Liability for vehicle theft from parking rests with the Hotel: Supreme Court
[ by Kavita Krishnan ]The Supreme Court upheld an order passed by the National Consumer Disputes Redressal Commission (‘National Commission’) to pay compensation of Rs 2.8 lakh to an individual whose Maruti Zen car was stolen in 1998 from its parking area holding that there was deficiency in services rendered by the hotel management.The Supreme Court ruled that a hotel cannot take the...
The Supreme Court upheld an order passed by the National Consumer Disputes Redressal Commission (‘National Commission’) to pay compensation of Rs 2.8 lakh to an individual whose Maruti Zen car was stolen in 1998 from its parking area holding that there was deficiency in services rendered by the hotel management.
The Supreme Court ruled that a hotel cannot take the cover of ‘owner’s risk’ clause on parking tokens to deny compensation to its guests for theft or damage to their vehicles once keys are handed over to the valet.
A bench of Supreme Court Justices Mohan M. Shantanagoudar and Ajay Rastogi held that if the hotel is allowed to exclude its liability for negligence by way of a contract, the standard of care imposed under Section 151 of the Indian Contract Act 1872 (ICA) will become illusory and virtually redundant, rendering consumers vulnerable without any remedy. Further, 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.
The Apex Court said that when the hotel actively undertakes to park the vehicle for the owner, keep it in safe custody and return it upon presentation of a parking slip, it would be liable to return the vehicle in the condition in which it was given. In a case of theft of a vehicle given for valet parking, the hotel cannot claim exemption from liability by arguing it was due to acts of third parties beyond their control, or that they are protected by an ‘owner’s risk’ clause, prior to fulfilling its burden as required under Section 151 and 152 of the ICA.
According to the Court it is immaterial that parking is provided free of cost as these services are covered by the exorbitant rates charged for renting of rooms, food, entry fee to lounges and clubs and so on.
The Court ruled that 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 a parking slip in a manner such that the parking of the vehicle is beyond the control of the owner, a contract of bailment exists. Thus, the hotel would be liable as a bailee for returning the vehicle in the condition in which it was delivered.
According to the Court, when the possession of the vehicle was handed over to a hotel employee for valet parking, it can be said that ‘delivery’ of the vehicle has been made for the purposes of Section 148 and 149 creating a relationship of bailment. The hotel could not refute the existence of bailment by contending that its valet parking service was purely complimentary in nature and that the consumer (bailor) had not paid for the same.
In this case, the onus lied on the Hotel to prove that efforts were undertaken by it to take reasonable care of the vehicle bailed, and that the theft did not occur due to its neglect or misconduct. Citing sections 151 and 152 of the ICA, the Apex Court held that the bailee has a duty to keep its premises in a condition of safety that would be reasonable to prevent loss, damage, or theft of the goods of its guests. The Court held that it was the responsibility of the Hotel to take additional steps to guard against situations which may result in wrongful loss or damage to the car.
The Court observed that 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 Section 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 under Section 151.
The Court brushed aside the contention of Taj Hotel that it was not liable as parking tag given to the guest clearly stated that it would be at the guest’s ‘own risk’. The Court ruled that hotels are at liberty to print clear contractual disclaimers notifying their guests that their liability is excluded for loss or damage to vehicles taken for valet parking which are occasioned by acts of a third party, contributory negligence or by force majeure events. However, this would always be subject to the hotel discharging its initial burden of proving that it fulfilled the standard of care imposed under Section 151 of the ICA. Where the hotel or its servants have actively connived against or acted negligently in safeguarding the vehicles delivered for valet parking, ‘owner’s risk’ clauses in the parking token will not come to their rescue.