Back
SUPREME COURT OF INDIA
MOHAN M. SHANTANAGOUDAR, AJAY RASTOGI, JJ.
Taj Mahal Hotel – Appellant
Versus
United India Insurance Company Ltd. and Others – Respondents
Civil Appeal No. 8611 of 2019, S.L.P. (Civil) No. 11213 of 2018
Decided On : 14-11-2019
(a) Consumer Protection Act, 1986 - Section 12 and 19 - Actual consumer/assured person executing a POA and a letter of subrogation in favour of Respondent No. 1 (car insurer) - Insurer and assured filing complaint in State commission as co-complainants - Complaint held maintainable. (Para 9)
(b) Consumer Protection Act, 1986 - Section 12 and 19 - Hotel’s liability for theft of car - Infra hospitium - Principle of strict liability for vehicles - Though applied in Common Law jurisdictions, not applied in India - Instant judgment of National Commission first example of application of the rule in India - Interests of hotel owners and guests required to be balanced - The hotel as bailee of guest’s car would be liable if it did not take a reasonable degree of care in respect of the bailed goods - Failure to return the vehicle strikes gives rise to a prima-facie case of negligence against the hotel. (Para 15, 16)
(c) Indian Contract Act, 1872 - Sections 148, 149 - Bailment and Bailee - Relationship between hotel and guest as regards valet parking of vehicle - Hotel actively undertaking to park the vehicle for owner, keep it in safe custody and return it upon presentation of a parking slip - Parking of vehicle beyond control of owner - A contract of bailment exists - Hotel would be liable as a bailee for returning the vehicle in the condition in which it was delivered - Burden of proof of having taken reasonable care of the vehicle bailed, and the theft did not occur due to its neglect or misconduct lies on the hotel. (Para 18, 19, 29)
(d) Indian Contract Act, 1872 - Sections 151 and 152 - Responsibility of bailee - Reasonable care - 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 - More so in case of five star hotel - Merely appointing an attendant or security guard for parking the vehicle and keeping the car keys in his custody until the vehicle owner is inside the hotel premises, not enough - Payment or non-payment of parking fee irrelevant - Instantly appellant-hotel not ensuring safe custody of car keys of guests outside the reach of outsiders or that parking the cars in a safe location with adequate barriers to verify their owners - Appellant has failed to discharge its burden of disproving the prima-facie case of negligence against it - Theft of the car of Respondent No. 2 was a result of the negligence of the Appellant-hotel - The exemption clause on the parking tag will not exclude the Appellant’s liability. (Para 20, 29)
(e) Indian Contract Act, 1872 - Sections 152 - Not open to a bailee to contract out of the minimum standard of liability under Section 151 - Any exemption clause with regard to negligence would be void as opposed to public policy - A bailee would be liable for the negligence of its servants, except in cases where a specific negligence clause is inserted in the contract - Contract Act does not prohibit a party from contracting out of its duty of care under Section 151 - However in case of a five star hotel, standard of care required to be taken by the hotel as a bailee under Section 151 is sacrosanct and cannot be contracted out of. (Para 24, 25, 28)
(f) Indian Contract Act, 1872 - Sections 151 and 152 - Words ‘in the absence of any special contract’ - Bailee can accept a higher standard of liability than Section 151 under contract, and not otherwise. (Para 28)
(g) Indian Contract Act, 1872 - Sections 151 and 152 - 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, 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. (Para 28)
Facts of the case:
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 non-industrial 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.
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. A complaint was lodged with the police, but the car remained untraced.
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 and a letter of subrogation in favour of Respondent No. 1. They both then approached the State Commission seeking payment of the value of the car and compensation for deficiency in service from the hotel.
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.
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.
Finding of the Court:
The consumer complaint filed by the insurer as a subrogee, along with the original owner as a co-complainant was maintainable.
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.
Result: Appeal dismissed.
JUDGMENT :
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.
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 non-industrial 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 vs. New India Assurance Company Limited, (2000) 1 SCR 554 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.
3.4. Notably, Oberoi was partly overruled by a subsequent decision of a Constitution Bench of this Court in Economic Transport Organisation vs. Charan Spinning Mills (Pvt.) Ltd. (2010) 4 SCC 114. 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 vs. Mulchand Agarwal, (2002) NCDRC 42 and B. Dutta, Senior Advocate vs. Management of State, (2010) 1 CPC 319 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 an
gpt-4
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
