Case Law: Taj Mahal Hotel v. United India Insurance Ltd., 2019

Facts of the Case:

• On 1st August 1998, a Maruti Suzuki Zen was parked in the respondent’s hotel and the owner gave his car for the parking in the valet service.
• When the owner returned to get back his car, he learned that his car was stolen.
• A complaint was lodged against the thief, but the car could not be found.
• Respondent’s hotel valet parking service stated that the car was at the owner’s risk and outside the hotel premises and in case of theft, loss, or damage, the hotel will not be liable.
• The plaintiff company paid a sum of ₹2,80,000 to the car owner to settle the insurance claim.
• The plaintiff company sued the respondent hotel for negligence.

Issues Involved in the Case

• Whether this case was a case of bailment?
• Was the hotel liable in this case for negligence under the law of bailment?
• Was the car owner eligible for compensation due to the absence of consideration between the two parties?

Judgement by the Court

• Supreme Court in this case held that the theft of the car was a result of the respondent’s negligence and the respondent would be liable.
• The court stated that the respondent cannot exclude its liability for negligence towards the vehicle parked in the parking of the respondent.
• The consideration would be free parking for the customer for using the respondent’s services.
• Hence, it can be concluded that if the general rule of bailment is applied, the bailee (hotel) will be liable if there is a loss of goods (vehicle) due to negligence.

Bailment is defined in the Indian Contract Act, 1872 under Section 148 as “A Bailment is the delivery of goods by one person to another for some 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”. Bailment is a legal agreement that occurs when one person known as the Bailor, gives personal property to another, known as the Bailee, for a set amount of time or a specific reason. In a Bailment arrangement, the property is temporarily given to the Bailee, but the Bailor owns it. For a specific amount of time, the property is given to the bailee’s care, possession, and control. Once that time has passed, the item is returned to the bailor.

Geeky Takeaways:

• The person who delivers the goods is known as Bailor.
• The person who receives the goods for a specific purpose is called a Bailee.
• It is covered under Chapter IX of the Indian Contract Act, 1872 and is a special type of contract.
• Bailor gives property to the Bailee for a specific amount of time and once that time is completed, the item is returned to the bailor.