Once a guest hands over the car keys to the valet, the vehicle is under the hotel’s responsibility, and it will have to compensate any damage to it, the supreme court has ruled.

In a judgment under the contract law, a bench of justices Mohan M Shantanagoudar and Ajay Rastogi has upheld concurrent findings of the state consumer commission, New Delhi, in 2016 and the national consumer disputes redressal commission in 2018, holding the Taj Mahal hotel, New Delhi accountable for negligence and directing it to pay compensation of Rs 2.8 lakh to a hotel guest whose Maruti Zen car was stolen from its parking premises in 1998.

The guest had handed over his car for valet parking around 11 pm on August 1 that year. The parking tag he was handed read: “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.”

The guest was later informed that his car had been stolen. The state consumer commission awarded him a compensation of Rs 2.8 lakh with interest at 12% per annum (later modified to 9%) and Rs 50,000 as litigation costs. Later, the national forum applied the principle of ‘infra hospitium’ and held that the liability of a hotel cannot be precluded by a printed notice on the parking tag disclaiming liability. The order was challenged by the hotel in the apex court.

The court held in the judgment of November 14 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.

It said that a contract for bailment exists. The hotel would be liable as a bailee for returning the vehicle in the condition in which it was delivered. “…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 sections 148 and 149 of the Indian Contract Act. 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... 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 five-star hotels specifically we find that the responsibility to take such measures is higher.”

The court held that it is not sufficient for the hotel to merely appoint an attendant or security guard who takes the responsibility for safety of vehicle but the hotel must take additional steps to guard against situations which may result in wrongful loss or damage to the car.

“…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 five-star hotels would entail adequate safety of the vehicles handed over for valet parking… 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,” said the court.

It also said 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. “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. … 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 as 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,” said the court while dismissing the appeal of hotel against the compensation order of the consumer commission.