# TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE COMPANY LTD. & ORS

- **Citation:** [2019] 13 S.C.R. 850
- **Court:** Supreme Court of India
- **Decided:** 2019-11-14
- **Case number:** Civil Appeal No. 8611 of 2019
- **Bench:** Mohan M. Shantanagoudar, Ajay Rastogi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/taj-mahal-hotel-v-united-india-insurance-company-ltd-ors-33249
- **Pages:** 43

## Headnote

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
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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 lia

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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
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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.
Words & Phrases - 'in the absence of any special contract'
in s.152, 1872 Act - Meaning of - Held: Though courts may have
construed the phrase 'in the absence of any special contract' in
TAJ MAHAL HOTEL v. UNITED INDIA
INSURANCE COMPANY LTD.
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s.152 to mean that a bailee can reduce his liability u/s.151 but,
such an interpretation is incorrect - Words 'in the absence of any
special contract' in s.152 clearly indicate that it is open to the
bailee to accept a higher standard of liability than s.151 under
contract, and not otherwise - 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 - Contract Act, 1872 -
ss.151, 152 - Interpretation of Statutes - Consumer Protection.
Dismissing the appeal, the Court
HELD: 1.1 COMPLAINT FILED BY INSURER AS A
SUBROGEE
It has been settled by a Constitution Bench of this Court
in Economic Transport Organisation that even though a
consumer complaint filed by an insurer in its own name is not
maintainable, a complaint filed by the insurer acting as a subrogee
is maintainable if it is filed by: i) the insurer in the name of the
assured, wherein the insurer acts as the attorney holder of the
assured; or ii) the insurer and the assured as co-complainants.
In the instant case, respondent no. 2 (actual consumer/assured)
had executed a POA and a letter of subrogation in favour of
respondent no. 1 (car insurer). Consequently, the complaint
before the state commission was filed by respondent nos.1 and
2 as co-complainants. Hence, both the conditions are squarely
applicable to this case and the complaint is maintainable. [Paras
8, 9] [865-E-G]
Economic Transport Organisation v. Charan Spinning
Mills (Pvt.) Ltd. (2010) 4 SCC 114 - followed.
Oberoi Forwarding Agency v. New India Assurance
Company Limited [2000] 1 SCR 554 ; B. Dutta, Senior
Advocate v. Management of State (2010) 1 CPC 319 ;
Klaus Mittelbachert v. East India Hotels Ltd. AIR 1997
Del 201 ; Hotel Hyatt Regency v. Atul Virmani III
(2008) CPJ 281 (NC) - referred to.
1.2 LIABILITY OF HOTELS FOR THEFT OR LOSS OF
VEHICLES OF GUESTS
The imposition of strict liability for loss or damage to
vehicles of guests is overly burdensome in today's context. The
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strict liability rule had emerged in an age and time where travel
was rare and tourism was virtually non-existent, thereby
prompting Courts to hold hotel owners liable so as to protect
the interests of the guests. However, in today's context of
economies with well-established hotel industries and mandatory
insurance of vehicles owned by guests, there has been a trend
across jurisdictions of moving away from the strict liability of
innkeepers in respect of vehicles of guests. Persons visiting
hotels and parking their cars in their premises or under valet
parking, cannot be left at the mercy of hotel owners. It is
essential to balance the interests of hotel owners and guests,
and it is found that the prima facie liability rule strikes this
balance without placing undue burden on either of the parties.
The fact that guests are already protected by virtue of insurance
of their vehicles tips the scale in favour of adopting a relatively
moderate approach. Thus, given that the prima facie liability rule
is premised on the existence of a bailment relationship, in cases
where such a relationship is found to exist between the hotel
and its guest, the rule should be applied in respect of vehicles
so bailed to the hotel. This is also the approach that has found
mention 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, 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 (N.R. Srinivasa Iyer v. New
India Assurance Co. Ltd.). This is because there is an implicit
expectation between the hotel and the guest when a vehicle is
handed over for valet parking that the vehicle would be taken
reasonable care of, and returned in a proper condition. Thus,
the failure to return the vehicle strikes at the root of the bailment
relationship and gives rise to a prima facie case of negligence
against the hotel. The strict liability rule under common law is
a relic of the past and should not be given effect in the Indian
context. To this extent, the National Commission erred in
adopting the common law rule without justifying its choice or
without noting the well-recognised exception in respect of the
vehicles of guests. [Paras 15.2, 16] [872-A-B-F-H; 873-A-C]
N.R. Srinivasa Iyer v. New India Assurance Co. Ltd.
AIR (1983) SC 899 : [1983] 3 SCR 479 - relied on.
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1.3 EXISTENCE OF BAILMENT RELATIONSHIP
The existence of a contract of bailment often turns on the
degree of control exercised by the prospective bailee over the
property or good in question. In other words, the crucial point
to be considered is whether the custody or possession of the
vehicle is purposefully handed over to the hotel (as is the case
with valet parking) or whether the complainant is merely allowed
to park his car in a parking space or facility. While the laws of
bailment apply in the former case, the latter is only a licensorlicensee relationship where laws of bailment or the prima facie
liability rule cannot be applied. 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. In a scenario where
possession of the vehicle is 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.
Consequently, a relationship of bailment is created. The 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. A
contract of bailment under Section 148 may be gratuitous. In any
case, it is common knowledge that 'complimentary' services
provided by 5-star hotels are not actually free-of-cost. These
services are covered by the exorbitant rates charged for renting
of rooms, food, entry fee to lounges and clubs, and so on. It
cannot be denied that valet parking service, even if offered
gratuitously, benefits the hotel. A hotel holding itself out to the
public as providing such a service seeks to pitch it as a value
addition to the experience of a guest and incentives greater foot
fall. Therefore, for such cases, there exists an implied
consideration for the contract of bailment created by virtue of
the valet parking service. Respondent No. 2 had given up
possession of his car by handing it over to the valet. Thus,
the Appellant-hotel cannot refute the existence of bailment
by contending that its valet parking service was purely
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complimentary in nature and that the consumer (bailor) had not
paid for the same. The existence of a bailment relationship is
clear. [Paras 18, 18.3, 18.7 and 18.8] [873-E-F; 874-E-F; 875B-C; 878-C-H]
Bombay Brazzerie v. Mulchand Agarwal (2002)
NCDRC 42 - disapproved.
Commissioner, Corporation of Madras v. S. Alagraj
I (1996) CPJ 54 (NC) ; Rohini Group of Theatres v.
V. Gopalakrishnan II (1996) CPJ 1 (NC) ; New India
Assurance Co. Ltd. v. Delhi Development Authority AIR
1991 Del 298 - referred to.
1.4 THE REQUIRED DEGREE OF CARE UNDER
BAILMENT
Given the existence of a bailment relationship, the failure
of the Appellant to deliver the car to Respondent No. 2 (carowner), raises a prima facie case of negligence against it. Thus,
the burden of proof is on the hotel (bailee) to show 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. Under Sections 151 and 152, 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. With respect to 5-star hotels specifically, the
responsibility to take such measures is higher. Sections 151 and
152 of the Contract Act 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 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. Whether or not such standard of
reasonable care was fulfilled will depend upon the facts and
circumstances of each case. [Para 19, 20.1-20.3] [879-B-E-F;
880-C; 881-B-C]
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1.5 The records show that the car of Respondent No.2 was
stolen when three young boys who had parked their car in the
Appellant-hotel came out of the hotel, asked the valet driver to
bring their car to the porch, and one of them then picked up
the keys of the car of Respondent No.2 from the desk, went to
the parking area and stole the car. Entire case of the appellant
has been premised on the exclusion clause in the notice, and
not on the absence of negligent conduct on its part. In fact, there
has been 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. The
manner in which the car was stolen manifests that no steps had
been taken by the Appellant-hotel to ensure that car keys were
kept outside the reach of outsiders or that the cars were parked
in a safe location with adequate barriers to verify their owners.
In the absence of such measures, the Appellant failed to
discharge its burden of disproving the prima facie case of
negligence against it. Thus, the theft of the car of Respondent
No.2 was a result of the negligence of the Appellant-hotel. [Para
21] [881-D-H; 882-A]
Sheik Mahamad Ravuther v. The British Indian Steam
Navigation Co. Ltd. (1909) ILR 32 Mad 95 ; Kariadan
Kumber v. British India Steam Navigation (1913) 38
Mad. 941 ; Hollandia Pinmen v. H. Oppenheiner AIR
1924 Rang 356 ; Bombay Steam Navigation Ltd v.
Vasudev Baburao Kamat ILR (1928) 52 Bom 37 ;
Lakhaji Dollaji & Co. v. Boorugu Mahadeo Rajanna
41 Bom LR 6 ; Indian Air Lines Corporation v. Jothaji
Maniram AIR 1959 Mad 285 ; State Bank of India
v. M/s Quality Bread Factory, Batala AIR 1983 P&H
244 ; Central Bank of India v. M/s Grains & Gunny
Agencies AIR 1989 MP 28 ; Nath Bros. Exim
International Ltd. v. Best Roadways Ltd. (2000) 4 SCC
553 : [2000] 2 SCR 538 - referred to.
2.1 EXCLUDING LIABILITY BY CONTRACT
Upon perusal of the relevant decisions on this point, it is
found that White C.J. and Wallis J's opinion in Sheik Mahamad
was peculiar to the facts of that case. With respect to liability
for vehicles bailed to a hotel as is the case with valet parking,
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Sankaran Nair J.'s opinion in Sheik Mahamad should be adopted.
Given that such vehicles would normally be parked in the hotel's
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 hotel's custody, especially given the congested
urban areas where such hotels are located. 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. 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. Though courts may have construed the phrase
'in the absence of any special contract' in Section 152 to mean
that a bailee can reduce his liability under Section 151, such an
interpretation is incorrect. The words 'in the absence of any
special contract' in Section 152 clearly indicate that it is open
to the bailee to accept a higher standard of liability than Section
151 under contract, and not otherwise. 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 bailor's 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 or by public authorities, damage due to natural
causes such as unforeseen weather conditions, presence of
inherent defects in the vehicle, acts of loss or damage caused
by the guest's own negligence and so on. A joint reading of
Sections 151 and 152 shows that, in such cases, the Contract
Act intended that the bailee should not be liable for the loss or
damage of the goods bailed on all occasions. Section 152
expressly states that the bailee, in the absence of any special
contract, is not responsible for loss or damage of the thing bailed,
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if he is able to prove that he has taken the amount of care
required under Section 151. Therefore, 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 Contract Act. 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.
Where a valet or servant has been handed custody of the vehicle,
and such a servant takes away the vehicle without authority, the
hotel will be liable. This is because there will still be a prima
facie assumption that the hotel has exercised laxity in
supervising the actions of its servants. However, the hotel will
not liable where, in spite of due diligence, a servant or employee
who was not entrusted with custody of the vehicle takes it
without authority, as this would be similar to a case of theft by a
third-party. The above observations are limited to the issue for
consideration, that is, the liability of hotels as bailees for vehicles
handed over to them for valet parking. Whether the rule as laid
down by White C.J. and Wallis J. in Sheik Mahamad, and
followed in subsequent High Court decisions, holds good in other
kinds of contracts is not being commented upon, and it is
desisted from commenting further on this aspect. 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. While a case of a robbery by force
is visibly beyond a bailee's control, in cases of private stealth,
or simple theft where no force or violence is involved, the bailee
still has the prima facie burden of explaining that the loss or
disappearance of the goods in his custody is not attributable to
his neglect or want of care. This is because no one apart from
the bailee is in a position to explain the fate of the goods. In
the instant case, given the finding that the theft of the car of
Respondent No.2 was a result of the negligence of the Appellant-
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hotel, the exemption clause on the parking tag will not exclude
the Appellant's liability. Hence, the argument of the Appellanthotel on this count fails. In conclusion: (i) 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. (ii) 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 per Sections 151
and 152 of the Contract Act. It is 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. [Paras 28-30] [889D-H; 890-A-H; 891-A-H; 892-A-B]
2.2 The consumer complaint in consideration is
maintainable as it was filed by the insurer as a subrogee, along
with the original owner as a co-complainant. Further, 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
facie negligence should be adopted. The Appellant has not
explained why its failure to return the vehicle to Respondent
No. 2 was not on account of fault or negligence on its part. Thus,
liability should be affixed on the Appellant-hotel due to want of
the requisite care towards the car bailed to it. [Para 31] [892C-D]
Law Commission of India, Contract Act, 1872 (Law
Com No 13, 1958) para 125 ; Pollock and Mulla, The
Indian Contract and Specific Relief Acts (Nilima
Bhadbhade ed, updated 14th edn, 2013) 1505, 1522;
Pollock and Mulla (n 32) 1505 - referred to.
Dickerson v. Rogers 4 Humph 179 (1843) ; Aria v.
Bridge House Hotel (Staines) Ltd. (1927) 137 LT 299;
Williams v. Linnitt, 1 ALL E.R. 2 78 (Eng. 1951) ; Laird
v. Eichold 10 Ind. 212 (1858) ; Ashby v. Tolhurst [1937]
2 K.B. 242 ; Tinsley v. Dudley [1951] 2 K.B. 19 ;
Port Swettenham Authority v. T.W. Wu & Co. [1979]
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A.C. 580 ; Price & Co v. Union Lighterage Company
(1903) 1 K.B. 750 - referred to.
John E. H. Sherry, The Laws of Innkeepers: For
Hotels, Motels, and Restaurants (3rd edn, Cornell
University Press 1993) 415-417 ; Joseph James
Hemphling, 'Innkeeper's Liability at Common Law
and Under the Statutes' (1929) 4(7) Notre Dame Law
Review 421, 422; Wayne Quinton, 'Liability for
Automobile Parking at Hotels: The Tennessee Case
Abstract' (1992) 16(1) Hospitality Research Journal
109, 110 ; Sylvan H. Hirsch, 'Limited Liability of
Innkeepers Under Statutory Regulations' (1928) 76
University of Pennsylvania Law Review 272 ; John
H. Sherry, 'The Innkeeper's Liability for Automobiles
and Their Contents' (Aug 1964) <https://doi.org/
10.1177/001088046400500202
>
accessed
2
November 2019 ; Park-O-Tell Co. v. Roskamp, 203
Okla. 493, 223, P.2d 375 (1950) ; Abercrombie v.
Edwards, 62 Okla. 54, 161 P. 1084 (Okla. 1916) ; L.J.
Blom-Cooper, 'Second Report of the Law Reform
Committee on the Law of Innkeepers' Liabilities for
Property of Travellers, Guests, and Residents (May
1954)' (Jul 1955) 18(4) The Modern Law Review 374,
376 ; Hotel Proprietors Act 1956, s 2(2) (United
Kingdom); Innkeepers Act 1968, s 6(a) (New South
Wales) ; Carriers and Innkeepers Act 1958, s 29(a)
(Victoria); Annex to the Convention on the Liability
of Hotel-Keepers concerning the Property of their
Guests, Article 7 (Paris, 1962) - referred to.
Case Law Reference
[2000] 1 SCR 554
referred to
Para 3.4
(2010) 4 SCC 114
followed
Para 3.4
(2010) 1 CPC 319
referred to
Para 3.5
AIR 1997 Del 201
referred to
Para 5
III (2008) CPJ 281 (NC)
referred to
Para 5
[1983] 3 SCR 479
relied on
Para 16
I (1996) CPJ 54 (NC)
referred to
Para 18.1
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II (1996) CPJ 1 (NC)
referred to
Para 18.1
AIR 1991 Del 298
referred to
Para 18.6
(2002) NCDRC 42
disapproved
Para 18.7
(1909) ILR 32 Mad 95
referred to
Para 23
(1913) 38 Mad. 941
referred to
Para 25
AIR 1924 Rang 356
referred to
Para 25
ILR (1928) 52 Bom 37
referred to
Para 25
41 Bom LR 6
referred to
Para 25
AIR 1959 Mad 285
referred to
Para 25
AIR 1983 P&H 244
referred to
Para 25
AIR 1989 MP 28
referred to
Para 25
[2000] 2 SCR 538
referred to
Para 27
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8611
of 2019.
From the Judgment and Order dated 05.02.2018 of the National
Consumer Disputes Redressal Commission at New Delhi in First Appeal
No. 440 of 2016
Gopal Jain, Sr. Adv., Ms. Meenakshi Midha, Kapil Midha,
Ms. Pritika Juneja, Ms. Prashanti, Chander Shekhar Ashri, Advs. for
the Appellant.
Amit Kumar Singh, Ms. K. Enatoli Sema, Gaurav Prakash,
Asutosh Sharma, Kuldeep Singh Tomar, S.L. Gupta, Varinder Kumar
Sharma, for the Respondents.
The Judgment of the Court was delivered by
MOHAN M. SHANTANAGOUDAR, J.
1. Leave granted.
2. This appeal, by special leave, arises out of judgment dated
05.02.2018 passed by the National Consumer Disputes Redressal
Commission ('National Commission') dismissing the appeal against order
dated 29.01.2016 passed by the State Consumer Disputes Redressal
Commission ('State Commission'), New Delhi in Complaint Case No.
198/1999.
TAJ MAHAL HOTEL v. UNITED INDIA
INSURANCE COMPANY LTD.
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3. The following are the facts out of which this appeal arises:
3.1. On the night of 01.08.1998, at around 11 p.m., Respondent
No. 2 herein (Complainant No. 2) visited the Appellant-hotel in his
Maruti Zen car. While the car was insured with Respondent No. 1
herein (Complainant No. 1), the Appellant-hotel had taken a nonindustrial 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 read inter alia:
"IMPORTANT CONDITION: This vehicle is being parked at
the request of the guest at his own risk and responsibility in or
outside the Hotel premises. In the event of any loss, theft or
damage, the management shall not be held responsible for the
same and the guest shall have no claim whatsoever against the
management."
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.
3.2. 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 Appellant-Hotel seeking payment of the value of
the car and compensation for deficiency in service.
3.3. Relying upon this Court's decision in Oberoi Forwarding
Agency v. New India Assurance Company Limited,1 the State
Commission dismissed the complaint on the ground that an insurance
company acting as a subrogee cannot qualify as a 'consumer'. Hence,
Respondent No. 1 filed an appeal before the National Commission.
1 (2000) 1 SCR 554.
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3.4. Notably, Oberoi was partly overruled by a subsequent
decision of a Constitution Bench of this Court in Economic Transport
Organisation v. Charan Spinning Mills (Pvt.) Ltd.2 In light of this
change in law, by order dated 20.09.2010, the National Commission in
appeal remanded the complaint back to the State Commission, observing
that Respondent No. 1 (car insurer) had locus standi to file the
complaint.
3.5. Deciding on merits, the State Commission relied on the
decisions of the National Commission in Bombay Brazzerie v.
Mulchand Agarwal3 and B. Dutta, Senior Advocate v. Management
of State4 to hold that laws of bailment apply when a customer pays to
park his car in a parking lot and it is then stolen or damaged. It was
noted that the price paid for food consumed in the hotel would include
consideration for a contract of bailment from the consumer (bailor) to
the hotel (bailee). Applying this to the facts of this case, the State
Commission observed that though the Appellant-hotel had averred that
Respondent No. 2 had not had dinner at the hotel that night, it was
improbable for him to have stayed inside the hotel from 11 p.m. to 1
a.m. without consuming any food or snacks or paying any kind of bill.
Hence, the State Commission proceeded on the assumption that
Respondent No. 2 had paid consideration for the contract.
In light of this, the State Commission allowed the complaint and
directed the Appellant-hotel to pay Respondent No. 1 a sum of Rs.
2,80,000 (the value of the car) with interest at 12% per annum and
Rs. 50,000 as litigation costs. In addition to this, it directed payment of
Rs. 1,00,000 to Respondent No. 2 for inconvenience and harassment
faced by him. The State Commission also held that Respondent No. 3
(insurer of the hotel) would not be liable to indemnify the loss caused
to the Appellant-hotel, as the theft of the car had not been notified to
it within due time.
3.6. Appeal filed against this order by the Appellant herein was
disposed of vide the impugned judgment. On the question of locus
standi of Respondent No. 1 (subrogee) to file the complaint, the National
Commission observed that its earlier order dated 20.09.2010 (supra)
had not been challenged, and had consequently attained finality. Hence,
2 (2010) 4 SCC 114.
3 (2002) NCDRC 42.
4 (2010) 1 CPC 319.
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]
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it was held that the Appellant could not argue that Respondent No. 1
(car insurer) did not have locus standi.
The National Commission further applied the principle of infra
hospitium (Latin for 'within the hotel') and observed that common law
has historically imposed strict liability on a hotel for the loss of a guest's
property if the guest and the property were within the hotel premises.
It was noted that once the guest presents the car keys to the valet and
possession of the car is transferred from the guest to the hotel, a
relationship of bailment is established. Relying on various decisions by
foreign Courts on strict liability for property kept infra hospitium, the
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.
4. Learned Senior Counsel for the Appellant made submissions
on two fronts. 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 in
Bombay Brazzerie and B. Datta to argue that a bailment necessarily
exists under a contract, the terms of which are encapsulated 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.
5. Per contra, 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.5 and Hotel Hyatt Regency v. Atul Virmani,6 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.
6. Heard learned Counsel for both parties.
5 AIR 1997 Del 201.
6 III (2008) CPJ 281 (NC).
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7. At this juncture, it is pertinent to note that the compensation
awarded by the State Commission (including interest) has already been
paid by the Appellant to Respondent Nos. 1 and 2. Thus, we are only
concerned with the questions of law involved in the matter. Based on
a perusal of the record, the following issues arise for consideration in
the present appeal:
First, whether the insurer had locus standi to file the complaint
as a subrogee?;
Second, 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?;
Third, if the second question is answered in the affirmative, what
is the degree of care required to be taken by the Appellant-Hotel?; and
Fourth, whether the Appellant-hotel can be absolved of liability
by virtue of a contract?
We will be adverting to each of these in turn.
I. COMPLAINT FILED BY INSURER AS A SUBROGEE
8. It has been settled by a Constitution Bench of this Court in
Economic Transport Organisation (supra) that even though a
consumer complaint filed by an insurer in its own name is not
maintainable, a complaint filed by the insurer acting as a subrogee is
maintainable if it is filed by:
i) the insurer in the name of the assured, wherein the insurer
acts as the attorney holder of the assured; or
ii) the insurer and the assured as co-complainants.
9. In the instant case, Respondent No. 2 (actual consumer/
assured) had executed a POA and a letter of subrogation in favour of
Respondent No. 1 (car insurer). Consequently, the complaint before the
State Commission was filed by Respondent Nos. 1 and 2 as
co-complainants. Hence, both the conditions are squarely applicable to
this case and the complaint is maintainable.
10. Having considered the maintainability of the complaint, we
now proceed to examine the liability of the Appellant-hotel for theft of
the vehicle of Respondent No. 2.
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]
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II. LIABILITY OF HOTELS FOR THEFT OR LOSS OF
VEHICLES OF GUESTS
11. The liability of hotel owners or innkeepers (as they were
traditionally called) for the loss of, or damage to goods of their guest
has been a subject of judicial consideration for a long time. Though the
issue has come up before this Court for the first time in this case, it
has received ample judicial and academic attention in other common
law jurisdictions. Thus, we find it appropriate to allude to this
jurisprudence for a comparative context to the legal issue at hand.
Though other jurisdictions have dealt with the liability of innkeepers with
respect to goods or property of the guests in general, we will be
confining our discussion to vehicles of guests, as the present case is
concerned with the same.
12. Broadly, two approaches have been taken towards the liability
of an innkeeper for loss or damage to the vehicles of his guest7 - first,
the common law rule of insurer's liability wherein the innkeeper is
treated as an insurer and made responsible for any loss or damage to
the vehicle of its guest, regardless of the presence or absence of
negligence on his part ('the common law rule'); and second, the rule
of prima facie negligence wherein the innkeeper is presumed to be liable
for loss or damage to the vehicle of his guest, but can exclude his liability
by proving that the loss did not occur due to any fault or negligence on
his part ('prima facie liability rule').
A. Common law Rule
13. At common law, innkeepers were held strictly liable for the
loss of or damage to a guest's horse or carriage placed within the
confines of the inn, i.e. infra hospitium. They were excused from
liability only if the loss or damage occurred by an act of God, an act of
the public enemy, or the fault or negligence of the guest himself.8
13.1. The earliest recorded opinion discussing this rule is
Dickerson v. Rogers,9 where the Supreme Court of Tennessee State
(USA) held the innkeeper liable for injury caused to a horse brought
7 John E. H. Sherry, The Laws of Innkeepers: For Hotels, Motels, and Restaurants
(3rd edn, Cornell University Press 1993) 415-417.
8 Joseph James Hemphling, 'Innkeeper's Liability at Common Law and Under the
Statutes' (1929) 4(7) Notre Dame Law Review 421, 422.
9 4 Humph 179 (1843).
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by the guest and placed in the stable of the inn. Citing English common
law, the Court noted as follows:
 "It is laid down by Chancellor Kent (2 Com. 593), upon the
authority of the English cases, that an innkeeper is bound to keep
safe the goods of his guest deposited within the inn, except where
the loss is occasioned by inevitable casualty, or by superior force,
as robbery. And Mr. Justice Story says (Law of Bailments, 306,
sec. 470) that an innkeeper is bound to take, not ordinary care
only, but uncommon care of the goods and baggage of his guests.
If, therefore, the goods or baggage of his guest are damaged in
his inn, or are stolen from it by his servants or domestics, or by
another guest, he is bound to make restitution...
...If this rule was not inflexibly enforced, no traveller would be
safe in entrusting his horse to the hands of the inn-keeper until
he had first inspected his stables, and selected a place for his
horse to be kept, an inconvenience which could not be endured."
13.2. The imposition of such strict liability was dictated by the
conditions of the time. It emerged in a context where inns were intended
to provide a safe haven to travelers against bands of marauders and
robbers. However, the popular prejudice was that innkeepers would
collude with such persons to rob the guests of their properties.10 Given
the vulnerability of travelers to robbery and violence in such a setting,
the judges fashioned the strict liability rule to allow travelers to recover
from innkeepers without the need to prove fault.