Holding

A hotel that undertakes valet parking creates a bailment relationship and is liable on a prima facie negligence basis; it cannot contract out of the duty of care under Section 151 of the Contract Act without a clear, specific negligence clause.

Summary

The case arose when a guest's car, parked under the valet service of Taj Mahal Hotel, was stolen after three young men entered the premises and took the keys from the valet. The guest's insurer, United India Insurance, settled the claim and, together with the car owner, filed a consumer complaint against the hotel. The issues before the Supreme Court were whether the insurer, as a subrogee, had locus standi, whether a bailment relationship existed between the hotel and the guest, the standard of care required under the Contract Act, and whether the hotel could rely on an exclusion clause to escape liability. The Court held that the complaint was maintainable, that a bailment arose when the hotel undertook to park the vehicle, and that the hotel owed a prima facie duty of care under Sections 151 and 152 of the Contract Act, which could not be contracted out without a specific negligence clause. Finding that the hotel failed to take reasonable precautions and that the theft resulted from its negligence, the Court dismissed the appeal and affirmed the hotel’s liability.

Issues considered

The insurer's locus standi to file a consumer complaint as a subrogee.
Whether a contract of bailment exists when a hotel provides valet parking.
The degree of care required of the hotel under Sections 151 and 152 of the Contract Act, 1872.
Whether an exclusion clause on the parking token can exempt the hotel from liability for negligence.

Legislation cited

Indian Contract Act, 1872s. 148, s. 149, s. 151, s. 152

Subjects

bailmentvalet parkinghotel liabilityconsumer protectionexclusion clauseprima facie negligenceContract Act 1872subrogationlocus standi

Judgment

850 [2019]
SUPREME COURT 13 S.C.R. 850
REPORTS [2019] 13 S.C.R.

A TAJ MAHAL HOTEL
v.
UNITED INDIA INSURANCE COMPANY LTD. & ORS.
(Civil Appeal No. 8611 of 2019)
B
NOVEMBER 14, 2019
[MOHAN M. SHANTANAGOUDAR AND
AJAY RASTOGI, JJ.]
Consumer Protection – Vehicles of guests handed over to the
C hotels for valet parking – Liability of hotels in case of theft/loss –
Bailor-bailee relationship under the Contract Act, if exists –
Respondent no.2’s car parked under the valet parking of the
appellant-hotel – Car driven away by another person– Respondent
no.1 (insurer) settled the insurance claim by respondent no.2 – Both
filed complaint against the appellant – Dismissed by the State
D Commission on the locus standi of the insurer – National Commission
remanded the complaint back to the State Commission which
allowed the complaint – National Commission dismissed the appeal
filed by the appellant – Held: Complaint filed by the insurer as
subrogee, along with the original owner as co-complainant is
maintainable – In a situation where the hotel actively undertakes
E
to park the vehicle for the owner, keep it in safe custody and return
it upon presentation of parking slip in a manner such that the
parking of the vehicle is beyond the control of the owner, a
contract of bailment exists – Hotel liable as a bailee for returning
the vehicle in the condition in which it was delivered – However,
F imposition of strict liability under common law for loss or damage
to vehicles of guests is overly burdensome and should not be given
effect in the Indian context, instead, the rule of prima facie
negligence should be adopted – To this extent, the National
Commission erred in adopting the common law rule – Under ss.151
& 152, 1872 Act, the bailee has duty to keep its premises in a
G condition of safety, reasonable to prevent loss, damage, or theft
of the goods of its guests – Responsibility to take such measures
is higher with respect to 5-star hotels – Hotel cannot refute the
existence of bailment by contending that its valet parking service
was complimentary in nature and that the consumer (bailor) had
not paid for the same – Burden of proof is on the hotel (bailee) to
H
850
TAJ MAHAL HOTEL v. UNITED INDIA 851
INSURANCE COMPANY LTD.

show that it took efforts to take reasonable care of the vehicle A
bailed, and the theft did not occur due to its neglect/misconduct –
Entire case of the appellant is premised on the exclusion clause in
the notice, and not on the absence of negligent conduct on its part
– There was an admission of the fact that one of the three young
boys who had visited the hotel, stole the car of respondent no.2
while its keys were under the watch of the valet driver – Theft of B
the respondent no.2’s car was result of the appellant’s negligence
– Exemption clause on the parking tag will not exclude its liability
– Contract Act, 1872 – ss.148, 149, 151, 152 – Principle of strict
liability for vehicles infra hospitium; Prima facie liability rule.
Contract Act, 1872 – ss.151, 152 – Standard of care to be C
taken by the bailee (hotel) for the vehicles parked within its
premises – Discussed – Consumer Protection.
Contract Act, 1872 – ss.148, 149 – ‘Delivery’ under – When
– Held: In a scenario where possession of the vehicle is handed
over to hotel employee for valet parking, it can be said that D
‘delivery’ of the vehicle has been made for the purposes of s.148
and 149 – Consequently, a relationship of bailment is created –
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 – Consumer Protection. E
Contract Act, 1872 – ss.151, 152 – Vehicles of guests parked
under the valet parking of the hotels – Loss/theft of – Distinction
between gratuitous bailee and bailee for reward – If any – Held:
ss.151 and 152 do not distinguish between a gratuitous bailee and
a bailee for reward – It is irrelevant as to how much parking fee F
was paid by the consumer, or whether any parking fee was paid
at all, as the duty of care required to be taken by the hotel will be
the same in all circumstances – However, this is not a strict liability
standard insofar as s.152 excludes the liability of a bailee for loss
or damage of the bailed goods if he is able to show that he fulfilled
the standard of reasonable care u/s.151 – Whether or not such G
standard of reasonable care was fulfilled will depend upon the facts
and circumstances of each case – Consumer Protection.
Words & Phrases – ‘in the absence of any special contract’
in s.152, 1872 Act – Meaning of – Held: Though courts may have
construed the phrase ‘in the absence of any special contract’ in H
852 SUPREME COURT REPORTS [2019] 13 S.C.R.

A s.152 to mean that a bailee can reduce his liability u/s.151 but,
such an interpretation is incorrect – Words ‘in the absence of any
special contract’ in s.152 clearly indicate that it is open to the
bailee to accept a higher standard of liability than s.151 under
contract, and not otherwise – However, this does not mean that
the hotel would be liable in all scenarios or that it cannot impose
B any exemption clause through a contract – Contract Act, 1872 –
ss.151, 152 – Interpretation of Statutes – Consumer Protection.
Dismissing the appeal, the Court
HELD: 1.1 COMPLAINT FILED BY INSURER AS A
SUBROGEE
C
It has been settled by a Constitution Bench of this Court
in Economic Transport Organisation that even though a
consumer complaint filed by an insurer in its own name is not
maintainable, a complaint filed by the insurer acting as a subrogee
is maintainable if it is filed by: i) the insurer in the name of the
D assured, wherein the insurer acts as the attorney holder of the
assured; or ii) the insurer and the assured as co-complainants.
In the instant case, respondent no. 2 (actual consumer/assured)
had executed a POA and a letter of subrogation in favour of
respondent no. 1 (car insurer). Consequently, the complaint
E before the state commission was filed by respondent nos.1 and
2 as co-complainants. Hence, both the conditions are squarely
applicable to this case and the complaint is maintainable. [Paras
8, 9] [865-E-G]
Economic Transport Organisation v. Charan Spinning
F Mills (Pvt.) Ltd. (2010) 4 SCC 114 – followed.
Oberoi Forwarding Agency v. New India Assurance
Company Limited [2000] 1 SCR 554 ; B. Dutta, Senior
Advocate v. Management of State (2010) 1 CPC 319 ;
Klaus Mittelbachert v. East India Hotels Ltd. AIR 1997
Del 201 ; Hotel Hyatt Regency v. Atul Virmani III
G
(2008) CPJ 281 (NC) – referred to.
1.2 LIABILITY OF HOTELS FOR THEFT OR LOSS OF
VEHICLES OF GUESTS
The imposition of strict liability for loss or damage to
H vehicles of guests is overly burdensome in today’s context. The
TAJ MAHAL HOTEL v. UNITED INDIA 853
INSURANCE COMPANY LTD.

strict liability rule had emerged in an age and time where travel A
was rare and tourism was virtually non-existent, thereby
prompting Courts to hold hotel owners liable so as to protect
the interests of the guests. However, in today’s context of
economies with well-established hotel industries and mandatory
insurance of vehicles owned by guests, there has been a trend
B
across jurisdictions of moving away from the strict liability of
innkeepers in respect of vehicles of guests. Persons visiting
hotels and parking their cars in their premises or under valet
parking, cannot be left at the mercy of hotel owners. It is
essential to balance the interests of hotel owners and guests,
and it is found that the prima facie liability rule strikes this C
balance without placing undue burden on either of the parties.
The fact that guests are already protected by virtue of insurance
of their vehicles tips the scale in favour of adopting a relatively
moderate approach. Thus, given that the prima facie liability rule
is premised on the existence of a bailment relationship, in cases
D
where such a relationship is found to exist between the hotel
and its guest, the rule should be applied in respect of vehicles
so bailed to the hotel. This is also the approach that has found
mention under Indian law. The general rule has been that in a
contract of bailment, if goods are lost or damaged while in the
possession of the bailee, he will be liable. The burden of proof E
will be on the bailee to show that he took a reasonable degree
of care in respect of the bailed goods (N.R. Srinivasa Iyer v. New
India Assurance Co. Ltd.). This is because there is an implicit
expectation between the hotel and the guest when a vehicle is
handed over for valet parking that the vehicle would be taken
F
reasonable care of, and returned in a proper condition. Thus,
the failure to return the vehicle strikes at the root of the bailment
relationship and gives rise to a prima facie case of negligence
against the hotel. The strict liability rule under common law is
a relic of the past and should not be given effect in the Indian
context. To this extent, the National Commission erred in G
adopting the common law rule without justifying its choice or
without noting the well-recognised exception in respect of the
vehicles of guests. [Paras 15.2, 16] [872-A-B-F-H; 873-A-C]
N.R. Srinivasa Iyer v. New India Assurance Co. Ltd.
AIR (1983) SC 899 : [1983] 3 SCR 479 – relied on. H
854 SUPREME COURT REPORTS [2019] 13 S.C.R.

A 1.3 EXISTENCE OF BAILMENT RELATIONSHIP
The existence of a contract of bailment often turns on the
degree of control exercised by the prospective bailee over the
property or good in question. In other words, the crucial point
to be considered is whether the custody or possession of the
B vehicle is purposefully handed over to the hotel (as is the case
with valet parking) or whether the complainant is merely allowed
to park his car in a parking space or facility. While the laws of
bailment apply in the former case, the latter is only a licensor-
licensee relationship where laws of bailment or the prima facie
liability rule cannot be applied. In a situation where the hotel
C actively undertakes to park the vehicle for the owner, keep it
in safe custody and return it upon presentation of a parking slip
in a manner such that the parking of the vehicle is beyond the
control of the owner, a contract of bailment exists. Thus, the
hotel would be liable as a bailee for returning the vehicle in the
D condition in which it was delivered. In a scenario 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 Section 148 and 149.
Consequently, a relationship of bailment is created. The parking
token so handed over to the bailor is evidence of a contract, by
E which the bailee (hotel) undertakes to park the car and return
it in a suitable condition when the vehicle owner so directs. A
contract of bailment under Section 148 may be gratuitous. In any
case, it is common knowledge that ‘complimentary’ services
provided by 5-star hotels are not actually free-of-cost. These
F services are covered by the exorbitant rates charged for renting
of rooms, food, entry fee to lounges and clubs, and so on. It
cannot be denied that valet parking service, even if offered
gratuitously, benefits the hotel. A hotel holding itself out to the
public as providing such a service seeks to pitch it as a value
addition to the experience of a guest and incentives greater foot
G fall. Therefore, for such cases, there exists an implied
consideration for the contract of bailment created by virtue of
the valet parking service. Respondent No. 2 had given up
possession of his car by handing it over to the valet. Thus,
the Appellant-hotel cannot refute the existence of bailment
H by contending that its valet parking service was purely
TAJ MAHAL HOTEL v. UNITED INDIA 855
INSURANCE COMPANY LTD.

complimentary in nature and that the consumer (bailor) had not A
paid for the same. The existence of a bailment relationship is
clear. [Paras 18, 18.3, 18.7 and 18.8] [873-E-F; 874-E-F; 875-
B-C; 878-C-H]
Bombay Brazzerie v. Mulchand Agarwal (2002)
NCDRC 42 – disapproved. B

Commissioner, Corporation of Madras v. S. Alagraj
I (1996) CPJ 54 (NC) ; Rohini Group of Theatres v.
V. Gopalakrishnan II (1996) CPJ 1 (NC) ; New India
Assurance Co. Ltd. v. Delhi Development Authority AIR
1991 Del 298 – referred to. C

1.4 THE REQUIRED DEGREE OF CARE UNDER
BAILMENT
Given the existence of a bailment relationship, the failure
of the Appellant to deliver the car to Respondent No. 2 (car- D
owner), raises a prima facie case of negligence against it. Thus,
the burden of proof is on the hotel (bailee) to show that efforts
were undertaken by it to take reasonable care of the vehicle
bailed, and that the theft did not occur due to its neglect or
misconduct. Under Sections 151 and 152, the bailee has a duty E
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 5-star hotels specifically, the
responsibility to take such measures is higher. Sections 151 and
152 of the Contract Act do not distinguish between a gratuitous
F
bailee and a bailee for reward. It is irrelevant as to how much
parking fee was paid by the consumer, or whether any parking
fee was paid at all, as the duty of care required to be taken by
the hotel will be the same in all circumstances. However, this
is not a strict liability standard insofar as Section 152 excludes
the liability of a bailee for loss or damage of the bailed goods if G
he is able to show that he fulfilled the standard of reasonable
care under Section 151. Whether or not such standard of
reasonable care was fulfilled will depend upon the facts and
circumstances of each case. [Para 19, 20.1-20.3] [879-B-E-F;
880-C; 881-B-C] H
856 SUPREME COURT REPORTS [2019] 13 S.C.R.

A 1.5 The records show that the car of Respondent No.2 was
stolen when three young boys who had parked their car in the
Appellant-hotel came out of the hotel, asked the valet driver to
bring their car to the porch, and one of them then picked up
the keys of the car of Respondent No.2 from the desk, went to
the parking area and stole the car. Entire case of the appellant
B has been premised on the exclusion clause in the notice, and
not on the absence of negligent conduct on its part. In fact, there
has been an admission of the fact that one of the three young
boys who had visited the hotel stole the car of Respondent No.
2, while its keys were under the watch of the valet driver. The
C manner in which the car was stolen manifests that no steps had
been taken by the Appellant-hotel to ensure that car keys were
kept outside the reach of outsiders or that the cars were parked
in a safe location with adequate barriers to verify their owners.
In the absence of such measures, the Appellant failed to
discharge its burden of disproving the prima facie case of
D negligence against it. Thus, the theft of the car of Respondent
No.2 was a result of the negligence of the Appellant-hotel. [Para
21] [881-D-H; 882-A]
Sheik Mahamad Ravuther v. The British Indian Steam
Navigation Co. Ltd. (1909) ILR 32 Mad 95 ; Kariadan
E Kumber v. British India Steam Navigation (1913) 38
Mad. 941 ; Hollandia Pinmen v. H. Oppenheiner AIR
1924 Rang 356 ; Bombay Steam Navigation Ltd v.
Vasudev Baburao Kamat ILR (1928) 52 Bom 37 ;
Lakhaji Dollaji & Co. v. Boorugu Mahadeo Rajanna
41 Bom LR 6 ; Indian Air Lines Corporation v. Jothaji
F
Maniram AIR 1959 Mad 285 ; State Bank of India
v. M/s Quality Bread Factory, Batala AIR 1983 P&H
244 ; Central Bank of India v. M/s Grains & Gunny
Agencies AIR 1989 MP 28 ; Nath Bros. Exim
International Ltd. v. Best Roadways Ltd. (2000) 4 SCC
G 553 : [2000] 2 SCR 538 – referred to.
2.1 EXCLUDING LIABILITY BY CONTRACT
Upon perusal of the relevant decisions on this point, it is
found that White C.J. and Wallis J’s opinion in Sheik Mahamad
was peculiar to the facts of that case. With respect to liability
H for vehicles bailed to a hotel as is the case with valet parking,
TAJ MAHAL HOTEL v. UNITED INDIA 857
INSURANCE COMPANY LTD.

Sankaran Nair J.’s opinion in Sheik Mahamad should be adopted. A
Given that such vehicles would normally be parked in the hotel’s
own parking facility, or in the vicinity of the hotel, the hotel staff
is well-placed to ensure safe custody of the vehicle and monitor
its condition. Though 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 B
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 5-star hotels
would entail adequate safety of the vehicles handed over for valet
parking. Thus, in such a scenario, if the hotel is allowed to C
exclude its liability for negligence by way of a contract, the
standard of care imposed under Section 151 will become illusory
and virtually redundant, rendering consumers vulnerable without
any remedy. 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. Though courts may have construed the phrase D
‘in the absence of any special contract’ in Section 152 to mean
that a bailee can reduce his liability under Section 151, such an
interpretation is incorrect. 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 E
151 under contract, and not otherwise. However, this does not
mean that the hotel would be liable in all scenarios or that it
cannot impose any exemption clause through a contract. There
may be situations where the loss or damage may be caused due
to the negligence of third parties, the bailor’s own negligence
or unforeseen circumstances beyond the bailee’s control, which F
could not have been foreseen with ordinary diligence. This would
include, for example, acts of God, seizure of the vehicle under
legal process or by public authorities, damage due to natural
causes such as unforeseen weather conditions, presence of
inherent defects in the vehicle, acts of loss or damage caused
by the guest’s own negligence and so on. A joint reading of G
Sections 151 and 152 shows that, in such cases, the Contract
Act intended that the bailee should not be liable for the loss or
damage of the goods bailed on all occasions. Section 152
expressly states that the bailee, in the absence of any special
contract, is not responsible for loss or damage of the thing bailed, H
858 SUPREME COURT REPORTS [2019] 13 S.C.R.

A if he is able to prove that he has taken the amount of care
required under Section 151. Therefore, 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,
B this would always be subject to the hotel discharging its initial
burden of proving that it fulfilled the standard of care imposed
under Section 151 of the Contract Act. Where the hotel or its
servants have actively connived against or acted negligently in
safeguarding the vehicles delivered for valet parking, ‘owner’s
C risk’ clauses in the parking token will not come to their rescue.
Where a valet or servant has been handed custody of the vehicle,
and such a servant takes away the vehicle without authority, the
hotel will be liable. This is because there will still be a prima
facie assumption that the hotel has exercised laxity in
supervising the actions of its servants. However, the hotel will
D not liable where, in spite of due diligence, a servant or employee
who was not entrusted with custody of the vehicle takes it
without authority, as this would be similar to a case of theft by a
third-party. The above observations are limited to the issue for
consideration, that is, the liability of hotels as bailees for vehicles
E handed over to them for valet parking. Whether the rule as laid
down by White C.J. and Wallis J. in Sheik Mahamad, and
followed in subsequent High Court decisions, holds good in other
kinds of contracts is not being commented upon, and it is
desisted from commenting further on this aspect. In a case of
theft of a vehicle given for valet parking, the hotel cannot claim
F exemption from liability by arguing it was due to acts of third
parties beyond their control, or that they are protected by an
‘owner’s risk’ clause, prior to fulfilling its burden as required
under Section 151 and 152. While a case of a robbery by force
is visibly beyond a bailee’s control, in cases of private stealth,
or simple theft where no force or violence is involved, the bailee
G still has the prima facie burden of explaining that the loss or
disappearance of the goods in his custody is not attributable to
his neglect or want of care. This is because no one apart from
the bailee is in a position to explain the fate of the goods. In
the instant case, given the finding that the theft of the car of
H Respondent No.2 was a result of the negligence of the Appellant-
TAJ MAHAL HOTEL v. UNITED INDIA 859
INSURANCE COMPANY LTD.

hotel, the exemption clause on the parking tag will not exclude A
the Appellant’s liability. Hence, the argument of the Appellant-
hotel on this count fails. In conclusion: (i) 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 B
in a safe condition upon the direction of the owner. (ii) Even
where there is a general or specific exemption clause, 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 per Sections 151 C
and 152 of the Contract Act. It is only after this burden of proof
is discharged that the exemption clause can come into force. The
burden of proving that such loss or damage was covered by the
exemption clause will also be on the hotel. [Paras 28-30] [889-
D-H; 890-A-H; 891-A-H; 892-A-B]
D
2.2 The consumer complaint in consideration is
maintainable as it was filed by the insurer as a subrogee, along
with the original owner as a co-complainant. Further, 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. The Appellant has not E
explained why its failure to return the vehicle to Respondent
No. 2 was not on account of fault or negligence on its part. Thus,
liability should be affixed on the Appellant-hotel due to want of
the requisite care towards the car bailed to it. [Para 31] [892-
C-D]
F
Law Commission of India, Contract Act, 1872 (Law
Com No 13, 1958) para 125 ; Pollock and Mulla, The
Indian Contract and Specific Relief Acts (Nilima
Bhadbhade ed, updated 14th edn, 2013) 1505, 1522;
Pollock and Mulla (n 32) 1505 – referred to.
G
Dickerson v. Rogers 4 Humph 179 (1843) ; Aria v.
Bridge House Hotel (Staines) Ltd. (1927) 137 LT 299;
Williams v. Linnitt, 1 ALL E.R. 2 78 (Eng. 1951) ; Laird
v. Eichold 10 Ind. 212 (1858) ; Ashby v. Tolhurst [1937]
2 K.B. 242 ; Tinsley v. Dudley [1951] 2 K.B. 19 ;
Port Swettenham Authority v. T.W. Wu & Co. [1979] H
860 SUPREME COURT REPORTS [2019] 13 S.C.R.

A A.C. 580 ; Price & Co v. Union Lighterage Company
(1903) 1 K.B. 750 – referred to.
John E. H. Sherry, The Laws of Innkeepers: For
Hotels, Motels, and Restaurants (3 rd edn, Cornell
University Press 1993) 415-417 ; Joseph James
B Hemphling, ‘Innkeeper’s Liability at Common Law
and Under the Statutes’ (1929) 4(7) Notre Dame Law
Review 421, 422; Wayne Quinton, ‘Liability for
Automobile Parking at Hotels: The Tennessee Case
Abstract’ (1992) 16(1) Hospitality Research Journal
109, 110 ; Sylvan H. Hirsch, ‘Limited Liability of
C Innkeepers Under Statutory Regulations’ (1928) 76
University of Pennsylvania Law Review 272 ; John
H. Sherry, ‘The Innkeeper’s Liability for Automobiles
and Their Contents’ (Aug 1964) <https://doi.org/
10.1177/001088046400500202 > accessed 2
D November 2019 ; Park-O-Tell Co. v. Roskamp, 203
Okla. 493, 223, P.2d 375 (1950) ; Abercrombie v.
Edwards, 62 Okla. 54, 161 P. 1084 (Okla. 1916) ; L.J.
Blom-Cooper, ‘Second Report of the Law Reform
Committee on the Law of Innkeepers’ Liabilities for
Property of Travellers, Guests, and Residents (May
E 1954)’ (Jul 1955) 18(4) The Modern Law Review 374,
376 ; Hotel Proprietors Act 1956, s 2(2) (United
Kingdom); Innkeepers Act 1968, s 6(a) (New South
Wales) ; Carriers and Innkeepers Act 1958, s 29(a)
(Victoria); Annex to the Convention on the Liability
of Hotel-Keepers concerning the Property of their
F
Guests, Article 7 (Paris, 1962) – referred to.
Case Law Reference
[2000] 1 SCR 554 referred to Para 3.4
(2010) 4 SCC 114 followed Para 3.4
G (2010) 1 CPC 319 referred to Para 3.5
AIR 1997 Del 201 referred to Para 5
III (2008) CPJ 281 (NC) referred to Para 5
[1983] 3 SCR 479 relied on Para 16
H I (1996) CPJ 54 (NC) referred to Para 18.1
TAJ MAHAL HOTEL v. UNITED INDIA 861
INSURANCE COMPANY LTD.

II (1996) CPJ 1 (NC) referred to Para 18.1 A
AIR 1991 Del 298 referred to Para 18.6
(2002) NCDRC 42 disapproved Para 18.7
(1909) ILR 32 Mad 95 referred to Para 23
(1913) 38 Mad. 941 referred to Para 25 B
AIR 1924 Rang 356 referred to Para 25
ILR (1928) 52 Bom 37 referred to Para 25
41 Bom LR 6 referred to Para 25
AIR 1959 Mad 285 referred to Para 25
C
AIR 1983 P&H 244 referred to Para 25
AIR 1989 MP 28 referred to Para 25
[2000] 2 SCR 538 referred to Para 27
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8611
of 2019. D

From the Judgment and Order dated 05.02.2018 of the National
Consumer Disputes Redressal Commission at New Delhi in First Appeal
No. 440 of 2016
Gopal Jain, Sr. Adv., Ms. Meenakshi Midha, Kapil Midha, E
Ms. Pritika Juneja, Ms. Prashanti, Chander Shekhar Ashri, Advs. for
the Appellant.
Amit Kumar Singh, Ms. K. Enatoli Sema, Gaurav Prakash,
Asutosh Sharma, Kuldeep Singh Tomar, S.L. Gupta, Varinder Kumar
Sharma, for the Respondents. F
The Judgment of the Court was delivered by
MOHAN M. SHANTANAGOUDAR, J.
1. Leave granted.
G
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. H
862 SUPREME COURT REPORTS [2019] 13 S.C.R.

A 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-
B 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
C 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.,
D 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
E
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
F 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.
G 3.3. Relying upon this Court’s decision in Oberoi Forwarding
Agency v. New India Assurance Company Limited, 1 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.
1
H (2000) 1 SCR 554.
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 863
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

3.4. Notably, Oberoi was partly overruled by a subsequent A
decision of a Constitution Bench of this Court in Economic Transport
Organisation v. Charan Spinning Mills (Pvt.) Ltd.2 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
B
complaint.
3.5. Deciding on merits, the State Commission relied on the
decisions of the National Commission in Bombay Brazzerie v.
Mulchand Agarwal3 and B. Dutta, Senior Advocate v. Management
of State4 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 C
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 D
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 any kind of bill.
Hence, the State Commission proceeded on the assumption that
Respondent No. 2 had paid consideration for the contract.
In light of this, the State Commission allowed the complaint and E
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 F
to the Appellant-hotel, as the theft of the car had not been notified to
it within due time.
3.6. Appeal filed against this order by the Appellant herein was
disposed of vide the impugned judgment. On the question of locus
standi of Respondent No. 1 (subrogee) to file the complaint, the National G
Commission observed that its earlier order dated 20.09.2010 (supra)
had not been challenged, and had consequently attained finality. Hence,
2
(2010) 4 SCC 114.
3
(2002) NCDRC 42.
4
(2010) 1 CPC 319. H
864 SUPREME COURT REPORTS [2019] 13 S.C.R.

A it was held that the Appellant could not argue that Respondent No. 1
(car insurer) did not have locus standi.
The National Commission further applied the principle of infra
hospitium (Latin for ‘within the hotel’) and observed that common law
has historically imposed strict liability on a hotel for the loss of a guest’s
B property if the guest and the property were within the hotel premises.
It was noted that once the guest presents the car keys to the valet and
possession of the car is transferred from the guest to the hotel, a
relationship of bailment is established. Relying on various decisions by
foreign Courts on strict liability for property kept infra hospitium, the
C 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. Hence, the present appeal.
D 4. Learned Senior Counsel for the Appellant made submissions
on two fronts. With respect to the locus standi of Respondent No. 1,
he argued that Respondent No. 1 does not qualify as a ‘consumer’.
On merits, he vehemently submitted that the decision of the National
Commission is erroneous inasmuch the principle of infra hospitium is
E not established under Indian law. He further relied on the decisions in
Bombay Brazzerie and B. Datta to argue that a bailment necessarily
exists under a contract, the terms of which are encapsulated in the
parking tag in this case. Since the liability for theft is specifically
precluded under the terms stated on the parking tag, he submitted that
the Appellant cannot be held liable.
F
5. Per contra, Counsel for Respondent No. 1 submitted that it is
entitled to file a joint complaint with the original consumer in its capacity
as a subrogee. Further, he relied on Klaus Mittelbachert v. East India
Hotels Ltd.5 and Hotel Hyatt Regency v. Atul Virmani,6 to argue that
the duty of care owed by 5-star hotels is higher, and the Appellant must
G
therefore be subject to the highest standard of insurer liability in case
of theft of goods from its premises.
6. Heard learned Counsel for both parties.
5
AIR 1997 Del 201.
6
H III (2008) CPJ 281 (NC).
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 865
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

7. At this juncture, it is pertinent to note that the compensation A
awarded by the State Commission (including interest) has already been
paid by the Appellant to Respondent Nos. 1 and 2. Thus, we are only
concerned with the questions of law involved in the matter. Based on
a perusal of the record, the following issues arise for consideration in
the present appeal:
B
First, whether the insurer had locus standi to file the complaint
as a subrogee?;
Second, whether the Appellant-hotel can be held liable for the
theft of a car taken for valet parking, under the laws of bailment or
otherwise?; C
Third, if the second question is answered in the affirmative, what
is the degree of care required to be taken by the Appellant-Hotel?; and
Fourth, whether the Appellant-hotel can be absolved of liability
by virtue of a contract?
D
We will be adverting to each of these in turn.
I. COMPLAINT FILED BY INSURER AS A SUBROGEE
8. It has been settled by a Constitution Bench of this Court in
Economic Transport Organisation (supra) that even though a
consumer complaint filed by an insurer in its own name is not E
maintainable, a complaint filed by the insurer acting as a subrogee is
maintainable if it is filed by:
i) the insurer in the name of the assured, wherein the insurer
acts as the attorney holder of the assured; or
F
ii) the insurer and the assured as co-complainants.
9. In the instant case, Respondent No. 2 (actual consumer/
assured) had executed a POA and a letter of subrogation in favour of
Respondent No. 1 (car insurer). Consequently, the complaint before the
State Commission was filed by Respondent Nos. 1 and 2 as G
co-complainants. Hence, both the conditions are squarely applicable to
this case and the complaint is maintainable.
10. Having considered the maintainability of the complaint, we
now proceed to examine the liability of the Appellant-hotel for theft of
the vehicle of Respondent No. 2. H
866 SUPREME COURT REPORTS [2019] 13 S.C.R.

A II. LIABILITY OF HOTELS FOR THEFT OR LOSS OF
VEHICLES OF GUESTS
11. The liability of hotel owners or innkeepers (as they were
traditionally called) for the loss of, or damage to goods of their guest
has been a subject of judicial consideration for a long time. Though the
B issue has come up before this Court for the first time in this case, it
has received ample judicial and academic attention in other common
law jurisdictions. Thus, we find it appropriate to allude to this
jurisprudence for a comparative context to the legal issue at hand.
Though other jurisdictions have dealt with the liability of innkeepers with
C respect to goods or property of the guests in general, we will be
confining our discussion to vehicles of guests, as the present case is
concerned with the same.
12. Broadly, two approaches have been taken towards the liability
of an innkeeper for loss or damage to the vehicles of his guest 7 – first,
D the common law rule of insurer’s liability wherein the innkeeper is
treated as an insurer and made responsible for any loss or damage to
the vehicle of its guest, regardless of the presence or absence of
negligence on his part (‘the common law rule’); and second, the rule
of prima facie negligence wherein the innkeeper is presumed to be liable
for loss or damage to the vehicle of his guest, but can exclude his liability
E by proving that the loss did not occur due to any fault or negligence on
his part (‘prima facie liability rule’).
A. Common law Rule
13. At common law, innkeepers were held strictly liable for the
F loss of or damage to a guest’s horse or carriage placed within the
confines of the inn, i.e. infra hospitium. They were excused from
liability only if the loss or damage occurred by an act of God, an act of
the public enemy, or the fault or negligence of the guest himself.8
13.1. The earliest recorded opinion discussing this rule is
G Dickerson v. Rogers,9 where the Supreme Court of Tennessee State
(USA) held the innkeeper liable for injury caused to a horse brought
7
John E. H. Sherry, The Laws of Innkeepers: For Hotels, Motels, and Restaurants
(3rd edn, Cornell University Press 1993) 415-417.
8
Joseph James Hemphling, ‘Innkeeper’s Liability at Common Law and Under the
Statutes’ (1929) 4(7) Notre Dame Law Review 421, 422.
H 9
4 Humph 179 (1843).
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 867
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

by the guest and placed in the stable of the inn. Citing English common A
law, the Court noted as follows:
“It is laid down by Chancellor Kent (2 Com. 593), upon the
authority of the English cases, that an innkeeper is bound to keep
safe the goods of his guest deposited within the inn, except where
the loss is occasioned by inevitable casualty, or by superior force, B
as robbery. And Mr. Justice Story says (Law of Bailments, 306,
sec. 470) that an innkeeper is bound to take, not ordinary care
only, but uncommon care of the goods and baggage of his guests.
If, therefore, the goods or baggage of his guest are damaged in
his inn, or are stolen from it by his servants or domestics, or by
C
another guest, he is bound to make restitution…
…If this rule was not inflexibly enforced, no traveller would be
safe in entrusting his horse to the hands of the inn-keeper until
he had first inspected his stables, and selected a place for his
horse to be kept, an inconvenience which could not be endured.”
D
13.2. The imposition of such strict liability was dictated by the
conditions of the time. It emerged in a context where inns were intended
to provide a safe haven to travelers against bands of marauders and
robbers. However, the popular prejudice was that innkeepers would
collude with such persons to rob the guests of their properties. 10 Given
the vulnerability of travelers to robbery and violence in such a setting, E
the judges fashioned the strict liability rule to allow travelers to recover
from innkeepers without the need to prove fault. This is well-captured
in the following observations made in Dickerson (supra):
“…rigorous as this rule may seem, and hard as its operation may
be in a few instances, it is founded on the great principle of public F
utility, to which all private considerations ought to yield. “For”
as Sir William Jones justly observes (Bailments, 95), “travellers
who are most numerous in a rich and commercial country, are
obliged to rely almost implicitly on the good faith of innkeepers,
whose education and morals are none of the best, and who might G
have frequent opportunities of association with ruffians and
pilferers, while the injured guest would seldom or never obtain
10
Wayne Quinton, ‘Liability for Automobile Parking at Hotels: The Tennessee Case
Abstract’ (1992) 16(1) Hospitality Research Journal 109, 110; Sylvan H. Hirsch,
‘Limited Liability of Innkeepers Under Statutory Regulations’ (1928) 76 University
of Pennsylvania Law Review 272. H
868 SUPREME COURT REPORTS [2019] 13 S.C.R.

A legal proof of such combinations, or even of their negligence, if
no actual fraud had been committed by them.”
13.3. As the horse and buggy gave way to modern transportation
including automobiles and motor vehicles, the common law rule of strict
liability was extended to them. In Aria v. Bridge House Hotel (Staines)
B Ltd.,11 it was further held that the insurance liability of an innkeeper
for the goods of his guest also applied to automobiles parked in a space
adjoining the hotel, upon directions given by the porter. Since the car
of the plaintiff in that case had been parked in such a manner and was
stolen while he was dining at the hotel, the defendant hotel was held
liable.
C
13.4. English Courts as well as some jurisdictions in the United
States continued to apply the strict liability principle for vehicles of
guests through the first half of the 20th century.12 In England, this was
partly possible as the Innkeeper’s Liability Act of 1863 did not exclude
or limit the innkeeper’s liability for motor vehicles. The high point of
D English case law on this point came with the decision in Williams v.
Linnitt,13 where the Court held the innkeeper strictly liable for theft of
the car of a guest who had parked it in an open lot provided free of
charge. The Court noted that the provision of free parking space was
an invitation to the guest to park there, which was sufficient to constitute
E the lot as being infra hospitium. Notably, liability was imposed despite
a notice in the car park stating that the innkeeper would not be liable
for loss or damage to any vehicle or goods therein. The following
observations of Asquith L.J. are noteworthy:
“The most material facts in this case are that the area, being an
F area contiguous to the inn, is one in which the guest with a motor
car is invited to leave it; that there is no evidence that any other
accommodation belonging to the inn is provided for cars, though
a garage was marked as being in the neighbourhood of the inn
on a plan which was not agreed or proved; and that it is part of
the innkeeper’s normal business to provide for guests who arrive
G
11
(1927) 137 LT 299. See John H. Sherry, ‘The Innkeeper’s Liability for Automobiles
and Their Contents’ (Aug 1964) <https://doi.org/10.1177/001088046400500202>
accessed 2 November 2019.
12
See Park-O-Tell Co. v. Roskamp, 203 Okla. 493, 223, P.2d 375 (1950);
Abercrombie v. Edwards, 62 Okla. 54, 161 P. 1084 (Okla. 1916).
13
H Williams v. Linnitt, 1 ALL E.R. 278 (Eng. 1951).
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 869
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

in cars. These circumstances are very strong evidence that the A
area is within the “hospitium”, and, as I read the judgment, the
judge has so found.
If I am wrong in thinking that the question is substantially one of
fact, I consider that the conclusion which the judge has reached
on this point is the right legal inference from the circumstances B
referred to, and, if his conclusion is right, the strict liability
attached and could not, in my view, be displaced by such notice
as was put up in the car park, which, incidentally, would be quite
invisible at 9 p.m. on a February night. For these reasons, and
those given by my Lord, I agree that the appeal, though very
attractively argued, should be dismissed.” C

13.5. However, with increasing commercial development, the
conditions in which the common law liability of innkeepers originated
began fading away. Mindful of these changes, in 1954, the Law Reform
Commission in England recommended that the extent of absolute liability
of innkeepers be reduced. It observed that the most serious hardships D
due to the strict liability rule occurred with respect to motor vehicles,
since these cases were often a battle between two insurance
companies. Recognising the increasing burden of liability as in cases
such as Williams v. Linnitt (supra), the Committee recommended that
liability should only be imposed when the innkeeper is negligent. 14 E
13.6. These recommendations were eventually given effect with
the introduction of the Hotel Proprietors Act, 1956, which continues to
remain in force in the United Kingdom till date. The Act is significant,
as it was the first time that the strict liability of hotels in relation to
vehicles of their guests was considered. While it retains strict liability F
of hotel proprietors in respect of guest’s property in certain
circumstances, it specifically excludes motorcars and other vehicles of
any kind as well as property left in them.15 In effect, the application of
the common law strict liability has been limited by this legislation, in
recognition of the unfair burden placed on the innkeepers.
G
13.7. A study of the law in other jurisdictions reveals that the
unlimited common law liability of innkeepers with respect to vehicles
14
L.J. Blom-Cooper, ‘Second Report of the Law Reform Committee on the Law of
Innkeepers’ Liabilities for Property of Travellers, Guests, and Residents (May
1954)’ (Jul 1955) 18(4) The Modern Law Review 374, 376.
15
Hotel Proprietors Act 1956, s 2(2) (United Kingdom). H
870 SUPREME COURT REPORTS [2019] 13 S.C.R.

A has been similarly restricted by legislation. In Singapore, the Innkeeper’s
Act of 1921 specifically excludes horse, live animals, a car or carriage
from the purview of strict liability. Likewise, several states in Australia
(including Victoria and New South Wales) have excluded motor vehicles
and their contents from the liability of innkeepers, recognizing that this
is a well-established exception to the innkeeper’s liability.16 Arguably,
B
this limitation has been on the basis of the availability of travel insurance
for motor vehicles, and the absence of any undue burden thereby falling
on the guest. This exception is also recognized in the Convention on
the Liability of Hotel-keepers concerning the Property of their Guests,
which applies to several members of the European Union. Under the
C Convention, no form of strict liability has been fastened with respect
to vehicles, any property left in vehicles, or to live animals.17
13.8. While the exception has increasingly been adopted in these
jurisdictions, some states in the United States, such as Oklahoma and
Utah, continue to apply the strict rule of insurance liability to an
D innkeeper with respect to goods kept infra hospitium.18 At the same
time, other States have attempted to balance the interests of hotel owners
and guests by adopting the relatively moderate prima facie liability rule,
which we will now discuss.
B. Prima facie liability Rule
E
14. Though there has been a shift away from the common law
insurer’s rule with respect to vehicles of guests, this has not meant that
legislatures have completely absolved hotel owners of liability. Instead,
they have adopted an approach where the hotel owner/proprietor is held
responsible only for those losses that occur as a result of his negligence.
F Under this rule, the hotel owner is presumed to be liable for loss or
damage to the vehicle of the guest upon his failure to return the same.
However, he has an opportunity to exonerate himself by proving that
the loss did not arise due to negligence or fault on his part or that of
his servants. The rationale for adopting this approach is well-explained
in Laird v. Eichold:19
G
16
Innkeepers Act 1968, s 6(a) (New South Wales); Carriers and Innkeepers Act 1958,
s 29(a) (Victoria).
17
Annex to the Convention on the Liability of Hotel-Keepers concerning the Property
of their Guests, Article 7 (Paris, 1962).
18
Sherry, supra note 11.
19
H 10 Ind. 212 (1858).
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 871
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

“Innkeepers, on grounds of public policy, are held to a strict A
accountability for the goods of their guests. The interests of the
public, we think, are sufficiently subserved, by holding the
innkeeper prima facie liable for the loss or injury of the goods
of his guest; thus throwing the burden of proof upon him, to show
that the injury or loss happened without any default whatever
B
on his part, and that he exercised the strictest care and diligence.
And it is more in accordance with the principles of natural justice,
to permit him to exonerate himself by making such proof, than
to shut the door against him, and hold him responsible for an
accident happening entirely without his default, and against which
strict care and prudence would not guard.” C
(emphasis supplied)
14.1. Today, this rule is prevalent in several jurisdictions in the
United States including Indiana, Illinois, Kentucky, Maryland, Texas, and
Vermont,20 as well as in other common law jurisdictions where strict
liability for vehicles has been excluded by statute. D

14.2. In most States, the liability is predicated on the existence
of a bailment relationship between the guest and the hotel owner.21
Where a contract of bailment can be said to exist, the mere failure to
deliver the vehicle, or its redelivery in a damaged condition, constitutes
a prima facie case against the bailee (hotel owner). He must then bring E
forth evidence to show that the loss was not caused by his negligence.
C. Position in India
15. In the backdrop of the aforementioned two approaches
adopted in other jurisdictions, we will now examine the relevant F
provisions under Indian law and the approach that should be adopted
in the Indian context in respect of liability of hotel owners for loss of
or damage to vehicles of their guests.
15.1. Notably, we have not found any instances where Indian
courts have applied the common law rule of insurer’s strict liability upon G
a hotel owner. It appears that the impugned judgment of the National
Commission is the first time that the principle of strict liability for
vehicles infra hospitium was read in and applied in the Indian context.
20
Sherry, supra note 7, at 417.
21
Sherry, supra note 11. H
872 SUPREME COURT REPORTS [2019] 13 S.C.R.

A 15.2. From an examination of the underlying rationales for each
of the approaches, we find that the imposition of strict liability for loss
or damage to vehicles of guests is overly burdensome in today’s context.
The strict liability rule had emerged in an age and time where travel
was rare and tourism was virtually non-existent, thereby prompting
B Courts to hold hotel owners liable so as to protect the interests of the
guests. However, in today’s context of economies with well-established
hotel industries and mandatory insurance of vehicles owned by guests,
there has been a trend across jurisdictions of moving away from the
strict liability of innkeepers in respect of vehicles of guests.
C 15.3. Keeping in view the change in socio-economic conditions
in India, we do not think it proper to impose a standard of strict liability
upon hotel owners. Due to the growing population and the parallel
economic expansion in the country, hotels and similar establishments
are much more accessible to the public than they may have been a
D few decades ago. Hotels have also launched diversified services to keep
up with changing times and to meet growing competition from alternate
hospitality ventures. Hence, a person may frequent hotels for limited
periods of time for purposes other than residing as a guest in the rooms.
For example, a person may visit a hotel for business meetings,
conferences, weddings, dinner outings, and so on. In all such situations,
E if the hotel is made strictly liable for the safety of vehicles of these
persons without proof of negligence on its part, it may lead to grave
injustice. Given the growing number of visitors, hotels cannot be
expected to maintain surveillance of each and every vehicle parked on
their premises at all times.
F
16. At the same time, it is true that persons visiting hotels and
parking their cars in their premises or under valet parking, cannot be
left at the mercy of hotel owners. It is essential to balance the interests
of hotel owners and guests, and we find that the prima facie liability
rule strikes this balance without placing undue burden on either of the
G parties. The fact that guests are already protected by virtue of insurance
of their vehicles tips the scale in favour of adopting a relatively
moderate approach. Thus, given that the prima facie liability rule is
premised on the existence of a bailment relationship, in cases where
such a relationship is found to exist between the hotel and its guest,
H the rule should be applied in respect of vehicles so bailed to the hotel.
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 873
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

Notably, this is also the approach that has found mention under A
Indian law. The general rule has been that in a contract of bailment, if
goods are lost or damaged while in the possession of the bailee, he will
be liable. The burden of proof will be on the bailee to show that he
took a reasonable degree of care in respect of the bailed goods (See
N.R. Srinivasa Iyer v. New India Assurance Co. Ltd.22). This is
B
because there is an implicit expectation between the hotel and the guest
when a vehicle is handed over for valet parking that the vehicle would
be taken reasonable care of, and returned in a proper condition. Thus,
the failure to return the vehicle strikes at the root of the bailment
relationship and gives rise to a prima facie case of negligence against
the hotel. In our considered opinion, the strict liability rule under common C
law is a relic of the past and should not be given effect in the Indian
context. To this extent, we find that the National Commission has erred
in adopting the common law rule without justifying its choice or without
noting the well-recognised exception in respect of the vehicles of guests.
17.In light of this exposition on the applicability of the prima facie D
liability rule in India, we will now examine whether a bailment
relationship exists in the present case for such liability to be affixed on
the Appellant-hotel.
D. Existence of bailment relationship
18. The existence of a contract of bailment often turns on the E
degree of control exercised by the prospective bailee over the property
or good in question. In other words, the crucial point to be considered
is whether the custody or possession of the vehicle is purposefully
handed over to the hotel (as is the case with valet parking) or whether
the complainant is merely allowed to park his car in a parking space or F
facility. While the laws of bailment apply in the former case, the latter
is only a licensor-licensee relationship where laws of bailment or the
prima facie liability rule cannot be applied.
18.1. In a number of decisions, the National Commission has held
that the manager of a parking facility cannot be held liable as a ‘bailee’ G
for loss of vehicles parked therein. In Commissioner, Corporation of
Madras v. S. Alagraj,23 a 3-member Bench held that a person who
provides parking facility for a nominal fee does not undertake to ensure

22
AIR 1983 SC 899.
23
I (1996) CPJ 54 (NC) H
874 SUPREME COURT REPORTS [2019] 13 S.C.R.

A the safety of the vehicle. Later, a 5-member Bench in Rohini Group
of Theatres v. V. Gopalakrishnan24 relied upon Alagraj (supra) and
held that an attendant in a theatre parking lot who collects a nominal
fee for parking of the vehicle cannot be said to be a bailee, as in such
cases, it cannot be said that the vehicle was ‘delivered’ for some
‘purpose.’ Hence, the operators of the parking lot would not be liable
B
for the vehicle going missing.
18.2. However, in our opinion, these decisions do not support the
case of the Appellant, as they relate to situations where the possession
of the vehicle was not purposefully handed over to the hotel or
management of the parking facility, or their servants. In the
C
aforementioned cases decided by the National Commission, the
concerned facility had only licensed out its premises for parking, and
left it to the discretion of the vehicle owner as to where to park the
car. In such instances, the manager of the premises does not undertake
the safe return of the vehicle and there is no ‘parking service’ rendered
D by the parking facility operator as such. Rather, it is the owner’s
responsibility to find a suitable parking spot, park the vehicle correctly,
return, and take out the vehicle upon display of the parking token/slip.
Hence, in such situations, it cannot be considered that possession has
been handed over or that a relationship of bailment has been created.
E 18.3. On the other hand, in a situation where 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 in a manner such that
the parking of the vehicle is beyond the control of the owner, a contract
of bailment exists. Thus, the hotel would be liable as a bailee for
F returning the vehicle in the condition in which it was delivered. To further
elaborate upon this point, we may refer to the following provisions of
the Indian Contract Act, 1872 (‘Contract Act’):
“148. ‘Bailment’, ‘bailor’ and ‘bailee’ defined.—A ‘bailment’
is the delivery of goods by one person to another for some
G purpose, upon a contract that they shall, when the purpose is
accomplished, be returned or otherwise disposed of according
to the directions of the person delivering them. The person
delivering the goods is called the ‘bailor’. The person to whom
they are delivered is called the ‘bailee’…
24
H II (1996) CPJ 1 (NC)
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 875
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

149. Delivery to bailee how made.—The delivery to the bailee A
may be made by doing anything which has the effect of putting
the goods in the possession of the intended bailee or of any person
authorised to hold them on his behalf.”
(emphasis supplied)
In view of these provisions, it is clear that in a scenario where B
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 Section 148 and 149. 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 C
the car and return it in a suitable condition when the vehicle owner so
directs.
18.4. The distinction between a person who leaves his vehicle
in a car park, and a person making delivery of a vehicle for safekeeping
has been well-established in common law by the Court of Appeal in
D
Ashby v. Tolhurst.25 In this case, the plaintiff parked his car in a car
park owned by the defendants and received a parking ticket with an
“owner’s risk” clause. The car park attendant allowed another person
to take away the car based upon a mistaken impression that the thief
was the true owner of the car. The Court of Appeal held that no
relationship of bailment was established, and the defendant was under E
no contractual liability to the plaintiffs as:
“It seems to me that reading the document as a whole, including
its own description of itself, namely “Car park ticket,” it really
means no more than this: the holder of this ticket is entitled to
park his car in the Seaway Car Park, but this does not mean F
that the proprietors are going to be responsible for it…If that be
the true view, the relationship was a relationship of licensor and
licensee alone, and that relationship in itself would carry no
obligations on the part of the licensor towards the licensee in
relation to the chattel left there, no obligation to provide anybody
to look after it, no liability for any negligent act of any person in G
the employment of the licensor who happened to be there.
The word “give” in the context quite clearly is not accurately
used. The car is placed upon the ground, and if the owner came
25
[1937] 2 K.B. 242. H
876 SUPREME COURT REPORTS [2019] 13 S.C.R.

A for it he would get into it and drive it away. There is no question
of giving, no question of physical delivery coming into it at all. It
is not like articles in a railway cloak-room which have to be
handed out by the cloak-room attendant before the person
claiming them can get them. This is a case where any one can
walk on to the land and get into a car, and I cannot myself read
B
that one phrase as evidence of any such delivery as Mr. Cloutman
admits is essential for the success of his case.”
(emphasis supplied)
18.5. Similarly, in Tinsley v. Dudley,26 the plaintiff went to a
C public inn and parked his motorcycle in the premises. No parking fee
was charged, nor was there any attendant to look after the vehicles.
Relying upon Ashby (supra), the Court of Appeal held that the inn would
not be liable:
“But, apart altogether from that point, it seems quite plain that
D the decision in this court proceeded upon the view that one who
parks his car in a car park does not thereby deliver over the
possession or custody of the motor car to the keeper of the park
— at any rate in the absence of some unusual or special
circumstances which did not exist in that case and were not to
E be imported by the giving or the terms of the ticket.
It seems to me clear, therefore, that there is no basis for saying
that there was any delivery over to the defendant, or to any agent
of his, of the possession or custody of the motor-bicycle. There
was nobody about, and it is not suggested that access to the yard
F was not available to any who liked to walk in…
…As Romer, L.J., said in Scarborough v. Cosgrove, all these
cases must depend upon their own facts; and it should not be
assumed that in every case in which, adjoining a public house
there is a place provided for the leaving or storage of motor cars
G by patrons of the house it will follow that the publican is under
no liability. That question will depend on whether, in the particular
case, a contract of bailment comes into existence or not.”
(emphasis supplied)
26
H [1951] 2 K.B. 19.
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 877
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

18.6. Indian courts have also followed this distinction. In New A
India Assurance Co. Ltd. v. Delhi Development Authority,27 the
insurer had filed a civil suit (as subrogee) to recover damages on
account of theft of a truck from the parking facility maintained by the
defendant-authority. While holding that this was a case of bailment under
Sections 148 and 149, the Delhi High Court made the following pertinent
B
observations:
“6…There is nothing on the record to show that the Idle Truck
Parking Centre was only an open space of land where licence
was being granted to the truck owners to park their trucks on
payment of certain fee without their being any obligation on the
part of the defendants to look after the safety of the vehicles C
parked therein…
7…If I may apply the principle of law as laid above, it is a clear
case of bailment and the defendants as bailee having failed to
show having exercised reasonable care as man of ordinary
prudence are liable for the loss of the truck… D

10. Essence of bailment is possession. The possession of the truck
was handed over to the defendants when the truck was parked
in the Parking Centre of the defendants. The defendants had
issued a receipt and charged Rs. 3/- for the safe keeping of the
vehicle for a period of 24 hours. Immediately at that time a E
contract of bailment came into being. The defendants as bailee
having failed to deliver the vehicle back to the second plaintiff
within the contracted period and not having shown to have
exercised any prudent care for the safetly of the truck, are liable
for its loss. It is immaterial if the driver of the truck was also F
sleeping in the vehicle. The vehicle could not have been taken
out of the Parking Centre without surrendering the receipt.
This is particularly, so when the plaintiffs have submitted that the
truck was under the charge, custody, control and possession of
the defendants. I would have certainly agreed with Mr. Amit
Chadha, learned counsel for the defendants, if there was anything G
on the record to show that the defendants were merely collecting
a fee for parking and were not to guard or watch the vehicles
parked generally in the Idel Parking Centre…

27
AIR 1991 Del 298. H
878 SUPREME COURT REPORTS [2019] 13 S.C.R.

A …I find, in the present case, the vehicles was parked in the Truck
Parking Centre against a receipt and it was the duty of the
defendants to guard the truck for 24 hours and to deliver the same
back to the plaintiff No. 2 within this period. It was not that the
defendants had merely granted a licence to the plaintiff to park
the truck at any open space on a certain fee without there being
B
any liability on the part of the defendants to look after the truck
for its safe keeping.”
(emphasis supplied)
18.7. In view of the foregoing discussion, we find that the
C decision in Bombay Brazzerie (supra) is wrong insofar as the National
Commission observed that the laws of bailment would apply only when
a customer makes a separate payment to park the car in a parking lot.
It is not disputed that a contract of bailment under Section 148 may be
gratuitous. In any case, it is common knowledge that ‘complimentary’
services provided by 5-star hotels are not actually free-of-cost. These
D services are covered by the exorbitant rates charged for renting of
rooms, food, entry fee to lounges and clubs, and so on. It cannot be
denied that valet parking service, even if offered gratuitously, benefits
the hotel. A hotel holding itself out to the public as providing such a
service seeks to pitch it as a value addition to the experience of a guest
E and incentives greater foot fall. In fact, many luxury hotels are located
in central urban areas which are prone to congestion, thereby
necessitating valet parking to protect guests from overcrowding and
pollution caused by haphazard parking of vehicles. In such a setting,
the provision of valet parking offers the hotel an edge over others, as
visitors are generally inclined to accept the invitation of greater
F convenience furnished by the hotel, i.e. of having someone else park
their vehicles in a secure place. Therefore, for such cases, there exists
an implied consideration for the contract of bailment created by virtue
of the valet parking service.
18.8. Applying this to the instant case, Respondent No. 2 had
G given up possession of his car by handing it over to the valet. Thus,
the Appellant-hotel cannot refute the existence of bailment by
contending that its valet parking service was purely complimentary in
nature and that the consumer (bailor) had not paid for the same. In
other words, the existence of a bailment relationship is clear. In view
of this finding, the requisite standard of care under such a bailment
H contract merits examination.
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 879
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

III. THE REQUIRED DEGREE OF CARE UNDER A
BAILMENT
19. Given the existence of a bailment relationship, the failure of
the Appellant to deliver the car to Respondent No. 2 (car-owner), raises
a prima facie case of negligence against it. Thus, the burden of proof
is on the hotel (bailee) to show that efforts were undertaken by it to B
take reasonable care of the vehicle bailed, and that the theft did not
occur due to its neglect or misconduct.
20. To ascertain the standard of reasonable care to be taken by
the bailee (hotel) for vehicles parked within its premises, Sections 151
and 152 of the Contract Act are relevant: C
“151. Care to be taken by bailee.—In all cases of bailment
the bailee is bound to take as much care of the goods bailed to
him as a man of ordinary prudence would, under similar
circumstances, take of his own goods of the same bulk, quantity
and value as the goods bailed. D
152. Bailee when not liable for loss, etc., of thing bailed.—
The bailee, in the absence of any special contract, is not
responsible for the loss, destruction or deterioration of the thing
bailed, if he has taken the amount of care of it described in
section 151.” E
20.1. 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 5-star
hotels specifically, we find that the responsibility to take such measures
is higher. Counsel for Respondent No.1 sought to rely on Klaus F
Mittelbachert and Hotel Hyatt Regency (supra) to argue that 5-star
hotels should be subject to the strict liability standard of insurers under
common law. Here, it is crucial to note that Klaus Mittelbachert was
in respect of personal injury caused to the guests on account of
negligence by the hotel. As mentioned supra, such standard cannot be
G
applied in the context of liability for vehicles of guests. However, we
do agree with the observations of Lahoti J. in Klaus Mittelbachert that
the high prices charged by such hotels imply a relatively higher degree
of care as a reasonable person would normally expect higher quality
and safety of the services made available by such hotels. This is also
in consonance with the observations of the National Commission in H
880 SUPREME COURT REPORTS [2019] 13 S.C.R.

A Hotel Hyatt Regency (supra) that five star hotels have a high duty of
care for cars parked in their premises.
20.2. This would mean that it is not sufficient for the hotel to
merely appoint an attendant or security guard who takes the
responsibility of parking the vehicle and keeping the car keys in his
B custody until the vehicle owner is inside the hotel premises. The hotel
must take additional steps to guard against situations which may result
in wrongful loss or damage to the car. This includes, for example,
ensuring that the car keys are kept out of reach of outsiders, that the
valet parks the car in a safe location, that parking spaces which are in
the vicinity of the hotel are well-guarded, that parking spaces inside
C the hotel (if any) are reasonably well-maintained and CCTV cameras
are installed there for detecting any suspicious activity, that the car is
handed over only to those who present the parking slip and so on.
Needless to say this is only an illustrative, and not an exhaustive list.
20.3. Further, it is relevant to note that Sections 151 and 152 of
D the Contract Act do not distinguish between a gratuitous bailee and a
bailee for reward. In Port Swettenham Authority v. T.W. Wu & Co,28
the Privy Council commented on Sections 104 and 105 of the Contracts
(Malay States) Ordinance of 1950, which are in pari materia with
Sections 151 and 152 of the Contract Act, as follows:
E “It will be observed that these sections apply to all bailments and
make no distinction between bailments for reward and gratuitous
bailments…
…There is no compelling authority that a gratuitous bailee who
fails to return the goods left in his custody is not obliged to explain
why he is not able to return them and to show that their loss is
F
not due to his failure to have taken as much care of the goods
as a man of ordinary prudence would have taken of his own
goods in similar circumstances. In any event, a bank, which offers
its customers, in the ordinary course of business, the service of
looking after goods deposited with it, can hardly be described as
G a gratuitous bailee. The bank must realise that were it to refuse
a customer such a service it would probably lose the customer
who would have no difficulty in finding another bank which would
be happy to render the service which is normally offered by banks
to their customers.
28
H [1979] A.C. 580
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 881
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

However, this may be, in their Lordships’ view the onus is always A
upon the bailee, whether he be a bailee for reward or a gratuitous
bailee, to prove that the loss of any goods bailed to him was not
caused by any fault of his or of any of his servants or agents to
whom he entrusted the goods for safe keeping.”
Therefore, it is irrelevant as to how much parking fee was paid B
by the consumer, or whether any parking fee was paid at all, as the
duty of care required to be taken by the hotel will be the same in all
circumstances. However, this is not a strict liability standard insofar as
Section 152 excludes the liability of a bailee for loss or damage of the
bailed goods if he is able to show that he fulfilled the standard of
reasonable care under Section 151. Whether or not such standard of C
reasonable care was fulfilled will depend upon the facts and
circumstances of each case.
21. Coming to the facts of the instant case, the records show
that the car of Respondent No. 2 was stolen when three young boys
who had parked their car in the Appellant-hotel came out of the hotel, D
asked the valet driver to bring their car to the porch, and one of them
then picked up the keys of the car of Respondent No. 2 from the desk,
went to the parking area and stole the car. It has been stated in the
complaint that the thief escaped despite an attempt by the hotel guard
to stop him. Notably, in the written statement filed by the Appellant- E
hotel, it has denied negligence by stating that the guest was aware of
the risk of valet parking, which was not a service for safe custody of
the vehicle, especially given the terms printed on the parking tag. Its
entire case has been premised on the exclusion clause in the notice,
and not on the absence of negligent conduct on its part. In fact, there
has been an admission of the fact that one of the three young boys F
who had visited the hotel stole the car of Respondent No. 2, while its
keys were under the watch of the valet driver.
As mentioned supra, to meet the requisite standard of care, the
hotel must go beyond appointing an attendant or security guard and take
additional measures to guard against situations that may result in G
wrongful loss of or damage to the car of its guest. Here, the manner
in which the car was stolen manifests that no steps had been taken by
the Appellant-hotel to ensure that car keys were kept outside the reach
of outsiders or that the cars were parked in a safe location with
adequate barriers to verify their owners. In the absence of such H
882 SUPREME COURT REPORTS [2019] 13 S.C.R.

A measures, the Appellant has failed to discharge its burden of disproving
the prima facie case of negligence against it. Thus, we find that the
theft of the car of Respondent No. 2 was a result of the negligence of
the Appellant-hotel.
IV. EXCLUDING LIABILITY BY CONTRACT
B 22. Since the parking tag given to Respondent No. 2 stated that
the parking would be at the guest’s own risk, it is to be considered
whether it is open to the Appellant-hotel (bailee) to contract out his
liability for negligence beyond what is already provided under Section
152 of the Contract Act. In other words, can the bailee contractually
C exclude liability for his negligence or that of his servants?
23. Under Indian law, the seminal decision on this point is that
of a Full Bench of the Madras High Court in Sheik Mahamad
Ravuther v. The British Indian Steam Navigation Co. Ltd.29 In that
case, the plaintiffs alleged that their goods were damaged on account
D of the negligence of the defendant shipping company. The trial court
and the lower Appellate Court found that there had been no negligence
on the part of the defendants. However, in second appeal, though the
Division Bench of the High Court agreed that the defendants were
negligent, they differed on whether the terms of the bill of lading
excluded liability for negligence. Consequently, the case came before
E the Full Bench by way of a Letters Patent Appeal.
On facts, Sir Arnold White C.J. and Sankaran Nair J. of the Full
Bench found that the defendant had been negligent and allowed the
appeal, whereas Wallis J. dissented. However, with respect to the
question of whether the bill of lading excluded liability for negligence,
F White C.J., and Wallis J. were of the opinion that a carrier is not
exempted from liability for his negligence or that of his servants, unless
such an exemption is made in express terms through a ‘specific
negligence clause’. While holding so, they noted that such a contractual
exemption, if properly made, would not be contrary to public policy.
G However, on facts, White C.J. found that such a specific negligence
clause had not been inserted in the bill of lading. Thus, he allowed the
appeal. Placing significant reliance upon the decision of the King’s
Bench in Price & Co v. Union Lighterage Company, (1903) 1 K.B.
750 while arriving at this conclusion, he observed that:
29
H (1909) ILR 32 Mad 95.
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 883
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

“…The view which I take appears to be in accordance with the A
decision of the Court of Appeal in Rathbone Brothers & Co. v.
David MacIver Sons & Co. where the Court holding that the
carriers were unable, on the facts, to claim the benefit of a special
proviso relating to unseaworthiness, the carriers were held liable
notwithstanding general words in the bill of lading which
B
exempted them in the case of injury or default…
…The words “in all cases and under all circumstances” in the
present bill of lading are no doubt as wide and as general as
possible, but the reiterated use of general words does not of
course exclude the application of the special canons of
C
construction which a long course of Judicial decisions has held
applicable to the construction of contracts which purport to relieve
a carrier from liability for negligence. The authorities were
discussed by Walton, J., in Price & Co. v. Union Lighterage
Company. In that case goods were loaded on a barge under a
contract for carriage by which the barge owner was exempt from D
liability “for any loss of or damage to goods which can be covered
by insurance.” The barge was sunk owing to the negligence of
the servants of the barge owner, and the goods were lost. The
learned Judge held that the barge owner was not protected from
liability by the contract. In the course of his judgment the learned E
Judge observed: “...If it were right or permissible to deal with
this case without regard to the rules of construction which have
been laid down in a well-known series of cases and looking only
at the language used, it might very well be said that its meaning
was that the defendants wore to be exempt from liability for
insurable losses whether caused by negligence or not. But there F
is, I think, a well-established rule of construction applicable to
the present case. The law of England, unlike in this respect the
law of the United States of America, does not forbid the carrier
to exempt himself by contract from liability for the negligence
of himself and his servants; but if the carrier desires so to exempt G
himself, it requires that he shall do so in express, plain, and
unambiguous terms.”
After discussing the authorities Walton, J., summarises their
effect in these words: “it really comes to this, that if a carrier
wishes to exempt himself from liability for the negligence of his H
884 SUPREME COURT REPORTS [2019] 13 S.C.R.

A servants he must insert in his contract, in one form or another,
something equivalent to what is well-known as a negligence
clause.” Now I understand a negligence clause to be a provision
which in express terms exempts a carrier from liability for the
negligence of his servants. The specific condition in the bill of
lading in the present case contains no such provision…
B
… It is no doubt true that the bill of lading in the present case
does not contain contradictory terms and, in a sense, it is not
ambiguous, but the portion of the bill of lading which deals with
the liability of the carrier at the particular stage of the adventure
when the negligence occurred, is not express with reference to
C
the question of negligence, and this being so I do not think the
carrier is protected…
… As in my view of the law a shipowner is not exempted from
liability for negligence unless the contract which exempts him is
both clear and express, and as the contract in the present case,
D though it may perhaps be said to be clear is certainly not express,
I am of opinion that the defendants are not protected by their
bill of lading. Two other questions remain for consideration. I can
deal with them shortly. Mr. Sundara Ayyar contended that a
contract which purported to relieve a shipowner from his liability
E as a carrier for negligence was contrary to public policy and
should not be enforced. As pointed out by Walton, J., in Price &
Co. v. Union Lighterage Company, the law of the United States
of America forbids a carrier to exempt himself by contract from
liability for negligence, whilst the law of England does not. I am
of opinion that on a question of this character Courts in India
F ought to follow the law of England.”
(emphasis supplied)
Wallis J. in his dissent, similarly relied upon Walton J.’s decision
in Union Lighterage Company (supra) and observed that:
G “As regards the second point I am of opinion that it is not open
to us to hold that contracts exempting a carrier from liability for
the negligence of his servants are void as opposed to public policy.
As pointed out by Walton, J., in Price & Co. v. Union
Lighterage Company “the law of England, unlike the law of the
H United States of America, does not forbid the carrier to exempt
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 885
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

himself by contract from liability for the negligence of himself A
and his servants; but, if the carrier desires so to exempt himself,
it requires that he shall do so in express, plain, and unambiguous
terms.” So far as the general question goes this is the law which
has been received and applied by the Indian Courts, [Jellicoe v.
The British, India Steam Navigation. Co. and Hajee Ismail
B
Sait v. The Company of the Messageries Maritimes of
France]. Contracts have been made and business has been
carried on for many years in India on this footing, and if the law
is to be altered now it must be by the legislature.”
(emphasis supplied)
C
24. Notably, neither White C.J. nor Wallis J. adverted to the
provisions of the Contract Act, which was in force in India at that time,
in their opinions on the enforceability of contractual ‘negligence
clauses’. Rather, they primarily placed reliance upon the common law
in England which governed the issue at the time. On the other hand,
Sankaran Nair J. in his concurring judgment, upon a detailed D
consideration of the provisions of the Contract Act, particularly the
provisions relating to bailment, opined that it is not open to a bailee to
contract out of the minimum standard of liability under Section 151. He
noted that while the rule of law in England allowed shipowners to
contractually exclude their responsibility for the negligence of their E
servants, the validity of the exemption clause under Indian law would
necessarily have to be tested on the touchstone of the provisions of
the Contract Act. The following portions of his opinion are important
for deciding this issue:
“Under Section 151 of the Act, the defendants, therefore, are F
bound to take as much care of the goods as a man of ordinary
prudence would under similar circumstances. It is only the incident
of any contract not inconsistent with its provisions that remains
unaffected by the Contract Act (see Section 1 of the Contract
Act). The incident of the contract before us that the bailee is
exempt from taking the care required by Section 151 appears to G
me to be clearly inconsistent with that section. Section 152 seems
to make this clear. It declares that the bailee’s liability is limited
as declared by Section 151, “in the absence of any special
contract,” or in other words he may by contract undertake a
higher responsibility, for instance, that of an insurer. The provision H
886 SUPREME COURT REPORTS [2019] 13 S.C.R.

A in Section 152 that a bailee may undertake a higher responsibility,
the absence of a similar provision that he may limit the liability
imposed by Section 151, and the fact that, in the chapter IX
relating to Bailment, whenever a rule of law is intended to
operate only in the absence of a contract to the contrary it is
expressly so stated - (see Sections 163, 165, 170, 171 and 174)
B
leave no doubt in my mind that a bailee’s liability cannot be
reduced by contract below the limit prescribed by Section 151.
In fact, throughout the Act, whenever the legislature intended that
the provisions of the Act should be enforced only in the absence
of a contract between the parties they have said so. (See Sections
C 109, 113, 116, 121, 93, 94, 95, 202, 219, 221, 230, 241, 253, 256,
261, 265)
The obligation imposed by Section 151 applies to bailees as well
as to their servants in the discharge of their duty. The agent
represents the bailee under the Act. The Contract Act thus
D sweeps away all the distinctions between the degrees of care
required of the bailees. In the English law the amount of care
required seems to depend upon the benefit accruing to the bailee.
Under the Contract Act the obligation arises from the simple fact
of accepting delivery or receiving property for a certain purpose,
and the care to be taken is the same in all cases…
E
…The relations between parties may well be left to be regulated
by contract when the degree of care required is dependent upon
the benefit derived from the bailment, but when the same amount
of care is required independent of any benefit to the bailee then
it may well be that the legislature did not think it right to allow
F the bailee to reduce his liability. Assuming then that the rule of
English law that a common carrier can get rid of his liability by
contract has been accepted in India, the contract itself must be
obviously one which will be recognized in the Indian Courts, and,
if I am right in the view above set forth, it necessarily follows
G that while a common carrier may exempt himself from the liability
of an insurer by contract, he cannot exempt himself from the
liability of an ordinary carrier imposed by Section 151 of the
Indian Contract Act.
…The reason why a common carrier is bound to receive goods
H tendered and the great responsibility of an insurer is imposed
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 887
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

upon him is that necessity compels the owners of goods to trust A
him…As Best, C.J., puts it in Riley v. Horne, “When goods are
delivered to a carrier, they are usually no longer under the eye
of the owner.... If they should be lost or injured by the grossest
negligence of the carrier or his servants, or stolen by them, the
owner would be unable to prove either of these causes of loss;
B
his witnesses must be the carrier’s servants, and they, knowing
that they could not be contradicted, would excuse their masters
and themselves.” For the above reasons it is essential that
common carriers must in India also be subject to the English
common liability, and the Privy Council have now placed the
matter beyond dispute. Where the obligation is imposed upon the C
common carrier for the benefit of the public he cannot get rid of
that obligation by agreement, if it is not reasonable.
The reasons given above by Lord Holt, Lord Mansfield and
Abbot, C.J., are, it appears to me, conclusive to show that it is
against public policy to allow a claim for exemption as the one D
now put forward. There is practically no freedom of choice, and
persons when entrusting shipowners with their property are
obliged to accept any condition that may be imposed upon them
by the steamship companies. The cargo-owners have no control
over the servants, and it is only right that the master and not the
cargo-owner should suffer for the misuse of his powers by the E
servant as he has armed him with those powers. The law which
requires care and diligence on the part of a carrier will, otherwise,
to illusory in the case of steamship companies, as everything is
left to the servants. There will be a tendency to lax supervision
over the servants, and to make their selection dependent more F
upon cheapness than on efficiency…Nothing is more easy than
for the carriers to call their servants as witnesses and to prove
prima facie that the goods were protected in the usual way. It
would then be impossible for the plaintiff to bring negligence or
criminality home to the carriers although the goods may not be
forth coming and no explanation given how the loss occurred.” G

(emphasis supplied)
Sankaran Nair J. was firmly of the opinion that any exemption
clause with regard to negligence would be against the interests of the
mercantile community and shipowners, and thereby void as opposed to H
888 SUPREME COURT REPORTS [2019] 13 S.C.R.

A public policy. This would be true even in a case where the bailor agreed
to pay lower remuneration to the bailee on the condition that the latter
would not be liable for their servant’s negligence.
25. Admittedly, the opinion of Sankaran Nair J. forms part of one
school of thought on the point of contractual exclusion of liability for
B negligence. However, in India, the opinion of White C.J. and Wallis J.
in Sheik Mahamad (supra) on this point has largely been followed in
subsequent decisions of various High Courts. These decisions have held
that a bailee would be liable for the negligence of its servants, except
in cases where a specific negligence clause is inserted in the contract.
They have all noted that the Contract Act does not prohibit a party from
C contracting out of its duty of care under Section 151.30
26. Notably, academic opinion has also supported the view that
a bailee may contract out of his liability under Section 151. The Law
Commission of India has opined that the view of White C.J. and Wallis
J. in Sheik Mahamad (supra) is correct and that the words “in the
D absence of any special contract” ought to be added to Section 151 of
the Contract Act to resolve the controversy.31 Similarly, in their
commentary on the Contract Act, Pollock and Mulla have noted that
though a bare reading of Section 152 indicates that a bailee may make
a contract to increase his responsibility over and above the standard
E under Section 151, the provision has been interpreted to mean that the
duty of care enjoined on a bailee under Section 151 may be subject to
a contract excluding such responsibility. Hence, a contract of exemption
from liability for any loss or damage due to the fault, carelessness or
negligence of the bailee’s staff would bind the parties and not be void
as opposed to public policy.32
F
27. On a closer reading, we find that the decision in Sheik
Mahamad (supra) and the subsequent High Court decisions which

30
See Kariadan Kumber v. British India Steam Navigation (1913) 38 Mad. 941;
Hollandia Pinmen v. H. Oppenheiner AIR 1924 Rang 356; Bombay Steam
G Navigation Ltd v. Vasudev Baburao Kamat ILR (1928) 52 Bom 37; Lakhaji Dollaji
& Co. v. Boorugu Mahadeo Rajanna 41 Bom LR 6; Indian Air Lines Corporation
v. Jothaji Maniram AIR 1959 Mad 285; State Bank of India v. M/s Quality Bread
Factory, Batala AIR 1983 P&H 244; Central Bank of India v. M/s Grains & Gunny
Agencies AIR 1989 MP 28.
31
Law Commission of India, Contract Act, 1872 (LawCom No 13, 1958) para 125.
32
Pollock and Mulla, The Indian Contract and Specific Relief Acts (Nilima Bhadbhade
H ed, updated 14th edn, 2013) 1505, 1522.
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 889
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

followed it were in the context of common carriers as bailees. With A
respect to liability of common carriers, it is settled that the opinon of
Sankaran Nair J now holds the field. A Division Bench of this Court
has clarified in Nath Bros. Exim International Ltd. v. Best Roadways
Ltd.33 that their liability is equivalent to that of an insurer and is absolute.
Further, it has been observed that such liability is governed by the
B
Carriers Act of 1865 and not by Sections 151 and 152 of the Contract
Act, and can therefore not be excluded by way of a special “owner’s
risk” clause in a contract. However, given that the present case
concerns with liability of a hotel for loss of vehicles of its guest due to
negligence, the question arises whether White C.J.’s opinion in Sheik
Mahamad holds good with respect to Section 151 and 152 and the C
prima facie liability standard which we have laid down supra.
28. Upon perusal of the relevant decisions on this point, we find
that White C.J. and Wallis J’s opinion in Sheik Mahamad (supra) was
peculiar to the facts of that case. The case of a common carrier at
sea is different from a hotel which undertakes to park vehicles for its D
guests on ground. In the former case, given the unpredictable conditions
at sea, and the fact that the shipowner may be unable to supervise the
conduct of his servants during an overseas voyage, it can be argued
that carriers should have the liberty to contract out of liability for their
servants’ negligence.
E
However, with respect to liability for vehicles bailed to a hotel
as is the case with valet parking, we are of the considered opinion that
Sankaran Nair J.’s opinion in Sheik Mahamad should be adopted. Given
that such vehicles would normally be parked in the hotel’s own parking
facility, or in the vicinity of the hotel, the hotel staff is well-placed to
ensure safe custody of the vehicle and monitor its condition. Though F
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. As
emphasized earlier, the guest has an implicit expectation that the repute G
and standards of 5-star hotels would entail adequate safety of the
vehicles handed over for valet parking. Thus, in such a scenario, if the
hotel is allowed to exclude its liability for negligence by way of a
contract, the standard of care imposed under Section 151 will become
33
(2000) 4 SCC 553. H
890 SUPREME COURT REPORTS [2019] 13 S.C.R.

A illusory and virtually redundant, rendering consumers vulnerable without
any remedy. In our view, 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.
It is important to clarify that though courts may have construed
B the phrase ‘in the absence of any special contract’ in Section 152 to
mean that a bailee can reduce his liability under Section 151, such an
interpretation is incorrect. 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.
C
However, this does not mean that the hotel would be liable in all
scenarios or that it cannot impose any exemption clause through a
contract. There may be situations where the loss or damage may be
caused due to the negligence of third parties, the bailor’s own negligence
or unforeseen circumstances beyond the bailee’s control, which could
D not have been foreseen with ordinary diligence. This would include, for
example, acts of God, seizure of the vehicle under legal process or by
public authorities, damage due to natural causes such as unforeseen
weather conditions, presence of inherent defects in the vehicle, acts of
loss or damage caused by the guest’s own negligence and so on. A
E joint reading of Sections 151 and 152 shows that, in such cases, the
Contract Act intended that the bailee should not be liable for the loss
or damage of the goods bailed on all occasions. To re-iterate, Section
152 expressly states that the bailee, in the absence of any special
contract, is not responsible for loss or damage of the thing bailed, if he
is able to prove that he has taken the amount of care required under
F Section 151.
Therefore, 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
G events. However, as mentioned supra, this would always be subject to
the hotel discharging its initial burden of proving that it fulfilled the
standard of care imposed under Section 151 of the Contract Act. Where
the hotel or its servants have actively connived against or acted
negligently in safeguarding the vehicles delivered for valet parking,
H ‘owner’s risk’ clauses in the parking token will not come to their rescue.
TAJ MAHAL HOTEL v. UNITED INDIA INSURANCE 891
COMPANY LTD. [MOHAN M. SHANTANAGOUDAR, J. ]

In this regard, it is relevant to note where a valet or servant has A
been handed custody of the vehicle, and such a servant takes away
the vehicle without authority, the hotel will be liable. This is because
there will still be a prima facie assumption that the hotel has exercised
laxity in supervising the actions of its servants. However, the hotel will
not liable where, in spite of due diligence, a servant or employee who
B
was not entrusted with custody of the vehicle takes it without
authority34, as this would be similar to a case of theft by a third-party.
At this juncture, we would like to emphasize that the above
observations are limited to the issue for consideration before us, that
is, the liability of hotels as bailees for vehicles handed over to them for
C
valet parking. We are not commenting on whether the rule as laid down
by White C.J. and Wallis J. in Sheik Mahamad, and followed in
subsequent High Court decisions, holds good in other kinds of contracts,
and we desist from commenting further on this aspect.
29.In light of the above discussion, in a case of theft of a vehicle
D
given for valet parking, the hotel cannot claim exemption from liability
by arguing it was due to acts of third parties beyond their control, or
that they are protected by an ‘owner’s risk’ clause, prior to fulfilling its
burden as required under Section 151 and 152. It is by now well
established, that while a case of a robbery by force is visibly beyond a
bailee’s control, in cases of private stealth, or simple theft where no E
force or violence is involved, the bailee still has the prima facie burden
of explaining that the loss or disappearance of the goods in his custody
is not attributable to his neglect or want of care. This is because no
one apart from the bailee is in a position to explain the fate of the goods.
In the instant case, given our finding that the theft of the car of F
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. Hence, the argument of the Appellant-hotel on this count fails.
30. In conclusion, we would summarize our observations on this
point as follows: G
(i) 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

34
See Pollock and Mulla (n 32) 1505. H
892 SUPREME COURT REPORTS [2019] 13 S.C.R.

A staff or valet, there is an implied contractual obligation to return the
vehicle in a safe condition upon the direction of the owner.
(ii) Even where there is a general or specific exemption clause,
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
B account of its negligence or want of care 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. The burden of proving that
such loss or damage was covered by the exemption clause will also be
on the hotel.
C 31. In view of the foregoing discussion, we hold that the
consumer complaint in consideration is maintainable as it was filed by
the insurer as a subrogee, along with the original owner as a co-
complainant. Further, we find that 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. Applying
D this rule to the present case, it is clear that the Appellant has not
explained why its failure to return the vehicle to Respondent No. 2 was
not on account of fault or negligence on its part. Thus, liability should
be affixed on the Appellant-hotel due to want of the requisite care
towards the car bailed to it. The instant appeal is dismissed accordingly.
E
Divya Pandey Appeal dismissed.

F

G

H