1. Note on the
judgment passed by Supreme Court of India in the matter of
Associated Hotels Of India Ltd vs R. N. Kapoor on 19 May, 1959 Equivalent
citations: 1959 AIR 1262, 1960 SCR (1) 368.( http://indiankanoon.org/doc/1719430/
2.
In
the above case licensed agreement was only for one year with a clause to
extend the agreement for a further period of one year at the option of
the Licensor. The agreement was considered to be a lease on the ground that it
has a clause granting right to the licensee to transfer to any person with
consent and approval of the licensor under some specific circumstances. The
cause was as follows:
“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.”
3.
Supreme Court held that the document was that of
lease and not a license and made the following observations :
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.
4.
In our license agreement, we are conceding to
allow our licensee to sub-let the premises or part of the premises to
their subsidiary companies in certain circumstances. We should try to dilute
this clause by deleting the word “sub-let” if any in the relevant
paragraph. Draft paragraph is given below:
‘It is clarified and agreed that the licensee will
have no right in any circumstances to sublet the premises or any portion
thereof to any third party. However, the Licensor agrees that in the
event license due to any reason does not require the premises or any part
thereof and request the licensor to permit any of its subsidiary company
having paid up capital of one crore or more, then the Licensor will permit to
the said subsidiary company on the same terms and conditions on execution of
fresh License Agreement with the said subsidiary company.