LIABILITY FOR VEHICLE THEFT FROM PARKING RESTS WITH THE HOTEL: SUPREME COURT

The Supreme Court upheld an order passed by the National Consumer Disputes Redressal Commission (‘National Commission’) to pay compensation of ₹2.8 lakh to an individual whose Maruti Zen car was stolen in 1998 from its parking area holding that there was deficiency in services rendered by the hotel management.

The Supreme Court ruled that a hotel cannot take the cover of ‘owner’s risk’ clause on parking tokens to deny compensation to its guests for theft or damage to their vehicles once keys are handed over to the valet.

A bench of Supreme Court Justices Mohan M. Shantanagoudar and Ajay Rastogi held that if the hotel is allowed to exclude its liability for negligence by way of a contract, the standard of care imposed under Section 151 of the Indian Contract Act 1872 (ICA) will become illusory and virtually redundant, rendering consumers vulnerable without any remedy. Further, 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.

The Apex Court said that when 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, it would be liable to return the vehicle in the condition in which it was given.