# ] ASSOCIATED HOTELS OF INDIA LTD v. R. N. KAPOOR

- **Citation:** [1960] 1 S.C.R. 368
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Case number:** Civil Appeal No. 38of1955
- **Bench:** S. K. DAs, A. K. Sarkar, K. SuBBA RAo
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/associated-hotels-of-india-ltd-v-r-n-kapoor-1763
- **Pages:** 21

## Headnote

Rent Control-Application for standardisation of rent-' Room
in a hotel', Meaning of-Delhi and Ajmer-Merwara Rent Control
Act, I947 (I9 of r947), ss. 2(b) and 7(r).
Section z(b) of the Delhi and Ajmer-Merwara Rent Control
Act 1947, provided as follows:-
" S. 2. In this Act, unless there is anything repugnant in
in the subject or context,-
(a) ...................................................................... ; .. ,,
(b) 'premises' means any building or part of a building
which is, or is intended to be, let separately for use as a residence
or for commercial use or for any other purpose ............ but does
not include a room in a dharamshala, hotel or lodging house."
The respondent occupied two rooms in the appellant's hotel,
described as the Ladies' and Gents' Cloak Rooms, where he used
to carry on his business as a hair-dresser. The document executed hy the parties purported to be one as between a licensor
and licensee and provided, inter a!ia, that the respondent was
to pay an annual rent of Rs. 9,600 in four quarterly instalments,
which was later reduced to Rs. 8,400 by mutual agreement. The
respondent made an application for standardisation of rent
under s. 7(1) of the Delhi and Ajmer-Merwara Rent Control Act,
1947• and the Rent Controller of Delhi fixed the rent at Rs. 94
per month. On appeal by the appellant, the District Judge
reversed the order of the Rent Controller and dismissed the
application holding that the Act did not apply. The High Court
in revision set aside the order of the District Judge and restored
that of the Rent Controller, holding that the agreement created
a lease and not a license and that s. ;2 of the Act did not exempt
the two rooms from the operation of the Act. The two questions
for determination in this appeal were, (1) whether the agreement
created a lease or a licence and, (2) whether the said rooms were
rooms in a hotel within the meaning of s. z(b) of the Act.
Held, (Per S. K. Das and Sarkar, JJ., Subba Rao, J. dissenting), that the rooms let out by the appellant to the respondent
were rooms in a hotel within the meaning of s. z(b) of the AjmerMerwara Rent Control Act, 1947, and were as such excluded
from the purview of the Act and the respondent was not entitled
to claim standardisation of rent under its provisions.
Per S. K. Das, ].-In order that a room may be 'a room
in a hotel' within the meaning of the Act, it must fulfil
two conditions, (1) it must be part of the hotel in the physical
sense and, (2) its user must be connected with the general purpose
ol the hotel of which it is a part.
J
S.C.R.
SUPREME COURT REPORTS
369
A hair-dresser's business provided one of the amenities of a
z959
modern hotel and as such it was connected with the business of
the note!.
Associated Hotels of
There could be no doubt from the terms of the agreement
India Ltd.
executed by the parties in the instant case that it was a lease
v.
and not a licence.
R. N. Kapoor
Per Sarkar, J.-The words "room in a hotel" in s. 2(b) of the .
Act must be given their plain meaning and a room in a hotel must,
therefore, mean any room in a building jn the whole of which the
business of a hotel was carried on.
·
Per Subba Rao, ].--Although the document executed by the.
parties was apparently in a language appropriate to a licence, the
agreement between them, judged by its substance and real intention, as it must be, left no manner of doubt that the document
was a lease. It had all the characteristics that distinguished it
from a license, namely, (1) that it created an interest in the property in favour of the respondent, and, (2) it gave him exclusive
possession thereof, which, in the absence of any circumstances
that negatived it, must indicate a clear intention to grant a
lease.
Errington v. Errington, [1952] l All E.R. 149 and Cobb,v.
Lane, [1952] l All E.R. u99, referred to.
The words 'room in a hotel ', properly construed, must
mean a room that was part of a hotel and partook of its character and did not cease to do s

## Text

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1959
ftJay I9•
368
SUPREME COURT REPORTS
[1960(1)]
ASSOCIATED HOTELS OF INDIA LTD.
v.
R. N. KAPOOR
(S. K. DAs, A. K. SARKAR and K. SuBBA RAo, JJ.)
Rent Control-Application for standardisation of rent-' Room
in a hotel', Meaning of-Delhi and Ajmer-Merwara Rent Control
Act, I947 (I9 of r947), ss. 2(b) and 7(r).
Section z(b) of the Delhi and Ajmer-Merwara Rent Control
Act 1947, provided as follows:-
" S. 2. In this Act, unless there is anything repugnant in
in the subject or context,-
(a) ...................................................................... ; .. ,,
(b) 'premises' means any building or part of a building
which is, or is intended to be, let separately for use as a residence
or for commercial use or for any other purpose ............ but does
not include a room in a dharamshala, hotel or lodging house."
The respondent occupied two rooms in the appellant's hotel,
described as the Ladies' and Gents' Cloak Rooms, where he used
to carry on his business as a hair-dresser. The document executed hy the parties purported to be one as between a licensor
and licensee and provided, inter a!ia, that the respondent was
to pay an annual rent of Rs. 9,600 in four quarterly instalments,
which was later reduced to Rs. 8,400 by mutual agreement. The
respondent made an application for standardisation of rent
under s. 7(1) of the Delhi and Ajmer-Merwara Rent Control Act,
1947• and the Rent Controller of Delhi fixed the rent at Rs. 94
per month. On appeal by the appellant, the District Judge
reversed the order of the Rent Controller and dismissed the
application holding that the Act did not apply. The High Court
in revision set aside the order of the District Judge and restored
that of the Rent Controller, holding that the agreement created
a lease and not a license and that s. ;2 of the Act did not exempt
the two rooms from the operation of the Act. The two questions
for determination in this appeal were, (1) whether the agreement
created a lease or a licence and, (2) whether the said rooms were
rooms in a hotel within the meaning of s. z(b) of the Act.
Held, (Per S. K. Das and Sarkar, JJ., Subba Rao, J. dissenting), that the rooms let out by the appellant to the respondent
were rooms in a hotel within the meaning of s. z(b) of the AjmerMerwara Rent Control Act, 1947, and were as such excluded
from the purview of the Act and the respondent was not entitled
to claim standardisation of rent under its provisions.
Per S. K. Das, ].-In order that a room may be 'a room
in a hotel' within the meaning of the Act, it must fulfil
two conditions, (1) it must be part of the hotel in the physical
sense and, (2) its user must be connected with the general purpose
ol the hotel of which it is a part.
J
S.C.R.
SUPREME COURT REPORTS
369
A hair-dresser's business provided one of the amenities of a
z959
modern hotel and as such it was connected with the business of
the note!.
Associated Hotels of
There could be no doubt from the terms of the agreement
India Ltd.
executed by the parties in the instant case that it was a lease
v.
and not a licence.
R. N. Kapoor
Per Sarkar, J.-The words "room in a hotel" in s. 2(b) of the .
Act must be given their plain meaning and a room in a hotel must,
therefore, mean any room in a building jn the whole of which the
business of a hotel was carried on.
·
Per Subba Rao, ].--Although the document executed by the.
parties was apparently in a language appropriate to a licence, the
agreement between them, judged by its substance and real intention, as it must be, left no manner of doubt that the document
was a lease. It had all the characteristics that distinguished it
from a license, namely, (1) that it created an interest in the property in favour of the respondent, and, (2) it gave him exclusive
possession thereof, which, in the absence of any circumstances
that negatived it, must indicate a clear intention to grant a
lease.
Errington v. Errington, [1952] l All E.R. 149 and Cobb,v.
Lane, [1952] l All E.R. u99, referred to.
The words 'room in a hotel ', properly construed, must
mean a room that was part of a hotel and partook of its character and did not cease to do so even after it was let out.
Consequently, where a hotel, as in the instant case, occupied
the entire building, and rooms were let out for carrying on a
business different from that of a hotel, such rooms could not fall
within purview of s. 2 of the Act.
There could be no reasonable nexus in this case between a
hair-dresser's business and that of a hotel as there was nothing
in the document in question to prevent the tenant from carrying
on any other business. or to bind him to give any preferential
treatment to the lodgers, who could take their chance only as
general customers, the tenant's only liability being to pay the
stipulated rent.
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
38of1955.
Appe!!>l lily special leave from the judgment and
order dated the April 29, 1953, of the Punjab High
Court at Simla in Civil Revision No. 761 of 1951,
arising out of the Appellate Order dated October 6,
1951, of the Court of District Judge, Delhi in Misc.
Civil Appeal No. 248 of 1950, against the order of the
Rent Controller, Delhi dated the December 14, 1950.
47
370
SUPREME COURT REPORTS (1960(1))
Z959
a. K. Daphtary, Solicitor-General of India, N. a.
Associawl Hol•ls 010hatterjee, 8 N. Anclley and J. B. Daclachanji, for the
I"dia Ud.
appellant.
v.
The respondent did not appear.
R. N. Kapoor
1959. May 19. The following Judgments were
delivered
s. K. Das J.
S. K. DAS J.-I have had the advantage and
privilege of reading ,the judgments prepared by my
learned brethren, Sarkar, J., and Subba Rao, J. I
agree with my learned brother Subba Rao, J., that the
deed of May 1, 1949, is a lease and not a licence. I
have nothing useful to add to what he has said on this
part of the case of the appellant.
On the question of the true scope and effect of s. 2(b)
of the Delhi and Ajmer-Merwara Rent Control Act,
(19 of 1947) hereinafter called the Rent Control Act, I
have reached the same conclusion as has been reached
by my learned brother Sarkar, J., namely, that the
rooms or spaces let out by the appellant to the respondent in the Imperial Hotel, New Delhi, were rooms
in a hotel within the meaning of s. 2(b) of the Rent
Control Act; therefore that Act did not apply and the
respondent was not entitled ~o ask for the determination
of fair rent under its provisions. Th@ reasons for which
I ha.ve reached that conclusion are somewha.t different
from those of my learned brother, Sarkar J., and it is,
therefore, necessa.rythat I should state the reasons in
my own words.
I read first s. 2(b) of the Rent Control Act so far as
it is relevant for our purpose:
"S. 2. In this Act, unless there is anything
repugnant in the subject or context,-
(a) ............................................................. .
(b) ' premises ' means any building Q.l' part of a
building which is, or is intended to be, let separately
for use as a residence or for commercial use or for .
any other purpose ......... but does not include a room
in a dha.ra.mshala, hotel or lodging house."
The question before us is-what is the meaning of
the expression 'a room in a hotel '? Does it merely
i
S.C.R.
SUPREME COURT REPORTS
371
mean a room which in a physical sense is within a
x959
building or part of a building used as a hotel ; or does A
·a1 ~ H 1 1• 1
't
th'
th
. th
't If .
t
ssoe1 e,.
o es o
l mean some mg more,
at lS
e room l se
ls. no
India Ltd.
only within a hotel in a physical sense but is let out to
v.
serve what a.re known as 'hotel purposes~? If a strictly
R. N. Kopoor
literal construction is adopted, then a room in a hotel
or dharamshala or lodging house means merely that
s. K. Das J.
the room is within, and part of, the building which is
used as a hotel, dharamshala or lodging house. There
may be a. case where the entire building is not used as
a hotel, dharamshala or lodging house, but only a pa.rt
of it so used. In that event, the hotel, lodging house
or dharamshala will be that part of the building only
whtch is used as such, and any room therein will be a
room in a hotel, dharamshala or lodging house. Rooms
outside that part but in the same building will not be
rooms in a hotel, dharamshala or lodging house. Take,
however, a case where the room in question is within
that part of the building which is used as a hotel,.
dharamshala or lodging house, but the room is let out
for a purpose totally unconnected with that of the
hotel, lodging house or dharamshala as the case may
be.
Will the room still be a room in a. hotel, lodging
house or dharamshala ? That I take it, is the question
which we have to answer.
·
The word ' hotel ' is not defined in the Rent Control
Act. It is defined in a cognate Act called the Bombay
Rents, Hotel and Lodging House Rates Control Act,
1947 (Born. 57 of 47).
The definition there says that
a hotel or lodging house means a building or a part of
a. building where lodging with or without board or
other service is provided for a monetary consideration.
I do not pause here to decide whether that definition
should be adopted for the purpose of interpreting
s. 2(b} of the rent Control Act. It is sufficient to state
that in its ordinary connotation the word 'hotel' means
a house for entertaining strangers or travellers: a
place where lodging is furnished to transient guests as
well as one where both lodging and food or other
amenities are furnished. It is worthy of note that in
s. 2(b) of the Rent Control Act three different words
are used ' hotel ', dha.ramshala ' or ' lodging house '.
372
SUPREME COURT REPORTS [1960(1)]
Obviously, the three words do not mean the same
'959
establishment. In the cognate Act, the Bombay Rents
Associated Hotels of Hotel and Lodging House Rates Control Act, 1947,
India Ltd.
however, the definition clause gives the same meaning
v.
to the words 'hotel' and 'lodging house'. In my view
R. N. Kapoor
s. 2(b) of the Hent Control Act by using two different
s. K. Das f.
words distinguishes a hotel from a lodging house in
some respects and indicates that the former is an
establishment where not merely lodging but some other
amenities are provided. It was, however, never questioned that the Imperial Hotel, New Delhi, is a hotel·
within the meaning of that word as it is commonly
understood, or even as it is defined in the cognate Act.
Passing now from definitions which are apt not to
be uniform, the question is whether the partitioned
spaces in the two cloak rooms let out to the respondent
were rooms in that hotel. In a physical sense they
were undoubtedly rooms in that hotel. I am prepared,
however, to say that a strictly literal construction may
not be justified and the word 'room ' in the composite
expression 'room in a hotel' must take colour from the
context or the collocation of words in which it has
been used; in other words, its meaning should be determined noscitur a. sociis. The reason why I think so
may be explained by an illustration. Suppose there
. is a big room inside a hotel; in a physical sense it is a
room in a hotel, but let us suppose that it is let out, to
1_
take an extreme example, as a timber godown. Will
it still be a room in a hotel, though in a physical sense
it is a room of the building which is used as a hotel?
I think it would be doing violence to the context if
the expression ' room in a hotel ' is interpreted in a
strictly literal sense. On the view which I take a room
in a hotel must fulfil two conditions: (1) it must
be 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. The circumstance that people not resident in
the hotel might also be served by the hair dresser does
S.C.R
SUPREME COURT REPORTS
373
not alter the position ; it is still an amenity for the
x959
residents in the hotel to have a hair dressing saloon A . . --:-H 11 ,,
"th" th h t 1 "t lf A
d
h t l
"d
'"
0"ate..
0 1 5
OJ
w1 m
e o e . i se .
mo ern o e prov1 es many
1,.4;,. Lid.
facilities to its residents; some hotels have billiard
v.
rooms let out to a private person where residents of
R. N. Kapoor
the hotel as also non-residents can play billiards on
payment of a small fee; other hotels provide posts. K. Das J.
office and banking facilities by letting out rooms in the
hotel for that purpose. All these amenties are connected with the hotel business and a barber's shop within
the hotel premises is no exception.
These are my reasons for holding that the rooms in
question were rooms in a hotel within the meaning of
s. 2(b) of the Rent Control Act, 1947, and the respondent was not entitled to ask for fixation of fair or
standard rent for the same. I, therefore,' agree with
my learned brother Sarkar, J., that the appeal should
be allowed, but in the circumstances of the case there
should be no order for costs.
SARKAR J.-The appellant is the proprietor of an
Sarkar J.
hotel called the Imperial Hotel which is housed in a
building on Queenswa.y, New Delhi. R. N. Kapoor, the
respondent named above who is now dead, was the
proprietor of a business carried on under the name of
Madam Janes. Under an agreement with the appellant,
he came to occupy certain spaces in the Ladies' and
Gents' cloak rooms of the Imperial Hotel paying therefor initially at the rate of Rs. 800 and subsequently
Rs. 700, per month.
On SeRtember 26, 1950, R. N. Kapoor made an
application under s. 7 (1) of the Delhi and AjmereMerwara Rent Control Act, 1947 (19 of 1947), to the
Rent Controller, New Delhi, alleging that he was a
tenant of the spaces in the cloak rooms under the
appellant and asking that standard rent might be fixed
in respect of them. The appellant opposed the applic~
tion, contending for reasons to be mentioned later, that
the Act did not apply and no standard rent could be
fixed.
The Rent Controller however rejected the
appellant's contention and allowed the application
fixing the standard rent at Rs. 94 per month. ~
374
SUPREME COURT REPORTS [1960(1)]
'959
appeal by the appellant, the District Judge of Delhi
Associated Hotels 01 seht aside
1
. th~ orderRofNthe17Rent Controller and dismissed
India Ltd.
t e app icat10n.
. £ • >capoor then moved the High
v.
Court in revision. The High Court set aside the order
R. N. Kapol>r
of the District Judge and restored that of the Rent
Sarkar].
Controller. Hence this appeal. We are informed that
R. N. Kapoor died pending the present appeal and his
legal representatives have been duly brought on the
record.
No one has however appeared to oppose the
appeal and we have not had the advantage of the
other side of the case placed before us.
As earlier stated, the appellant contends that the Act
does not apply to the present case and the Rent
Controller had no jurisdiction to fix a standard rent.
This contention was founded on two grounds which I
Rhall presently state, but before doing that I wish to
wfer to a few of the provisions of the Act as that
would help to appreciate the appellant's contention.
For the purpose of the present case it may be stated
that the object of the Act is to control rents and
evictions. Section 3 says that no tenant shall be liable
to pay for occupation of any premises any sum in
excess of the standard rent of these premises. Section
2(d) defines a tenant as a person who takes on rent any
premises. Section 2(b) defines what is a premises within
the meaning of the Act and this definition will have to
be set out later because this case largely turns on that
definition. Section 2( c) provides how standard rent in
relation to any premises is to be determined. Section
7 (I) states that if any dispute arises regarding the
standard rent payable for any premises, then it shall
be determined by the Court. It is under this section
that the application out of which this appeal arises
was made, the Court presumably being the Rent
Controller. It is clear from these provisions of the Act
that standard rent can be fixed only in relation to
premises as defined in the Act and only a tenant, that
is, the person to whoi:μ the premises have been let out,
can ask for the fixing of the standard rent.
I now set out the definition of "premises " given in
the Act so far as is material for our purposes:
S.C.R.
SUPREME COURT REPORTS
375
" "premises " means any building or part of a
z959
building which is or is intended to be let separately A
. 1 dHo1 l 1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
but does not include a room in a dharamsala, hotel
or lodgirg house."
It is clear from this definition that the Act did not
intend to control the rents payable by and evictions of,
persons who take on rent rooms in a dharamsala, hotel
or lodging house.
The appellant contends that the spaces are not
premises within the Act as they are rooms in a hotel
and so no standard rent could be fixed in respect of
them. Thus the first question that arises in this appeal
is are the spaces rooms in an hotel within the definition ? If they are rooms in an hotel, clearly no
standard rent could be fixed by the Rent Controller in
respect of them.
The Act does not define an hotel. That word has
therefore to be understood in its ordinary sense.
It is
clear to me that the Imperial Hotel is an hotel however
the word may be understood. It was never contended
in these proceedings that the Imperial Hotel was not
an "hotel" within the Act. Indeed, the Imperial Hotel
is one of the best known hotels of New Delhi. It also
seems to me plain that the spaces are "rooms", for,
this again has not been disputed in the Courts below
and I have not found any reason to think that they
are not rooms.
The language used in the· Act is " room in a ........ .
hotel ". The word " hotel " here must refer to a
building for a room in an hotel must be a room in a.
building. That building no doubt must be an hotel,
that is to say, a building in which the business of an
hotel is carried on. The language used in the Act
would include any room in the hotel building. That is
its plain meaning. Unless there is good reason to do
otherwise, that meaning cannot be departed from.
This is the view that the learned District Judge took.
Is there then any reason why the words of the
statute should be given a meaning other than their
ordinary meaning ? The Rent Controller and the High
ssocsa 1
1 so
India Lid •
v.
R.N. Kapow
Sarkar J.
376
SUPREME COURT REPORTS (1960(1))
z959
Court found several such reasons and these I will now
.A.sso&iated Hotels of consider•
India Ltd.
The learned Rent Controller took the view that a
v.
room in an hotel would be a room normally used for
R. N. Kapoor
purposes of lodging and not any room in an hotel. He
Sarkar].
took this view because he thought that if, for example,
there was a three storeyed building, the ground floor of
which was used for shops and the two upper floors for
an hotel, it could not have been intended to exclude the
entire building from the operation of the Act, and so
the rooms on the ground floor would not have been
rooms in an hotel. I am unable to appreciate how this
illustration leads to the conclusion that a room in an
hotel contemplated is a room normally used for lodging. The learned Rent Controller's reasoning is clearly
fallacious. Because in a part of a building there is a
hotel, the entire building does not become a hotel.
Under the definition, a part of a building may be a
premises and there is nothing "to prevent a part only
of a building being a hotel and the rest of it not being
one. In the illustration imagined the ground floor is
not a part of the hotel. The shoprooms in the ground
floor cannot for this reason be rooms in a hotel at all.
No question of these rooms being rooms in an hotel
normally used for lodging, arises. We see no reason
why a room in an hotel within the Act must be a room
normally used for lodging. The Act does not say so.
It would be difficult to say which is a room normally
used for lodging for the hotel owner may use a room
in an hotel for any purpose of the hotel he likes.
Again, it would be an unusual hotel which lets out its
lodging rooms; the usual thing is to give licences to
boarders to live in these rooms.
I now pass on to the judgment of the High Court.
Khosla, J., who delivered the judgment, thought that
a room in an hotel would be within the definition if it
was let out to a person to whom board or other service was also given. It would seem that according to
the learned Judge a room in an hotel within the Act
is a room let out to a guest in an hotel, for only a
guest bargains for lodging and food and services in
an hotel. But the section does not contain words
S.C.R.
SUPREME COUR.T REPORTS
377
indicating that this is the meaning contemplated.
z959
In defining a room in an hotel it does not circumscribe
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the tenant would be entirely unprotected. Ex hypov.
thesi he would be outside the protection of the Act.
R. N. Kapoor
Though he would be for all practical purposes a boarder in an hotel, he would also be outside the protecSarkar J.
tion of the cognate Act, The Bombay Rents, Hotels
and Lodging House, Rates Control Act, 194 7 (Born.
57 of 1947), which has been made applicable to Delhi,
for that Act deals with lodging rates in an hotel which
are entirely different from rents payable when hotel
rooms are let out. A lodger in an hotel is a mere
licensee and not a tenant for "there is involved in the
term "lodger" that the man must lodge in the house
of another "; see Foa on Landlord and Tenant (8th
Ed.) p. 9. It could h~rdly have been intended to
leave a person who is practically a boarder in an hotel
in that situation. As I have earlier said, it would be
a most unusual hotel which lets out its rooms to a.
guest, and the Act could not have been contemplating
such a thing.
Khosla, J., also said that the room in a hotel need
not necessarily be a bed room but it must be so intimately connected with the hotel as to be a part and
parcel of it, that it must be a room which is an essential amenity provided by an hotel e.g., the dining
room in an hotel. I am unable to agree. I do not
appreciate why any room in an hotel is not intimately
connected with it, by which apparently "is meant, the
business of the hotel. The business of the hotel is
carried on in the whole building and therefore in
every part of it. It would be difficult to say that one
part of the building is more intimately connected with
the hotel business than another. Nor do I see any
reason why the Act should exempt from its protection
a part which is intimately connected as it is said, and
which I confess I do not understand, and not a part
not so intimately connected. I also do not understand
what is meant by' saying that a part of an hotel
supplies essential amenities. The idea of essentiality
of an amenity is so vague as to be unworkable. This
378
SUPREME COURT REPORTS [1960(1))
z959
test would introduce great uncertainty in the working
,
. 1 d H 1 1
, of the Act which could not have been intended. Nor
.iissocia e
o e s OJ
India Ltd.
do I see any reason why the Act should have left out
v.
of its protection a room which is an essential amenity
R. N. Kapoor
of the hotel and not other rooms in it.
Sarkar j.
Though it is not clear, it may be that Khosla J., was
thinking that in order that a room in an hotel may be
within the definition it must be let out for the purposes
of the hotel. By this it is apparently meant that the
room must be let out to supply board or give other
services to the guests, to do which are the purposes of
an hotel. Again, I find no justification for the view.
There is nothing in the definition about the purposes
of the letting out. Nor am I aware that hotel proprietors are in the habit of letting out portions of the
hotel premises to others for supplying board and
services to the guests in the hotels. It may be that
an hotel proprietor grants licences to contractors to
to use parts of his premises to provide board and
services to the guests in the hotel. This however is a
different matter and with such licences we are not
concerned. Again, a proprietor of a different kind of
business who lets out a portion of his business premises for the purposes of his business does not get an
exemption from the operation of the Act. I am unable
to see why the proprietor of an hotel business should
have special consideration. The Act no doubt exempts
a room in an hotel but it says nothing about the purposes for which the room must be let out to get the
the exemption. Further, not only a room in an hotel
is exempted by the definition but at the same time
also a room in a dharamsala. If a room in an hotel
within the Act is a room let out for the purposes of the
hotel so must therefore be a room in a dharamsala,
It would however be difficult to see how a room in
a dharamsala can be let out for the purposes of the
dharamsala for a dharamsala does not as a rule
supply food or give any services, properly so called.
Having given the matter my best conside~ation I
have not been able to find any reason why the words
used in the definition should not have their plain
meaning given to them.
I therefore come to the
S.C.R.
SUPREME COURT REPOR.TS
379
conclusion that a room in an hotel within the definir959
tibn is any room in a building in the whole of which
-
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definition would include the spaces in the cloak rooms
n ·~.
a.
of the Imperiol Hotel with which we are concerned.
R. N. Kapoor
These spaces are, in my view, rooms in an hotel and
excluded from the operation of the Act. The Rent
Sarkar /.
Controller had no power to fix any standard rent in
respect of them.
The appellant also contended that Kapoor was not
a tenant of the spaces but only a licensee and so again
the Act did not apply. The question so raised depends
on the construction of the written agreement under
which Kapoor came to occupy the spaces and the circumstances of the case. I do not consider it necessary
to express any opinion on this question for this appeal
· must in my view be allowed as the spaces are
outside the Act being rooms in an hotel.
In the result I would allow the appeal and dismiss
the application for fixing standard rent. I do not
propose to make any order for costs.
SuBBA RAO J.-I have had the advantage ofperusSubbaRaoJ.
ing the judgment of my learned brother, Sarkar,· J.,
and I regret my inability to agree with him.
The facts material to the question raised are in a
narrow compass.
The appellants, the Associated
Hotels of India Ltd., are the proprietors of Hotel
Imperia~, New Delhi. The respondent,. R. N. Kapur,
since deceased, was in occupation of two rooms described as ladies' and gentlemen's cloak rooms, and
carried on his business as a hair-dresser. He secured
possession of the said rooms under a deed dated May I,
1949, executed by him and the appellants. He got
into possession of the said rooms, agreeing to pay a
sum of Rs. 9,600 a year, i.e., Rs. 800 per month, but
later on, by mutual consent, the annual p[tyment was
· reduced to Rs. 8,400, i.e., Rs. 700 per month. On September 26, 1950, the respondent made an applicn.tion
to the Rent Controller, Delhi, alleging that the rent
demanded was excessive and therefore a fair rent
might be fixed under the Delhi and Ajmer-Merwara
380
SUPREME COURT REPORTS [1960(1)]
I959
Rent Control Act, 1947 (19 of 1947), hereinafter called
Associated Hotels of the Act. The appellants appeared before the R:ent
India Ltd.
Controller and contended that the Act had no apphcav.
tion to the premises in question as they were premises
R. N. Kapoor
in a hotel exempted under s. 2 of the Act from its
operation, and also on the ground that under the
Subba Rao J.
aforesaid document the respondent was not a tenant
but only a licensee. By order dated October 24, 1950,
the Rent Controller held that the exemption under
s. 2 of the Act related only to residential rooms in a
hotel and therefore the Act applied to the premises
in question. On appeal the District Judge, Delhi,
came to a contrary conclusion ; he was of the view
that the rooms in question were rooms in a hotel
within the meaning of s. 2 of the Act and therefore
the Act had no application to the present case.
Further on a construction of the said document, he
held that the appellants only permitted the respondent
to use the said two rooms in the hotel, and, therefore,
the transaction between the parties was not a. lease but
a licence. On the basis of the aforesaid two findings,
he came to the conclusion that the Rent Controller
had no jurisdiction to fix a fair rent for the premises.
The respondent preferred a revision against the said
order of the District Judge to the High Court of
Punjab at Simla, and Khosla, J., held that the said premises were not rooms in a hotel within the meaning of
s. 2 of the Act and that the documenti-executed between the parties created a lease and not a licence. On
those findings, he set aside the decree of the learned
District Judge and restored the order of the Rent
Controller.
The present appeal was filed in this
Court by special leave granted to the appellants on
January 18, 1954.
The learned Solicitor-General and Mr. Chatterjee,
who followed him, contended that the Rent Controller
had no jurisdiction to fix a fair rent under the Act in
regard to the said premises for the following reasons :
(1) The document dated May 1, 1949, created a relationship of licensor and licensee between the parties
and not that of lessor and lessee as held by the High
Court ; and (2) the said rooms were rooms in a hotel
S.C.R.
SUPREME COURT REPORTS
381
within the meaning of s. 2 of the Act, and, therefore,
x959
they were exempted from the operation of the Act. A
. 1 dH 11 ,,
.
ssocia e
o e s OJ
Unfortunately, the legal representative of the responIndia Ltd.
dent was ex parte and we did not have the advantage
v.
of the opposite view being presented to us. But we
R. N. Kapoor
have before us the considered judgment of the High
Court, which has brought out all the salient points in
Subba Rao J.
favour of the respondent.
The first question turns upon the true construction
of the document dated May, 1, 1949, whereunder the
respondent was put in possession of the said rooms. As
the argument turns upon the terms of the said docu-
. ment, it will be convenient to read the relevant
portions thereof. The document is described as a deed
of licence and the parties are described as licensor and
licensee. The preamble to the document runs thus :
"Whereas the Licensee approached the Licensor
through their constituted Attorney to permit the
Licensee to allow the use and occupation of space
allotted in the Ladies and Gents Cloak Rooms, at the
Hotel Imperial, New Delhi, for the consideration and
on terms and conditions as follows :-"
The following are its terms. and conditions :
" 1. In pursuance of the said agreement, ~he
Licensor hereby grants to the Licensee, Leave and
License to use and occupy the said premises to carry
on their business of Hair Dressers from 1st May,
1949 to 30th April, 1950.
2. That the charges of such use and occupation shall
be Rs. 9,600 a year payable in four quarterly instalments i.e., 1st immediately on signing the contract,
2nd on the 1st of August, 1949, 3rd on the 1st
November, 1949 and the 4th on the 1st February,
1950, whether the Licensee occupy the premises and
carry on the business or not.
3. That in the first instance the Licensor shall allow
to the Licensee leave and license to use and occupy
the said premises for a period of one year only.
4. 'l'hat the licensee shall have the opportunity of
further extension of the period of license after the
expiry of one year at the option of the licensor on
I959
Associated Hotels of
India Ltd,
v.
R. N. Kapoor
Subba Rao l•
382
SUPREME COURT REPORTS (1960(1)]
the same terms and conditions but in any case the
licensee shall intimate their desire for an extension
at least three months prior to the expiry of one year
from the date of the execution of this DEED.
5. The licensee shall use the premises as at present
fitted and keep the same in good condition. The
licensor shall not sRpply any fitting or fixture more
then what exists in the premi8es for the present. 'fhe
licensee will have their power and light meters and
will pay for electric charges.
6. That the licensee shall not make any alterations
in the premises without the prior consent in writing
from the licensor.
7. That should the licensee fail to pay the agreed
f!Je to the licensor from the date and in the manner
as agreed, the licensor shall be at liberty to terminate this DEED without any notice and without
payment of any compensation and shall be entitled
to charge interest at 12% per annum on the amount
remaining unpaid.
8. That in case the licensee for reasons beyond their
control are forced to close their business in Delhi,
the licensor agrees that during the remaining period
the license shall be transferred to any person with
the consent and approval of the licensor subject to
charges so obtained not exceeding the monthly
charge of Rs. 800."
The document no doubt uses phraseology appropriate
to a licence. But it is the substance of the agreement
that matters and not the form, for otherwise clever
drafting can camouflage the real intention of the
parties.
What is the substance of this document ? Two rooms
at the Hotel Imperial were put in possession of the
respondent for the purpose of carrying on his business
as hair-dresser from May 1, 1949. The term of the
document was, in the first in"tance, for one year, but it
might be renewed. The amount payable for the use
and occupation was fixed in a sum of Rs. 9,600 per
annum, payable in four instalments. The respondent
was to keep the premises in good condition. He should
S.C.R.
SUPREME COURT REPORTS
383
pay for power and electricity. He should not make
z959
alterations in the premises without the consent of the Associated Hotels of
appellants. If he did not pay the prescribed amount
India Ltd.
in the manner agreed to, he could be evicted therefrom
v.
without notice, and he would also be liable to pay
R. N. Kapoor
compensation with interest. He could transfer his inSubba Rao J.
terest in the document with the consent of the appel-.
lants. The respondent agreed to pay the amount
prescribed whether he carried on the business in the
premises or not. Shortly stated, under the document
the respondent was given possession of the two rooms
for carrying on his private business on condition that
he should pay the fixed amount to the appellants
irrespective of the fact whether he carried on his business in the premises or not.
There is a marked distinction between a lease and a
licence. Section 105 of the Transfer of Property Act
defines a lease of immoveable property as a transfer of
a right to enjoy such property made for a certain
time in consideration for a price paid or promised.
Under s. 108 of the said Act, the lessee is entitled to
be put in possession of the property. A lease is therefore a transfer of an interest in land. The interest
transferred is called the leasehold interest. The lessor
parts with his right to enjoy the property during the
term of the lease, and it follows from it that the lessee
gets that right to the exclusion of the lessor. Whereas
s. 52 of the Indian Easements Act defines a licence
thus:
"Where one person grants to another, or to a
definite number of other persons, a right to do or continue to do in or upon the immoveable property of
the grantor, something which would, in the absence
of such right, be unlawful, and such right does not
amount to an easement or an interest in the property, the right is called a licence."
Under the aforesaid section, if a document gives only
a right to use the property in a particular way or
under certain terms while it remains in possession and
control of the owner thereof, it will be a licence. 'fhe
legal possession, therefore, continues to be with the
owner of the property, but the licensee is permitted to
384
SUPREME OOURT REPORTS [1960(1)]
r959
make use of the premises for a particular purpose. But
A
. -
for the permission, his occupation would be unlawful.
ssoeialed Hotels of It d
. h"
.c.
•
India Ltd.
oes not create m 1s 1a vour any estate or mterest
v.
in the property. There is, therefore, clear distinction
B. N. Kapoor
between the two concepts. The dividing line is clear
though sometimes it becomes very thin or even blurSubba Ran J.
red. At one time it was thought that the test of exclusive possession was infalliable and if a person was
given .exclusive possession of a premises, it would conclusively establish that he was a lessee. But there was
a change and the recent trend of judicial opinion is
reflected in Errington v. Errington('), wherein Lord
Denning reviewing the case law on the subject summa-
,
rizes the result of his discussion thus at p. 155 :
"The result of all these oases is that, although a
~
person who is let into exclusive possession is, prima
facie, to be considered to be tenant, nevertheless he
will not be held to be so if the circumstances negative any intention to create a tenancy."
The Court of Appeal again in Cobb v. Lane(') considered the legal position and laid down that the intention
of the parties was the real test for ascertaining the
character of a document. At p. 1201, Somervell, L. J.,
stated:
" ............... the solution that would seem to have
been found is, as one would expect, that it must
depend on the intention of the parties."
Denning, L. J., said much to the same effect at p. 1202 :
"The question in all these cases is one of intention: Did the circumstances and the conduct of the
parties show that all that was intended was thll>t the
occupier should have a personal privilege with no
interest in the land ?"
The following propositions may, therefore, be taken
as well-established: (1) To a8certain whether a document creates a licence or lease, the substance of the
document must be preferred to the form ; (2) the real
test is the intention of the parties-whether they
intended to create a lease or a licence; (3) if the document creates an interest in the property, it is a lease;
(1) [1952] 1 All E.R. 149.
(2) [1952] I All E.B,, 1199·
S.C.R.
SUPREME COURT REPORTS
385
but, if it only permits another to make use of the pro.
z959
Perty, of which the legal possession continues with the A
. 1 dH 11
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d
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ssocia e
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owner, it is a icence ; an
1 un er t e ocumen a
of India Ltd.
party gets exclusive possession of the property, prima
v.
facie, he is considered to be a tenant; but circumstances
R. N. Kapoor
may be established which negative the intention to
create a lease. Judged by the said tests, it is not
Subba Rao f.
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, untram.
melled 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. The
solitary circumstance that the rooms let out in the
present case are situated in a building wherein a hotel
is run cannot make any difference in the character of
the holding. The intention of the parties is clearly
manifest, and the clever phraseology used or the
ingenuity of the document-writer hardly conceals the
real .intent.