Supreme Court Orders PNB To Vacate Delhi Property After Ruling Bank Merger Amounted To Tenancy Transfer

The Supreme Court has ordered Punjab National Bank (PNB) to vacate a commercial property in Delhi after ruling that it could not continue as the tenant following its merger with Hindustan Commercial Bank (HCB), which had originally rented the premises.

Court Restores Eviction Order

The bench has restored an eviction order against PNB, holding that the bank became liable for eviction under Section 14(1)(b) of the Delhi Rent Control Act after HCB, the original tenant, merged with PNB in 1986.

The court said the key issue was whether the tenancy rights and possession of the premises had passed to another entity without the landlord's written approval. It held that once both conditions are met, the law permits the landlord to seek eviction, regardless of whether the transfer happened voluntarily or through a statutory merger.

Dispute Dates Back To 1947 Lease

The case relates to commercial premises in Pratap Building at Connaught Circus in New Delhi. The property was leased in 1947 by British Motor Car Company (1939) Ltd. to Hindustan Commercial Bank for banking operations at a monthly rent of Rs 585.

Following the merger of HCB with PNB in 1986, all assets, liabilities and rights of HCB were transferred to PNB, which continued operating from the premises.

Then the landlord filed an eviction petition saying that HCB handed over the tenancy rights and possession to the PNB without his written approval as stipulated in the Delhi Rent Control Act.

The Additional Rent Controller had initially dismissed the petition. But the Rent Control Tribunal overturned that decision and ordered eviction. The Delhi High Court later restored the Rent Controller's order, saying PNB came into possession through a statutory merger and not because of a voluntary transfer by the tenant.

Merger Does Not Override Rent Law

The Supreme Court disagreed with the High Court's interpretation and set aside its judgment.

Referring to Section 14(1)(b) of the Delhi Rent Control Act, the court said the provision applies when tenancy rights and possession pass to another entity without the landlord's written consent. It added that the reason behind the transfer, including whether it resulted from a statutory amalgamation, does not change the legal position.

Referring to one of its earlier rulings from a 2017 case (Bhairon Sahai v. Bishamber Dayal), the court allowed the landlord's appeal and directed PNB to vacate the premises by January 31, 2027.