ASSOCIATED HOTELS V. R.N. KAPOOR, AIR 1959 SC 1262
FACTS
The Appellants are the proprietors of the Hotel Imperial, New Delhi. The Respondent was in occupation of the two rooms and carried on his business as a hairdresser. He secured a possession of the said room under a deed dated 1-5-1949, executed by him and the appellants. He got into the possession of the said rooms, agreeing to pay a sum of Rs. 9,600 a year i.e., Rs. 800/month. Later on by mutual consent, the annual payment was reduced to Rs. 8,400/year i.e. Rs. 700/month.
On 26-9-1950, the Respondent made an application to the Rent Controller, Delhi, alleging that the rent demanded was excessive and therefore a fair rent must be fixed under the Delhi and Ajmer-Merwara Rent Control Act, 1947.
The Appellants, on the contrary contended:
ISSUES
PROCEDURAL HISTORY
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.
District Judge: 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 and that the transaction between the parties was not a lease but a license.
Hight Court of Punjab and Shimla: Held premises were not rooms in a hotel within the meaning of S. 2 of the Act and that the document 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.
JUDGEMENT
As per the first issue,
Section 2(b) of the Ajmer-Merwara Rent Control Act, 1947 defines the term “premises” and the material portion of it is as follows:
“Premises” means any building or part of a building which is, or is intended to be, let separately…but does not include a room in a dharamshala, hotel or lodging house.
It was observed that the rooms in question were not let out as part of a hotel or for hotel purposes. As, the tenant was not bound by the contract to give any preferential treatment to the lodger, he was not even bound to carry on a business of a hairdresser. His only liability was to pay the stipulated amount to the landlord therefore, it was held that they are not rooms in a hotel within S. 2 of the Act.
As per the second issue,
The Court observed that there is a distinction between a lease and a licence:
Section 105 of the Transfer of Property Act,1882 defines a lease of immovable 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.
Whereas S. 52 of the Indian Easements Act defines a licence: According to 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.
However, the Court of Appeal again in Cobb v. Lane [(1952) 1 All E.R. 1199] considered the legal position and laid down that the intention of the parties was the real test for ascertaining the character of a document.
Therefore, in the present case the following propositions were laid down:
(1) To ascertain 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. But, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence;
(4) if under the document a party gets exclusive possession of the property, prima facie, he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease.
After applying the aforesaid propositions to the present case, it was held that the document was not one of licence but of a lease. As, it did 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.