The Tenant Did Not Move Out. It Ceased to Exist.

What happened

Hindustan Commercial Bank was the original tenant of premises in Delhi. It was amalgamated with Punjab National Bank under a scheme framed pursuant to the Banking Regulation Act, 1949. All assets, rights, liabilities and obligations of HCB stood vested in PNB, and PNB came into possession of the tenanted premises.

The landlord sought eviction under Section 14(1)(b) read with Section 14(1)(j) of the Delhi Rent Control Act, contending that HCB had sublet, assigned or otherwise parted with possession in favour of PNB without its written consent, so PNB was an unauthorised subtenant liable to be evicted.

The Additional Rent Controller dismissed the eviction petition. On appeal the Rent Control Tribunal passed a decree of eviction. In revision the High Court set that decree aside. The landlord came to the Supreme Court.

What amalgamation actually does

The Court started with what the transaction is, rather than what it is called.

‘Amalgamation’ denotes the fusion of two or more companies into one by merger or by one taking over the other. When two companies amalgamate and merge into one, the transferor company ceases to exist as a separate entity.

That is the pivot. The tenant did not assign its lease to a stranger and walk away; it stopped existing. But the consequence for the premises is the same — possession, and the tenancy rights attached to it, ended up with a different legal person from the one the landlord contracted with.

How wide Section 14(1)(b) is

The respondents’ position depended on reading Section 14(1)(b) narrowly, as directed at conventional subletting and assignment rather than at a statutory vesting.

The Court read it the other way. The provision is wide enough to encompass every mode by which possession or tenancy rights of the demised premises are transferred from the original tenant to another entity.

Once possession of the tenanted premises together with the accompanying rights passes from the original tenant to another entity, the section is attracted. The mechanism producing the transfer — a private sublease, an assignment, or a scheme of amalgamation under banking legislation — does not change the result.

Why this matters beyond banks

The facts are a bank amalgamation, but the reasoning is about corporate reorganisation generally. Any restructuring that puts a different legal entity into possession of tenanted premises engages the same analysis, and a scheme approved under a special statute does not by itself answer the rent control question.

The practical point for a corporate tenant is that the consent clause in the lease is not a formality to be tidied up after a merger closes. On this reasoning, if written consent was required and not obtained, the landlord has a ground for eviction that the reorganisation itself created.

Who argued it

Frequently asked

Does a bank merger amount to subletting under the Delhi Rent Control Act?

On this judgment it can. Section 14(1)(b) is wide enough to encompass every mode by which possession or tenancy rights are transferred from the original tenant to another entity, and an amalgamation that vests the premises in the transferee bank falls within it.

What happens to the original tenant on amalgamation?

It ceases to exist. The Court described amalgamation as the fusion of two or more companies into one, by merger or by one taking over the other, with the transferor company ceasing to exist as a separate entity.

Does a scheme under the Banking Regulation Act protect the tenancy?

It did not here. The Court's reasoning turned on the effect of the transaction — possession and the accompanying rights passing to a different entity — rather than on the statutory mechanism that produced it.

Is the landlord's written consent still the key question?

Yes. The eviction was sought on the footing that the original tenant had sublet, assigned or parted with possession without the landlord's written consent, which is what Section 14(1)(b) is directed at.

Does this apply outside banking?

The facts involve a bank amalgamation, but the reasoning is about any transfer of possession and tenancy rights from the original tenant to another entity, so corporate reorganisations generally should be assessed the same way.

If a corporate tenant is restructuring

1. Read the consent clause in every lease before the scheme is sanctioned, not after it completes.
2. Do not assume a scheme under a special statute overrides rent control. The Court treated the mechanism of transfer as irrelevant to whether Section 14(1)(b) is attracted.
3. Get the landlord's written consent in writing, specifically referring to the amalgamation and to the entity that will hold possession.
4. If you are the landlord, check who is actually in possession and under what instrument — the tenant on the rent receipt may no longer exist.
5. Where consent was not obtained, consider the limitation position early: the transfer happens on the scheme taking effect, not when the landlord notices.

Source. Supreme Court of India, 2026 INSC 671, [2026] 7 S.C.R. 581, Civil Appeal No. 5714 of 2012, decided 9 July 2026 by Justice Sanjay Karol and companion Judge. This explainer is written from the judgment text as reported.

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