Once possession of the vehicle is handed to the hotel staff or valet, there is an implied contractual obligation to return the vehicle in a safe condition

Ravikiran Shukre | Manikchand Pahade Law College, Aurangabad | 3rd March 2020 

Taj Mahal Hotel v. United India Insurance Co. Ltd. and Ors. (Civil Appeal no. 8611 of 2019)

Facts of the case: 

1. On the night of 01.08.1998, at around 11 p.m., Respondent No. 2 visited the hotel in his Maruti Zen car. While the car was insured with Respondent No. 1 the Appellant-hotel had taken a non- industrial risk insurance/liability policy from Respondent No. 3. Upon reaching the hotel, Respondent No. 2 handed over his car and its keys to the hotel valet for parking, and then went inside the hotel. The parking tag handed over to him with the condition that, the vehicle is being parked at the request of the guest at his own risk and responsibility in or outside the hotel premises.
2. When Respondent No. 2 came out of the hotel at about 1 a.m., he was informed that his vehicle had been driven away by another person. Upon enquiry with the security officer, he found that three young boys had come to the hotel in their separate car, parked it, and gone inside the hotel. After some time, they came out and asked the valet to bring their car to the porch. During this process, one of the boys, one Deepak, picked up the keys of the car of Respondent No. 2 from the desk, went to the car parking, and stole the Maruti Zen car. Though the security guard tried to stop him, he sped away. A complaint was lodged with the police, but the car remained untraced.
3. Respondent No. 1 (car insurer) settled the insurance claim raised by Respondent No. 2 (car owner) in respect of the stolen car for Rs. 2,80,000/-. Thereafter, Respondent No. 2 executed a Power of Attorney (POA) and a letter of subrogation in favour of Respondent No. 1. They both then approached the State Commission by filing a complaint against the Hotel seeking payment of the value of the car and compensation for deficiency in service. State commission dismissed the complaint and held that the insurance company acting as subrogee cannot qualify as a consumer. Hence, Respondent no. 1 has filed an appeal before National commission.
4. National Commission held that the liability of a hotel cannot be precluded by a printed notice on the parking tag disclaiming liability. Consequently, the appeal against the order of the State Commission was dismissed, although the interest awarded was modified from 12% per annum to 9% per annum. Hence, the present appeal.

Judgment:

1. Learned Senior Counsel for the Appellant made submissions as; with respect to the locus standi of Respondent No. 1, he argued that Respondent No. 1 does not qualify as a consumer. On merits, he vehemently submitted that the decision of the National Commission is erroneous inasmuch the principle of infra hospitium is not established under Indian law. He further relied on the decisions by Supreme Court to argue that a bailment necessarily exists under a contract, the terms of which are summarized in the parking tag in this case. Since the liability for theft is specifically precluded under the terms stated on the parking tag, he submitted that the Appellant cannot be held liable.
2. Counsel for Respondent No. 1 submitted that it is entitled to file a joint complaint with the original consumer in its capacity as a subrogee. Further, he relied on Klaus Mittelbachert v. East India Hotels Ltd^[1]. and Hotel Hyatt Regency v. Atul Virmani^[2], to argue that the duty of care owed by 5-star hotels is higher, and the Appellant must therefore be subject to the highest standard of insurer liability in case of theft of goods from its premises. 
3. with respect to liability for vehicles bailed to a hotel as is the case with valet parking, that such vehicles would normally be parked in the hotels own parking facility, or in the vicinity of the hotel, the hotel staff is well-placed to ensure safe custody of the vehicle and monitor its condition. Though valet parking may be offered as an optional complimentary service in some instances, more often than not, guests visiting the hotel have no other option but to entrust their vehicles to the hotels custody, especially given the congested urban areas where such hotels are located. As emphasized earlier, the guest has an implicit expectation that the repute and standards of 5-star hotels would entail adequate safety of the vehicles handed over for valet parking. Thus, in such a scenario, if the hotel is allowed to exclude its liability for negligence by way of a contract, the standard of care imposed under Section 151 will become illusory and virtually redundant, rendering consumers vulnerable without any remedy. In our view, the standard of care required to be taken by the hotel as a bailee under Section 151 is sacrosanct and cannot be contracted out of.
4. However, this does not mean that the hotel would be liable in all scenarios or that it cannot impose any exemption clause through a contract. There may be situations where the loss or damage may be caused due to the negligence of third parties, the bailors own negligence or unforeseen circumstances beyond the bailee’s control, which could not have been foreseen with ordinary diligence. This would include, for example, acts of God, seizure of the vehicle under legal process.

The Supreme Court has come to a conclusion that; the hotel-owner cannot contract out of liability for its negligence or that of its servants in respect of a vehicle of its guest in any circumstance. Once possession of the vehicle is handed to the hotel staff or valet, there is an implied contractual obligation to return the vehicle in a safe condition upon the direction of the owner.

^[1] AIR 1997 Del 201

^[2] III (2008) CPJ 281 (NC)