Associated Hotels of India v R.N. Kapoor (1959)

Transfer of Property · Sale & Lease

Facts.

R.N. Kapoor was allowed to occupy two rooms in a hotel to run a hairdressing business, under a document that the parties called a “licence” and which reserved an annual payment. When he claimed the protection of the rent-control law, the hotel argued the arrangement was only a licence, not a lease.

Issue.

How does one tell a lease from a licence — by the label the parties use, or by the substance of the grant?

Held.

The Supreme Court (Subba Rao J) held that the substance, not the form or label, governs. The decisive test is whether the grant confers a right to exclusive possession: if the occupier has exclusive possession, the grant is a lease (an interest in the property) even if the document calls itself a licence; if he has only permission to use while possession stays with the owner, it is a licence. On the facts, Kapoor had exclusive possession, so it was a lease.

Why it matters.

It is the leading authority on the lease-versus-licence distinction — courts look past the drafting to exclusive possession — and underlies the Lease-versus-Licence comparison in Unit IV.

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