Delhi High Court

Hindustan Commercial Bank Ltd & ... vs British Motor Car Company (1934) ... on 12 March, 2012

Author: Indermeet Kaur

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                             Date of Judgment: 12.03.2012

+                    CM (M) No. 485/2001


HINDUSTAN COMMERCIAL BANK LTD. & ANR.       ..... Petitioner
                Through: Mr. Y.P. Chandana and
                         Mr. Pankaj Nagpal, Advocates.

                     versus

BRITISH MOTOR CAR COMPANY (1934) LTD.       ..... Respondent
                  Through: Mr. Sanjay Jain, Sr. Adv. with
                           Ms. S.K. Gandhi, Ms. Ruchi Jain
                           and Ms. N. Gupta, Advocate.

      CORAM:
      HON'BLE MS. JUSTICE INDERMEET KAUR


INDERMEET KAUR, J. (Oral)

1 The impugned judgment is dated 21.05.2001. It had disposed of

two appeals, one filed by the landlord i.e. British Motor Co. Ltd. and the

other by the tenant i.e. Hindustan Commercial Bank Ltd. (HCB). The

eviction petition filed by the landlord being EP No.229/1988 had been

dismissed by the Additional Rent Controller (ARC) vide judgment dated

03.11.1995. Appeal filed by the landlord was allowed; eviction petition

stood decreed. This was on the ground of subletting as contained in

Section 14 (1)(b) of the Delhi Rent Control Act (DRCA). Tenant is

aggrieved by this finding.

2 Briefly stated the facts are that the landlord was aggrieved by an

act of subletting of his tenant M/s HCB. Contention was that the tenant

had sublet/assigned/parted with possession of the suit premises in favour

of Punjab National Bank (PNB) without obtaining the written consent of

the petitioner. It is not in dispute that M/s HCB had since been

amalgamated with PNB by virtue of a Gazette Notification issued by the

Ministry of Finance (Banking Division) Govt. of India; necessary effect

was that M/s HCB became non-existent and its complete power and

control vested with the transferee company i.e. PNB. Contention of the

landlord was that this merger amounted to a subletting and the ground

under Section 14 (1)(b) of the Delhi Rent Control Act (DRCA) became

available to him. The ARC had dismissed his petition. The RCT had

reversed this finding.

3 The only question which now has to be answered by this Court is

whether the merger of M/s HCB with the PNB by virtue of a Gazette

Notification dated 18.12.1986 issued by the Government of India under

Section 45 (7) of the Banking Regulation Act, 1949 sanctioning the

scheme of amalgamation of the HCB (Kanpur) with the PNB amounted

to a subletting under Section 14 (1)(b) of the DRCA or whether being an

involuntary act, it did not attract the provisions of Section 14 (1)(b) of

the said Act.

4 On behalf of the tenant, it has been contended that the impugned

judgment suffers from an illegality as the view taken in the impugned

judgment has now been set at rest by the judgment of this Court reported

in Asha Rohtagi and Others Vs. Erstwhile New Bank of India through

General Manager PNB 119 (2005) DLT 538 which was followed by a

subsequent Division Bench judgment of this Court in Allahabad Bank

Vs. M/s K. Kishore (HUF) in RFA No. 15/2006 dated 23.07.2007.

5 These arguments have been refuted. Contention of the learned

counsel for the respondent is that the impugned judgment in no manner

suffers from any infirmity; submission being that the ratio of Asha

Rohtagi (Supra) and Allahabad Bank (Supra) would not be applicable to

the factual scenario of the instant case. Learned counsel for the

respondent submits that a clear distinction has to be drawn between the

an administrative act and a legislative enactment; the notification issued

under Section 45 (7) of the Banking Regulation Act, 1949 and a

notification under Section 9 of the Banking Acquisition Act are not

paramateria one another; reliance has been placed upon AIR 1988

Supreme Court 686 K.I. Shephard and Others Vs. Union of India and

others as also the judgment of the Apex Court reported in AIR 1996

Supreme Court 3208 New Bank of India Employees Union and another

Vs. Union of India and others where the ratio of K.I. Shephard (Supra)

had been quoted with approval; contention being that a legislative act is

the creation and promulgation of a general rule of conduct without

reference to a particular case; 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; contention

being that the notification issued in the present case which was a

notification under Section 45 (7) of the Banking Regulation Act, 1945

was only an administrative process; such an administrative process is

distinct from a legislative enactment; the presumption of involuntariness

on the part of the tenant could not have been presumed; further

submission being that this distinction between the legislative act and

administrative process has not been noted in either of the two judgments

relied upon by learned counsel for the petitioner in Asha Rohtagi

(Supra) and Allahabad Bank (Supra); submission being that by applying

the ratio of the aforenoted judgment of K.I. Shephard (supra) and New

Bank of India Employees Union (supra) coupled with the judgment of

the Apex Court reported in (2004) 7 SCC 1 Singer India Ltd. Vs.

Chander Mohan Chadha and others, it is clear that unless and until

there is a protection available to the tenant under a statutory enactment;

the original tenant in this case being the HCB and not the PNB, tenanted

premises now in occupation of the PNB amounted to a subletting.

6. Arguments have been afore-noted. This matter now stands settled

in view of the judgment of a Bench of this Court reported in Asha

Rohtagi and Others Vs. Erstwhile New Bank of India through General

Manager PNB 119 (2005) DLT 538; appeal filed against this judgment

has also been dismissed by the Apex Court on 29.08.2005. This was a

case where a similar Notification under Section 45 (7) of the Banking

Regulation Act had been issued; this was a merger of New Bank of

India with the PNB; similar contentions had been raised and were noted;

they were repelled; the finding of the Bench of this Court was returned

as follows:-

"9. In the present case the tenancy rights have been conferred on the PNB by statute namely clause 4(2) of the notification dated 4.9.1993 promulgated by Central Government under section 9 of the Banking Companies (Acquisition and Transfer of Undertaking) Act 1980 which scheme is legislative in character. It does not amount to merger of two companies under the provisions of Companies Act. Therefore the ratio of M/s Parasram Harnand Rao (Supra); M/s General Radio and Appliances Co. Ltd. and Ors. and Cox and Kings Ltd. and Anr. v. Chander Malhotra (Smt.) will not apply to the facts of the present case. One more decision which must be taken note of is a three judges bench decision in the case of G. Sridharamurti v. Hindustan Petroleum Corporation Ltd. and Anr." MANU/SC/0067/1996 : AIR1996SC264 . The facts of the case were that an open space, was in the possession of Esso company pursuant to a lease dated 17.7.1969 granted by the appellant. Esso company was merged into respondent corporation on 14.3.197. The appellant filed eviction petition under section 21(1)(f) of the Karnataka Rent Control on the ground of sub-letting, assignment parting with possession . The courts below dismissed the application on the ground that the Esso company had not sub-set the demised premises but by virtue of statutory provisions under the Esso Act, the respondent-corporation stood transposed as a tenant which is an involuntary act pursuant to section 7 of the Act and notwithstanding the specific embargo created under Section 21(1)(f) of the Act, it cannot be construed to be a case of sub- letting. The High Court also reached the same conclusion. In appeal Supreme Court upheld the order of the High Court and took note of section 5(1) of the Esso Act and observed that pre-existing tenancy rights held by Esso company with the appellant initially stood transferred and vested in the Central Government, and thereafter, by operation of section 7 of the Esso Act; the said rights in turn stood transposed and vested in

the government company as if the government company initially became the tenant of the appellant- landlord. On the Esso Act coming into force, by operation of sections 5 and 7 of that Act, the respondent corporation became statutory tenant and thereby it cannot be construed to be an assignment of tenancy rights, which the appellant landlord had entered into with the Esso company. The ratio of Parasram Harnand Rao (supra) was distinguished with the observation that in that case the Official Liquidator had sold the tenancy rights in favor of the respondents and though the same was made in favor of the respondent through court, it amounted to transfer of an interest by the tenant.

10. It will thus be seen that consistent view of the Supreme court has been that take over of a company by the Central Government under a statute stands on a different footing then merger of two companies under the provisions of companies Act. Vesting of tenancy rights in the Central Government or a Government company by virtue of the provisions of the statute was upheld by the apex court in the case of HPCL case (supra) and this decision was cited with approval in the case of Singer India Ltd. (Supra). Whereas in cases of later category i.e transfer of tenancy rights under an scheme of amalgamation under provisions of company Act has been consistently held to be sub letting, assignment or parting with possession, in cases falling in the former category viz. where tenancy rights of one company are taken over by the Government and are conferred on some other government company under a statute have never been held to tantamount to sub letting, assignment or parting with possession. The case in hand falls in this category. As already noticed leasehold rights on PNB have been conferred by clause 4 (2) of the notification dated 4.9.93 issued under section 9 of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980 which

scheme is legislative in character. It cannot fall in the category of any voluntary or involuntary transfer of interest by the tenant. Therefore, it does not amount to sub-letting assignment or parting with possession of tenancy rights by the tenant. The impugned order passed by the learned Tribunal Therefore does not call for any interference."

7 In the case of Allahabad Bank (supra) the facts were identical;

this was a merger between a private bank with a Government bank;

private bank being the United Indian Bank and the Government bank

being the PNB. In this context, the Division Bench of this Court has

noted as under:-

"In contradistinction, by notification issued under Section 45 of the Banking Regulation Act, scheme is foisted upon the shareholders, creditors and other stakeholders. In a case like this, the respondents would not be entitled to say that there is a breach of clause (8) of the Sub-lease on the part of UIB which stipulated as under:- 8 The sub-tenant shall not assign or part with the possession of the flat or any part thereof of any person or any basis whatsoever and will use the same entirely for its own banking business.

It is not the voluntary act of the UIB parting with possession of the suit premises but a consequence of statutory step taken by a third party, namely the Central Government in the instant case making appellant bank as successor-in-interest. Moreover, it cannot be denied that the premises continued to be used for banking business by the appellant Bank, including the one which was hitherto carried out by the

UIB.

We are, therefore, of the opinion that the learned Single Judge was right in deciding issue No. 1 and holding that the appellant bank was not in unauthorized occupation when it got possession of the suit property as a result of the amalgamation of UIB with the appellant bank."

8 Applying the ratio of the aforenoted judgments, 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 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