Delhi Police has registered an FIR against the hotel owner. Officials said three persons sustained injuries in the incident.
"Buildings can only be constructed up to four floors in Delhi", Delhi's home minister Satyendra Jain told NDTV.
"A 43-year-old woman suffered 45 per cent burn injuries", he told reporters, adding that 13 of the bodies had been taken to Ram Manohar Lohia Hospital, two to Lady Hardinge Hospital and one to BLK Hospital.
An investigation is underway, but the blaze is believed to have been caused by a short circuit.
Hotel Arpit Palace is located in Karol Bagh, an area popular with tourists for its budget hotels and shopping.
"Many of the deaths took place due to smoke, not fire".
G.C. Misra, Delhi fire brigade director, said the blaze had been brought under control and that 35 people were rescued by firefighters in an operation lasting several hours.
Fire accidents are not uncommon in Indian cities, where builders often flout safety regulations.
Activists say builders and landlords often amend building plans to add space and ignore safety norms to save costs. The Union tourism minister said there were a lot of wooden structures inside, which may have helped the fire spread.
It was a nightmare without end, said Somshekhar, who had come to Delhi from Kerala with his family to attend a wedding Ghaziabad and was staying in the hotel. He further said that a license is issued to a hotel only after inspection.
In December, six people were killed when a fire engulfed a hospital in Mumbai, the capital of western Maharashtra state.