TAJ MAHAL HOTEL versus UNITED INDIA INSURANCE COMPANY LTD. & ORS.

Citation: [2019] 13 S.C.R. 850 · Decided: 14-11-2019 · Supreme Court of India · Bench: MOHAN M. SHANTANAGOUDAR · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 13 S.C.R.
TAJ MAHAL HOTEL
v.
UNITED INDIA INSURANCE COMPANY LTD. & ORS.
(Civil Appeal No. 8611 of 2019)
NOVEMBER 14, 2019
[MOHAN M. SHANTANAGOUDAR AND
AJAY RASTOGI, JJ.]
Consumer Protection – Vehicles of guests handed over to the
hotels for valet parking – Liability of hotels in case of theft/loss –
Bailor-bailee relationship under the Contract Act, if exists –
Respondent no.2’s car parked under the valet parking of the
appellant-hotel – Car driven away by another person– Respondent
no.1 (insurer) settled the insurance claim by respondent no.2 – Both
filed complaint against the appellant – Dismissed by the State
Commission on the locus standi of the insurer – National Commission
remanded the complaint back to the State Commission which
allowed the complaint – National Commission dismissed the appeal
filed by the appellant – Held: Complaint filed by the insurer as
subrogee, along with the original owner as co-complainant is
maintainable – In a situation where the hotel actively undertakes
to park the vehicle for the owner, keep it in safe custody and return
it upon presentation of parking slip in a manner such that the
parking of the vehicle is beyond the control of the owner, a
contract of bailment exists – Hotel liable as a bailee for returning
the vehicle in the condition in which it was delivered – However,
imposition of strict liability under common law for loss or damage
to vehicles of guests is overly burdensome and should not be given
effect in the Indian context, instead, the rule of prima facie
negligence should be adopted – To this extent, the National
Commission erred in adopting the common law rule – Under ss.151
& 152, 1872 Act, the bailee has duty to keep its premises in a
condition of safety, reasonable to prevent loss, damage, or theft
of the goods of its guests – Responsibility to take such measures
is higher with respect to 5-star hotels – Hotel cannot refute the
existence of bailment by contending that its valet parking service
was complimentary in nature and that the consumer (bailor) had
not paid for the same – Burden of proof is on the hotel (bailee) to
   [2019] 13 S.C.R. 850
850
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show that it took efforts to take reasonable care of the vehicle
bailed, and the theft did not occur due to its neglect/misconduct –
Entire case of the appellant is premised on the exclusion clause in
the notice, and not on the absence of negligent conduct on its part
– There was an admission of the fact that one of the three young
boys who had visited the hotel, stole the car of respondent no.2
while its keys were under the watch of the valet driver – Theft of
the respondent no.2’s car was result of the appellant’s negligence
– Exemption clause on the parking tag will not exclude its liability
– Contract Act, 1872 – ss.148, 149, 151, 152 – Principle of strict
liability for vehicles infra hospitium; Prima facie liability rule.
Contract Act, 1872 – ss.151, 152 – Standard of care to be
taken by the bailee (hotel) for the vehicles parked within its
premises – Discussed – Consumer Protection.
Contract Act, 1872 – ss.148, 149 – ‘Delivery’ under – When
– Held: In a scenario where possession of the vehicle is handed
over to hotel employee for valet parking, it can be said that
‘delivery’ of the vehicle has been made for the purposes of s.148
and 149 – Consequently, a relationship of bailment is created –
Parking token so handed over to the bailor is evidence of a
contract, by which the bailee (hotel) undertakes to park the car
and return it in a suitable condition when the vehicle owner so
directs – Consumer Protection.
Contract Act, 1872 – ss.151, 152 – Vehicles of guests parked
under the valet parking of the hotels – Loss/theft of – Distinction
between gratuitous bailee and bailee for reward – If any – Held:
ss.151 and 152 do not distinguish between a gratuitous bailee and
a bailee for reward – It is irrelevant as to how much parking fee
was paid by the consumer, or whether any parking fee was paid
at all, as the duty of care required to be taken by the hotel will be
the same in all circumstances – However, this is not a strict liability
standard insofar as s.152 excludes the liability of a bailee for loss
or damage of the bailed goods if he is able to show that he fulfilled
the standard of reasonable care u/s.151 – Whether or not such
standard of reasonable care was fulfilled will depend upon the facts
and circumstances of each case – Consumer Protection.

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