Associated Hotels of India Ltd. v. R.N. Kapoor

Supreme Court of India · 19 May 1959 · 3 judges · 1959 AIR 1262; 1960 SCR (1) 368

By majority, two cloak rooms in the Imperial Hotel let to a hair-dresser were 'rooms in a hotel' excluded from the Delhi and Ajmer-Merwara Rent Control Act, 1947, so no standard rent could be fixed; the appeal was allowed.

Facts

The appellant owned the Imperial Hotel, New Delhi. Under a deed dated May 1, 1949, described as a licence, R.N. Kapoor occupied the Ladies' and Gents' cloak rooms to carry on a hair-dressing business, paying Rs. 9,600 a year, later reduced to Rs. 8,400. He applied under Section 7(1) of the Delhi and Ajmer-Merwara Rent Control Act, 1947 for fixation of standard rent. The Rent Controller fixed Rs. 94 per month. The District Judge reversed, holding the rooms were rooms in a hotel and the deed a licence. The Punjab High Court in revision held the deed a lease and the rooms outside the exemption, and restored the Rent Controller's order. The hotel appealed by special leave; the respondent died pending the appeal and his legal representatives did not appear.

Questions before the Court

Did the deed of May 1, 1949 create a lease or a licence?
Were the cloak rooms 'a room in a hotel' within Section 2(b) of the Delhi and Ajmer-Merwara Rent Control Act, 1947, and so excluded from the Act?

What the Court held

The rooms were rooms in a hotel within Section 2(b) and outside the Act, so the Rent Controller could not fix standard rent and the appeal was allowed (S.K. Das and Sarkar, JJ.).
S.K. Das, J.: a room in a hotel must be part of the hotel physically and its use must be connected with the general purpose of the hotel. A hair-dresser's saloon is one of the amenities a modern hotel provides.
Sarkar, J.: the words take their plain meaning, so a room in a hotel is any room in a building in the whole of which the business of a hotel is run. He did not decide the lease or licence question.
Lease or licence (Subba Rao, J., with whom S.K. Das, J. agreed): substance prevails over form; the test is the parties' intention; a document creating an interest in property is a lease, one merely permitting use while legal possession stays with the owner is a licence; exclusive possession is prima facie evidence of tenancy. The deed was a lease.

Why it matters

Subba Rao, J.'s four propositions for distinguishing a lease from a licence, stated after discussing Section 105 of the Transfer of Property Act, Section 52 of the Easements Act and English decisions, were expressly agreed to by S.K. Das, J., and hold that the label in a deed does not decide its character. On the rent control point, the majority judges reached the same result by different routes: a connected-use test and a plain-meaning test.

In the Court's words

Copied from the official judgment; each passage links to its page.

“Judged by the said tests, it is not possible to hold that the document is one of licence. Certainly it does not confer only a bare personal privilege on the respondent to make use of the rooms. It puts him in exclusive possession of them, untrammelled by the control and free from the directions of the appellants. The covenants are those that are usually found or expected to be included in a lease deed. The right of the respondent to transfer his interest under the document, although with the consent of the appellants, is destructive of any theory of licence.”

Subba Rao, J. (agreed to by S.K. Das, J. on this point)Page 12 of the judgment

“On the view which I take a room in a hotel must fulfil two conditions: (1) it must he part a hotel in the physical sense and (2) its user must be connected with the general purpose of the hotel of which it is a part. In the case under our consideration the spaces were let out for carrying on the business of a hair dresser. Such a business I consider to be one of the amenities which a modern hotel provides.”

S.K. Das, J.Page 4 of the judgment

“I therefore come to the conclusion that a room in an hotel within the definition is any room in a building in the whole of which the business of an hotel is run. So understood, the definition would include the spaces in the cloak rooms of the Imperiol Hotel with which we are concerned. These spaces are, in my view, rooms in an hotel and excluded from the operation of the Act.”

Sarkar, J.Page 8 of the judgment

Provisions interpreted

Section 2(b), Delhi and Ajmer-Merwara Rent Control Act, 1947
Section 7(1), Delhi and Ajmer-Merwara Rent Control Act, 1947
Section 105, Transfer of Property Act, 1882
Section 52, Indian Easements Act, 1882

Case and bench

Parties: Associated Hotels of India Ltd. v. R. N. Kapoor
Case: Civil Appeal No. 38 of 1955
Decided: 19 May 1959
Bench: S.K. Das, A.K. Sarkar, K. Subba Rao
Opinions: Majority 2:1 on the result. S.K. Das, J. and Sarkar, J. wrote separate opinions holding the rooms to be rooms in a hotel; Subba Rao, J. dissented on that point. On lease or licence, S.K. Das, J. agreed with Subba Rao, J. that the deed created a lease; Sarkar, J. expressed no opinion.

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