FACTS:
- At around 11 p.m. on August 1, 1998, the second respondent drove up hotel of the Appellant in his Maruti car. Once the vehicles owner (Respondent No. 2) reached the hotel handed the valet parking keys to the establishment and went inside. Around 1 a. m. that same night the security informed the car’s owner that his vehicle had been taken by someone else as soon as he left the hotel.
- On further investigation, it was discovered that three lads had arrived in a separate car and entered the hotel during Respondent No.2’s stay. After some time, they departed from the hotel and as the valet was returning their vehicle to them, when one of the boys, named Deepak, grabbed the Respondents car keys from the desk and ran. The security guard made an effort to stop him but failed. The stolen car was reported to the police but its identity was not revealed.
- “Important Condition: This car that is being parked at the request of the visitor in or outside the Hotel premises is at his own risk and responsibility. The management will not be held liable for any loss, theft, or damage, and the guest will have no claim against the management.”
- Respondent No.1 that is the car insurer paid Respondent No. 2 (automobile owner) Rs. 280000 in order to cover the cost of the stolen car insurance claim. Thereafter Respondent No. 2 assigned Respondent No.3 a letter of subrogation and a Power of Attorney (POA) are required. Right away they went to the State Commission and lodged a complaint against the Appellant-Hotel demanding reimbursement for both the cars value and any shortfalls in service.
- “The State Customer Disputes Redressal Commission (State Commission) dismissed the case on the grounds that an insurance company acting in subrogee capacity is not a consumer. Therefore, Respondent No.1 appeal to the National Commission who is the auto insurer has standing to file the complaint as per the National Commission for Consumer Disputes Redressals remand of the complaint back to the State Commission on September 20 2010.” Given this the State Commission accepted the complaint and mandated that the cars value plus Rs. 50000 for litigation costs and interest charged at a rate of 12 percent annually comes to Rs. 280000. “
- Furthermore, it mandated Respondent No. 1 to be compensated for the hardship and abuse he had to face 2 will receive Rs. 100000. The State Commission also found that the respondent no. Because the cars theft was not reported to 3 (the hotels insurer) in a timely manner and would not be responsible for any damages incurred by the appellant-hotel. Following that the National Commission received an appeal from the appellant.
- In the end the State Commissions ruling on the appeal was upheld but the annual percentage rate was lowered from 12 per cent to 9 per cent. This appeal by special leave is therefore based on the National Commissions 05. 02 ruling. 2018.
ISSUES RAISED:
1. “Whether it is true that the insurer had locus standi to file the subrogee complaint?
2. Whether the Appellant-hotel, under the laws of bailment or elsewhere, will be held liable for the theft of the car taken for valet parking?
3. Whether it is possible for the Appellant-hotel to be released from liability due to a contract?”
CONTENTIONS:
- Arguments in favour of the Plaintiff:
According to the appellant since the insurer (Complainant No. 1) had no legal standing in the dispute because it was not a customer. He contended that since Indian law does not recognize the concept of “infra hospitium” the National Commissions decision was erroneous. Furthermore, the appellant maintained that there was no bailment because no contract was ever signed by the car owner and the appellant-hotel. No payment was made for parking so there was no compelling reason to sign a contract. Additionally, it was claimed that the Respondent No.2 shielded the Appellant from liability for the loss had already been informed by the hotel of the valet parking policies. It is explicitly stated on the parking tag that the hotel will not be held liable for any mishap loss or damage.
- Arguments in favour of Defendant:
As a subrogee, respondents contended the insurer (Respondent No. 1) had the right to file a complaint alongside the initial customer. It was further argued that the appellant should be subject to the highest level of insurance liability in the event that products are stolen from its premises as five-star hotels are obliged to uphold a higher standard of care.
RATIONALE:
In deciding the case the court used the following principles:
A grievance is maintainable if it is filed by the insurer in its capacity as a subrogee. The insured and the insurer together as co-complainants or the insurer in the assured’s name serving as the assured’s attorney-in-fact. The Respondent No. 2 (actual customer/assured) had consented to the terms of Respondent No. 1 and was given the power of attorney and subrogation letters benefit (auto insurance). As a result, Respondents Nos. 1 and 2 filed a complaint with the State Commission as co-complainants. As a result, the Court determined that both prerequisites apply to this instance and that the complaint is maintainable.
- “It was decided that if custody of the vehicle is turned over to a hotel employee for valet parking it can be argued that delivery of the vehicle has occurred for the purposes of Sections 148 and 149 of the Indian Contract Act 1872”. Consequently, a bailment relationship was formed in this instance. The court further stated that it cannot be disputed that valet parking service benefits the hotel even if it is given gratis. Therefore, the bailment contract made by the valet parking service in this particular instance had an implied consideration. For this reason, the appellant-hotel cannot argue that there was no bailment because the consumer (bailor) had not paid for the valet parking service which it offered as a courtesy. This demonstrated the existence of bailment.
- “The court noted that in a case of theft of a car provided for valet parking the hotel cannot claim immunity from liability by claiming it was caused by acts of third parties beyond their control or that they are protected by a owners risk clause. This is before the hotel fulfilled its burden as required by Sections 151 and 152 of the Indian Contract Act 1872”. We have concluded that Respondent No. was stolen due to the Appellants negligence at the hotel. the parking tags exemption clause will not exclude the appellant’s responsibility in this instance for vehicle No. 2. Consequently, the appellant’s argument regarding the hotel falls short.
DEFECTS OF LAW:
A hotel owner cannot be released from liability under any circumstances for the carelessness of its employees or themselves with regard to a visitor’s vehicle. After the car is turned over to the hotel staff or valet there is an implied contractual duty on the part of the hotel or valet to return the car to the owner safe and sound. Even in the event that a special exemption clause exists the appellant is unable to circumvent the requirements of “Sections 151 and 152 of the Indian Contract Act 1872”. The appellant-hotel would still need to demonstrate that any harm or loss was not brought on by its negligence. The fact that the original owner and the insurer both filed complaints as co-complainants and subrogee makes the Court conclude that the particular consumer complaint is feasible. In addition, the rule of prima facie negligence was put into effect. The reason for the appellant’s incapacity to return the vehicle to respondent no.2 had been blatantly ignored was not the result of carelessness or fault on its part. The court decided to impose liability on the appellant hotel due to its failure to provide the reasonable care to the car that was bailed to it.
INFERENCE:
Based on the facts and provisions listed above, it is clear that the matter at hand is one involving bailment. I agree with the court’s ruling. The general rule of bailment law is that if a property of a bailee is lost or damaged while in his or her control, the bailee is accountable and until and unless the bailee can show that he or she took reasonable care. In the particular case, it appears that the hotel was negligent. Outsiders should not have had access to the keys, and the car should have been secured in a more secure position. The guest transfers ownership of the car to the hotel and establishes bailment when they give the valet their keys. Consequently, the hotel cannot argue that they were not held accountable because there was insufficient consideration.
Name: Sajij Dafadar
College: KIIT School of Law