Contract:
Bailment & Case Analysis of ‘Taj Mahal Hotel vs United India
Insurance co. ltd.’
SUBMITTED BY: SUBMITTED TO:
MIHIR SINGH
DR. RUCHI GUPTA
1120202174
ASSISTANT PROFESSOR OF
BBA LLB LAW
3rd SEMESTER HIMACHAL PRADESH
NATIONAL LAW
UNIVERSITY, SHIMLA.
INDEX
SERIAL NO. CONTENT
1 Acknowledgement
2 Introduction
3 Case Analysis: Facts
4 Important points
5 Issues
6 Arguments of appellant
7 Arguments of Respondents
8 Judgement
9 Ratio Decidendi
ACKNOWLEDGEMENT
This project's progress and final result involved a lot of encouragement and support from
many people, and I am incredibly fortunate to have them during the completion of my
project. Everything I have done is solely because of such supervision and support, and I will
not fail to thank them.
I appreciate and thank Dr. Ruchi Gupta for giving me the opportunity to do this assignment
and for providing us with all the support and encouragement that helped me to duly complete
the assignment. I am extremely grateful to her for giving such strong advice and
encouragement.
I am grateful and lucky enough to receive continuous motivation, support and guidance from
my teacher to help me achieve our project work successfully. Thank you for your
encouragement!
INTRODUCTION
What is Bailment?
The word "bailment" comes from the French word "ballier," which literally means "to
deliver. "Bailment, in general, refers to the delivery of commodities by a person who has
been granted authorization to possess the goods of another. Bailment contracts are classified
as a unique type of contract and are governed by Sections 148 to 181 of the Indian Contract
Act, 1872.1 Although the Contract Act covers the broad principles governing bailment
contracts, it does not cover all types of bailments.
The Carriers Act of 1865, the Carriage Act of Goods by Sea Act of 1925, and the Railways
Act of 1890 are the only Acts that address specific forms of bailments. "Bailment is the
surrender of commodities by one person to another for some purpose, upon a contract that
they shall, after the purpose is fulfilled, be returned or otherwise disposed of pursuant to the
directives of the person delivering them”.2 The individual who delivers the items is known as
the "bailer," and the person who receives them is known as the "bailee."
Essential features of a Bailment Contact:3
Delivery of possession:
To meet the aim of bailment, there must be a delivery of goods, which implies the bailer must
hand over control of the commodities to the bailee. Possession is having control over
something and not allowing anyone else to do the same.
The same is discussed in Section 149 of the Indian Contract Act of 1872. Possession can be
delivered in two ways: actual or constructive. It means that the bailee can either have direct
physical possession of the commodities or be in a position of control over goods that can be
physically possessed later, if that is practicable. The bailor offers the bailee access to the
custody of the good rather than its actual delivery in constructive delivery.
1
Contract & Specific Relief, Avtar Singh.
2
Section 148, Indian Contract Act.
3
Contract & Specific Relief, Avtar Singh.
Delivery upon Contract:
For such a transfer or return of a good, there must be a contract between the bailor and the
bailee. There can be no bailment if there is no contract. In addition, the contract can be
explicit or implicit.
There is, however, an exception to this rule. Even if there was no contract of bailment or
delivery of goods under a contract, the finder of the good will be considered the bailee. A
finder of goods is someone who discovers a missing item that belongs to someone else and
retains it in his hands until the owner is located. This results in an unintentional Bailment
contract between them. The finder has all of the rights and responsibilities of a bailee.
Delivery must be for some purpose:
There must be a reason for the delivery of the products to take place. Bailment cannot be
invoked if the good is not accounted for after the purpose of the bailment has been fulfilled.
This is a crucial quality since it distinguishes it from other types of relationships such as
agency and so on.
Return of Goods:
The good must be delivered to the bailor or handled with according to his instructions after
the purpose is completed. There is no bailment if he or she is not obligated to return the item.
Even if an agreement is reached to return an equivalent rather than the identical good, this
does not constitute bailment.
As the bailee, a tailor, for example, receives a saree for stitching. The tailor is expected to
return the saree to the bailor after it has been sewn. Furthermore, the bailee must follow the
bailor's instructions for the return of the good, if any.
CONCLUSION
From what we’ve discussed above we can conclude that bailment differs from the notion of
licence and sale in that it involves the delivery of custody of certain things to another person
for a specific purpose. The bailee and the bailor must comply with the provisions of the
Indian Contract Act, 1872, as well as the bailment contract.
The transfer of possession of the good from the bailor to the bailee for a defined purpose is
referred to as a bailment contract, and both the bailor and the bailee are given certain rights
and responsibilities that must be followed whenever it appears appropriate. In addition, all of
the basic requirements of the bailment contract must be met in order for it to be legitimate.
Furthermore, bailment of goods differs from sale of goods in that bailment involves the
transfer of possession while sale involves the transfer of ownership.
CASE ANALYSIS:
Taj Mahal Hotel vs United India Insurance co. ltd.
Facts of the Case
At around 11 p.m. on August 1, 1998, Respondent No. 2 (Complainant No. 2) drove up to the
Appellant's hotel in his 'Maruti Zen' automobile. When the car owner (Respondent No. 2)
arrived at the hotel, he gave over the keys to the hotel for valet parking and then proceeded
inside. On the same night, around 1 a.m., the automobile owner emerged from the hotel and
was informed by security that his car had been stolen by someone else.
Upon further investigation, it was discovered that three lads had arrived in a separate car and
entered the hotel during Respondent No.2's stay. They left the hotel after a while, and while
the valet was bringing their car to them, one of the boys, "Deepak," snatched the
Respondent's car keys from the desk and stole it. The security guard attempted but failed to
stop him. The police were notified, but the stolen car remained unidentified.
Important points:
The car was insured with Respondent No. 1's insurance company (Complainant No.
1).
Respondent No. 3 had provided the Appellant's hotel with a nonindustrial risk
insurance/liability policy.
After the valet parked Respondent No.2's car, the valet handed him a parking ticket
that read:
"IMPORTANT CONDITION: This vehicle is being parked at the request of the
visitor in or outside the Hotel premises at his own risk and responsibility. The
management will not be held liable for any loss, theft, or damage, and the guest will
have no claim against the management."4
Issues
Did the insurer have locus standi to file the subrogation complaint?
Whether, under the laws of bailment or elsewhere, the Appellant-hotel can be held
accountable for the theft of a car taken for valet parking?
Is it possible for the Appellant-hotel to be released from liability due to a contract?
Arguments of the Appellant
The Appellant argued that because the insurer (Complainant No.1) was not a "customer," it
had no legal standing in the dispute. He argued that the National Commission's ruling was
4
https://indiankanoon.org/doc/1613427/
incorrect since the notion of "infra hospitium" is not recognised by Indian law. The Appellant
further claimed that there was no bailment because the Appellant-hotel and the car owner
never signed a contract.
There was no compelling reason to get into a contract (no fee paid for car parking). It was
also argued that the Appellant was not liable for the loss because Respondent No.2 had
already been told about the valet parking requirements by the hotel.5 The parking tag
expressly states that the hotel is not responsible for any loss, damage, or other incident.
Arguments of the Respondents
Respondents argued that as a 'subrogee,' the insurer (Respondent No.1) was entitled to file a
joint complaint with the original consumer. It was further contended that because 5-star
hotels have a higher duty of care, the Appellant must be held to the greatest standard of
insurance liability in the event of theft of products from its premises.
Judgement
Issue 1:
The court applied the following principles in resolving the case:
A complaint made by a subrogee insurer is maintainable if it is brought by either: I the
insurer in the name of the assured, where the insurer acts as the assured's attorney; or ii) the
insurer and the assured as co-complainants.
Respondent No. 2 (real consumer/assured) had signed a power of attorney and a letter of
subrogation in the name of Respondent No. 1. (Car insurer). As a result, Respondents Nos. 1
and 2 filed a complaint with the State Commission as co-complainants. Hence, the Court
5
https://lawlex.org/lex-bulletin/case-sum
determined that both prerequisites apply to this instance and that the complaint is
maintainable.
Issue 2:
It was decided that, for the purposes of Sections 148[i] and 149[ii] of the Indian Contract Act,
1872, if custody of the vehicle is handed over to a hotel employee for valet parking, it can be
argued that 'delivery' of the vehicle has occurred. As a result, in this case, a bailment
relationship was established.
"It cannot be denied that valet parking service, even if provided gratuitously, helps the hotel,"
the court added. As a result, there was an implied consideration for the bailment contract
made by the valet parking service in the instant case. As a result, the Appellant-hotel cannot
deny the existence of bailment by claiming that its valet parking service was provided as a
courtesy and that the consumer (bailor) had not paid for it. The presence of bailment was
therefore proved.
Issue 3:
Before fulfilling its burden as required under Sections 151 and 152[iii] of the Indian Contract
Act, 1872, the court observed that in a case of theft of a vehicle given for valet parking, the
hotel cannot claim immunity from liability by claiming it was caused by acts of third parties
beyond their control or that they are protected by an "owner's risk" clause.
Given our conclusion that the Appellant-carelessness hotels caused the theft of Respondent
No. 2's automobile, the exemption clause on the parking tag will not bar the Appellant's
culpability in this case. As a result, the Appellant-argument hotels on this point fails.
RATIO DECINDENDI:
In no circumstances can a hotel owner contract out of liability for its own or its servants'
negligence in relation to a guest's vehicle. Once the vehicle is handed over to the hotel
employees or valet, the hotel or valet has an implied contractual obligation to return it to the
owner in a secure condition.
The Appellant cannot avoid the obligations of sections 151 and 152 of the Indian Contract
Act, 1872, even if there was a special exemption provision. The Appellant-hotel would still
have to show that any loss or damage was not caused by its carelessness.
In addition, the Court finds that the consumer complaint in question is viable because it was
submitted by the insurer as a subrogee and the original owner as a co-complainant.
Furthermore, the prima facie negligence rule was implemented. The Appellant had clearly
failed to explain why its inability to return the vehicle to Respondent No. 2 was not due to its
own fault or negligence.
As a result of the Appellant-failure hotels to provide the required care to the car bailed to it,
the court ruled that culpability be imposed on it. As a result, the current appeal was
dismissed.
