India’s Approach to Liability of Hotels for Loss of Guest Property

[Pareekshit Bishnoi is an advocate based in Delhi]

What are the legal consequences when a person visits a hotel and gives their car for valet parking, which is later reported as lost or damaged? In such cases of loss or damage from infra hospitium (meaning “within the hotel”), a question often arises as to the nature of liability of such hotel-owner or innkeeper. To determine the nature of liability in such cases, there are two approaches: first, the common law strict liability approach and, second, the prima facie liability approach. The former attaches strict liability on the innkeeper, regardless of presence or absence of negligence on its part, whereas in the latter the innkeeper is presumed to be liable for the loss or damage, but it can exclude liability by proving that the loss did not occur due to any fault or negligence on its part.

Thus, common law, as a rule, imposed strict liability on the hotel for loss of guest’s property infra hospitium. This can be marked from decisions like Dickerson v. Rogers, 4 Humph 179 (1843),Aria v. Bridge House Hotel (Stains) Ltd., (1927) 137 LT 299, and peaked with Williams vs. Linnitt, 1 ALL E.R. 278 (Eng. 1951), wherein the parking was free with a notice that the innkeeper would not liable for such loss or damage. By common law, the proprietor of a hotel is an insurer of the property of its guests if it is lost, stolen or damaged infra hospitium,and it has a strict liability to make good the loss incurred to his guests. The liability arises regardless of negligence on the part of the innkeeper [See Armistead v. Wilde,[1851] 17 QB 261; BassAnne Hendricks v. Shangrila Hotel Ltd,[2011] SGHC 232].

To draw a parallel and distinction between the two approaches, the complainant guest has the initial burden to prove the delivery of the relevant property and then a subsequent loss raises a presumption of negligence on the part of an innkeeper under both the approaches. Hereinafter, however, under the common law strict liability approach the innkeeper is deemed liable except only for an act of God, an act of public enemy, or fault or negligence of the guest [Hallman v. Federal Parking Services, Inc., 134 A.2d 382, 384 (D.C. 1957)]. On the other hand, under the prima facie liability rule, the innkeeper gets an opportunity to prove that it has taken requisite care and has not been negligent. Thereafter, the complainant finally gets another opportunity to prove actionable negligence [Kerry Hudson Hotel Co., 204 Miss. 396 (Miss. 1948)].

However, with commercial developments and increasing burden of liability of innkeepers, the United Kingdom slid its approach of strict liability to the prima facie liability approach wherein the hotel-owner was given an opportunity to exonerate itself of liability for loss by proving that it was not negligent or had taken requisite standard of care. With the introduction of the Hotel Proprietors Act, 1956on the recommendation of the Law Reform Commission in England,the liability of innkeeper for the lost property of guests is reformed and now imposes liability only if the innkeeper is found negligent. Similarly, strict liability of innkeepers has been restricted with respect to vehicles in Singapore, Australia, some states of the US, i.e., Indiana, Illinois, Kentucky, Maryland, Texas, and Vermont, and several European Union members under Convention on the Liability of Hotelkeepers concerning the Property of their Guests, 1962. The shift away from the common law rule to the prima facie liability approach has been well-explained in Laird v. Eichold,10 Ind 212 (1858):

Innkeepers, on grounds of public policy, are held to a strict 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 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.”

Recently, the question of whether India follows a common law strict liability approach or a prima facie liability approachfor loss of property of a guest infra hospitium was decided by the Supreme Court of India in Taj Mahal Hotel v. United India Insurance Company Ltd. (14 November 2019). The National Consumer Dispute Redressal Commission (NCDRC) had applied the strict liability approach on the hotel owner for theft or loss of vehicle infra hospitium. The Supreme Court noted that this is the first time that the principle of strict liability for vehicles lost or damaged infra hospitium was read and applied in India.

The Supreme Court, after noting the above-discussed shift away and other changes with time, held that the strict liability of innkeepers in such cases would be overly burdensome in today’s context. The Court held that the strict liability rule under common law is a “relic of the past” and should not be given effect in India. Considering the change in socio-economic conditions like growing population, the expanding economy, and increased access to hotels for different purposes like business meetings, weddings, dining outings and so on, the standard of strict liability on the innkeeper places a heavy burden. Thus, a “relatively moderate approach” should be adopted, and the prima facie rule “strikes the balance without placing an undue burden on either of the parties”.

The Court went on to hold that, as a consequence of India following a prima facie liability approach, the relation between a hotel owner and a guest is governed by the laws of bailment provided under the Indian Contract Act, 1872. The Court noted that, whether gratuitously or non-gratuitously, “where 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”. If due minimal care as required by section 151 of the Contract Act is not taken, the hotel-owner will be liable as a bailee of goods.  Hotel, particularly those that are five-star where the duty of care is higher, ought to take requisite steps whereby “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 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”.Merely appointing an attendant or security guard cannot exonerate the innkeepers from the liability arising for a loss incurred by a guest infra hospitium.

Further, the Court held that the aforesaid liability under section 151 of the Contract Act cannot be excluded or reduced from standard specified in that provision. An exemption clause cannot exonerate a party from exercising of care of goods as a bailee would “as a man of ordinary prudence would, under similar circumstances, take of his own goods”. The hotels are at liberty to print exclusion for loss or damage to vehicles taken for valet parking which are “occasioned by the acts of a third party, contributory negligence or force majeure events”, but this is always subject to the hotel discharging the burden of an initial standard of care as required under section 151. Failing this, a hotel will be liable as a negligent bailee would.

To conclude, the Supreme Court, considering socio-economic developments and undue hardship on innkeepers, adopted the prima facie liability approach of hotels for a loss incurred by a guest infra hospitium. The hotel has an opportunity to rebut the presumption of negligence created against it by discharging the burden of exercising the standard of care as required under section 151. There can be no exemption, except for situations occasioned by the acts of the third party, contributory negligence, or force majeure,where expressly stated and where due minimal mandated care by the hotel owner in aforesaid terms is shown to have been taken.

– Pareekshit Bishnoi