakhi Ram v. Sanjeev Kumar Bhatiani17]
8. The parametric content and the meaning of the words ‘parted with
possession of whole or any part of the premises’ have come up for
consideration before this Court in Jagan Nath v. Chander Bhan18,
wherein it was held that:
“6. … It is well settled that parting with possession meant
giving possession to persons other than those to whom
17 (2008) 14 SCC 356.
18 (1988) 3 SCC 57.
594 [2026] 7 S.C.R.
Supreme Court Reports
possession had been given by the lease and the parting
with possession must have been by the tenant; user by
other person is not parting with possession so long as
the tenant retains the legal possession himself, or in
other words there must be vesting of possession by the
tenant in another person by divesting himself not only of
physical possession but also of the right to possession.
So long as the tenant retains the right to possession there
is no parting with possession in terms of clause (b) of
Section 14(1) of the Act.”
[See also: Shalimar Tar Products Ltd. v. H.C. Sharma19 and Celina
Coelho Pereira v. Ulhas Mahabaleshwar Kholkar20]
9. In the present case, the amalgamation of HCB with PNB, was effected
pursuant to a scheme framed under Section 45 of the BR Act. As a
consequence, thereof, all assets, rights, liabilities and obligations of
HCB stood vested in PNB and the former ceased to exist.
10. Before adverting to the contentions raised at the Bar, it would be
apposite to briefly discuss the concept of amalgamation. The term
‘amalgamation’ denotes the fusion of two or more companies into
one by merger or by one taking over the other. When two companies
amalgamate and merge into one, the transferor company ceases
to exist as a separate entity. The true effect and character of an
amalgamation largely depends on the terms of the merger scheme.
The said position was iterated by a three-judge Bench of this Court
in Singer India Ltd. (supra), in the following terms:
“7. The provision for facilitating reconstruction and
amalgamation of companies is made under Section 394
of the Companies Act. In an amalgamation, two or more
companies are fused into one by merger or by one taking
over the other. Reconstruction or amalgamation has no
precise legal meaning. In Halsbury’s Laws of England (4th
Edn., Vol. 7), para 1539, the attributes of amalgamation
of companies have been stated as under:
19 (1988) 1 SCC 70.
20 (2010) 1 SCC 217.
[2026] 7 S.C.R. 595
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
“Amalgamation is a blending of two or more
existing undertakings into one undertaking,
the shareholders of each blending company
becoming substantially the shareholders in
the company which is to carry on the blended
undertakings. There may be amalgamation
either by the transfer of two or more undertakings
to a new company, or by the transfer of one
or more undertakings to an existing company.
Strictly ‘amalgamation’ does not, it seems, cover
the mere acquisition by a company of the share
capital of other companies which remain in
existence and continue their undertakings, but
the context to which the term is used may show
that it is intended to include such an acquisition.
The question whether a winding up is for the
purposes of reconstruction or amalgamation
depends upon the whole of the circumstances
of the winding up.”
8. In Saraswati Industrial Syndicate Ltd. v. CIT [1990
Supp SCC 675 : AIR 1991 SC 70] (para 6) it has been
held that there can be no doubt that when two companies
amalgamate and merge into one, the transferor company
loses its identity as it ceases to have its business. However,
their respective rights or liabilities are determined under
the Scheme of Amalgamation, but the corporate identity
of the transferor company ceases to exist with effect from
the date the amalgamation is made effective. …”
(emphasis supplied)
11. In the context of rent control legislation, the effect of amalgamation on
the tenancy rights, i.e., whether it results in sub-letting, assignment
or parting with possession or not, has been considered by this Court
in various judicial pronouncements.
11.1. In Parasram Harnand Rao (supra), while interpreting Section
14(1)(b) of the DRC Act, this Court held that the provision is
of wide amplitude and covers not merely subletting but also
assignment and every other mode by which possession of the
596 [2026] 7 S.C.R.
Supreme Court Reports
tenanted premises is parted. Rejecting the contention that an
involuntary transfer of tenanted premises would fall outside
the ambit of this provision, this Court held as under:
“6. … Secondly, in our opinion, the Official Liquidator
had merely stepped into the shoes of Laxmi Bank
which was the original tenant and even if the Official
Liquidator had transferred the tenancy interest to
Respondent 1 under the orders of the court, it was
on behalf of the original tenant. It was undoubtedly
a voluntary sale which clearly fell within the mischief
of Section 14(1)(b) of the Delhi Rent Control Act.
Assuming that the sale by the Official Liquidator was
an involuntary sale, then it undoubtedly became an
assignment as provided for by Section 14(1)(b) of
Delhi Rent Control Act. …
7. The language of Section 14(1)(b) is wide enough not
only to include any sublease but even an assignment
or any other mode by which possession of the tenanted
premises is parted. In view of the wide amplitude of
Section 14(1)(b) we are clearly of the opinion that it
does not exclude even an involuntary sale. …”
(emphasis supplied)
[Followed in: Cox & Kings Ltd. v. Chander Malhotra21 and General
Radio & Appliances Co. Ltd. v. M.A. Khader22]
11.2. In the same vein, this Court in Singer India Ltd. (supra), held
that the applicability of Section 14(1)(b) of the DRC Act depends
upon the occurrence of a factual situation and not upon the
circumstances that warrant such transfers. The question as
to whether the transfer is voluntary or involuntary and the
reasons necessitating such transfer are wholly irrelevant. The
relevant observations read as under:
“5. … There is no ambiguity in the section and it
clearly says that if, without obtaining the consent
21 (1997) 2 SCC 687.
22 (1986) 2 SCC 656.
[2026] 7 S.C.R. 597
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
in writing of the landlord the tenant has, on or after
9-6-1952 (i) sub-let, or (ii) assigned, or (iii) otherwise
parted with the possession of the whole or any part
of the premises, he would be liable for eviction. The
applicability of the section depends upon occurrence
of a factual situation, namely, sub-letting or assignment
or otherwise parting with possession of the whole or
any part of the premises by the tenant. Whether it is
a voluntary act of the tenant or otherwise and also
the reasons for doing so are wholly irrelevant and
can have no bearing. This view finds support from
an earlier decision rendered in Parasram Harnand
Rao v. Shanti Parsad Narinder Kumar Jain [(1980)
3 SCC 565 : AIR 1980 SC 1655] wherein Section
14(1)(b) of the Delhi Rent Control Act came up for
consideration. … The Court further held that the
language of Section 14(1)(b) is wide enough not only
to include any sub-lease but even an assignment or
any other mode by which possession of the tenanted
premises is parted with and the provision does not
exclude even an involuntary sale.
... ... ...
11. These cases clearly hold that even if there
is an order of a court sanctioning the Scheme of
Amalgamation under Sections 391 and 394 of the
Companies Act whereunder the leases, rights of
tenancy or occupancy of the transferor company get
vested in and become the property of the transferee
company, it would make no difference insofar as the
applicability of Section 14(1)(b) is concerned, as the
Act does not make any exception in favour of a lessee
who may have adopted such a course of action in
order to secure compliance with law.”
(emphasis supplied)
[See also: Speedline Agencies v. T. Stanes & Co. Ltd.23]
23 (2010) 6 SCC 257.
598 [2026] 7 S.C.R.
Supreme Court Reports
12. The exposition of law emerging from the aforesaid decisions is
clear. Section 14(1)(b) of the DRC Act is wide enough to encompass
every mode by which possession or tenancy rights of the demised
premises are transferred from the original tenant to another entity.
Once the possession of the tenanted 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 DRC Act stands automatically attracted. Therefore,
what is material is that – (a) there is a transfer of tenancy rights and
possession of the tenanted premises; and (b) such transfer is done
without the written consent of the landlord.
13. In the present case, it is undisputed that upon the amalgamation
taking effect, on 19.12.1986, the original tenant, viz. HCB ceased to
exist and all its rights, liabilities, assets and interests, including the
tenancy rights qua the tenanted premises stood vested in PNB. As
a result, HCB parted with the possession of the tenanted premises
and PNB came to occupy the same. It is equally undisputed that
such a transfer took place without the written consent of the landlord.
Therefore, both the ingredients of Section 14(1)(b) of the DRC Act,
as stated in Para 7 (supra), stood fully met.
14. The respondent(s), per contra, have sought to distinguish the
aforesaid line of judicial precedents merely because they arose
in the context of amalgamations effected under Sections 391 r/w
Section 394 of the Companies Act 1956, where the process was
initiated by the companies themselves and was thus voluntary in
nature. According to the respondent(s), since the amalgamation in the
present case was effected pursuant to a Gazette Notification and a
scheme prepared by RBI under Section 45 of the BR Act, the transfer
of tenancy rights and possession must be regarded as involuntary
and falling outside the ambit of Section 14(1)(b). However, we are
unable to agree with this contention and find it to be unsustainable in
law. The ratio of Parasram Harnand Rao (supra) and Singer India
Ltd. (supra) makes it abundantly clear that the applicability of Section
14(1)(b) upon occurrence of a factual situation, namely, sub-letting
or assignment or otherwise parting with possession of the whole or
any part of the premises by the tenant. The said provision does not
distinguish between voluntary and involuntary transfers, nor does
it carve out any exception in favour of transfers effected pursuant
[2026] 7 S.C.R. 599
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
to a scheme of amalgamation or to secure compliance with law.
Therefore, where, upon amalgamation effected under Section 45 of
the BR Act, the tenancy rights vest in another entity and possession
qua tenanted premises passes to it without the written consent of
the landlord, the ingredients of Section 14(1)(b) shall stand fully
satisfied. The reasons necessitating such transfer or whether it was
voluntary or involuntary, are wholly immaterial for the purposes of
attracting the said provision.
15. Therefore, in view of the law laid down in Parasram Harnand Rao
(supra) and Singer India Ltd. (supra), the ground of eviction under
Section 14(1)(b) of the DRC Act is clearly made out in the facts of
the present case. Our conclusion is further fortified by the decision
of this Court in Bhairon Sahai v. Bishamber Dayal24, wherein it
was held that “Parting with the possession of the premises without
consent of the landlord was sufficient for eviction of the tenant without
getting into the question of subletting or assignment.”
16. The respondent(s) further contended that the amalgamation in the
present case was triggered pursuant to a scheme framed by RBI
in exercise of its ‘statutory power’ under Section 45 of the BR Act.
Such a scheme-framing process, according to them, is legislative in
nature. It was submitted that since the tenancy rights stood vested
in PNB 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 DRC Act.
In our considered view, such a contention is misconceived.
17. This Court in K.I. Shephard (supra) has categorically held that
the scheme-making process under Section 45 of the BR Act is
administrative in nature and not legislative. The Court held that
merely because a scheme framed under Section 45 of the BR Act
is required to be sanctioned by the Central Government and placed
before both the Houses of Parliament, it does not become legislative
in nature. It was observed as under:
“9. … Learned Counsel for RBI and the transferee banks
have taken the stand that the scheme-making process
under Section 45 is legislative in character and, therefore,
24 (2017) 8 SCC 492
600 [2026] 7 S.C.R.
Supreme Court Reports
outside the purview of the ambit of natural justice under
the protective umbrella whereof the need to put the
excluded employees to notice or enquiry arose. It is well
settled that natural justice will not be employed in the
exercise of legislative power … But is the scheme-making
process legislative? Power has been conferred on the
RBI in certain situations to take steps for applying to the
Central Government for an order of moratorium and during
the period of moratorium to propose either reconstruction
or amalgamation of the banking company. A scheme for
the purposes contemplated has to be framed by RBI and
placed before the Central Government for sanction. Power
has been vested in the Central Government in terms of
what is ordinarily known as a Henry VIII clause for making
orders for removal of difficulties. Section 45(11) requires
that copies of the schemes as also such orders made
by the Central Government are to be placed before both
Houses of Parliament. We do not think this requirement
makes the exercise in regard to schemes a legislative
process. It is not necessary to go to any other authority
as the very decision relied upon by Mr Salve in the case
of Cynamide India Ltd [(1987) 2 SCC 720] lays down
the test. In para 7 of the judgment it has been indicated:
(SCC pp. 735-36)
“Any attempt to draw a distinct line between
legislative and administrative functions, it has
been said, is ‘difficult in theory and impossible
in practice’. Though difficult, it is necessary that
the line must sometimes be drawn as different
legal rights and consequences may ensue.
The distinction between the two has usually
been expressed as ‘one between the general
and the particular’. ‘A legislative act is the
creation and promulgation of a general rule of
conduct without reference to particular cases;
an administrative act is the making and issue
of a specific direction or the application of a
general rule to a particular case in accordance
with the requirements of policy’. ‘Legislation
[2026] 7 S.C.R. 601
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
is the process of formulating a general rule of
conduct without reference to particular cases
and usually operating in future; administration
is the process of performing particular acts, of
issuing particular orders or of making decisions
which apply general rules to particular cases.’
It has also been said: ‘Rule-making is normally
directed towards the formulation of requirements
having a general application to all members of a
broadly identifiable class’ while, ‘an adjudication,
on the other hand, applies to specific individuals
or situations’. But, this is only a broad distinction,
not necessarily always true.”
Applying these tests it is difficult to accept Mr Salve’s
contention that the framing of the scheme under Section
45 involves a legislative process. There are similar
statutory provisions which require placing of material
before the two Houses of Parliament yet not involving any
legislative activity. The fact that orders made by the Central
Government for removing difficulties as contemplated
under sub-clause (10) are also to be placed before the
two Houses of Parliament makes it abundantly clear that
the placing of the scheme before the two Houses is not
a relevant test for making the scheme-framing process
legislative. We accordingly hold that there is no force in the
contention of Mr Salve that the process being legislative,
rules of natural justice were not applicable.”
(emphasis supplied)
Thus, in view of the above, the amalgamation scheme framed by the
Reserve Bank of India, in exercise of power under Section 45(4) of
the BR Act, cannot be accorded the status of a statutory enactment
so as to override the operation of Section 14(1)(b) of the DRC Act.
18. The decisions relied upon by the respondent(s), viz., G. Sridharamurti
(supra) and Shyam Coop. Housing Society (supra) are clearly
distinguishable and have no application to the facts of the present
case. These decisions were rendered in the context of the Esso
(Acquisition of Undertakings in India) Act, 1974, a legislative
602 [2026] 7 S.C.R.
Supreme Court Reports
enactment which expressly provided for the vesting of tenancy rights
in the Central Government by operation of Sections 5 and 7 thereof.
By virtue of these statutory provisions, the Central Government was
held to have become a statutory tenant. The present case, however,
stands on a completely different footing. Here, we are dealing with
a scheme of amalgamation effected under Section 45 of the BR
Act which, as held in K.I. Shephard (supra), is not a legislative
enactment. The aforesaid decisions, therefore, lend no support to
the case of the respondent(s).
19. Additionally, the respondent(s) have placed reliance on Ganesh Bank
of Kurundwad Ltd. v. Union of India25, to argue that the scheme
made by RBI, in exercise of Section 45 of the BR Act, is made in
public interest. However, in our opinion, since we have held that the
minute possession is parted with Section 14(1)(b) applies irrespective,
no occasion arises to consider any other factor, including the one
raised in Ganesh Bank of Kurundwad Ltd. (supra).
20. We also find merit in the appellant’s contention that the reliance placed
on Mrs Asha Rohatgi (supra) by the High Court was misplaced. The
said decision arose in the context of an amalgamation effected under
Section 9 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act 198026. In New Bank of India Employees’ Union
(supra), this Court drew a clear distinction between the schemes
framed under Section 9 of the Acquisition Act and those framed
under Section 45 of the BR Act. While a scheme framed under
Section 9 of the Acquisition Act was held to be legislative, the one
framed under Section 45 of the BR Act was held to be administrative
in nature. The two aforementioned provisions were, thus, held not
to be pari materia and distinctive in nature. Given the difference in
language between the two provisions, namely, Section 45 of the BR
Act and Section 9 of the Acquisition Act, this Court distinguished the
judgment of K.I. Shephard (supra) and held as thus:
“32. … The High Court relied upon the decision in Shephard
case [(1987) 4 SCC 431 : 1987 SCC (L&S) 438 : (1988) 1
SCR 188] and came to hold that the provisions of Section
25 (2006) 10 SCC 645.
26 ‘Acquisition Act’ for short.
[2026] 7 S.C.R. 603
British Motor Car Company (1939) Ltd. v.
M/s Hindustan Commercial Bank Ltd.
45 of the Banking Regulation Act being in pari materia
with Section 9 of the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1980, and the scheme
framed under Section 45 of the Banking Regulation Act,
1949 having been held by this Court to be not legislative,
the scheme framed under the Acquisition Act as in the
present case, must also be held to be not a legislative one.
It is undisputed that in Shephard case … the amalgamation
was of a private bank with a nationalised bank and the
provisions of the Banking Regulation Act, 1949 applied.
This Court in Shephard case [(1987) 4 SCC 431 : 1987
SCC (L&S) 438 : (1988) 1 SCR 188] on examining Section
45(11) of the Banking Regulation Act, 1949 came to hold
that merely because a scheme framed is required to be laid
before both the Houses of Parliament after the same has
been sanctioned by the Central Government the scheme
cannot be held to be legislative in nature. But in our
considered opinion the High Court has failed to notice the
fundamental distinction between the provisions of Section
45 of the Banking Regulation Act, 1949 and Section 9 of
the Acquisition Act. Under Section 9 of the Acquisition Act
under which Act the impugned scheme has been framed,
every scheme framed by the Central Government has to
be laid before each House of Parliament for a total period
of 30 days and Parliament has the power to agree to the
scheme and making any modification or in giving to a
decision that the scheme should not be made and it is only
thereafter the scheme has the effect either in the modified
form or does not agree (sic). The essential distinction
between the two provisions therefore, is that whereas
under the Banking Regulation Act, 1949 the scheme
framed has merely to be placed before Parliament and
nothing further but under the Acquisition Act the scheme
becomes effective only after the same is placed before
both the Houses of Parliament and after Parliament makes
such modification and agrees to the scheme. In this view
of the matter the decision of this Court in Shephard case
[(1987) 4 SCC 431 : 1987 SCC (L&S) 438 : (1988) 1 SCR
188] has no application to a scheme framed under the
604 [2026] 7 S.C.R.
Supreme Court Reports
provisions of the Acquisition Act and in our considered
opinion, a scheme framed under Section 9 of the Banking
Companies Acquisition and Transfer of Undertakings Act,
1980, is a legislative one. The High Court was in error in
holding the scheme not to be a legislative one.”
(emphasis supplied)
21. In view of the aforesaid discussion, we hold that the amalgamation of
the original tenant HCB with PNB rendered PNB liable to be evicted
from the tenanted premises under Section 14(1)(b) of the DRC Act.
The appeal is, accordingly, allowed. The impugned judgment and order
dated 12.03.2012, passed by the High Court of Delhi at New Delhi in
CM (M) No.485 of 2001, is set aside. The judgment and order dated
21.05.2001 passed by the Additional Rent Control Tribunal in RCA
No.22/2000, whereby the suit for eviction was decreed, is restored.
22. Since the respondent(s) have been in possession of the tenanted
premises for a long time, we grant a time till 31st January 2027 to
deliver a peaceful and vacant possession of the tenanted premises
to the appellant. The respondent(s) will furnish an undertaking
before this Court to the above effect within a period of four weeks
from the date of this judgment. The respondent(s) shall continue to
pay rent on contractual terms/fixed by the Courts below. In case the
respondent(s) fail to do so, then the appellant will be at liberty to
proceed for taking possession in accordance with law.
Pending application(s), if any, shall stand disposed of.
Result of the case: Appeal allowed.
†
Headnotes prepared by: Divya Pandey
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