The Supreme Court has held that tenancy rights transferred from one bank to another under a scheme of amalgamation framed under the Banking Regulation Act do not enjoy immunity from the Delhi Rent Control Act. Holding that Section 14(1)(b) does not distinguish between voluntary and statutory transfers, the Court restored an eviction decree against Punjab National Bank after finding that the original tenant had ceased to exist and the tenancy had passed to another entity without the landlord’s written consent.BackgroundThe Supreme Court has ruled that a bank cannot resist eviction under the Delhi Rent Control Act merely because it came into possession of leased premises through a statutory amalgamation.Allowing an appeal filed by British Motor Car Company (1939) Ltd., a Bench of Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh held that once tenancy rights pass from one legal entity to another without the landlord’s written consent, the protection available under the Delhi Rent Control Act comes into play, irrespective of whether the transfer took place voluntarily or under a statutory scheme.The dispute dates back to 1947, when British Motor Car Company leased portions of Pratap Building at Connaught Circus, New Delhi, to Hindustan Commercial Bank (HCB) for commercial purposes.Nearly four decades later, the Reserve Bank of India framed a scheme under Section 45 of the Banking Regulation Act for the amalgamation of HCB with Punjab National Bank. The Central Government approved the scheme, which came into effect on 19.12.1986. As a result, all the assets, liabilities and legal rights of HCB, including its tenancy rights, vested in Punjab National Bank, which continued to occupy the premises.The landlord subsequently initiated eviction proceedings under Section 14(1)(b) of the Delhi Rent Control Act, arguing that the tenancy had been transferred to another entity without its written consent.The litigation travelled through three forums.The Additional Rent Controller dismissed the eviction petition, holding that the transfer had taken place by operation of a statutory scheme and could not be treated as an assignment or subletting by the tenant.The Additional Rent Control Tribunal took a different view. It held that regardless of the source of the transfer, tenancy rights had passed from one entity to another without the landlord’s consent and, therefore, the statutory ground for eviction stood attracted.The Delhi High Court restored the Controller’s decision. Relying on its earlier judgment in Asha Rohatgi v. Erstwhile New Bank of India, it held that since the amalgamation was brought about through a statutory notification issued under the Banking Regulation Act, it was not a voluntary transfer and would not fall within Section 14(1)(b) of the Delhi Rent Control Act.The landlord challenged that view before the Supreme Court.Before examining the effect of the Banking Regulation Act, the Court first turned to the language of Section 14(1)(b) of the Delhi Rent Control Act.The provision enables a landlord to seek eviction where the tenant has “sub-let, assigned or otherwise parted with possession” of the premises without obtaining the landlord’s written consent.According to the Bench, the provision contains only two requirements.First, the tenancy or possession must have passed to another person. Secondly, the transfer must have taken place without the landlord’s written consent.Therefore, referring to Vaishakhi Ram v. Sanjeev Kumar Bhatiani, the Court observed that these are the only statutory ingredients. Nothing in the provision suggests that Parliament intended to distinguish between voluntary transfers and those taking place under a statutory scheme.“There are only two ingredients which are required to be fulfilled,” the Bench observed while explaining the scope of Section 14(1)(b). The Court then examined what amounts to “parting with possession”. Relying on its earlier decision in Jagan Nath v. Chander Bhan, it reiterated that the expression is not confined to physical occupation of the premises.“Parting with possession meant giving possession to persons other than those to whom possession had been given by the lease… 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.”Applying that principle, the Bench noted that Hindustan Commercial Bank ceased to exist once the amalgamation took effect on 19.12.1986. Simultaneously, all its assets and liabilities, including the tenancy, stood transferred to Punjab National Bank. The Court observed that once the original tenant lost both its legal identity and its right to occupy the premises, and another juristic entity stepped into its place without the landlord’s written consent, the ingredients of Section 14(1)(b) were prima facie satisfied.The remaining question, according to the Bench, was whether the Banking Regulation Act created an exception to that rule merely because the transfer occurred under a statutory scheme. Examining the legislative framework and the authorities governing statutory amalgamations, the Court answered that question in the negative.Punjab National Bank further argued that the tenancy had vested in it by virtue of a statutory amalgamation approved under Section 45 of the Banking Regulation Act and not because of any voluntary act on the part of the original tenant. Since the transfer had taken place by operation of law, it argued that Section 14(1)(b) of the Delhi Rent Control Act was not attracted.The Supreme Court did not accept the submission. The Bench explained that Section 45 enables the Reserve Bank of India to frame a scheme for the amalgamation of banking companies in public interest, subject to approval by the Central Government. Such a scheme transfers the assets, liabilities and obligations of the transferor bank to the transferee bank. However, it does not enlarge tenancy rights or take away the protection available to landlords under the Delhi Rent Control Act.“The Banking Regulation Act facilitates amalgamation of banking companies; it does not confer immunity from the operation of the Delhi Rent Control Act,” the Court observed.The Court said there was no conflict between the two statutes. While the Banking Regulation Act governs the restructuring of banking companies, the Delhi Rent Control Act independently regulates landlord-tenant relationships. Therefore, although Punjab National Bank lawfully stepped into the shoes of Hindustan Commercial Bank under the amalgamation scheme, it acquired the tenancy subject to the restrictions imposed by the Rent Act.Court Says Statute Draws No Distinction Between Voluntary and Statutory TransfersThe Bench found that the Delhi High Court had fallen into error by treating statutory transfers as a separate category outside the scope of Section 14(1)(b).Referring to General Radio & Appliances Co. Ltd. v. M.A. Khader, the Court observed that the issue was no longer open to debate. In that case, the Supreme Court had held that even where tenancy rights pass by operation of law, the landlord can still seek eviction if the conditions prescribed by the rent control statute are satisfied.The Court also relied on Cox & Kings Ltd. v. Chander Malhotra and Singer India Ltd. v. Chander Mohan Chadha, both of which reaffirm that statutory tenancy is a personal right and cannot automatically pass to another legal entity in disregard of the restrictions contained in the Rent Act.Rejecting the reasoning adopted by the High Court, the Bench observed:“The provision nowhere distinguishes between voluntary and involuntary transfers. Once the tenant has assigned or otherwise parted with possession without the consent in writing of the landlord, the ground under Section 14(1)(b) stands attracted.”The Court said that if Parliament intended to exempt statutory transfers from the scope of Section 14(1)(b), it would have expressly said so.Instead, the provision simply requires two conditions to be satisfied;
- a transfer of tenancy rights; and
- absence of the landlord’s written consent.
“It is not for the Court to add words into the statute which the legislature has consciously omitted,” the Bench observed.The judgment also overruled the reasoning adopted by the Delhi High Court in Asha Rohatgi v. Erstwhile New Bank of India. According to the Supreme Court, that decision incorrectly proceeded on the assumption that every statutory transfer is immune from eviction under the Delhi Rent Control Act, an interpretation contrary to the law laid down in General Radio and the subsequent decisions following it.Applying these principles, the Court held that the legal position in the present case was straightforward. Hindustan Commercial Bank ceased to exist as a separate legal entity on 19.12.1986. On the same day, its tenancy rights vested in Punjab National Bank under the amalgamation scheme. Since the landlord had never consented in writing to the transfer, both ingredients of Section 14(1)(b) stood fulfilled.The Bench concluded that the High Court had erred in treating the statutory character of the amalgamation as a defence to eviction. Once the original tenant ceased to exist and another entity entered into possession without the landlord’s written consent, the statutory ground for eviction became available.The Supreme Court accordingly allowed the appeal, set aside the judgments of the Delhi High Court and the Additional Rent Controller, and restored the eviction order passed by the Additional Rent Control Tribunal. Considering that Punjab National Bank had been occupying the premises for several decades, the Court granted it six months’ time to vacate, subject to filing the usual undertaking within four weeks and continuing to pay all lawful charges during the extended period. Failure to comply with these conditions would entitle the landlord to execute the eviction decree in accordance with law.CIVIL APPEAL NO. 5714 OF 2012BRITISH MOTOR CAR COMPANY (1939) LTD. Vs M/S HINDUSTAN COMMERCIAL BANK LTD. SINCE HAS BEEN MERGED INTO PUNJAB NATIONAL BANK & ANR.Appearance:For Appellant(s) : Mr. Shyam Divan, Sr. Adv. Mr. Shyam Mehta,, Sr. Adv. Mr. Bhargava V. Desai, AOR Mrs. Manjula Gandhi, Adv. Mr. Shyam Sharma, Adv. Mr. Harsh Narwal, Adv. Mr. Sudipto Sircar, Adv. Mr. Shaishir Divatia, Adv. Mr. Rahul Dubey, Adv. Mr. Amar Kumar Yadav, Adv. Mr. S K Gandhi, Adv. Mr. Shivam Makkar, Adv.For Respondent(s) :M/S. Mitter & Mitter Co., AOR(The author of this article, Vatsal Chandra is a Delhi-based Advocate practicing before the courts of Delhi NCR.)