In British Motor Car Company (1939) Ltd. v. M/s Hindustan Commercial Bank Ltd. (since merged into Punjab National Bank) &Anr. [Neutral Citation: 2026 INSC 671, decided on July 9, 2026], the Supreme Court of India adjudicated a significant question of law regarding whether a bank amalgamation scheme under the Banking Regulation Act, 1949 (BR Act), overrides the anti-subletting protections afforded to a landlord under rent control legislation. The appellant-landlord sought the eviction of Punjab National Bank (PNB) from commercial premises in New Delhi, asserting that the original tenant, Hindustan Commercial Bank (HCB), had “parted with possession” without written consent following an executive amalgamation scheme in 1986. The Delhi High Court had set aside the eviction decree, treating the amalgamation as a statutory, involuntary merger outside the scope of the Delhi Rent Control Act, 1958 (DRC Act).
The Supreme Court allowed the civil appeal, setting aside the High Court’s judgment and restoring the eviction decree. A Division Bench comprising Justice Sanjay Karol and Justice NongmeikapamKotiswar Singh ruled that an amalgamation scheme under Section 45 of the BR Act is purely administrative, not legislative, in nature. The Court held that Section 14(1)(b) of the DRC Act does not differentiate between voluntary and involuntary transfers; the moment a tenant merges into another entity and divests itself of legal control and physical possession without the landlord’s prior written consent, the ground for eviction is automatically satisfied. PNB was ordered to peacefully vacate the premises by January 31, 2027.
1. Factual Matrix and Origin of the Dispute
- The Original Lease: In 1947, the appellant-landlord leased a commercial area consisting of 2,443.75 sq. ft. on the ground floor and 1,150.25 sq. ft. on the mezzanine floor of the Pratap Building, Connaught Circus, New Delhi, to HCB for non-residential purposes at a monthly rent of ₹585.
- The Amalgamation: On December 18, 1986, the Government of India issued a Gazette Notification under Section 45(7) of the BR Act, sanctioning an amalgamation scheme prepared by the Reserve Bank of India (RBI). Under the scheme, HCB was merged into PNB with effect from December 19, 1986, vesting all rights, assets, and liabilities of HCB into PNB, which subsequently took over physical possession of the tenanted premises.
- The Eviction Proceedings: The landlord filed an eviction petition (E-161/1987) under Section 14(1)(b) of the DRC Act, asserting that HCB had sublet, assigned, or otherwise parted with possession to PNB without obtaining prior written consent.
- Conflicting Lower Court Decisions:
- The Additional Rent Controller dismissed the petition in 1995, ruling that the statutory amalgamation scheme bound the landlord and operated as a statutory succession rather than unauthorized subletting.
- The Additional Rent Control Tribunal reversed this in 2001, granting an eviction decree by holding that the DRC Act is a special, subsequent legislation that overrides general banking regulations, making the landlord’s written consent mandatory.
- Operating under a revision petition under Article 227, the Delhi High Court set aside the eviction decree in 2012. Relying on Asha Rohtagi (2005), the High Court held that the merger was a statutory, involuntary act forced by a third party (the Central Government), placing it beyond the tenant’s control and outside the purview of the DRC Act.
2. Core Legal Issues Formulated
The Supreme Court evaluated two primary legal controversies:
- Whether the transfer of tenancy rights and physical possession via a bank amalgamation scheme under Section 45 of the BR Act satisfies the elements of “parting with possession” under Section 14(1)(b) of the DRC Act.
- Whether an RBI-formulated amalgamation scheme possesses a legislative character capable of overriding protections granted to landlords under provincial Rent Control statutes.
3. Legal Analysis and Ratio Decidendi
A. The Factual Content of “Parting with Possession”
The Supreme Court analyzed the statutory text of Section 14(1)(b) of the DRC Act, highlighting that eviction is mandated if a tenant sublets, assigns, or otherwise parts with possession without the landlord’s consent in writing. Citing foundational rulings like Jagan Nath v. ChanderBhan (1988) and Celina Coelho Pereira (2010), the Court reiterated that “parting with possession” occurs when a tenant divests itself of both physical occupancy and the absolute legal right to possession, vesting it in a separate entity.
Following the amalgamation, HCB completely lost its corporate identity and ceased to exist. Possession passed entirely to PNB without the landlord’s written consent. Relying heavily on the three-judge bench precedents in ParasramHarnand Rao (1980) and Singer India Ltd. v. Chander Mohan Chadha (2004), the Court ruled that the applicability of Section 14(1)(b) is triggered by the factual occurrence of the transfer. The underlying motives, corporate benefits, or whether the transaction was voluntary or involuntary are completely irrelevant.
B. Administrative vs. Legislative Schemes
The respondents argued that because the transfer was executed via a Gazette Notification under a statutory banking framework, it was a legislative act that insulated them from eviction.
The Supreme Court rejected this argument by citing K.I. Shephard v. Union of India (1987), which established that the scheme-framing process under Section 45 of the BR Act is strictly administrative, not legislative. The mere requirement that an RBI scheme be laid before Parliament does not transform a specific administrative direction into a general law of conduct. Consequently, an administrative banking arrangement cannot be utilized to override or wipe out a landlord’s statutory protections under the DRC Act.
C. Correcting the High Court’s Reliance on Asha Rohtagi
The Court found that the High Court erred by relying on the Delhi High Court decision in Asha Rohtagi (2005). The Supreme Court, referencing New Bank of India Employees’ Union v. Union of India (1996), clarified that a fundamental distinction exists between mergers under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (Acquisition Act), and those under the BR Act.
Under Section 9 of the Acquisition Act, a scheme becomes effective only after it is presented to both Houses of Parliament for 30 days and is subject to active modification or rejection by the legislature, giving it a legislative character. Conversely, a scheme under Section 45 of the BR Act is simply placed before Parliament post-sanction without these mandatory conditions, remaining an administrative measure. Therefore, the protections recognized in Asha Rohtagi are not applicable to mergers under the BR Act.
4. Final Conclusion and Operational Directives
- Appeal Allowed: The Civil Appeal is allowed, setting aside the Delhi High Court’s order dated March 12, 2012.
- Eviction Decree Restored: The judgment of the Additional Rent Control Tribunal in RCA No. 22/2000 is restored, finalizing the eviction decree against PNB[cite: 20].
- Vacant Possession Timeline: To prevent disruptions to banking operations, the Court granted PNB an extension until January 31, 2027, to hand over peaceful and vacant possession of the premises to the appellant[cite: 20].
- Undertaking Mandate: PNB must file a formal written undertaking to comply with the eviction timeline within four weeks from the date of the judgment[cite: 20].
- Rent Arrears: PNB is directed to continue paying rent regularly based on contractual terms or rates previously fixed by the lower courts until the premises are vacated[cite: 20]. If it fails to comply, the landlord is at liberty to initiate execution proceedings immediately[cite: 20].
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. (D.O.J. 09.07.2026)
