‘Owner’s risk’ defunt; hotels now responsible for ‘valet parked’ vehicle theft

In a remarkable verdict, Supreme Court has held that the hotels cannot deny compensation in case of vehicle theft parked through valet under 'Owner's risk' clause

Hotel valet, Supreme Court, Court verdict, Valet parking, Vehicle insurance, Compensation, Owners risk

‘Park at your own risk’ or ‘owner’s risk’ clause has kind of lost all its credibility as Supreme Court has now passed the verdict that hotels cannot deny compensation in case of vehicle theft parked through valet or its staff.  Valet parking, as stated by the Honb’l Court, is unlike other common parking facility, where it is the owner’s sole responsibility to find a suitable and safe parking spot. So, any loss or damage caused to vehicles parked through the hotel’s valet, has to be explained and proved by the hotel that it was not on account of negligence or want of care. 


The top court's verdict came recently when a person who had visited a five-star hotel had parked his vehicle through a valet, and upon his return was informed that the vehicle had been driven away by another person. Though, the vehicle insurer settled the insurance claim with that person, the hotel denied to pay the value of the car and compensation for deficiency in services, on the ground that there was a clause on the parking coupon that said that it will be on "owner's risk".


A bench of Justices MM Shantanagoudar and Ajay Rastogi ruled, "There is an implied contractual obligation that once possession of the vehicle is handed to the hotel staff or valet, it is to be returned in a safe condition to its owner as per his/her direction. 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."
However, the top court also said in favour of the hotels that in a country like India they do not think it is proper to impose a standard of strict liability upon hotel owners. The court ruled, “Due to the growing population, hotels and similar establishments are much more accessible to the public than they may have been a few decades ago. Hotels have also launched diversified services to keep up with changing times. The people visiting hotels and parking their cars in their premises or under valet parking, cannot be left at the mercy of hotel owners”.


It said, as there is an “implicit expectation” between the hotel and the guest when a vehicle is handed over for valet parking that the vehicle would be taken reasonable care of, and returned in a proper condition. Thus, the bench dealt with two scenarios where the custody or possession of the vehicle is purposefully handed over to the hotel (valet parking) and where a person is merely allowed to park his car in a parking space.

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