Can a Landlord Evict a Tenant After a Bank Merger Without the Landlord's Consent?

What the Supreme Court Held in British Motor Car Company (1939) Ltd. v. Hindustan Commercial Bank Ltd. decided on July 9, 2026.

Commercial premises often continue to be occupied seamlessly after banks merge or amalgamate. But does such a statutory amalgamation automatically transfer tenancy rights without the landlord's consent, or can it amount to an unlawful assignment under rent control law? This question came before the Supreme Court in British Motor Car Company (1939) Ltd. v. Hindustan Commercial Bank Ltd.

The dispute concerned commercial premises in Connaught Place, New Delhi, which had been leased in 1947 by British Motor Car Company to Hindustan Commercial Bank. In December 1986, Hindustan Commercial Bank was amalgamated with Punjab National Bank under a scheme sanctioned by the Central Government under Section 45 of the Banking Regulation Act, 1949. Following the amalgamation, Punjab National Bank continued to occupy the premises.

The landlord-initiated eviction proceedings under Section 14(1)(b) of the Delhi Rent Control Act, 1958, contending that the tenancy had been assigned, or possession had been parted with, in favour of Punjab National Bank without obtaining the landlord's written consent. The Rent Control Tribunal ordered eviction. The Delhi High Court subsequently restored the tenant's possession, holding that the amalgamation was a statutory and involuntary consequence of a government notification rather than a voluntary transfer by the tenant. The matter ultimately reached the Supreme Court.

The Supreme Court reversed the High Court's decision. It reiterated that Section 14(1)(b) of the Delhi Rent Control Act does not distinguish between voluntary and involuntary transfers of tenancy rights. The provision is attracted whenever the original tenant parts with possession or transfers its tenancy rights to another entity without obtaining the landlord's written consent. What matters is the fact of transfer itself, not the reason behind it.

The Court observed that once the amalgamation became effective, Hindustan Commercial Bank ceased to exist as a separate legal entity. All of its assets, liabilities, rights and interests, including the tenancy rights, stood vested in Punjab National Bank. Consequently, the original tenant no longer retained either its legal identity or its right to possession, while Punjab National Bank came to occupy the premises in its place. These facts satisfied the statutory requirements of Section 14(1)(b).

The tenant argued that the transfer resulted from a statutory scheme framed under Section 45 of the Banking Regulation Act and therefore could not be treated as an assignment or parting with possession. The Supreme Court rejected this contention. Relying on K.I. Shephard v. Union of India, the Court held that a scheme framed under Section 45 is administrative rather than legislative in nature. Accordingly, such a scheme cannot override or dilute the protections available to landlords under the Delhi Rent Control Act.

The Court also clarified that earlier decisions concerning amalgamations under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 were distinguishable because those schemes possess a legislative character. A scheme framed under Section 45 of the Banking Regulation Act stands on a different footing and cannot be treated similarly.

Accordingly, the Supreme Court allowed the appeal, set aside the Delhi High Court's judgment, restored the eviction decree passed by the Rent Control Tribunal, and directed Punjab National Bank to hand over vacant possession of the premises, while granting time until 31 January 2027 to vacate.

The judgment is significant because it reaffirms that Section 14(1)(b) of the Delhi Rent Control Act is concerned with the fact of transfer, not the manner in which it occurs. Even where tenancy rights pass through a statutory amalgamation of companies or banks, the transfer may amount to assignment or parting with possession if the original tenant ceases to exist and the landlord's written consent has not been obtained. The decision also clarifies that schemes framed under Section 45 of the Banking Regulation Act do not enjoy legislative status so as to override the landlord's statutory rights under rent control legislation.