In the case of Associated Hotels of India Ltd vs R. N. Kapoor on 19 May, 1959, the Supreme Court of India was tasked with interpreting the Delhi and Ajmer-Merwara Rent Control Act, 1947, particularly Section 2(b), in relation to the renting of rooms in a hotel. The case was presided over by Justice S.K. Das, Justice A.K. Sarkar, and Justice K. Subbarao.
Facts of the Case
The respondent, R. N. Kapoor, occupied two rooms in the appellant’s hotel, known as the Ladies’ and Gents’ Cloak Rooms, where he conducted his business as a hairdresser. The agreement between the parties was purported to be one between a licenser and licensee, with the respondent paying an annual rent of Rs. 9,600 in four quarterly installments, later reduced to Rs. 8,400 by mutual agreement. Kapoor made an application for standardisation of rent under Section 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.
Issues Raised
The appellant appealed this decision, leading to two main questions for determination: (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 Section 2(b) of the Act.
Court’s Observations and Judgment
The court, in a split decision, held that the rooms let out by the appellant to the respondent were rooms in a hotel within the meaning of Section 2(b) of the Ajmer-Merwara Rent Control Act, 1947, and were as such excluded from the purview of the Act. The respondent was not entitled to claim standardisation of rent under its provisions.
Justice S.K. Das and Justice Sarkar agreed that in order for a room to be considered ‘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 use must be connected with the general purpose of the hotel of which it is a part. They found that 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.
Justice Subba Rao, dissenting, argued that the agreement between the parties, judged by its substance and real intention, left no doubt that the document was a lease. He also argued that 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.
The judgment of the court was that the appeal should be allowed, but in the circumstances of the case, there should be no order for costs. This case serves as a significant precedent in the interpretation of the Delhi and Ajmer-Merwara Rent Control Act, 1947, particularly in relation to the renting of rooms in a hotel.