In Taj Mahal Hotel vs United India Insurance Company Ltd. & Ors., Supreme Court held that when it comes to valet parking, hotel owners can’t not simply use a paper tag stating “parking at owners’ risk” as a way to escape liability.
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 hotel had argued that the valet parking ticket clearly states that the vehicle will be parked at the guest’s own risk and responsibility and that the management will not be responsible for any loss, theft or damage.
Bench of Justice Mohan Shantanagoudar and Justice Ajay Rastogi held 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.
Bench stated that in an arrangement of valet parking, once the customer hands over the keys of his car to the valet, the possession of the car is transferred from the customer to the hotel and thus, a 'relationship of bailment' is established.
Bailment refers to the transfer of personal property from one person to another either for safekeeping or for the other person to control or use temporarily.
Apex Court made an observation that under Indian law, the general rule has been that in a contract of bailment, if goods are lost or damaged while in the possession of the bailee (person who gets possession of goods), he will be liable. The burden of proof will be on the bailee to show that he took a reasonable degree of care in respect of the bailed goods.
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 Indian Contract Act, 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. Court further 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 brushed aside the contention of Taj Hotel that it was not liable as parking slip given to the Guest clearly stated that it would be at the guest’s ‘own risk’. “ Bench said that 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 slip will not come to their rescue.
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