Hotel cannot take shelter of “owner’s risk” clause in valet parking to avoid liablity caused by theft.

The Supreme Court of India delivered the above-mentioned judgment in Taj Mahal Hotels v United India Insurance Company Ltd & Ors [C.P. (W) 8611/2019), decided on 14.11.2019.

 

Issues:

 

Following issues were raised before the Supreme Court:

  1. Whether the insurer had locus standi to file the complaint as a subrogee?;
  2. Whether the Appellant-hotel can be held liable for the theft of a car taken for valet parking, under the laws of bailment or otherwise?;
  3. If the second question is answered in the affirmative, what is the degree of care required to be taken by the Appellant-Hotel?; and
  4. Whether the Appellant-hotel can be absolved of liability by virtue of a contract?

 

 

Held:

Since no judgment on this aspect was considered by any Indian Courts, the Supreme Court

considered it appropriate to allude the jurisprudence for a comparative context to the legal issue at hand in regard to the liability of innkeepers with respect to goods or property of the guests in general.

 

The Court observed the following:

 

  1. 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;
  2. Even where there is a general or specific exemption clause, there remains a prima facie burden of proof on the hotel to explain that any loss or damage caused to the vehicles parked was not on account of its negligence or want of care as per Sections 151 and 152 of the Indian Contract Act, 1872. It is a only after this burden of proof is discharged that the exemption clause can come into force. The burden of proving that such loss or damage was covered by the exemption clause will also be on the hotel.

 

The consumer complaint in consideration before the Court held to be maintainable as it was filed by the insurer as a subrogee, along with the original owner as a co-complainant.

Further, it was observed that strict liability cannot be imposed on hotel owners in respect of loss of or damage to vehicles of their guests. Instead, the rule of prima face negligence should be adopted. Applying this rule to the present case liability was affixed on the Appellant-hotel due to want of the requisite care towards the car bailed to it.