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PETITIONER: ASSOCIATED HOTELS OF INDIA LTD.

       Vs.

RESPONDENT: R. N. KAPOOR

DATE OF JUDGMENT: 19/05/1959

BENCH: DAS, S.K. BENCH: DAS, S.K. SARKAR, A.K. SUBBARAO, K.

CITATION:  1959 AIR 1262            1960 SCR  (1) 368

ACT:        Rent  Control-Application for standardisation of rent   Room        in  a hotel Meaning of Delhi and Ajmer-Merwaya Rent  Control        Act, 1947 (19 Of 1947), Ss. 2(b) and 7(1).

HEADNOTE:        Section 2(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  by the parties purported to  be  one  as        between  a licenser and licensee and provided,  inter  alia,        that  the respondent was to pay an annual rent of Rs.  9,600        in  four quarterly installments, 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 I 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 license        and, (2) whether the said rooms were rooms in a hotel within        the meaning of s. 2(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.

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      2(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, j In order that a room may be ’a room  in  a        hotel’  within the meaning of the Act, it must  fulfill  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 of the hotel of which it is a part, 369    A  hair-dresser’s business provided one of the  amenities of  a  modern hotel and as such it was  connected  with  the business of the hotel.    There  could be no doubt from the terms of the  agreement executed  by the parties in the instant case that it  was  a lease and not a licence.   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  in  the whole of which the business of a hotel was carried on.   Per  Subba Rao, J.--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] 1 All E.R. 149 and Cobb  v. Lane, [1952] 1 All E.R. 1199, 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.

JUDGMENT:    CIVIL  APPELLATE  JURISDICTION: Civil Appeal  No.  38  of 1955. Appeal  by 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 C.   K.   Daphtary,  Solicitor-General  of  India,   N.   C. Chatterjee,  S.  N.  Andley and J. B.  Dadachanji,  for  the Appellant.

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The respondent did not appear. 1959.  May 19.  The following Judgments were delivered   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  to  ask  for   the determination  of  fair  rent  under  its  provisions.   The reasons  for  which  I  have  reached  that  conclusion  are somewhat different from those of my learned brother,  Sarkar J., and it is, therefore, necessary that 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 or building which is,  or is  intended  to  be,  let for use as  a  residence  or  for commercial any other purpose......... but does not include a room in a dharamshala, hotel or lodging house." The  question  before  us  is-what is  the  meaning  of  the expression ’a room in a, hotel’ ?  Does it merely 371 mean  a room which in a physical sense is within a  building or  part  of  a building used as a hotel; or  does  it  mean something more, that is the room itself is not’ only  within a hotel in a physical sense but is let out to serve what are known   as   ’hotel  purposes’?   If  a   strictly   literal construction  is  adopted,  then  a  room  in  a  hotel   or dharamshala  or lodging house means merely that 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 part of it so  used.   In  that event, the hotel, lodging house or dharamshala will be  that part  of  the building only which 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 (Bom. 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

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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  a. 2(b) of the Rent Control Act three different words are  used ’hotel’, dharamshals’ or ’lodging house’. 372 Obviously,   the   three  words  do  not   mean   the   same establishment.   In the cognate Act, the Bombay Rents  Hotel and  Lodging  House Rates Control Act,  1947,  however,  the definition  clause  gives  the same  meaning  to  the  words ’hotel’ and  lodging house’.  In my view s. 2(b) of the Rent Control  Act  by using two different 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 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 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.  The circumstance that people not resident in  the hotel might also be served by the hair dresser does 373 not  alter  the  position; it is still an  amenity  for  the residents in the hotel to have a hair dressing saloon within the hotel itself.  A modern hotel provides many’  facilities to its residents; some hotels have billiard rooms let out to a  private person where residents of the hotel as also  non- residents  can  play billiards on payment of  a  small  fee; other  hotels provide post 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. 1, therefore, agree with my  learned  brother

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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  hotel called  the Imperial Hotel which is housed in a building  on Queensway,  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 therefore initially at the rate of Rs. 800  and subsequently Rs. 700, per month.   On  September 26, 1950, R. N. Kapoor made  an  application under  s. 7(1) of the Delhi and Ajmere-Merwara 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  application,  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.  On 374 appeal by the appellant,. the,District Judge of Delhi If set aside  the  order of the Rent Controller and  dismissed  the application.   R.  N. Kapoor then moved the  High  Court  in revision.   The  High  Court  set aside  the  order  of  the District  Judge  and restored that of the  Rent  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 bad no jurisdiction  to fix a standard rent.  This  contention  was founded  on two grounds which I shall presently  state,  but before doing that I wish to refer 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 promises.  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  promises  is  to   be determined.  Section 7 (1) 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 whom  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: 375 " "premises" means any building or part of a building  which

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is  or  is intended to be let  separately..............  but does  not’ include a room in a dharamsala, hotel or  lodging 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 an 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 376 Court  found  several  such reasons and  these  I  will  now consider.   The  learned Rent Controller took the view that a room  in an  hotel  would  be a room normally used  for  purposes  of lodging  and  not any room in an hotel.  He 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,

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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 377 indicating  that  this  is  the  meaning  contemplated.   In defining  a  room in an hotel it does not  circumscribe  the terms  of  the letting.  ’If this was  the  intention,’  the tenant would be entirely unprotected.  Ex hypothesi he would be  outside the protection of the Act.  Though he  would  be for  all practical purposes a boarder in an hotel,the  would also  be  outside  the protection of the  cognate  Act,  The Bombay  Rents, Hotels and Lodging House, Rates Control  Act, 1947  (Bom.  57  of 1947), which has  been  made  applicable toDelhi,  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 hardly  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   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 48 378 test  would introduce great uncertainty in the  working   of the  Act which could not have been intended.  Nor do  I  see any  reason  why  the  Act  should  have  left  out  of  its protection a room which is an essential amenity of the hotel and not other rooms in it.   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

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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 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 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 consideration 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 379 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.   The Rent 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  of  perusing  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 Imperial, 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 1,  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 payment was reduced to Rs. 8,400, i.e.,  Rs.  700  per  month.  On  September  26,  1950,  the respondent  made  an  application to  the  Rent  Controller, Delhi,  alleging  that the rent demanded was  excessive  and

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therefore  a  fair rent might be fixed under the  Delhi  and Ajmer-Merwara 380 Rent  Control Act, 1947 (19 of 1947), hereinafter called  If the Act.  The appellants appeared before the Rent Controller and  contended  that  the  Act had  no  application  to  the premises  in  question  at they were  premises  in  a  hotel exempted under s. 2 of the Act from its operation, and  also on  the  ground  that  under  the  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  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.  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 381 within the meaning of s. 2 of the Act, and, therefore,  they were   exempted   from   the   operation.   of   the    Act. Unfortunately,  the legal representative of  the  respondent was  ex  parte  and we did not have  the  advantage  of  the opposite view being presented to us.  But we have before  us the considered judgment of the High Court, which has brought out all the salient points in 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 document 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:-"

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             The following are its terms and conditions:               1.    In pursuance of the said agreement,  the               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  installments  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.   That   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               382               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 supply  any               fitting  or fixture more then what  exists  in               the  premises for the present.   The  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  fee to the licensor from the date  an d               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 instance, for one year, but it might be renewed.   The amount payable for the use and occupation was fixed in a sum

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of  Rs. 9,600 per annum, payable in four  instalments.   The respondent  was to keep the premises in good  condition,  He should 383 pay   for  power  and  electricity.   He  should  not   make alterations  in  the  premises without the  consent  of  the appellants.  If he did not pay the prescribed amount in  the manner  agreed  to, he could be  evicted  therefrom  without notice, and he would also be liable to pay compensation with interest.   He could transfer his interest in  the  document with  the consent of the appellants.  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 there-’ fore 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.   The  legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to 384 make use of the premises for a particular purpose’.  But for the  permission, his occupation would be unlawful.  It  does not  create  in  his favour any estate  or  interest  n  the property.   There is, therefore, cleat  distinction  between the  two  concepts.   The  dividing  line  is  clear  though sometimes it becomes very thin or even blurred.  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 (1), wherein  Lord Denning reviewing the case law on the  subject summarizes the result of his discussion thus at p. 155:                "The  result  of  all these  cases  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."

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The Court of Appeal again in Cobb v. Lane (2) 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 that 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  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; (1) [1952] 1 All E.R. 149.    (2) [1952] 1 All E.R. 1199. 385 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; and (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. 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.   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.  I, therefore,  hold that  under  the document there was transfer of a  right  to enjoy the two rooms, and, therefore, it created a tenancy in favour of the respondent.   The  next  ground  turns  upon  the  construction  of  the provisions  of  s. 2 of the Act.  Section 2(b)  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, dharmashala,               hotel or lodging house." What is the construction of the words " a room in a hotel  " ? The object of the Act as disclosed in the preamble is " to provide for the control of rents and evictions, and for  the lease to Government of premises upon their becoming  vacant, in certain areas in the 49

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386 Provinces  of  Delhi  and  Ajmer-Merwara".   The  Act   was, therefore,  passed to control exorbitant rents of  buildings prevailing in the said States.  But s. 2 exempts a room in a hotel  from  the operation of the Act.  The reason  for  the exemption  may  be  to encourage running of  hotels  in  the cities, or it may be for other reasons.  Whatever may be the object  of  the Act, the scope of the  exemption  cannot  be enlarged  so  as  to limit the operation of  the  Act.   The exemption  from  the Act is only in respect of a room  in  a hotel.   The  collocation  of  the  words  brings  out   the characteristics of the exempted room.  The room is part of a hotel.   It partakes its character and does not cease to  be one  after  it is let out.  It is, therefore,  necessary  to ascertain the meaning of the word "hotel".  The word " hotel "  is  not defined in the Act.  A hotel in  common  parlance means  a place where a proprietor makes it his  business  to furnish  food  or lodging, or both to  travellers  or  other persons.   A  building  cannot  be run  as  a  hotel  unless services  necessary for the comfortable stay of lodgers  and boarders are maintained.  Services so maintained. vary  with the standard of the hotel and the class of persons to  which it caters; but the amenities must have relation to the hotel business.  Provisions for heating or lighting, supply of hot water, sanitary arrangements, sleeping facilities, and  such others  are  some  of the amenities a hotel  offers  to  its constituents.    But  every  amenity  however   remote   and unconnected with the business of a hotel cannot be described as  service in a hotel.  The idea of a hotel can  be  better clarified  by illustration than by definition and by  giving examples of what is a room in a hotel and also what is not a room in a hotel. (1) A owns a building in a part whereof  he runs  a hotel but leases out a room to B in the part of  the building not used as hotel; (2) A runs a hotel in the entire building but lets out a room to B for a purpose  unconnected with  the hotel business; (3) A runs a hotel in  the  entire building  and  lets  out a room to B  for  carrying  on  his business different from that of a hotel, though incidentally the inmates of the hotel take advantage of it because of its proximity; (4) A lets out a room in such a building 387 to  another with an express condition that he  should  cater only  to  the needs of the inmates of the hotel; and  (5)  A lets out a room in a hotel to a lodger, who can command  all the  services  and  amenities  of a  hotel.   In  the  first illustration,  the  room has never been a part  of  a  hotel though  it is part of a building where a hotel is  run.   In the  second,  though  a room was once part of  a  hotel,  it ceased  to be one, for it has been let out for  a  non-hotel purpose.   In the fifth, it is let out as part of  a  hotel, and, therefore, it is definitely a room in a hotel.  In  the fourth, the room may still continue as part of the hotel  as it  is  let out to provide an amenity or  service  connected with the hotel.  But to extend the scope of the words to the third illustration is to obliterate the distinction  between a  room in a hotel and a room in any other building.   If  a room in a building, which is not a hotel but situated near a hotel, is let out to a tenant to carry on his business of  a hair-dresser,  it is not exempted from the operation of  the Act.  But if the argument of the appellants be accepted,  if a similar room in a building, wherein a hotel is situated is let  out  for a similar purpose, it would be  exempted.   In either  case, the tenant is put in exclusive  possession  of the room and he is entitled to carry on his business without any  reference  to the activities of the hotel.  Can  it  be

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said that there is any reasonable nexus between the business of  the tenant and that of the hotel.  The only  thing  that can  be said is that a lodger in a hotel building  can  step into the saloon to have a shave or haircut.  So too, he  can do  so  in the case of a saloon in the  neighbouring  house. The  tenant  is  not  bound by  the  contract  to  give  any preferential treatment to the lodger.  He may take his  turn along  with others, and when he is served, he is served  not in  his  capacity  as a lodger but as  one  of  the  general customers.   What is more, under the document the tenant  is not  even bound to carry on the business of a  hair-dresser. His  only liability is to pay the stipulated amount  to  the landlord.  The room, therefore, for the purpose of the  Act, ceases  to  be a part of the hotel and becomes  a  place  of business  of the respondent.  As the rooms in question  were not let 388 out  as part of a hotel or for hotel purposes, I  must  hold that they are’ not rooms in a hotel within the meaning of s. 2 of the Act. In  this  view,  the appellants are not  exempted  from  the operation  of  the Act.  The judgment of the High  Court  is correct.  The appeal fails and is dismissed.                            ORDER In  accordance with the opinion of the majority, the  appeal is allowed.  No order as to costs.