by Aashta Singh – Law College Dehradun

Fact of the case

On 1st August 1998, the owner of the car ‘Maruti Suzuki Zen’ visited the Taj Mahal hotel around 11 pm and had given his car’s key for valet parking. Hotel parking services provided a provision which stated that ‘parking of vehicle is at owner’s own risk inside and outside the hotel premises and in case of theft, loss or damage hotel will not be liable.’ Around 1 am when the car owner came out of the hotel he found out that his car was missing. He was informed by the hotel security that his car was driven by some other person. After inquiry, it came into view that three boys came to the hotel and among them, a  boy named Deepak, stole the key from the hotel desk. The hotel security tried to stop him but failed. A complaint was lodged but the car was not found. The car insurance company (United India Insurance Company) settled the insurance claimed by the car owner that was of 2,80,000. Then, the insurance company had registered a complaint against the hotel on the ground of deficiency and negligence in hotel service. Complain of the insurance company was dismissed by the State Consumer Dispute Redressal Commission(State Commission) on the basis that it had no locus standi. Later, an appeal was made in National Disputes Redressal Commission (National Commission) and the appeal was accepted observing that the insurance company had locus standi to file a complaint.

Issues Revolving in the case

  1. Whether this is a case of bailment or not?
  2. Whether or not the Insurance company had locus standi to file the complaint?
  3. Whether or not the Hotel could be held liable for negligence of theft under the law of bailment?
  4. Whether or not the car owner was liable for compensation because there was no proper consideration between the car owner and hotel?
  5. Whether or not the hotel could be discharged from the allegation made by the insurance company?

Relevant cases

  • New India Assurance Co. Ltd vs The Delhi Development Authority( 8th January 1991)- the essence of bailment was possession. The possession of the truck was handed over to the defendants when the truck was parked in the parking center of the defendants. Immediately at the time, a contract of bailment came into being. The defendants as bailee had failed to deliver the vehicle back and hence, liable for loss.
  • Economic Transport Organization vs Charan Spinning Mills Ltd(2010) 4SSC 114)- The insurers paid the loss upon which the insured executed a ‘letter of subrogation-cum-special power of attorney’ in favour of the insurers. In this case, the insurer had ‘locus standi’.
  • Chhatumull Chowthmull vs Union Of India on 23 December,1954 -In this case, it was said that if the person was already in possession of the goods of another contracts to hold them as bailee, he thereby became the bailee and the owner became the bailor of such goods although they may not have been delivered by the way of bailment.
  • M/S Rasiklal Kantilal Co. Vs Board of Trustee of Port of Bombay, AIR 2017 SC 1283-  this case explains that bailment can be created by any person who is in possession/custody of goods. He need not necessarily be the owner of goods.

Related provisions

  • Section 148 of Indian Contract Act, 1872-   When an individual hands over a particular thing of his possession to another individual and the latter agrees to take the possession either explicitly or impliedly, he is bound by the duty of care to take proper care of the thing of the possession of the object at hand. In such a case, the person handing the possession is bailor, and the person taking the possession is bailee and the whole process is called bailment. In the present case, the bailee is Taj Hotel and the bailor is the Car owner
  • Section 149 of Indian Contract Act, 1872 –  the clear interpretation aforementioned section is that the bailee is bound to accept the delivery if the bailor does anything which results in placing the good in the possession of the former(bailee).
  • Section 151 of the Indian Contract Act,1872-   The interpretation of section 151 is that bailee is bound by the duty of care towards the goods handed in his possession. He is liable to take proper care of the goods handed in his possession in the same way as if he would do if the goods originally belonged to him. The bailee is supposed to take care of goods to such an extent which matches the extent of care of any rational man in a similar situation, under similar circumstances.
  • Section 152 of Indian Contract Act, 1872 – the interpretation of section 152 says that if bailee has taken proper care of goods, fulfilling the criteria mentioned in section 152  of Indian Contract Act 1872, he is not liable for any damage or loss incurred to the thing bailed or the bailor in general.

Judgment

On 14 November 2019, the Supreme court passed the judgment, in this case, holding, inter alia, that the hotel cannot exclude its legal liability for breach of that duty to a person who had parked his vehicle in the hotel parking. The court observed that in the case of free parking services offered by 5-star hotels, such services could be said to be paid for through consideration given for hotel meals, services, etc. Consequently, the court concluded that the theft of the car was the result of the hotel’s negligence.

Remedies available to consumers

  • Removal of defects- If any product is found defective while testing, the product can be replaced or technicality rectified by the concerned authority.
  • Replacement of goods- if a product is found faulty then it can be replaced with a new one and of the same type.
  • Refund of price- if the consumer is not satisfied with the product or there is any kind of defect in the product.  Consumer can get back the price of the product.
  • Award compensation- Consumers can claim compensation if negligence has occurred on part of the seller and the consumer suffers loss or damage.

Author’s Analysis

Owing to the facts and provisions mentioned above, it can be deduced that the case at hand is the one dealing with bailment. I agree with the decision of the court. The general rule of bailment law is that if any loss or damage occurs under the possession of a bailee , then, the bailee would be liable until and unless the bailee possesses proof that he or she had exercised reasonable care. In the present case, it depicts that negligence had occurred from the hotel’s side.  The keys should have been kept out of the reach of outsiders or the car should have been parked in a safer location. In my opinion, when the guest presents the keys to the valet, possession of the car is transferred from the guest to the hotel, and bailment is established, hence, the hotel cannot take the defense that there was no proper consideration and thus, they were not liable.

Taj Mahal Hotel v. United India Insurance Ltd.

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