Associated Hotels of India Ltd v RN Kapoor
Rule established
Test for lease vs licence is exclusive possession; document label is irrelevant
Facts
- Hotel granted occupation of its premises to a party for running a business
- Agreement was titled "leave and licence"
- Grantee had exclusive possession, own lock, and independent control
- Hotel sought to revoke the "licence"
Issue
- Whether an agreement granting exclusive possession to occupy and use premises is a lease or a licence, regardless of the document's title.
Held
- The agreement created a lease, not a licence. The test is substance, not form. Where exclusive possession is given, the right to exclude all others including the grantor, the transaction is a lease. The document's title ("leave and licence") is irrelevant.
Ratio Decidendi
Exclusive possession = lease. Mere permission to use without exclusive possession = licence. Courts look at: (a) whether grantee can exclude the grantor, (b) extent of control retained by grantor, (c) nature of occupation (independent vs. subordinate). The label chosen by parties cannot convert a lease into a licence.
How to use it in an exam
Primary authority for lease vs. licence distinction. Cite in any problem where a document is titled "licence" but grants exclusive possession. Key line: "The real test is exclusive possession, not what the parties choose to call the document."
Source
Source: AIR 1959 Supreme Court 1262
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.