British Motor Car Company (1939) Ltd. vs Hindustan Commercial Bank Ltd. Since Has Been Merged Into Punjab National Bank

Headnote Court Copy Facts Arguments Court observation Judicial Analysis Case Map Category Hierarchy Table of Content

2026 Supreme(SC) 744

SUPREME COURT OF INDIA
Sanjay Karol, Nongmeikapam Kotiswar Singh, JJ.
British Motor Car Company (1939) Ltd. – Appellant
Versus
M/S Hindustan Commercial Bank Ltd. Since Has Been Merged Into Punjab National Bank & Anr. – Respondents
Civil Appeal No. 5714 of 2012
Decided On : 09-07-2026

Important Points

The transfer of possession and tenancy rights to a successor entity following a corporate merger, even if involuntary or regulatory in nature, constitutes an assignment or parting with possession, thereby entitling the landlord to recover the premises if such transfer occurred without the owner's written consent.

Subject

Property Law - Rent Control and Tenancy

Act Referred

ACQUISITION ACT: S.9
BANKING COMPANIES ACQUISITION AND TRANSFER OF UNDERTAKINGS ACT: S.9
BANKING REGULATIONS ACT: S.45, S.45(4), S.45(7), S.45(8)
COMPANIES ACT: S.391, S.394
CONSTITUTION OF INDIA: Art.227, Art.31(a)(1)(c)
DELHI RENT CONTROL ACT: S.14

Headnote

(A) Property law - Transfer of possession - Rent control legislation - The provisions governing the recovery of premises from a tenant are of wide amplitude, encompassing all modes by which possession of property is transferred, including assignment or parting with possession. The language of such provisions does not distinguish between voluntary and involuntary transfers, nor does it carve out exceptions for regulatory reorganization or business mergers. Once the possession of the premises and the associated tenancy rights are passed to an successor entity without the written consent of the owner, the grounds for recovery of the premises are established. (Paras 11.1, 12, 14)

(B) Corporate mergers - Effect on tenancy - The process of business integration or merger, where a tenant entity ceases to exist and its assets and obligations are vested in a successor, constitutes an assignment of interest and a transfer of physical possession. The nature of the regulatory process underlying such a merger is irrelevant if the factual outcome is the unauthorized transfer of property usage, which triggers the owner's entitlement to seek possession under property legislation. (Paras 10, 13, 21)

Facts of the case:
A business entity occupied property under a long-term lease. Following a regulatory process of business integration, the original tenant merged into a larger institution, resulting in the transfer of all its assets, liabilities, and leasehold interests to the successor. The property owner initiated proceedings to recover the premises, arguing that the transfer of occupancy to the successor institution occurred without their written consent, thus constituting an unauthorized assignment or parting with possession.

Findings of Court:
The court determined that the transfer of property from the original tenant to the successor following a business merger constitutes a parting with possession within the intent of property regulation laws. The court found that the regulatory nature of the merger process does not grant an exemption from the requirement of prior written permission from the property owner for the transfer of tenancy.

Issues: Whether the integration of a tenant entity, resulting in the transfer of property usage to a successor institution, constitutes an unauthorized assignment or parting with possession, and whether the involuntary nature of such an integration exempts the successor from the requirements of property laws regarding owner consent.

Ratio Decidendi: The court reasoned that the legislative intent of property protection laws focuses on the factual occurrence of the transfer of possession rather than the circumstances or motivation behind the transfer. Because the original tenant lost its corporate identity and physical control of the property, the occupation by the successor entity without written consent satisfies the conditions necessary for the owner to recover the premises.

Result: Appeal allowed. The order dismissing the recovery plea is reversed, and the original decree for recovery of the premises is restored.

Judgement Key Points

Key Points: - Transfer of possession and tenancy rights to a successor entity following a corporate merger, even if involuntary, constitutes an assignment or parting with possession, entitling the landlord to recover the premises if done without the owner's written consent [p_11.1, p_12, p_14]. - The provisions governing recovery of premises under rent control legislation apply to all modes of transfer of possession, without distinguishing between voluntary and involuntary transfers, and do not exempt regulatory reorganizations or mergers [p_11.1, p_12, p_14]. - The amalgamation of a tenant into a successor entity results in the transfer of tenancy rights and possession to the successor without the landlord's written consent, thereby satisfying the grounds for eviction under Section 14(1)(b) of the rent control act [p_13, p_15].

What is the effect of a corporate merger on tenancy rights under rent control legislation?

How to determine whether a transfer of tenancy rights requires landlord consent?

What is the applicability of rent control provisions to involuntary transfers of possession?

Advocates appeared:
For the 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 the Respondent(s): M/S. Mitter & Mitter Co., AOR

Table of Content
1. historical progression of the litigation and factual background of the tenancy dispute. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9)
2. competing contentions regarding the impact of statutory amalgamation on eviction under section 14(1)(b) of the drc act. (Para 10 , 11)
3. analysis of the eviction provision and interpretation of 'parting with possession' under the rent control law. (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19)
4. determining that statutory amalgamation constitutes a transfer triggering section 14(1)(b), regardless of its involuntary nature. (Para 20 , 21 , 22)

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[In RCA No.22/2000.].

2. Brief facts, shorn of unnecessary details, are as follows:

2.1 The present appellant, British Motor Car Company Limited²[Hereinafter referred to as the ‘landlord’.], 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[Hereinafter referred to as the ‘tenanted premises’.], to Hindustan Commercial Bank⁴[‘HCB’ for short.] (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[Hereinafter referred to as ‘BR Act’.], pursuant to which HCB was amalgamated with Punjab National Bank (Respondent No.2 herein)⁶[‘PNB’ for short.]. The Notification 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[Hereinafter referred to as ‘DRC Act’.]. 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[In E-161/87], 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 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 petitio