2026 INSC 671 C.A. NO. 5714/2012 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5714 OF 2012

BRITISH MOTOR CAR COMPANY (1939) LTD. … APPELLANT(S)

Versus

M/S HINDUSTAN COMMERCIAL BANK LTD.

SINCE HAS BEEN MERGED INTO

PUNJAB NATIONAL BANK & ANR. … RESPONDENT(S)

J U D G M E N T

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 Tribunal

1

.

1

In RCA No.22/2000.

C.A. NO. 5714/2012 2

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

2.1 The present appellant, British Motor Car Company Limited

2

, 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 Delhi

3

, to Hindustan Commercial Bank

4

(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, 1949

5

, pursuant to

which HCB was amalgamated with Punjab National Bank (Respondent

No.2 herein)

6

. 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 1958

7

.

The contention of the landlord was that HCB had sublet/assigned/parted

with possession of the tenanted premises in favour of PNB without

2

Hereinafter referred to as the ‘landlord’.

3

Hereinafter referred to as the ‘tenanted premises’.

4

‘HCB’ for short.

5

Hereinafter referred to as ‘BR Act’.

6

‘PNB’ for short.

7

Hereinafter referred to as ‘DRC Act’.

C.A. NO. 5714/2012 3

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, Delhi

8

, 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 petitioner is bound by the scheme, which is law

providing for ·amalgamation of the two banking companies in

public interest and is, therefore, protected under Article 31-

A(l)(c) of the Constitution of India. The aforesaid scheme being

the statutory one, is law and is binding on the petitioner, leaving

no room for him to invoke the provision of Section 14(1)(b) of

the Act. By the law, in the shape of the scheme of amalgamation

referred above, the respondent no.l has become a tenant under

the petitioner.

12. … Herein the case the scheme was sanctioned by the Central

Government when the same was placed before it at the instance

of Reserve Bank on being sanctioned, the scheme got the status

of a Statute itself. Sub-Section (8) of Section 45 of the Banking

Regulations Act-1949 makes it clear that the scheme was a law

and binding upon all the parties. Therefore, the act of

sanctioning the said scheme by the Central Government was an

act of enacting a statute. Thus the proposition handed down in

M/s Parsh Ram Harnand Rao (supra) are not applicable to the

present controversy.

8

In E-161/87.

C.A. NO. 5714/2012 4

13. … The involuntary act of amalgamation exists in the present

controversy, never existed in M/s General Radio and Appliances

Company (supra). Therefore, the legal proposition laid in the

said case does not come to the rescue of the petitioner. Even

otherwise the scheme of amalgamation being a statutory one, is

binding on the petitioner, Hence, I find that Punjab National

Bank is successor-in-interest, in pursuance of scheme referred

above and there is neither sub-letting nor assignment, nor

parting with possession of the demised. premises in its favour.

Resultatingly the petition under reference deserves dismissal.

The same is hereby dismissed with costs. File be consigned to

record room.”

(emphasis supplied)

2.5 The appellant carried the matter in appeal, which was allowed by the

Additional Rent Control Tribunal in RCA No.22/2000, vide order dated

21.05.2001, and a decree of eviction was passed against the respondent(s).

It was held that:

“9. … I am of the firm view that the case of the landlords

(appellant or respondent as per the two appeals) is just every

clear and simply simple that the tenant (original) did breach the

provisions of Section 14(1)(b) of the Act and the tenant's

defence that it was either no transfer or assignment of tenancy

rights or that, at best, it was an involuntary transfer under a

statute - seems to be just unjust and totally contrary to law as

laid down u/s 14(1)(b) of the Act and also so pronounced by

several landmark decisions of the Hon'ble Supreme Court -

referred by Ld. Counsels for the landlords.

10. The Banking Regulation was formulated and brought in

action in 1949 whereas the Delhi Rent Control Act was

promulgated and put in force in 1958 what stood contained in

Section 45 of the Banking Regulation Act, 1949 stood good till

the time this special enactment i.e. Delhi Rent Control Act, 1958

came in, but, after the coming into operation of DRC Act, while

the Regulation Act, 1949 still stood - Section 14 of the DRC Act

made it crystal clear in its opening lines that "Notwithstanding

anything to the contrary contained in any other law or contract..

....... "· and, thus, all other laws and Acts, any ways concerning

with the rights or liabilities of persons in the capacity as

landlords or tenants, were silenced and made ineffective as and

when these were to be seen and compared in relation to the

rights or liabilities or landlords and tenants vide various sub-

C.A. NO. 5714/2012 5

clauses of Section 14(1) of the Act. Delhi Rent Control Act -

being a special Act and having come into operation subsequent

to the already existing Banking Regulation Act, 1949, thus, was

to prevail over any issue which seemed to be regulating any right

or liability of a person specially specified under sub-clause (b)

of Section. 14(1) of the DRC Act. It is here that scheme of

amalgamation and merger having been notified by Notification

of the Government could not violate the rights of the concerned

landlords until compliance of the requirements of Section

14(1)(b) of the Act had been duly made. Prior written consent of

the landlord was, thus, a must before any subletting, assignment

or parting with possession was proposed to be made irrespective

of the fact that the banking merger and amalgamation scheme

was brought into effect vide the concerned banking statute. It is

true that consent or even simple consultation from individual

citizen is not possible while enacting a new law, but, then, there

ought to be a new statute - speaking very vividly that rights or

liabilities earlier protected under a law stood waived and such

rights or liabilities will now be governed under the new Act. No

such order, law or any amendment to this effect was brought in,

hence, provisions of the special DRC Act were only to prevail.

… … …

11. … The gist of the discussion and observations made above

clearly lead to a sole conclusion that the tenant/alleged sub-

tenant did breach the provisions of Section 14(1)(b) of the Act

by assigning or parting with possession of the demised premises

without obtaining the written consent from the landlords.”

(emphasis supplied)

2.6 Challenging the eviction decree, the respondents herein filed a

Revision Petition under Article 227 of the Constitution of India, being CM

(M) No.485 of 2001, before the High Court. The said petition was allowed

by the High Court, vide impugned judgment and order dated 12.03.2012,

and the eviction decree passed by the Additional Rent Control Tribunal was

set aside. Relying on Asha Rohtagi v. Erstwhile New Bank of India

through General Mananger PNB

9

, the Court held as under:

“8. … it is clear that the merger of HCB with PNB was the

consequence of a statutory step which was taken by a third party

i.e. by the Central Government although admittedly pursuant to

a recommendation of the RBI. This merger was thus an

9

2005 SCC OnLine Del 464.

C.A. NO. 5714/2012 6

involuntary act on the part of the tenant; it was no voluntary act

on his part by virtue of which the PNB came to be operating

from the suit premises; it was a merger consequent to a Gazette

Notification issued by the Central Government over which the

tenant had no control; banking business which was carried out

by HCB was now being carried by PNB as all the rights and

liabilities of the transferor company i.e. HCB had now vested

with the transferee bank which was the PNB. The Gazette

notification dated 18.12.1986 specifically postulates that the

Central Government has sanctioned the scheme under Section

45(7) of the Banking Regulation Act, 1949 and all rights,

powers, claims, interests, authorities, privileges including

movable and immovable properties including premises subject

to all incidents of tenure, of the transferor bank (HCB) shall

stand transferred and become properties/ assets of the transferee

bank (PNB). 9. In these circumstances, the ground of subletting

was rightly held to be not available to the landlord. The

impugned judgment holding otherwise thus suffers from an

illegality. Petition is allowed. Eviction petition stands

dismissed.”

(emphasis supplied)

2.7 Aggrieved thereof, the landlord has preferred the present appeal.

SUBMISSIONS:

3. Mr. Shyam Divan and Mr. Shyam Mehta, learned senior counsel(s),

appearing on behalf of the appellant, have raised the following grounds for

challenge:

(a) Section 14(1)(b) of the DRC Act does not draw any distinction

between voluntary and involuntary transfer of possession of the tenanted

premises. The provision merely contemplates a situation where the tenant

‘sub-let, assigned or otherwise parted with the possession of the whole or

any part of the premises without obtaining the consent in writing’. It was,

thus, contended that upon the amalgamation of HCB with PNB, the

original tenant, i.e., HCB, ceased to exist and the possession along with

C.A. NO. 5714/2012 7

the tenancy rights stood vested in PNB. Consequently, the ingredients of

Section 14(1)(b) were satisfied. In support thereof, reliance was placed on

Singer India Ltd. v. Chander Mohan Chadha

10

and Parasram Harnand

Rao v. Shanti Parsad Narinder Kumar Jain

11

.

(b) Scheme framed by the Reserve Bank of India

12

under Section 45 of

the BR Act is administrative in nature. Reliance was placed on K.I.

Shephard v. Union of India

13

to contend that such a scheme cannot be

accorded the status of a statutory enactment so as to exclude the operation

of Section 14(1)(b) of the DRC Act.

(c) The High Court erred in placing reliance upon Mrs Asha Rohatgi

(supra) while setting aside the eviction decree. It was contended that the

ratio of Asha Rohatgi (supra) would not be applicable to the facts of the

present case since it arose in the context of an amalgamation effected

under Section 9 of the Banking Companies (Acquisition and Transfer of

Undertakings Act, 1980. Reliance was placed on New Bank of India

Employees' Union v. Union of India

14

, wherein this Court clearly

distinguished the schemes framed under Section 9 of the Banking

Companies (Acquisition and Transfer of Undertakings Act and Section 45

of the BR Act, holding the former to be legislative and the latter to be

administrative in nature. Therefore, the ratio of Asha Rohatgi (supra)

cannot be applied to the facts of the present case.

4. Per contra, Mr. Rajesh Kumar Gautam, learned counsel appearing for

the respondent(s) has submitted that:

10

(2004) 7 SCC 1.

11

(1980) 3 SCC 565.

12

‘RBI’ for short.

13

(1987) 4 SCC 431.

14

(1996) 8 SCC 407.

C.A. NO. 5714/2012 8

(a) The amalgamation of HCB with PNB was not the result of any

voluntary act, agreement or assignment entered into by the tenant. Rather,

the same was executed pursuant to a scheme framed by RBI and

sanctioned by the Government of India in exercise of their statutory power

under Section 45 of the BR Act. Therefore, the vesting of tenancy rights

in PNB occurred as a consequence of a statutory scheme.

(b) In support of the aforesaid contention, reliance was placed on G.

Sridharamurti v. Hindustan Petroleum Corpn. Ltd.

15

; Hindustan

Petroleum Corpn. Ltd. v. Shyam Coop. Housing Society

16

and Mrs Asha

Rohatgi (supra), wherein it was held that where tenancy rights stand

vested in another entity by virtue of a statute, such vesting constitutes a

transfer by ‘statutory operation’ and not by a ‘voluntary act of assignment

of interest intra-vivos’.

OUR VIEW

5. We have heard the senior learned counsel(s) for the appellant and learned

counsel for the respondent(s) and carefully perused the written submissions

placed on record. The short question that falls for our consideration is whether

the amalgamation of HCB with PNB, effected pursuant to the scheme framed

under the BR Act, attracts Section 14(1)(b) of the DRC Act or not?

6. For ready reference, it would be apposite to reproduce Section 14(1)(b) of

the DRC Act, which reads as under:

“14. Protection of tenant against eviction.— (1) Notwithstanding

anything to the contrary contained in any other law or contract, no order

15

(1995) 6 SCC 605.

16

(1988) 4 SCC 747.

C.A. NO. 5714/2012 9

or decree for the recovery of possession of any premises shall be made

by any court or Controller in favour of the landlord against a tenant:

Provided that the Controller may, on an application made to him in the

prescribed manner, make an order for the recovery of possession of the

premises on one or more of the following grounds only, namely:—

… … …

(b) that the tenant has, on or after the 9th day of June, 1952, sub-let,

assigned or otherwise parted with the possession of the whole or any

part of the premises without obtaining the consent in writing of the

landlord;”

(emphasis supplied)

7. A plain reading of this provision shows that the following ingredients must

be satisfied before an order of eviction can be passed under Section 14(1)(b):

(1) The tenant has sub-let or assigned or parted with the possession of

the whole or any part of the premises; and

(2) Such sub-letting, assignment or parting with possession has been

done without obtaining the written consent of the landlord.

[See: Vaishakhi Ram v. Sanjeev Kumar Bhatiani

17

]

8. The parametric content and the meaning of the words ‘parted with

possession of whole or any part of the premises’ have come up for consideration

before this Court in Jagan Nath v. Chander Bhan

18

, wherein it was held that:

“6. … It is well settled that parting with possession meant giving

possession to persons other than those to whom possession had been

given by the lease and the parting with possession must have been by

the tenant; user by other person is not parting with possession so long

as the tenant retains the legal possession himself, or in other words 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. So long as the tenant retains the right to possession there

17

(2008) 14 SCC 356.

18

(1988) 3 SCC 57.

C.A. NO. 5714/2012 10

is no parting with possession in terms of clause (b) of Section 14(1) of

the Act.”

[See also: Shalimar Tar Products Ltd. v. H.C. Sharma

19

and Celina Coelho

Pereira v. Ulhas Mahabaleshwar Kholkar

20

]

9. In the present case, the amalgamation of HCB with PNB, was effected

pursuant to a scheme framed under Section 45 of the BR Act. As a consequence,

thereof, all assets, rights, liabilities and obligations of HCB stood vested in PNB

and the former ceased to exist.

10. Before adverting to the contentions raised at the Bar, it would be apposite

to briefly discuss the concept of amalgamation. The term ‘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. The true effect and character of an

amalgamation largely depends on the terms of the merger scheme. The said

position was iterated by a three-judge Bench of this Court in Singer India Ltd.

(supra), in the following terms:

“7. The provision for facilitating reconstruction and amalgamation of

companies is made under Section 394 of the Companies Act. In an

amalgamation, two or more companies are fused into one by merger or

by one taking over the other. Reconstruction or amalgamation has no

precise legal meaning. In Halsbury's Laws of England (4th Edn., Vol.

7), para 1539, the attributes of amalgamation of companies have been

stated as under:

“Amalgamation is a blending of two or more existing

undertakings into one undertaking, the shareholders of each

blending company becoming substantially the shareholders

in the company which is to carry on the blended

undertakings. There may be amalgamation either by the

transfer of two or more undertakings to a new company, or

by the transfer of one or more undertakings to an existing

company. Strictly ‘amalgamation’ does not, it seems, cover

19

(1988) 1 SCC 70.

20

(2010) 1 SCC 217.

C.A. NO. 5714/2012 11

the mere acquisition by a company of the share capital of

other companies which remain in existence and continue

their undertakings, but the context to which the term is used

may show that it is intended to include such an acquisition.

The question whether a winding up is for the purposes of

reconstruction or amalgamation depends upon the whole of

the circumstances of the winding up.”

8. In Saraswati Industrial Syndicate Ltd. v. CIT [1990 Supp SCC 675 :

AIR 1991 SC 70] (para 6) it has been held that there can be no doubt

that when two companies amalgamate and merge into one, the

transferor company loses its identity as it ceases to have its business.

However, their respective rights or liabilities are determined under the

Scheme of Amalgamation, but the corporate identity of the transferor

company ceases to exist with effect from the date the amalgamation is

made effective. …”

(emphasis supplied)

11. In the context of rent control legislation, the effect of amalgamation on the

tenancy rights, i.e., whether it results in sub-letting, assignment or parting with

possession or not, has been considered by this Court in various judicial

pronouncements.

11.1 In Parasram Harnand Rao (supra), while interpreting Section

14(1)(b) of the DRC Act, this Court held that the provision is of wide

amplitude and covers not merely subletting but also assignment and every

other mode by which possession of the tenanted premises is parted.

Rejecting the contention that an involuntary transfer of tenanted premises

would fall outside the ambit of this provision, this Court held as under:

“6. … Secondly, in our opinion, the Official Liquidator had merely

stepped into the shoes of Laxmi Bank which was the original tenant

and even if the Official Liquidator had transferred the tenancy

interest to Respondent 1 under the orders of the court, it was on

behalf of the original tenant. It was undoubtedly a voluntary sale

which clearly fell within the mischief of Section 14(1)(b) of the

Delhi Rent Control Act. Assuming that the sale by the Official

Liquidator was an involuntary sale, then it undoubtedly became an

assignment as provided for by Section 14(1)(b) of Delhi Rent

Control Act. …

C.A. NO. 5714/2012 12

7. The language of Section 14(1)(b) is wide enough not only to

include any sublease but even an assignment or any other mode by

which possession of the tenanted premises is parted. In view of the

wide amplitude of Section 14(1)(b) we are clearly of the opinion that

it does not exclude even an involuntary sale. …”

(emphasis supplied)

[Followed in: Cox & Kings Ltd. v. Chander Malhotra

21

and General Radio

& Appliances Co. Ltd. v. M.A. Khader

22

]

11.2 In the same vein, this Court in Singer India Ltd. (supra), held that

the applicability of Section 14(1)(b) of the DRC Act depends upon the

occurrence of a factual situation and not upon the circumstances that warrant

such transfers. The question as to whether the transfer is voluntary or

involuntary and the reasons necessitating such transfer are wholly irrelevant.

The relevant observations read as under:

“5. … There is no ambiguity in the section and it clearly says that

if, without obtaining the consent in writing of the landlord the

tenant has, on or after 9-6-1952 (i) sub-let, or (ii) assigned, or (iii)

otherwise parted with the possession of the whole or any part of the

premises, he would be liable for eviction. The applicability of the

section depends upon occurrence of a factual situation, namely,

sub-letting or assignment or otherwise parting with possession of

the whole or any part of the premises by the tenant. Whether it is a

voluntary act of the tenant or otherwise and also the reasons for

doing so are wholly irrelevant and can have no bearing. This view

finds support from an earlier decision rendered in Parasram

Harnand Rao v. Shanti Parsad Narinder Kumar Jain [(1980) 3 SCC

565 : AIR 1980 SC 1655] wherein Section 14(1)(b) of the Delhi

Rent Control Act came up for consideration. … The Court further

held that the language of Section 14(1)(b) is wide enough not only

to include any sub-lease but even an assignment or any other mode

by which possession of the tenanted premises is parted with and the

provision does not exclude even an involuntary sale.

… … …

21

(1997) 2 SCC 687.

22

(1986) 2 SCC 656.

C.A. NO. 5714/2012 13

11. These cases clearly hold that even if there is an order of a court

sanctioning the Scheme of Amalgamation under Sections 391 and

394 of the Companies Act whereunder the leases, rights of tenancy

or occupancy of the transferor company get vested in and become

the property of the transferee company, it would make no

difference insofar as the applicability of Section 14(1)(b) is

concerned, as the Act does not make any exception in favour of a

lessee who may have adopted such a course of action in order to

secure compliance with law.”

(emphasis supplied)

[See also: Speedline Agencies v. T. Stanes & Co. Ltd.

23

]

12. The exposition of law emerging from the aforesaid decisions is clear.

Section 14(1)(b) of the DRC Act 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 the possession of the tenanted premises,

together with the accompanying rights, passes to an entity other than the original

tenant without the written consent of the landlord, and the tenant losing its

identity and control of possession of the tenanted premises, Section 14(1)(b) of

the DRC Act stands automatically attracted. Therefore, what is material is that –

(a) there is a transfer of tenancy rights and possession of the tenanted premises;

and (b) such transfer is done without the written consent of the landlord.

13. In the present case, it is undisputed that upon the amalgamation taking

effect, on 19.12.1986, the original tenant, viz. HCB ceased to exist and all its

rights, liabilities, assets and interests, including the tenancy rights qua the

tenanted premises stood vested in PNB. As a result, HCB parted with the

possession of the tenanted premises and PNB came to occupy the same. It is

equally undisputed that such a transfer took place without the written consent of

23

(2010) 6 SCC 257.

C.A. NO. 5714/2012 14

the landlord. Therefore, both the ingredients of Section 14(1)(b) of the DRC Act,

as stated in Para 7 (supra), stood fully met.

14. The respondent(s), per contra, have sought to distinguish the aforesaid line

of judicial precedents merely because they arose in the context of amalgamations

effected under Sections 391 r/w Section 394 of the Companies Act 1956, where

the process was initiated by the companies themselves and was thus voluntary in

nature. According to the respondent(s), since the amalgamation in the present case

was effected pursuant to a Gazette Notification and a scheme prepared by RBI

under Section 45 of the BR Act, the transfer of tenancy rights and possession must

be regarded as involuntary and falling outside the ambit of Section 14(1)(b).

However, we are unable to agree with this contention and find it to be

unsustainable in law. The ratio of Parasram Harnand Rao (supra) and Singer

India Ltd. (supra) makes it abundantly clear that the applicability of Section

14(1)(b) upon occurrence of a factual situation, namely, sub-letting or assignment

or otherwise parting with possession of the whole or any part of the premises by

the tenant. The said provision does not distinguish between voluntary and

involuntary transfers, nor does it carve out any exception in favour of transfers

effected pursuant to a scheme of amalgamation or to secure compliance with law.

Therefore, where, upon amalgamation effected under Section 45 of the BR Act,

the tenancy rights vest in another entity and possession qua tenanted premises

passes to it without the written consent of the landlord, the ingredients of Section

14(1)(b) shall stand fully satisfied. The reasons necessitating such transfer or

whether it was voluntary or involuntary, are wholly immaterial for the purposes

of attracting the said provision.

15. Therefore, in view of the law laid down in Parasram Harnand Rao (supra)

and Singer India Ltd. (supra), the ground of eviction under Section 14(1)(b) of

the DRC Act is clearly made out in the facts of the present case. Our conclusion

C.A. NO. 5714/2012 15

is further fortified by the decision of this Court in Bhairon Sahai v. Bishamber

Dayal

24

, wherein it was held that “Parting with the possession of the premises

without consent of the landlord was sufficient for eviction of the tenant without

getting into the question of subletting or assignment.”

16. The respondent(s) further contended that the amalgamation in the present

case was triggered pursuant to a scheme framed by RBI in exercise of its

‘statutory power’ under Section 45 of the BR Act. Such a scheme-framing

process, according to them, is legislative in nature. It was submitted that since the

tenancy rights stood vested in PNB pursuant to the operation of a statutory

scheme, the said transfer could not be equated with assignment or parting with

the possession within the meaning of Section 14(1)(b) of the DRC Act. In our

considered view, such a contention is misconceived.

17. This Court in K.I. Shephard (supra) has categorically held that the scheme-

making process under Section 45 of the BR Act is administrative in nature and

not legislative. The Court held that merely because a scheme framed under

Section 45 of the BR Act is required to be sanctioned by the Central Government

and placed before both the Houses of Parliament, it does not become legislative

in nature. It was observed as under:

“9. … Learned Counsel for RBI and the transferee banks have taken the

stand that the scheme-making process under Section 45 is legislative in

character and, therefore, outside the purview of the ambit of natural

justice under the protective umbrella whereof the need to put the

excluded employees to notice or enquiry arose. It is well settled that

natural justice will not be employed in the exercise of legislative power

… But is the scheme-making process legislative? Power has been

conferred on the RBI in certain situations to take steps for applying to

the Central Government for an order of moratorium and during the

period of moratorium to propose either reconstruction or amalgamation

of the banking company. A scheme for the purposes contemplated has

to be framed by RBI and placed before the Central Government for

24

(2017) 8 SCC 492

C.A. NO. 5714/2012 16

sanction. Power has been vested in the Central Government in terms of

what is ordinarily known as a Henry VIII clause for making orders for

removal of difficulties. Section 45(11) requires that copies of the

schemes as also such orders made by the Central Government are to be

placed before both Houses of Parliament. We do not think this

requirement makes the exercise in regard to schemes a legislative

process. It is not necessary to go to any other authority as the very

decision relied upon by Mr Salve in the case of Cynamide India

Ltd [(1987) 2 SCC 720] lays down the test. In para 7 of the judgment it

has been indicated: (SCC pp. 735-36)

“Any attempt to draw a distinct line between legislative and

administrative functions, it has been said, is ‘difficult in

theory and impossible in practice’. Though difficult, it is

necessary that the line must sometimes be drawn as

different legal rights and consequences may ensue. The

distinction between the two has usually been expressed as

‘one between the general and the particular’. ‘A legislative

act is the creation and promulgation of a general rule of

conduct without reference to particular cases; an

administrative act is the making and issue of a specific

direction or the application of a general rule to a particular

case in accordance with the requirements of policy’.

‘Legislation is the process of formulating a general rule of

conduct without reference to particular cases and usually

operating in future; administration is the process of

performing particular acts, of issuing particular orders or of

making decisions which apply general rules to particular

cases.’ It has also been said: ‘Rule-making is normally

directed towards the formulation of requirements having a

general application to all members of a broadly identifiable

class’ while, ‘an adjudication, on the other hand, applies to

specific individuals or situations’. But, this is only a broad

distinction, not necessarily always true.”

Applying these tests it is difficult to accept Mr Salve's contention that

the framing of the scheme under Section 45 involves a legislative

process. There are similar statutory provisions which require placing of

material before the two Houses of Parliament yet not involving any

legislative activity. The fact that orders made by the Central

Government for removing difficulties as contemplated under sub-

clause (10) are also to be placed before the two Houses of Parliament

makes it abundantly clear that the placing of the scheme before the two

Houses is not a relevant test for making the scheme-framing process

legislative. We accordingly hold that there is no force in the contention

of Mr Salve that the process being legislative, rules of natural justice

were not applicable.”

(emphasis supplied)

C.A. NO. 5714/2012 17

Thus, in view of the above, the amalgamation scheme framed by the Reserve Bank

of India, in exercise of power under Section 45(4) of the BR Act, cannot be

accorded the status of a statutory enactment so as to override the operation of

Section 14(1)(b) of the DRC Act.

18. The decisions relied upon by the respondent(s), viz., G. Sridharamurti

(supra) and Shyam Coop. Housing Society (supra) are clearly distinguishable and

have no application to the facts of the present case. These decisions were rendered

in the context of the Esso (Acquisition of Undertakings in India) Act, 1974, a

legislative enactment which expressly provided for the vesting of tenancy rights

in the Central Government by operation of Sections 5 and 7 thereof. By virtue of

these statutory provisions, the Central Government was held to have become a

statutory tenant. The present case, however, stands on a completely different

footing. Here, we are dealing with a scheme of amalgamation effected under

Section 45 of the BR Act which, as held in K.I. Shephard (supra), is not a

legislative enactment. The aforesaid decisions, therefore, lend no support to the

case of the respondent(s).

19. Additionally, the respondent(s) have placed reliance on Ganesh Bank of

Kurundwad Ltd. v. Union of India

25

, to argue that the scheme made by RBI, in

exercise of Section 45 of the BR Act, is made in public interest. However, in our

opinion, since we have held that the minute possession is parted with Section

14(1)(b) applies irrespective, no occasion arises to consider any other factor,

including the one raised in Ganesh Bank of Kurundwad Ltd. (supra).

20. We also find merit in the appellant’s contention that the reliance placed on

Mrs Asha Rohatgi (supra) by the High Court was misplaced. The said decision

25

(2006) 10 SCC 645.

C.A. NO. 5714/2012 18

arose in the context of an amalgamation effected under Section 9 of the Banking

Companies (Acquisition and Transfer of Undertakings) Act 1980

26

. In New Bank

of India Employees' Union (supra), this Court drew a clear distinction between

the schemes framed under Section 9 of the Acquisition Act and those framed

under Section 45 of the BR Act. While a scheme framed under Section 9 of the

Acquisition Act was held to be legislative, the one framed under Section 45 of the

BR Act was held to be administrative in nature. The two aforementioned

provisions were, thus, held not to be pari materia and distinctive in nature. Given

the difference in language between the two provisions, namely, Section 45 of the

BR Act and Section 9 of the Acquisition Act, this Court distinguished the

judgment of K.I. Shephard (supra) and held as thus:

“32. … The High Court relied upon the decision in Shephard case

[(1987) 4 SCC 431 : 1987 SCC (L&S) 438 : (1988) 1 SCR 188] and

came to hold that the provisions of Section 45 of the Banking

Regulation Act being in pari materia with Section 9 of the Banking

Companies (Acquisition and Transfer of Undertakings) Act, 1980, and

the scheme framed under Section 45 of the Banking Regulation Act,

1949 having been held by this Court to be not legislative, the scheme

framed under the Acquisition Act as in the present case, must also be

held to be not a legislative one. It is undisputed that in Shephard case

… the amalgamation was of a private bank with a nationalised bank and

the provisions of the Banking Regulation Act, 1949 applied. This Court

in Shephard case [(1987) 4 SCC 431 : 1987 SCC (L&S) 438 : (1988) 1

SCR 188] on examining Section 45(11) of the Banking Regulation Act,

1949 came to hold that merely because a scheme framed is required to

be laid before both the Houses of Parliament after the same has been

sanctioned by the Central Government the scheme cannot be held to be

legislative in nature. But in our considered opinion the High Court has

failed to notice the fundamental distinction between the provisions of

Section 45 of the Banking Regulation Act, 1949 and Section 9 of the

Acquisition Act. Under Section 9 of the Acquisition Act under which

Act the impugned scheme has been framed, every scheme framed by

the Central Government has to be laid before each House of Parliament

for a total period of 30 days and Parliament has the power to agree to

the scheme and making any modification or in giving to a decision that

the scheme should not be made and it is only thereafter the scheme has

the effect either in the modified form or does not agree (sic). The

26

‘Acquisition Act’ for short.

C.A. NO. 5714/2012 19

essential distinction between the two provisions therefore, is that

whereas under the Banking Regulation Act, 1949 the scheme framed

has merely to be placed before Parliament and nothing further but under

the Acquisition Act the scheme becomes effective only after the same

is placed before both the Houses of Parliament and after Parliament

makes such modification and agrees to the scheme. In this view of the

matter the decision of this Court in Shephard case [(1987) 4 SCC 431 :

1987 SCC (L&S) 438 : (1988) 1 SCR 188] has no application to a

scheme framed under the provisions of the Acquisition Act and in our

considered opinion, a scheme framed under Section 9 of the Banking

Companies Acquisition and Transfer of Undertakings Act, 1980, is a

legislative one. The High Court was in error in holding the scheme not

to be a legislative one.”

(emphasis supplied)

21. In view of the aforesaid discussion, we hold that the amalgamation of the

original tenant HCB with PNB rendered PNB liable to be evicted from the

tenanted premises under Section 14(1)(b) of the DRC Act. The appeal is,

accordingly, allowed. 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, is

set aside. The judgment and order dated 21.05.2001 passed by the Additional Rent

Control Tribunal in RCA No.22/2000, whereby the suit for eviction was decreed,

is restored.

22. Since the respondent(s) have been in possession of the tenanted premises

for a long time, we grant a time till 31

st

January 2027 to deliver a peaceful and

vacant possession of the tenanted premises to the appellant. The respondent(s)

will furnish an undertaking before this Court to the above effect within a period

of four weeks from the date of this judgment. The respondent(s) shall continue to

pay rent on contractual terms/fixed by the Courts below. In case the respondent(s)

fail to do so, then the appellant will be at liberty to proceed for taking possession

in accordance with law.

C.A. NO. 5714/2012 20

Pending application(s), if any, shall stand disposed of.

……………………………………………J.

(SANJAY KAROL)

……….…………………………………….J.

(NONGMEIKAPAM KOTISWAR SINGH )

NEW DELHI;

JULY 09, 2026