Associated Hotels of India Ltd. v. R. N. Kapoor, 1960(1) SCR 368

Case Analysis

Associated Hotels of India Ltd. v. R. N. Kapoor, 1960(1) SCR 368

August 10, 2025

A) ABSTRACT / HEADNOTE

The Supreme Court in Associated Hotels of India Ltd. v. R. N. Kapoor [1960(1) SCR 368] addressed the interpretation of Section 2(b) of the Delhi and Ajmer-Merwara Rent Control Act, 1947, specifically the meaning of the expression “a room in a hotel” and its exemption from rent control provisions. The case involved the Imperial Hotel, New Delhi, which had leased out two cloakroom spaces to the respondent, a hairdresser. The central issues were whether the agreement constituted a lease or licence, and whether such rooms fell within the statutory exemption for “rooms in a hotel”. The Rent Controller fixed standard rent in favour of the respondent, but the District Judge reversed the decision. The High Court restored the Rent Controller’s order, holding it was a lease and not exempt. On appeal, the Supreme Court, by majority (S.K. Das, J. and Sarkar, J.; Subba Rao, J. dissenting), held the rooms were indeed “rooms in a hotel” physically and functionally, serving as amenities integral to hotel operations, and thus excluded from the Act’s purview. The majority also agreed that the agreement was a lease, not a licence. The dissent stressed that for exemption, the room must be let out for hotel purposes, and here the hairdressing business had no binding nexus with the hotel’s operations. The judgment clarified the dual conditions for defining “room in a hotel” and reinforced the significance of parties’ intention in distinguishing leases from licences.

Keywords: Rent Control, Room in a Hotel, Lease vs Licence, Hotel Amenities, Statutory Exemption, Delhi Rent Law Interpretation, Supreme Court of India.

B) CASE DETAILS

i) Judgement Cause Title:
Associated Hotels of India Ltd. v. R. N. Kapoor

ii) Case Number:
Civil Appeal No. 38 of 1955

iii) Judgement Date:
May 19, 1959

iv) Court:
Supreme Court of India

v) Quorum:
S.K. Das, J., A.K. Sarkar, J., and K. Subba Rao, J.

vi) Author:
Majority opinions by S.K. Das, J., and A.K. Sarkar, J.; dissent by K. Subba Rao, J.

vii) Citation:
1960(1) SCR 368

viii) Legal Provisions Involved:

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

ix) Judgments Overruled by the Case:
None specifically overruled.

x) Law Subjects Involved:

Rent Control Law
Property Law (Lease and Licence distinction)
Statutory Interpretation

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arose in post-independence Delhi when commercial tenancy issues frequently reached courts under the 1947 Rent Control legislation. The Imperial Hotel, a high-profile establishment in New Delhi, had entered into an agreement with the respondent for use of its cloakroom spaces as a hairdressing salon. The legal classification of such an arrangement determined whether rent control protections applied. Section 2(b) of the Act excluded “a room in a hotel” from “premises” subject to rent control. However, the Act did not define “room in a hotel” or “hotel” itself, leaving scope for judicial interpretation. This case became pivotal in clarifying the legislative intent and scope of this exemption, as well as distinguishing between leases and licences—a recurring and often litigated property law question.

D) FACTS OF THE CASE

The appellant, Associated Hotels of India Ltd., owned the Imperial Hotel in New Delhi. On May 1, 1949, it executed an agreement with R. N. Kapoor allowing him occupation of two spaces described as Ladies’ and Gents’ Cloak Rooms. The document, framed as a licence, allowed the respondent to carry on his hairdressing business for one year, renewable at the hotel’s discretion, at an annual consideration of Rs. 9,600 (later reduced to Rs. 8,400). The agreement prohibited alterations without consent, required payment regardless of business operation, and allowed transfer with landlord consent.

Kapoor applied under Section 7(1) of the 1947 Act for fixation of standard rent, contending he was a tenant. The Rent Controller fixed the rent at Rs. 94 per month. The District Judge, on appeal, held the Act inapplicable as the premises were “rooms in a hotel” and the arrangement was a licence. The High Court reversed, terming it a lease and holding the exemption inapplicable. The matter reached the Supreme Court.

E) LEGAL ISSUES RAISED

i. Whether the agreement created a lease or a licence.
ii. Whether the cloakroom spaces constituted “rooms in a hotel” under Section 2(b), thereby exempt from the Act’s operation.

F) PETITIONER/APPELLANT’S ARGUMENTS

The appellants contended:

The agreement was a licence, not a lease, as no interest in the property was transferred; possession remained with the hotel.
Even if it were a lease, the premises were “rooms in a hotel” and thus excluded from the statutory definition of “premises” under Section 2(b).
The hairdressing salon was an amenity integral to hotel services, serving both residents and outsiders, thus connected to the hotel’s general purpose.
Legislative intent was to exempt such arrangements from rent control to preserve hotel operations.

G) RESPONDENT’S ARGUMENTS

The respondent argued:

The agreement, despite being labelled a licence, had all hallmarks of a lease—exclusive possession, fixed term, rent obligation, right to transfer with consent.
“Room in a hotel” must be construed narrowly—only rooms let for hotel purposes (lodging, direct guest services) should be exempt.
The hairdressing business was an independent commercial enterprise, not restricted to serving hotel guests, hence not for hotel purposes.
Rent control protection was necessary to prevent exploitation.

H) RELATED LEGAL PROVISIONS

i. Delhi and Ajmer-Merwara Rent Control Act, 1947 – Section 2(b) defining “premises” and exempting “room in a hotel”.
ii. Section 7(1) – Standard rent determination.
iii. Transfer of Property Act, 1882 – Section 105 definition of lease.
iv. Indian Easements Act, 1882 – Section 52 definition of licence.

I) JUDGEMENT

a. Ratio Decidendi (Majority – S.K. Das, J. & A.K. Sarkar, J.)

A “room in a hotel” must satisfy two conditions:
1. It must be physically part of the hotel.
2. Its use must be connected with the hotel’s general purpose.
Hairdressing services are a modern hotel amenity, akin to billiard rooms or banking counters, even if accessible to outsiders.
The plain meaning of “room in a hotel” covers any room within the hotel building, as the entire building houses the hotel business.
The agreement’s terms created a lease, not a licence, as exclusive possession and interest in the property were granted.
Hence, the Act did not apply; standard rent could not be fixed.

b. Obiter Dicta

Legislative exemptions like “room in a hotel” must be interpreted contextually, but without importing unwarranted restrictions absent in statutory language.
Amenities in hotels evolve; interpretation should accommodate modern facilities.

c. Guidelines Evolved

Determine “lease” vs “licence” by intention of the parties, not just labels.
“Room in a hotel” exemption applies if physically part of the hotel and functionally linked to hotel purposes.
For rent control applicability, the statutory definition must be strictly satisfied; exemptions construed per legislative intent, not beyond it.

J) CONCLUSION & COMMENTS

The judgment is a landmark in balancing statutory rent control with commercial realities of hotel operations. The majority favoured a broader, functional reading of “room in a hotel”, recognising evolving hotel amenities. It reaffirmed the principle that exclusive possession is strong evidence of lease, even where documents are styled as licences. The dissent by Subba Rao, J., however, highlights the risk of over-expanding exemptions, potentially undermining tenant protections. The case remains a critical precedent in lease vs licence disputes and in interpreting statutory exemptions within rent control laws.

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