Theft/damage to car during valet parking? Hotel has to take responsibility, says Supreme Court

The Supreme Court of India has just ruled that hotels that offer valet parking need to own up responsibility in case of theft or damage of a vehicle. The court held that hotels cannot deny compensation under the garb of “owner’s risk” when its staff or valet accepts the vehicle for parking. This judgment came in response to a case filed by a 5 star hotel against the competition commission’s decision to award compensation to a person who had given his car to a valet of the 5 star hotel, but failed to get his car back. The car was driven away by unknown people. While the insurance company made good the loss to the person by paying out the claim, the owner of the vehicle also demanded compensation from the 5 star hotel, which was denied by the hotel.

Theft/damage to car during valet parking? Hotel has to take responsibility, says Supreme Court

Justices M M Shantanagoudar and Ajay Rastogi held,

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 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. 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 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.

While hotels will now have to ensure that the vehicles accepted by their valets/staff for parking be returned in the same condition, owners parking their vehicles in parking lots have no such protection. The parking lot owner has no liability towards a theft/damage that takes place when the vehicle is left in a parking lot. Here’s what the court said about a situation where a vehicle owner parks in a parking lot,

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.

In other words, the clause ‘owner’s risk’ will still apply to vehicles parked in the parking lots of places such as malls, railway stations, hospitals, etc. Meanwhile, do check out six valet parking disasters from India, and the mistakes people make while handing over their cars for valet parking.