Your car stolen from a valet parking? The hotel can be held liable, says SC

The Supreme Court held that when it comes to valet parking, hotel owners cannot simply use a paper tag stating “parking at owners’ risk” as a way to escape liability.

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The Supreme Court ruled that if a customer’s vehicle which has been given for valet parking is stolen or damaged inside the parking premises, the hotel will be held liable for damages and cannot claim an exemption from the same.

The Supreme Court was hearing a petition by a customer seeking compensation after his car was stolen from the valet parking area of Taj Hotels in New Delhi. The hotel had argued that the valet parking ticket clearly states that the vehicle will be parked at the guest’s own risk and responsibility and that the management will not be responsible for any loss, theft or damage.

However, the Supreme Court bench of Justices Mohan Shantanagoudar and Ajay Rastogi on Thursday stated that in an arrangement of valet parking, once the customer hands over the keys of his car to the valet, the possession of the car is transferred from the customer to the hotel and thus, a 'relationship of bailment' is established. Bailment refers to the transfer of personal property from one person to another either for safekeeping or for the other person to control or use temporarily.

“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 (person who gets possession of goods), 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,” the apex court said.

The court said that the hotel cannot use a paper tag to dismiss the liabilities it faces under this relationship of bailment.

“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,” the SC said.

The court added that while a case of robbery by force can be beyond the control of hotel owners in some cases, the hotel still has the prima facie burden of explaining how the car disappeared or was damaged and whether it attributes to neglect or lack of care. “This is because no one apart from the bailee is in a position to explain the fate of the goods. 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,” the court said.