CASE ANALYSIS ON TAJ MAHAL HOTEL VS UNITED INDIA INSURANCE Co. Ltd. And Ors.

BASIC DETAILS ABOUT THE CASE:-

Name of the case:- Taj Mahal Hotel Vs United India Insurance Co. Ltd. and Ors.

Nature of the case:- Civil Appeal

Case No. :- Civil Appeal No. 8611 of 2019 (Arising out of S.L.P. (Civil) No. 11213 of 2018)

Name of the Court:- Supreme Court of India

Bench:- Hon'ble Mohan M. Shantanagoudar and Ajay Rastogi, JJ.

Citation:- MANU/SC/1566/2019

Equivalent Citation: 2020(2)ABR412, 2020(209)AIC241, AIR2020SC597, 2020(2)ALD263, 2020 (140) ALR 262, 2019(6)ALT274, IV(2019)CPJ44(SC), 2020(3)CTC353, 2020GLH(3)580, 2020-4-LW97, (2020)1MLJ261, 2019(16)SCALE201, (2020)2SCC224, 2020 (3) SCJ 676

FACTS OF THE CASE

?In this case, A person i.e Respondent Number 02 (Car Owner) visited the Appellant hotel i.e Taj Mahal Hotel in his Maruti Zen car on 1 August,1998. After reaching the hotel, he handed over the car and its key to the hotel valet parking and went inside with a parking tag that read an important condition that the hotel would not be responsible for any loss, theft or damage and that the guest had parked the car at his own risk and responsibility, no claim whatsoever against the management. The person came out of the hotel at around 1 am but he was told that his car was driven away by another person. Hence, The car was stolen from the hotel premises.

?The hotel said that three boys had visited the hotel in their separate car, parked it and went inside the hotel. After sometime they came out and asked the valet to bring their car to the porch. During this process, one of the boys picked up the keys of the car of the person from the desk and stole the vehicle. They sped away when the security guard tried to stop him. The car was never traced by the Police; however the person received the value of the stolen car from his insurer.

?Thereafter, Respondent Number 02 (Car Owner) executed a Power of Attorney* and a letter of subrogation* in favour of Respondent Number 01 (Insurance Co.).

* The?power of attorney?for the management of?insurance?and?claim?matters authorizes the holder to handle?insurance?and claims for the principal, with the exception of the right to appoint beneficiaries, fill in health declarations, or authorize a third person.

* A?subrogation letter?is a written notification sent by a?subrogation?adjuster to a person or organization that seems to be responsible for reimbursing expenses to an insurance company. ... An accident happens with a policyholder that sends an insurance claim?letter?to an insurance company to seek reimbursement.)

??Later on they both 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. The State Commission allowed the complaint and directed the Appellant-hotel to pay Respondent No. 1 the value of the car with interest. Appeal filed against this order by Appellant before the National Commission which stands dismissed.

?The Hotel then appealed before the Supreme Court. The court observed that in the case of theft of a vehicle given for valet parking, the hotel cannot claim exemption from liability by arguing that 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?of the Indian Contract Act, 1872.

?In the instant case, the theft of the car of 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.

?PROCEDURAL HISTORY

??Timeline of the events and Decision of the same.

?Firstly, Respondent No. 1 & 2 reached the State Commission for seeking the payment of the stolen car from Appellant.

The State Commission allowed the complaint and directed the Appellant-hotel to pay Respondent No. 1 the value of the car with interest.

?Appellant filed an Appeal in National Commission but the Appeal was dismissed.

?Then the Appellant reached the Supreme Court.

ACTS DISCUSSED IN THIS CASE

Section 148 of the Indian Contract Act, 1872.

?Section 149 of the Indian Contract Act, 1872.

?Section 151 of the Indian Contract Act, 1872.

?Section 152 of the Indian Contract Act, 1872.

Issues Raised by this case:-

?Question 01:- Whether the insurer has locus standi* to file a complaint as a subrogee* ?

*The right or capacity to bring an action or to appear in a court.

*The insurance company that assumes the legal right to collect the claim of an injured claimant (the subrogor) against the third party that caused the injury, in return for paying the other's expenses in advance.

Question 02:- 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?

Question 03:- Whether the Appellant-hotel can be absolved of liability by virtue of a contract?

JUDGEMENT (BASED ON THESE ISSUES)

ISSUE NO. 01:-?

The following principles were adapted by the court while solving the issue:

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,

ii) the insurer and the assured as co-complainants.

The Respondent No. 2 (actual consumer/assured) had executed a POA and a letter of subrogation in favour of Respondent No. 1 (car insurer). Thus, the complaint before the State Commission was filed by Respondent Nos. 1 and 2 as co-complainants. Hence, the Court held that both the conditions are squarely applicable to this case and the complaint is maintainable.

?ISSUE NO. 02:-

It was agreed upon that 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[i]?and 149[ii]?of the Indian Contract Act, 1872. Consequently, a relationship of bailment was created in the instant case.

The court further contended “It cannot be denied that valet parking service, even if offered gratuitously, benefits the hotel”. Therefore, in the instant case, there existed an implied consideration for the contract of bailment created by virtue of the valet parking service. 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. Thus, the existence of bailment was established.

?ISSUE NO. 03:-

The court observed that in a case of theft of a vehicle 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[iii]?of the Indian Contract Act, 1872.

In the instant case, given our finding that the theft of the car of 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.

?REASONING (BASED ON THE JUDGEMENT)

The hotel-owner cannot contract out of liability for its negligence or that of its servants in respect of a vehicle of its guest in any circumstance. Once possession of the vehicle is handed to the hotel staff or valet, there is an implied contractual obligation to return the vehicle in a safe condition upon the direction of the owner.

?Even though there was a specific exemption clause, the Appellant cannot exempt itself from the obligation of section 151 and 152 of the Indian Contract Act, 1872. The Appellant-hotel would still had to prove that any loss or damage was not on account of its negligence.

Further, the court 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.

?Moreover, It was clear that the Appellant had not explained why its failure to return the vehicle to Respondent No. 02 was not on account of fault or negligence on its part. Thus, the court ordered that liability should be affixed on the Appellant-hotel due to want of requisite care towards the car bailed to it.

?The instant appeal was dismissed accordingly.??

AUTHOR

NAMAN BANSAL - BBA LLB (H)

THE NORTHCAP UNIVERSITY (GURUGRAM)