AMITABHA DASGUPTA versus UNITED BANK OF INDIA & ORS. on 19 February 2021

[2021] 1 S.C.R. 905

AMITABHA DASGUPTA

v.

UNITED BANK OF INDIA & ORS.

(Civil Appeal No. 3966 of 2010)

FEBRUARY 19, 2021

[MOHAN M. SHANTANAGOUDARAND VINEET SAREEN, JJ.]

Consumer Protection Act, 1986 – Deficiency in service –Dispute w.r.t contents of locker of the appellant with respondent-Bank which it broke open inadvertently – District Commissionallowed the appellant’s complaint – State Commission inter aliaaccepted the finding on deficiency of service, however held thatConsumer forum has limited jurisdiction on recovery of the locker’scontents and directed appellant to approach civil court – Revisionpetition – Dismissed by NCDRC – On appeal, held: Respondenthas not disputed their negligence in breaking open the locker inspite of clearance of rental dues by the appellant – But the numberof items originally deposited by the appellant inside the locker is acontested fact – Appellant must file a separate suit before thecompetent civil court for seeking relief as to whether he is entitledto claim return/recovery of value of the ornaments allegedlydeposited by him and for proving that the said items were actuallyin the custody of the bank – However, breaking open of the lockerwas in blatant disregard to the responsibilities that the bank owedas a service provider – It is gross deficiency in service on the partof the bank – Bank to pay costs of Rs.5,00,000/- as compensationand Rs.1,00,000/- as litigation expense to the appellant – ContractAct, 1872 – ss.148, 149.

Consumer Protection:

Bank and locker holder – Relationship between – Indian Lawvis-à-vis foreign law – Discussed – Contract Act, 1872 – ss.148,149.

Locker management – Separate duty of care of Banks –Discussed – Consumer Protection Act, 1986 – Consumer ProtectionAct, 2019.

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ADirections by Supreme Court:

Locker management – Due diligence by Banks – Procedureslaid down – Information Technology Act, 2000.

Locker facility/Safe deposit facility management – Directionto RBI – Held: RBI to issue suitable rules or regulations mandatingBthe steps to be taken by banks with respect to locker facility/safedeposit facility management within six months from the date of thepresent judgment – Until such Rules are issued, the principles statedherein, to remain binding upon the banks providing locker or safedeposit facilities – Consumer Protection.

CDisposing of the appeal, the Court

HELD 1.1 Three components need to be fulfilled for theexistence of bailment. These are: (i) delivery of goods from oneperson to another by transfer of possession, actual orconstructive; (ii) an express or implied contract for delivery; (iii)Ddelivery should be for accomplishment of a purpose. There is nosubstantive domestic legislation or sector specific regulationswhich may throw light upon the issue of whether banks areresponsible under the laws of bailment for the loss of articlesplaced inside the locker. However, what has been commonlyEcontested in various High Court judgments guiding the field iswhether delivery of possession or entrustment of valuables fromthe locker holder to the bank had taken place, for the purpose ofSection 148 of the Contract Act. Even in the relevant foreignprecedents, the application of the principles of bailment wascontingent on determining whether possession was transferredFin the facts of the case. This in turn requires factual findings onwhether the bank had knowledge of the contents of the locker;or whether the locker holder had prepared any receipt orinventory of the articles placed inside the locker or was otherwiseable to prove the particulars of the items deposited in the locker.GThese questions cannot be adjudicated upon in the course ofproceedings before the consumer fora. This aspect must beevaluated by the civil court, upon appreciation of evidence led bythe parties. [Paras 6, 7, 8.6][915-A-B; 922-G-H; 923-A-B]

Jagdish Chandra Trikha v. Punjab National Bank AIR1998 Delhi 266; National Bank of Lahore Ltd. v. SohanH

Lal Saigal AIR 1962 P H 534; Mohinder Singh Nandav. Bank of Maharashtra 1998 ISJ (Banking) 673; AtulMehra v. Bank of Maharashtra AIR 2003 P&H 11;Punjab National Bank, Bombay v. K.B. Shetty 1991 (1)C.P.C. 592; Mahender Singh Siwach v. Punjab andSind Bank (2006) 4 CPJ 231 (NC); Pune ZillaMadyawarti Sahakari Bank Limited v. Ashok BayajiGhogare 2015 SCC OnLine NCDRC 2832 – referredto.

1.2 The approach adopted by the National Commission inthe impugned judgment is the correct approach. In the presentcase, the Respondent bank has not disputed their negligence inbreaking open the locker in spite of clearance of rental dues bythe Appellant. However, the number of items originally depositedby the Appellant inside the locker is a contested fact. Noconclusions are being recorded on whether the Appellant lockerholder in the present case is entitled to claim return or recoveryof the value of the ornaments alleged to have been deposited byhim. This Court is in agreement with the findings in the impugnedjudgment to the extent that the Appellant must file a separatesuit before the competent civil court for seeking this relief andfor proving that the aforesaid items were actually in the custodyof the bank. This is especially inasmuch as the contents of thelocker are disputed by the Respondent bank. Hence it is clarifiedthat all questions of fact and law are left open before the civilcourt to decide on the merits of the case, including as to whetherthe law of bailment is applicable, or any other law as the case maybe. [Para 8.10][924-B-E]

2.1 Imposition of liability upon the bank with respect tothe contents of the locker is dependent upon provision andappreciation of evidence in a civil suit for such purpose. However,this does not mean that the Appellant in the present case is leftwithout any remedy. Banks as service providers under the earlierConsumer Protection Act, 1986, as well as the newly enactedConsumer Protection Act, 2019, owe a separate duty of care toexercise due diligence in maintaining and operating their lockeror safety deposit systems. This includes ensuring the proper A

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Afunctioning of the locker system, guarding against unauthorizedaccess to the lockers and providing appropriate safeguards againsttheft and robbery. This duty of care is to be exercised irrespectiveof the application of the laws of bailment or any other legal liabilityregime to the contents of the locker. The banks as custodians ofpublic property cannot leave the customers in the lurch merelyBby claiming ignorance of the contents of the lockers. The RBIhad issued clear directions as far back as in 2007 imposing dutyof care in respect of protection of the bank lockers and mandatingtransparency vis-à-vis the locker holder in allotment and breakingopen of the lockers. However, it has been left to the discretion ofCthe individual banks to formulate the exact procedures for fulfillingthis duty of care. The banks are likely to draft the locker hiringagreements in a manner which is favourable to their interests,including clauses to the effect that the lockers are to be operatedat the consumers’ own risk. On 1.07.2015, the RBI issued aMaster Circular No. 59/2015-16 on Customer Service in BanksDwhich included updated guidelines on locker operation. However,these were more or less similar to what has already been statedin the 2007 Circular. Further, neither of the aforementionedCirculars provide any guidance on the degree of care that needsto be exercised by the bank for safeguarding the lockers or detailEthe exact steps that should be taken in this regard.[Paras 9, 10, 10.1][924-F-H; 925-A; 930-A-D]2.2 The present state of regulations on the subject of lockermanagement is inadequate and muddled. Each bank is followingits own set of procedures and there is no uniformity in the rules.FFurther, going by their stand before the consumer fora, it seemsthat the banks are under the mistaken impression that not havingknowledge of the contents of the locker exempts them fromliability for failing to secure the lockers in themselves as well. Inas much as being the highest Court of the country, this Courtcannot allow the litigation between the bank and locker holdersGto continue in this vein. This will lead to a state of anarchy whereinthe banks will routinely commit lapses in proper management ofthe lockers, leaving it to the hapless customers to bear the costs.Hence, it is found imperative that this Court lays down certainprinciples which will ensure that the banks follow due diligenceH

in operating their locker facilities, until the issuance ofcomprehensive guidelines in this regard. Irrespective of the valueof the articles placed inside the locker, the bank is under aseparate obligation to ensure that proper procedures are followedwhile allotting and operating the lockers. Procedures enumerated.[Paras 11, 12][930-D-G]

2.3 In the present case, it is undisputed that theRespondent Bank inadvertently broke the Appellant’s locker,without any just or reasonable cause, even though he had alreadycleared his pending dues. Moreover, the Appellant was not givenany notice prior to such tampering with the locker. He remainedin the dark for almost a year before he visited the bank forwithdrawing his valuables and enquired about the status of thelocker. Irrespective of the valuation of the ornaments depositedby the Appellant, he had not committed any fault so far as operationof the locker was concerned. Thus, the breaking open of thelocker was in blatant disregard to the responsibilities that thebank owed to the customer as a service provider. The allegedloss of goods did not result from any force majeure conditions, oracts of third parties, but from the gross negligence of the bankitself. It is case of gross deficiency in service on the part ofthe bank. Costs of Rs. 5,00,000/- imposed on the Bank to bepaid to the Appellant as compensation. Additionally, the Appellantbe paid Rs. 1,00,000/- as litigation expense. [Paras 13, 14][932-F-H; 933-A-B]

2.4 It is necessary that the RBI lays down comprehensivedirections mandating the steps to be taken by banks with respectto locker facility/safe deposit facility management. The banksshould not have the liberty to impose unilateral and unfair termson the consumers. The RBI to issue suitable rules or regulationsas aforesaid within six months from the date of this judgment.Until such Rules are issued, the principles stated in this judgment,in general and at para 12 in particular, shall remain binding uponthe banks which are providing locker or safe deposit facilities. Itis also left open to the RBI to issue suitable rules with respect tothe responsibility owed by banks for any loss or damage to thecontents of the lockers, so that the controversy on this issue isclarified as well. [Para 15.1][934-A-C]

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Charan Singh v. Healing Touch Hospital & Ors.(2000)7 SCC 668 : [2000] 3 Suppl. SCR 337 – referred to.

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UCO Bank v. RG Srivastava 1996 (1) CPR 97; MamtaChaudaha v. Branch Manager/Head Manager, StateBank of India (2020) 1 CPJ 276 (NC) – referred to.

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Roberts v. Stuyvesant Safe Deposit Co. (1890) 123 N.Y57; Emma M. Lockwood v. The Manhattan Storage &Warehouse Company N.Y.S 974 (N.Y. 1898); Mayer v.Brensigner 54 N.E 159 (1899); National Safe DepositCo. v. Stead 95 N.E. 973 (1911); Cussen v. SouthernCCal. Savings Bank 65 P. 1099 (1901); Blair v. Riley175 N.E.R 210; National Safe Deposit Company v. Stead,Attorney General 95 N.E.R. 973 – referred to.

Case Law Reference

[2000] 3 Suppl. SCR 337referred toPara 3DCIVIL APPELLATE JURISDICTION : Civil Appeal No. 3966of 2010.

From the Judgment and Order dated 18.12.2008 of the NationalConsumer Disputes Redressal Commission, New Delhi in RevisionPetition No. 389 of 2005.E

Parijat Sinha, Devesh Mishra, Ms. Pallak Bhagat, Rudra Dutta,Ms. Reshmi Rea Sinha, Rajesh Kumar-I, Anant Gautam, Nipun Sharma,M/S. Mitter & Mitter Co., Advs. for the appearing parties.

The Judgment of the Court was delivered by FMOHAN M. SHANTANAGOUDAR, J.

1. This appeal, by special leave, arises out of the judgment of theNational Consumer Disputes Redressal Commission (‘NationalCommission’) delivered on 18.12.2008 dismissing the Consumer DisputesRedressal Commission (‘State Commission’) dated 12.10.2004.

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2. The following are the facts out of which this appeal arises:

In the early 1950’s, the Appellant’s mother (since deceased) tooka locker on rent bearing No. A-222 in the Deshapriya Park, KolkataBranch of the Respondent No. 1 Bank. In 1970, the Appellant/Complainant was included as a joint holder of the locker. On 27.05.1995, H

the Appellant visited the Respondent No.1 Bank to operate the lockerand deposit the locker rent. However, the Appellant was informed thatthe Bank had broken open his locker on 22.09.1994 for non-payment ofrent dues for the period of 1993-1994. Further, that the locker hadsubsequently been reallocated to another customer.

2.2 On 29.05.1995 and 2.06.1995, the Appellant sentcommunications to Respondent No. 1 claiming that such breaking of hislocker by the Bank was illegal since he had cleared dues for 1994-1995on 30.07.1994, i.e., prior to the breaking of the locker. The Chief Managerof Respondent 1, who is Respondent No. 3 in the present appeal,responded to the communication and admitted to having inadvertentlybroken open the locker, though there were no outstanding dues to bepaid, and apologized for the same. He stated as an ancillary point thatreminders for the payment of dues had been sent on 25.11.1993 and23.02.1994. However, that these would have no meaning since the dueswere subsequently paid by the Appellant on 30.06.1994.

2.3 On 17.06.1995, when the Appellant went to collect the contentsof the locker, it is alleged that he found only two (one pair of bangles andone pair of ear pussa) of the seven ornaments that had been deposited inthe locker in a non-sealed envelope. However, Respondent No.1 Bankcontends that only those two ornaments were found in the Appellant’slocker when it was broken open. That the same is evident from theinventory prepared by Respondent No. 1 when the locker was brokenopen in the presence of an independent witness.

2.4 Subsequently, the Appellant filed a consumer complaint beforethe District Consumer Forum (‘District Forum’) calling upon RespondentNo. 1 to return the seven ornaments that were in the locker; or alternativelypay Rs. 3,00,000/- towards the cost of jewelry, and compensation fordamages suffered by the Appellant.

2.5 The District Forum allowed the complaint and held RespondentNo. 1 liable for deficiency of service, relying upon Respondent No. 3’sadmission that the Bank had inadvertently broken open the Appellant’slocker though there were no pending rent dues. Further, on the claim forthe cost of seven ornaments, it was held that Respondent No.1 could notprove that there had been only two ornaments in the locker since therewere no independent witnesses in the presence of whom the locker wasopened. Hence, Respondent No. 1 was directed to return the entirecontents of the locker, or alternatively pay the Appellant Rs. 3,00,000/- A

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Atowards cost of the jewelry and, Rs. 50,000/- as compensation for mentalagony, harassment, and cost of litigation.

2.6 On appeal, the State Commission vide order dated 12.10.2004accepted the District Commission’s findings on the question of deficiencyof service, though it reduced the compensation from Rs. 50,000/- to Rs.B30,000/-. However, with respect to recovery of the cost of the ornaments,the State Commission, relying upon the judgment of the NationalCommission in UCO Bank v. RG Srivastava,[1] observed that the disputeon the contents of the locker can only be decided upon provision ofelaborate evidence. That the Consumer Forum was not equipped toundertake this evaluation since it only has jurisdiction to conduct aCsummary trial. Therefore, the Appellants were directed to approach thecivil court for adjudication on the contents of the locker.

The Revision Petition against the order of the State Commissionwas dismissed vide the impugned order. The National Commission bythe impugned judgment, accepted the State Commission’s holding on theDlimited jurisdiction of the Consumer Forum to adjudicate on the recoveryof the contents of the locker.

Hence, the present appeal.

3. Learned counsel for the Appellant submitted that even if theEcase is remitted to the civil court for adjudication on the issue of thecontents of the locker, it would be highly improbable to ascertain thesame since the contents of a locker are exclusively known only to thelocker holder. On the question of damages, he relied on Charan Singhv. Healing Touch Hospital & Ors.[2]to argue that compensation mustbe awarded to bring a qualitative change in the attitude of the serviceFprovider.

3.1 Per contra, learned counsel for the Respondents submittedthat the National Commission’s holding does not warrant interference.He submitted that compensation for the loss of jewellery can only beawarded after appreciation of evidence by the trial court.

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4. Heard Learned Counsel for both parties. Based on a perusal ofthe record, the following issues arise for consideration in the presentappeal:

11996 (1) CPR 97.2 (2000) 7 SCC 668.H

AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.[MOHAN M. SHANTANAGOUDAR, J. ]

4.1 First, Whether the Bank owes a duty of care to the lockerholder under the laws of bailment or any other law with respect tothe contents of the locker? Whether the same can be effectivelyadjudicated in the course of consumer dispute proceedings?

4.2 Second, irrespective of the answer to the previous issue,whether the Bank owes an independent duty of care to itscustomers with respect to diligent management and operation ofthe locker, separate from its contents? Whether compensationcan be awarded for non-compliance with such duty?

I. Relief with Respect to the Contents of the Locker

5. Disputes between banks and locker holders, pertaining to lossof articles placed inside the locker, have been subject to judicialconsideration in various jurisdictions for nearly a century. For a broaderunderstanding of the subject, we find it necessary to briefly refer tocertain judgments of foreign jurisdictions, before clarifying the positionunder Indian law.

5.1 The dominant view of courts around the globe has been thatthe bank is in the position of a bailee with respect to the goods placedinside the locker by the locker holder. In Roberts v. Stuyvesant SafeDeposit Co.,[3] the defendant company permitted the police under a searchwarrant, to confiscate the articles that were inside the plaintiff’s locker.However, the articles were subsequently stolen from police custody. Asuit was filed by the plaintiff, alleging that the defendant company failedto comply with the duty of care required under the law by permitting thepolice to take away articles that were not mentioned in the search warrant.Affirming the plaintiff’s contentions, the Court of Appeals of New Yorkmade the following observations about the relationship of bailmentbetween the parties:

“The legal relationship which the defendant held to the plaintiff,and out of which this controversy has arisen, was that of a baileeor depositary for hire.The fundamental question in the case iswhether the defendant, upon the undisputed evidence in the record,discharged those duties and obligations to the plaintiff which thelaw imposed upon it in regard to the care and custody of herproperty.”

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914SUPREME COURT REPORTS

AIt is pertinent to note the Court’s observation that whether or notthe defendant had discharged its obligations as a bailee would have to bediscerned from the undisputed evidence on the record.

5.2 The position of law stated in Stuvyesant Safe Deposit Co.(supra) has been reiterated in subsequent precedents which haveBgoverned the law on the field such as Emma M. Lockwood v. TheManhattan Storage & Warehouse Company,[4]Mayer v. Brensigner,[5]National Safe Deposit Co. v. Stead.[6]In Cussen v. Southern Cal.Savings Bank,[7] money kept by the plaintiff in the bank’s safe depositvault was lost. The Supreme Court of California held that the bank wasliable under the laws of bailment. However, it observed that the plaintiffCwould have to make a prima facie case that they had deposited themoney inside the locker, and that it was subsequently lost. The burden ofproof would then shift to the defendant bank to prove that it exercisedthe necessary care required under the laws of bailment for the protectionof its contents. Therefore, before applying the laws of bailment, the Dcourt must first find on the facts of the case whether the plaintiff hadtransferred possession of the articles to the bank.

6. To identify if the relationship of bailment exists between thebank and the locker holder under Indian law, it is necessary at the outsetto refer to the relevant provisions under the Indian Contract Act, 1872E(‘Contract Act’):

“148. ‘Bailment’, ‘bailor’ and ‘bailee’ defined.—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 directionsFof the person delivering them. The person delivering the goods iscalled the ‘bailor’. The person to whom they are delivered is calledthe ‘bailee’.

149. Delivery to bailee how made.—The delivery to the baileemay be made by doing anything which has the effect of puttingGthe goods in the possession of the intended bailee or of any person authorised to hold them on his behalf.”

4 50 N.Y.S 974 (N.Y. 1898).5 54 N.E 159 (1899).6 95 N.E. 973 (1911).7 65 P. 1099 (1901).

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Thus, from the aforementioned provisions, it can be inferred thatthree components need to be fulfilled for the existence of bailment. Theseare: (i) delivery of goods from one person to another by transfer ofpossession, actual or constructive; (ii) an express or implied contract fordelivery; (iii) delivery should be for accomplishment of a purpose.

7. Unfortunately, there is no substantive domestic legislation orsector-specific regulations which may throw light upon the issue ofwhether banks are responsible under the laws of bailment for the loss ofarticles placed inside the locker. On 4.12.2006, the Reserve Bank ofIndia (‘RBI’) had issued a Draft Circular on Safe-Deposit Lockers (‘2006Circular’).[8] This circular was only in the form of a proposal issued to thebanks and hence does not have any binding value. However, it is usefulin understanding the RBI’s position at that stage. Clause 2.1 of the 2006Circular states:

“2. Security aspects relating to Safe Deposit Lockers:

2.1 It is clarified that the relationship between the bank and thelocker hirer is in the nature of a ‘bailor and bailee’ and not ‘landlordand tenant’ though the bank has no knowledge of the contents ofthe lockerand the bank is required to exercise due care andnecessary precaution for the protection of the lockers provided tothe customer.”

On perusal of the 2006 Circular, it is evident that at that point intime, the RBI had recommended that the laws of bailment ought to guidethe relationship between the bank and the locker holder, even if the bankhas no knowledge of the contents of the locker.

7.1 The RBI had also issued guidelines covering inter alia, thesubject of safe custody of articles placed inside the lockers (CircularNo. RBI/2006-2007/325) on 17.04.2007 (‘2007 Circular).[9] There wasno clause on the nature of the legal relationship between the bank andthe locker holder in the 2007 Circular. The only reference to the ContractAct was as follows:

“3.5 Banks are advised to be guided also by the provisions ofSections 45 ZC to 45 ZF of the Banking Regulation Act, 1949 and 8 https://www.rbi.org.in/Scripts BS_CircularIndexDisplay.aspx?Id=3196.

9 https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=3422.

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Athe Banking Companies (Nomination) Rules, 1985 and the relevantprovisions of Indian Contract Actand Indian Succession Act.”

However, this observation was made in the specific context ofreturn of safe custody of articles to the survivors/legal heirs of deceasedBlocker holders and hence may not have much bearing in the presentcase.

7.2 Subsequently, in response to a Right to Information (‘RTI’)enquiry made in 2017, the RBI, and various public sector banks, statedthat as per the agreement entered into with the customers who are hiring/Cleasing the lockers, the banks have no liability for loss or damage ofarticles placed inside the bank lockers. Hence the position of the RBIfrom 2006 to 2017 has undergone a sea-change. The position adoptedby the banks was challenged before the Competition Commission ofIndia (‘CCI’) as being in the nature of an anti-competitive practice. TheDCCI dismissed the claim, while making the following observations:[10]

“7. In the instant case, there is no such material to suggest anyunderstanding/consensus/arrangement amongst the OppositeParties to have pursued any of the aforesaid prohibited activities.Suspicion of a cartel has been raised in the information as all theEOpposite Parties allegedly do not take responsibility for any lossof valuables kept by customers availing safety deposit lockerfacility from them. However, the RTI replies of some of theOpposite Parties suggest that they are not completely absolvedfor loss of valuables kept in their locker. For instance, the replydated 7th October, 2015 of Bank of Baroda inter alia states that inFcase of loss suffered by the lessee due to theft or burglary etc. ofsafe custody locker, the liability of the bank will depend upon thefacts and circumstances surrounding the burglary. Further, thereply dated 13th October, 2015 of Dena Bank states that theresponsibility of the bank shall be governed by the terms andGconditions laid down in the memorandum of hiring of locker andthe guidelines issued by RBI from time to time. Reply dated 19thOctober, 2015 of Andhra Bank states that the relationship betweenthe bank and its customer, in case of safe deposit locker, is that of‘lessor and lessee’ and the particulars of the articles kept in safe 10 Kush Kalra v. Reserve Bank of India, 2017 SCC OnLine CCI 41.H

deposit locker will not be disclosed by the customer to the bankand hence, the bank cannot take responsibility for compensatingany loss as the extent of such loss cannot be assessed. It hasbeen further stated that the bank, however, takes all necessarymeasures and precautions to safeguard the lockers provided tothe customers. Similarly, the reply dated 30th October, 2015 ofCorporation Bank states that its liability in case of theft/loss ofvaluables kept in its safety lockers depends upon the parameterson which the bank takes insurance on the lockers and the sameparameters will be adopted while settlement of claims in case oftheft. Taking into consideration all these replies and in the absenceof any material suggesting collusion amongst the Opposite Parties,it cannot be said that a uniform practice is followed by all theOpposite Parties to avoid responsibility / liability for loss ofvaluables kept by customers availing their safety deposit lockerfacility.”

Therefore, the CCI took notice of the fact that it is common industrypractice for banks to disclaim liability for loss of articles placed insidethe locker, though there are no uniform parameters or policies guidingthe same. Additionally, the banks have stated that acceptance ofresponsibility for loss of articles placed in their locker facility will dependupon the relevant facts and circumstances of each case, such as theterms of the locker hiring agreement, the circumstances under whichthe articles were lost or stolen, and so on.

8. There has also not been any authoritative pronouncement fromthis Court on the issue of whether banks are responsible as bailees, or inany other capacity, for any loss or damage to the contents of the lockers.However, there have been various High Court judgments guiding thefield. One of the notable cases in which this issue arose was JagdishChandra Trikha v. Punjab National Bank.[11] In this case, the appellantshad, before the partition of India, entrusted a sealed box of gold ornamentsto the respondent bank in Peshawar on the payment of a fee forsafekeeping. The box was moved to the Rawalpindi branch, thensubsequently to the Lahore branch, and finally to India in November1961 under the Indo-Pakistan Movable Property Agreement. Uponpresentation of the box, the Appellant refused to take delivery since the11 AIR 1998 Delhi 266.

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Aappearance and weight of the box was different from what it had beenwhen it was deposited. A suit was filed seeking delivery of the ornamentsor alternatively recovery of the market value of the ornaments. Referringto the relevant common law authorities, the Delhi High Court held thatthe bank would be liable in the capacity of a bailee for the loss of theornaments:B

“71. The Box was entrusted to the defendant Bank at Peshawar.The same was accepted by the Bank as a baileeand it wasexpected that the usual care which is demanded on such matterswould be undertaken...it is established that the defendant Bankfailed to discharge its duties as a bailee and did not take care ofCthe goods of the parents of the plaintiff as one would under similarcircumstances, take of his own goods of the same bulk, quantityand value as the goods bailed.”

DIt is important to note that in the facts of Jagdish Chandra Trikha(supra), the High Court found that there was complete entrustment ofpossession of the appellant’s ornaments. The articles to be safeguardedwere handed over by the customer to the bank in a sealed box, whichwas then taken to a safe place to be stored. Though the respondentbank claimed it did not have any knowledge of the contents of the box, itEwas proved from evidence that the appellant’s predecessors had handedover a detailed list of the jewellery which was placed inside the safedeposit box to the bank. It was further proved that the customer did nothave any access to the same after entrustment to the bank. Hence theHigh Court considered it a fit case to apply the laws of bailment.F

8.1 However, the locker service provided by the banks has evolvedsince the pre-independence days. In that era, the bank’s employee wasentrusted with the relevant goods for safe keeping. Complete access tothe valuables, if any, remained with the bank till the time the customerclaimed return of the same. However, due to modernization of the lockerGsystem, banks now provide customers with partial access to the lockers.Under the current system, the bank allocates a locker to the customeron the payment of rent. The customer is then provided with a key to thelocker through which he can gain partial access to the locker. The bankhas a master key to the locker and the customer can gain completeaccess to the locker only when the bank uses its own key to the locker.H

Therefore, a combination of the bank’s key and the locker holder’s keyis required for opening a locker, providing neither with complete access.In more advanced, digitally operated locker systems, such ‘keys’ maynot be physical keys but may consist of passwords or data which isexclusively known to the bank and the customer. Further, the bank maynot have any receipt of the exact particulars of the articles placed insidethe locker, as was the case in Jagdish Chandra Trikha (supra). Thequestion that therefore arises for consideration before this Court is whetherthe modern-day bank locker system would be guided by the laws ofbailment.

8.2 An important decision which has considered the modern-daybank locker system is that in National Bank of Lahore Ltd. v. SohanLal Saigal.[12] In that case, the appellant bank had provided locker servicefor the safe custody of valuables. The locker could be operated jointlyby the locker holder and the bank’s custodian. However, the respondentlocker holder was able to prove before the Civil Court that the Manager/custodian of the bank had tampered with the locker such that it could beoperated even without the locker holder’s personal key. Hence the CivilCourt concluded that the Manager had exclusive control over the lockers.Consequently, referring to the decisions of the Court of Appeals of Ohioin Blair v. Riley[13]and the Supreme Court of Illinois in National SafeDeposit Company v. Stead, Attorney General,[14] the Punjab andHaryana High Court held that the bailor-bailee relationship applied. Inthis regard, the High Court observed that:(Pg. 578)

“It may be that the person who hires a locker retains some controlover it by having one key with himself but if the locker can beoperated without any key, as was possible in the lockers whichwere rented out to the plaintiffs,then at once any impediment inthe way of control and possession of the Bank to whom the lockerbelonged and in whose strong room it was to be found, would beremoved and it could well be said that the bank was strictly in theposition of the bailee.”

The High Court further observed that the locker holders hadproduced specific evidence in the form of lists of the articles of jewellery 12 AIR 1962 P H 534.13175 N.E.R 210.

14 95 N.E.R. 973.

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Adeposited inside the lockers so as to prove the extent of loss they hadsuffered.

8.3 In Mohinder Singh Nanda v. Bank of Maharashtra,[15]forty-four safe keeping lockers in the Respondent bank were brokenopen by miscreants and the contents were emptied. The Punjab &BHaryana High Court held that the bank would not be liable for the loss ofarticles, if any, since the bank had no knowledge of the contents of thelocker:

“4. But there is no evidence on recordto show that thedefendant-Bank had the knowledge of the articles in the locker.CUnless there is entrustment of the property to the defendant Bank,the Bank cannot be held responsible for the theft. The plaintiffshave miserably failed to prove that there was entrustment of thearticles with the defendant Bank and that the Bank authoritieswere aware of the articles placed in the locker.”

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8.4 Subsequently, the Punjab and Haryana High Court againundertook a comprehensive look into the present-day locker system inAtul Mehra v. Bank of Maharashtra,[16] which pertained to the samebundle of facts as in Mohinder Singh Nanda (supra). The appellantElocker holders filed a suit alleging that due to the robbery, jewels worthRs. 4,26,160/- were stolen from his locker. It was claimed that therespondent bank had not complied with the duty of care owed under thelaws of bailment. However, the trial court found that the knowledge ofthe weight and value of the articles stored inside the locker was exclusiveto the customer, and the bank did not have notice of the same. Further,Fthe appellants had not produced any evidence at the stage of trial toestablish the contents of the locker. Consequently, the Single Judge Benchof Nijjar J. opined that the provisions with respect to bailment under theContract Act would not apply as follows:

“17…The respondent bank could only be fastened with liabilityGon the contents of the locker being disclosed to it. In the absenceof this information, it would have to be held that there was noentrustment of the goods to constitute bailment as required underSection 148 of the Indian Contract Act, 1872.

151998 ISJ (Banking) 673.H16AIR 2003 P&H 11.

18…These authorities are of no assistance to the appellants inthe present case. In all these cases, exclusive possession of theproperty had been handed over by the bailor to the bailee. I am ofthe considered opinion that exclusive possession is a sine qua nonfor bailment. Therefore, I have no hesitation in coming to theconclusion that mere hiring of the locker would not be sufficientto constitute a contract of bailment as provided under Section 148of the Indian Contract Act, 1872. In order to constitute bailment,as provided in Section 148 of the Act, it is further necessary toshow that the actual exclusive possession of the property wasgiven by the hirer of the locker to the bank. It is only thereafterthat the question of reasonable care and quantum of damageswould arise. In the present case, it is impossible to know thequantity, quality or the value of the jewelry which was allegedlykept in the locker at the time when the robbery occurred. ………In the present case, the plaintiffs alone had the knowledge ofcontents of lockers, therefore, the plaintiffs had to lead independentevidence to prove that jewelry was actually in the locker on thedate of the robbery.Even if the plaintiffs had proved this peculiarfact; they would still have to prove the value of the jewelry.”

(emphasis supplied.)

Therefore, the High Court concluded that mere leasing out of thelocker ipso facto would not establish a relationship of bailment betweenthe bank and the locker holder. In order to establish exclusive possession,the claimant must prove that the bank had knowledge of the contents ofthe locker. Alternatively, where the locker holder alone has knowledgeof the contents, they must lead independent evidence to prove that theirarticles or valuables were actually inside the locker, and the valuation ofthe same.

8.5 However, Nijjar J. differentiated the holding in Sohan LalSaigal (supra) by observing as follows:

20. “In that case, the learned trial court had held that entrustmentand the valuation of jewelry had been proved…..On the twingrounds of exclusive possession of the jewelry deposited in thelocker and entrustment thereof to the Bank, it has been held thatthe Bank would be in the position of bailee.”

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ATherefore, in Sohan Lal Saigal (supra) entrustment of jewelrywas proved on production of elaborate evidence before the trial court.However, in Mohinder Singh Nanda (supra) and Atul Mehra (supra)no evidence was led to prove the entrustment of jewelry to the bank,and hence the claimant locker holders were unable to succeed in obtainingrelief. Nijjar J. further observed that:B

“22…Whatever property is deposited in the locker is, undoubtedlyin the custody and possession of the bank. Merely because thelocker can be operated only in the presence of the locker hirerwould not amount to joint possession of the locker. The Bankercan always open the locker with a “master key”. The hirer of theClocker is not in a position to open the locker without the assistance of the bank. The hirer has access to the locker only duringspecified banking hours. The banker has no such limitation. Itmust, however, be noticed that the transaction of bailment wouldonly be established if the provisions of Section 148 of the IndianDContract Act are complied with. With regard to this, it is thesubmission of Mr. Jagga that the plaintiffs have miserably failedto prove that the jewellery was kept in the locker as claimed inthe plaint. There being no entrustment or delivery of possession,Section 148 of the Act cannot be invoked by the plaintiffs.”

ETherefore, the Court in Atul Mehra was sympathetic to the factthat the principles of bailment may be applicable even to the contemporarydual-key locker system if the bank is in the possession of a master keyor has substantial degree of access to the locker. However, the plaintiffwould first have to prove that they had indeed handed over possessionof certain articles for being deposited in the locker of the bank. If thisFrequirement is not satisfied, the Court is barred from going into otherissues such as whether the locker holder and the bank were in jointpossession, etc.

8.6 Having perused the aforementioned precedents, we find thatwhat was commonly contested in all these cases is whether delivery ofGpossession or entrustment of valuables from the locker holder to thebank had taken place, for the purpose of Section 148 of the ContractAct. Even in the relevant foreign precedents which we have noted, theapplication of the principles of bailment was contingent on determiningwhether possession was transferred in the facts of the case. This in turnHrequires factual findings on whether the bank had knowledge of the contents of the locker; or whether the locker holder had prepared anyreceipt or inventory of the articles placed inside the locker or wasotherwise able to prove the particulars of the items deposited in thelocker. We are of the considered opinion that these questions cannot beadjudicated upon in the course of proceedings before the consumer fora.This aspect must be evaluated by the civil court, upon appreciation ofevidence led by the parties, as was done in all the aforementioneddecisions of Jagdish Chandra Trikha (supra), Sohan Lal Saigal(supra), Mohinder Singh Nanda (supra) and Atul Mehra (supra).

8.7 It is true that the National Commission has, in previous decisionssuch as Punjab National Bank, Bombay v. K.B. Shetty,[17] andMahender Singh Siwach v. Punjab and Sind Bank,[18] awarded thevalue of articles which have been stolen or gone missing from banklockers. Moreover, in Pune Zilla Madyawarti Sahakari Bank Limitedv. Ashok Bayaji Ghogare,[19] the National Commission has gone to theextent of holding that the affidavit of the locker holder should ordinarilybe accepted for proving the contents of the bank locker, unless the samestands impeached by way of cross examination. However, it is relevantto note that in the facts of the aforementioned cases, the complainantshad produced detailed and precise documentary proof for corroboratingthe extent of jewellery placed inside the locker, which has not been donein the present case.

8.8 In UCO Bank (supra), similar situation arose as in the presentcase, wherein the respondent locker holder claimed that his locker wastampered with and broken open, and valuables were subsequently lost,due to the negligence of the bank. The bank not only disputed the valueof jewellery kept inside the locker, but also denied any negligence in thebreaking open of the locker. The locker holder had only produced anaffidavit in respect of the value of the jewellery claimed by him. Hencethe National Commission held that it is appropriate that both these issuesshould be remitted for determination in a civil suit in a competent civilcourt, after adducing of elaborate evidence on both sides.

8.9 In the recent case of Mamta Chaudaha v. Branch Manager/Head Manager, State Bank of India,[20] the National Commission again 17 1991 (1) C.P.C. 592.

18 (2006) 4 CPJ 231 (NC).

19 2015 SCC OnLine NCDRC 2832.

20 (2020) 1 CPJ 276 (NC).

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Aobserved that the appellant locker holders had not produced any evidenceapart from a standard affidavit to prove that they had kept a specifiedquantity of gold ornaments inside the bank locker. Further, there was noevidence of forcible entry to the locker. Hence the complaint for recoveryof value of the ornaments was dismissed.

B8.10 In light of the aforementioned conflicting decisions of theNational Commission, we find that the approach adopted by the NationalCommission in the impugned judgment is the correct approach. In thepresent case, the Respondent bank has not disputed their negligence inbreaking open the locker in spite of clearance of rental dues by theAppellant. However, the number of items originally deposited by theCAppellant inside the locker is a contested fact. Hence, we do not proposeto record any conclusions on whether the Appellant locker holder in thepresent case is entitled to claim return or recovery of the value of theornaments alleged to have been deposited by him. We are in agreementwith the findings in the impugned judgment to the extent that the AppellantDmust file a separate suit before the competent civil court for seeking thisrelief and for proving that the aforesaid items were actually in the custodyof the bank. This is especially inasmuch as the contents of the locker aredisputed by the Respondent bank. Hence it is clarified that all questionsof fact and law are left open before the civil court to decide on themerits of the case, including as to whether the law of bailment is applicable,Eor any other law as the case may be.II.Separate Duty of Care of the Bank with regard to LockerManagement

9. As discussed supra, imposition of liability upon the bank withFrespect to the contents of the locker is dependent upon provision andappreciation of evidence in a civil suit for such purpose. However, thisdoes not mean that the Appellant in the present case is left without anyremedy. Banks as service providers under the earlier ConsumerProtection Act, 1986, as well as the newly enacted Consumer ProtectionAct, 2019, owe a separate duty of care to exercise due diligence inGmaintaining and operating their locker or safety deposit systems. Thisincludes ensuring the proper functioning of the locker system, guardingagainst unauthorized access to the lockers and providing appropriatesafeguards against theft and robbery. This duty of care is to be exercisedirrespective of the application of the laws of bailment or any other legalHliability regime to the contents of the locker. The banks as custodians of public property cannot leave the customers in the lurch merely by claimingignorance of the contents of the lockers.

9.1 In this regard, we may refer to the observations made by theNational Commission in the decisions discussed in Part I of our opinion.In Punjab National Bank (supra), in addition to directing return of thecost of the ornaments lost, the National Commission also made a separatefinding on the negligence of the bank in maintaining the security andsafety of the locker:

“4. The last and the most important question is whether theappellant Bank has been guilty of negligence in ensuring the securityand safety of the locker. The State Commission has taken adversenotice of the fact that the appellant Bank did not probedepartmentally when the locker had been found open on the 9thJune, 1988and treated the matter as closed so far as the Bank isconcerned. It was content with lodging a report with the police. Itis a matter of common knowledge, the Master Key of the lockeris with the Bank; the locker can be opened only with the MasterKey and the Key with the locker holder. The mechanism is,however, such that the locker must get closed, if the locker holdertakes out his/her key. Further, a certificate is recorded by thecustodian of the Bank that all the lockers operated during a dayhave been checked and found properly locked. Such a certificatewas also recorded on the 21[st]April, 1988. The State Commission,therefore, come to the conclusion that the Bank was negligent, inensuring the security of the locker with the result that it was foundon the 9th June, 1988 to have been opened unauthorized. For thisthe State Commission has held that the Bank is squarely responsibleand therefore liable to make good the loss suffered by therespondent complainant. This Commission fully concurs with thefindings of the State Commission.”

Accordingly, the bank was ordered to pay separate costs of Rs3,500/- by way of compensation to the locker holder.

9.2 In Mahendar Singh Siwach (supra) the bank negligentlyallowed a third party, who was the previous allottee of the locker, tobreak open the appellant’s locker and take away the valuables therein.It was found that the bank had failed to duly record and complete the A

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Arequired formalities with respect to change of allotment from the thirdparty to the current allottee, i.e., the appellant. The National Commissionarraigned the gross deficiency in service committed by the bank as follows:

“…We find that the record itself proves gross negligence anddeficiency in service on the part of the opposite party Bank inBrendering service. Firstly, O.P.’s argument is that fraud committedby Mr. Ramendra Singh Grover, the third party in removing thecontents of the locker comes under criminal jurisdiction, has norelevance as regards enforcement of civil liability against theopposite party Bank under Consumer Protection Act. There is noother valid argument given on behalf of the bank except to contendCthat they did not know the details of the contents of the locker andhence the Bank cannot be made liable. The Bank officials admittedtheir mistake and stated that they are liable to compensate for thesame. It is also interesting to see the evidence produced on record,i.e. an extract from the order of the Learned Sessions Judge,DMeerut dated 22.4.1996 granting bail to Mr. Grover which isreproduced hereunder:

“It appears that the alleged crime could not have beencommitted without the connivance of the bank authorities. Ifthe locker in question was allotted to the applicant in theEyear 1978, it is not clear how it could be allotted to MahendraSingh Siwach in the year 1979. Further, when MahendraSingh Siwach has been operating the locker for all these yearshaving his account No. 284 it is not understandable how theBank could without verifying from record, accept the requestof the applicant that the locker be broken open as the keyFhad been lost. It was necessary for the bank authorities tohave referred to the bank record and should have alsointimated Mahendra Singh Siwach about this request of theapplicant. Not only this, the bank authorities in thecircumstances mentioned above should have prepared anGinventory of the articles and should have got them valuedbefore handing over the same to the applicant. It does notappear that the police has taken any action against theconcerned delinquent bank official. The applicant-accusedclaims that he was the owner of the property kept in the lockerand the locker belonged to him. In these circumstances, when G

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no action has been taken against the bank authorities, I thinkit proper to release the applicant also on bail.

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It is very strange that the opposite party has not referred to theduties cast on them under their own instruction manual which ison the guidelines of the Reserve Bank of India to support theircase. Similar Manual of Instructions of United Commercial Bankon the guidelines of Reserve Bank of India filed by the Complainantis reproduced hereunder:

“Maintenance of Record

-6.1 Locker Register (Form G 126)

This Register should be maintained lockerwise in serial orderso as to facilitate locating the details of the hirer from thelocker number. All the details such as the name(s), theiraddresses, operational instructions, rent paid, etc., shouldbe recorded. The name(s) of the hirer(s) should be indexed inthe Register according to alphabetical order.

6.4 Locker Key Register

The branch should also maintain a Locker Key Register. Thisshould be maintained keywise to lockerwise and lockerwiseto keywise so as to facilitate tracing the number of Lockerfrom the Key number and tracing the number of Key from theLocker number. Moreover, when the locks of the lockers areinterchanged, such changes should be immediately recordedin the Locker Key Register. It should be marked ‘StrictlyPrivate’ and should be kept in personal custody of Custodianof locker cabinets. A suggested proforma of Locker KeyRegister is given in Annexure 1.

6.5 Daily Register of Access to Hired Lockers (G- 125)

Signature of the operator on Locker should be obtained inthis Register. Date and time of operation should also berecorded therein.

6.6 Branch should also maintain a pass book to keep a recordof total number of Lockers hired and number of Lockerssurrendered so that it is possible to find out at a particular A

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Atime the number of Lockers let out and number of Lockerslying vacant.

At the time of half yearly closing, the stock of keys on handshould be verified in reference to Lockers lying vacant.

12.3.1 Breaking Open of Locker Due to Loss of KeyB

When intimation has been received from hirer(s) about lossof key, the following procedure should be adopted forbreaking open the Locker:—

(a) An application should be obtained from hirer(s) requestingCfor breaking open the Locker.(b) The charges for breaking open the Locker should berealized from the hirer in advance and kept in Sundry CreditorsAccount.

(c) An appointment should be made with the agents of theDmakers of lockers cabinet, to send their mechanic to drillopen the Locker in consultation with the hirer(s). Lockershould be broken open in the presence of the hirer(s), theManager, Accountant and Custodian of the locker cabinet,and one respectable witness. A suitable remark about breakingopen of Locker should be made in Locker Register, RenewalEDiary and Specimen Signature Card.

xxx

The procedure laid down by the Reserve Bank of India guidelineshas been completely flouted by the opposite party by not maintaining-Fthe locker register, locker key register, nonpayment of rent duesand lastly the procedure that should be adopted for breaking opena locker etc.”

9.3 In Mamata Chaudaha (supra), though the NationalGCommission dismissed the complaint on the facts of that case, it notedthat the relationship between the bank and the locker holders, who arealso the account holders of the bank, will be that of a service providerand consumer.

10. We may also refer to the circulars which the RBI has issuedHon this subject from time to time. The 2007 Circular (supra) has, inter AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.[MOHAN M. SHANTANAGOUDAR, J. ]

alia, provided the following recommendations for facilitating easy andsafe operation of lockers:

“1.4 Banks are also advised to give a copy of the agreementregarding operation of the locker to the locker-hirer at the time ofallotment of the locker.

2.1 Operations of Safe Deposit Vaults/Lockers Banks should exercise due care and necessary precaution for theprotection of the lockers provided to the customer. Banks shouldreview the systems in force for operation of safe deposit vaults /locker at their branches on an on-going basis and take necessarysteps. The security procedures should be well-documented andthe concerned staff should be properly trained in the procedure.The internal auditors should ensure that the procedures are strictlyadhered to.

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2.2 (ii) Where the lockers have not been operated for more thanthree years for medium risk category or one year for a higher riskcategory, banks should immediately contact the locker hirer andadvise him to either operate the locker or surrender it. This exerciseshould be carried out even if the locker hirer is paying the rentregularly. Further, the bank should ask the locker hirer to give inwriting, the reasons why he/she did not operate the locker. Incase the locker hirer has some genuine reasons as in the case ofNRIs or persons who are out of town due to a transferable jobetc., banks may allow the locker hirer to continue with the locker.Further, banks should ask the locker hirer to give in writing, thereasons why he/she did not operate the locker. In case thelocker-hirer has some genuine reasons as in the case of NRIs orpersons who are out of town due to a transferable job etc., banksmay allow the locker hirer to continue with the locker. In case thelocker-hirer does not respond nor operate the locker, banks shouldconsider opening the lockers after giving due notice to him…

(iii) Banks should have clear procedure drawn up in consultationwith their legal advisers for breaking open the lockers and taking”stock of inventory.

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AHence the RBI had issued clear directions as far back as in 2007imposing duty of care in respect of protection of the bank lockers andmandating transparency vis a vis the locker holder in allotment andbreaking open of the lockers. However, it has been left to the discretionof the individual banks to formulate the exact procedures for fulfillingthis duty of care. The banks are likely to draft the locker hiring agreementsBin a manner which is favourable to their interests, including clauses tothe effect that the lockers are to be operated at the consumers’ ownrisk.

A

10.1. On 1.07.2015, the RBI issued a Master Circular No. 59/2015-16 on Customer Service in Banks which included updated guidelinesCon locker operation. However, these were more or less similar to whathas already been stated in the 2007 Circular. Further, neither of theaforementioned Circulars provide any guidance on the degree of carethat needs to be exercised by the bank for safeguarding the lockers ordetail the exact steps that should be taken in this regard.D

11. It appears to us that the present state of regulations on thesubject of locker management is inadequate and muddled. Each bank isfollowing its own set of procedures and there is no uniformity in therules. Further, going by their stand before the consumer fora, it seemsthat the banks are under the mistaken impression that not havingEknowledge of the contents of the locker exempts them from liability forfailing to secure the lockers in themselves as well. In as much as weare the highest Court of the country, we cannot allow the litigation betweenthe bank and locker holders to continue in this vein. This will lead to astate of anarchy wherein the banks will routinely commit lapses in propermanagement of the lockers, leaving it to the hapless customers to bearFthe costs. Hence, we find it imperative that this Court lays down certainprinciples which will ensure that the banks follow due diligence in operatingtheir locker facilities, until the issuance of comprehensive guidelines inthis regard.

12. Thus, we emphasize that irrespective of the value of the articlesGplaced inside the locker, the bank is under a separate obligation to ensurethat proper procedures are followed while allotting and operating thelockers:

(a) This includes maintenance of a locker register and locker keyregister.H

(b) The locker register shall be consistently updated in case ofany change in allotment.

(c) The bank shall notify the original locker holder prior to anychanges in the allotment of the locker, and give them reasonableopportunity to withdraw the articles deposited by them if they sowish.

(d) Banks may consider utilizing appropriate technologies, suchas blockchain technology which is meant for creating digital ledgerfor this purpose.

(e) The custodian of the bank shall additionally maintain a recordof access to the lockers, containing details of all the parties whohave accessed the lockers and the date and time on which theywere opened and closed.

(f) The bank employees are also obligated to check whether thelockers are properly closed on a regular basis. If the same is notdone, the locker must be immediately closed and the locker holdershall be promptly intimated so that they may verify any resultingdiscrepancy in the contents of the locker.

(g) The concerned staff shall also check that the keys to the lockerare in proper condition.

(h) In case the lockers are being operated through an electronicsystem, the bank shall take reasonable steps to ensure that thesystem is protected against hacking or any breach of security.

(i) The customers’ personal data, including their biometric data,cannot be shared with third parties without their consent. Therelevant rules under the Information Technology Act, 2000 will beapplicable in this regard.

(j) The bank has the power to break open the locker only inaccordance with the relevant laws and RBI regulations, if any.Breaking open of the locker in a manner other than that prescribedunder law is an illegal act which amounts to gross deficiency ofservice on the part of the bank as a service provider.

(k) Due notice in writing shall be given to the locker holder at areasonable time prior to the breaking open of the locker. Moreover,the locker shall be broken open only in the presence of authorized A

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Aofficials and an independent witness after giving due notice to thelocker holder. The bank must prepare a detailed inventory of anyarticles found inside the locker, after the locker is opened, andmake a separate entry in the locker register, before returning themto the locker holder. The locker holder’s signature should beobtained upon the receipt of such inventory so as to avoid anyBdispute in the future.

(l) The bank must undertake proper verification procedures toensure that no unauthorized party gains access to the locker. Incase the locker remains inoperative for a long period of time, andthe locker holder cannot be located, the banks shall transfer theCcontents of the locker to their nominees/legal heirs or dispose ofthe articles in a transparent manner, in accordance with thedirections issued by the RBI in this regard.

(m) The banks shall also take necessary steps to ensure that thespace in which the locker facility is located is adequately guardedDat all times.

(n) A copy of the locker hiring agreement, containing the relevantterms and conditions, shall be given to the customer at the time ofallotment of the locker so that they are intimated of their rightsand responsibilities.

E(o) The bank cannot contract out of the minimum standard ofcare with respect to maintaining the safety of the lockers as outlinedsupra.

13. In the present case, it is undisputed that the Respondent BankFinadvertently broke the Appellant’s locker, without any just or reasonablecause, even though he had already cleared his pending dues. Moreover,the Appellant was not given any notice prior to such tampering with thelocker. He remained in the dark for almost a year before he visited thebank for withdrawing his valuables and enquired about the status of thelocker. Irrespective of the valuation of the ornaments deposited by theGAppellant, he had not committed any fault so far as operation of thelocker was concerned. Thus, the breaking open of the locker was inblatant disregard to the responsibilities that the bank owed to the customeras a service provider. The alleged loss of goods did not result from anyforce majeure conditions, or acts of third parties, but from the gross H

negligence of the bank itself. It is case of gross deficiency in service onthe part of the bank.

14. Thus, looking to the facts and circumstances of the case, wedeem it appropriate to impose costs of Rs. 5,00,000/- on the Bank whichshould be paid to the Appellant as compensation. The amount of Rs.5,00,000/- shall be deducted from the salary of the erring officers, if theyare still in service. If the erring officers have already retired, the amountof costs should be paid by the Bank. Additionally, the Appellant shall bepaid Rs. 1,00,000/- as litigation expense.

15. Before concluding, we would like to make a few observationson the importance of the subject matter of the present appeal. With theadvent of globalization, banking institutions have acquired a verysignificant role in the life of the common man. Both domestic andinternational economic transactions within the country have increasedmultiple folds. Given that we are steadily moving towards a cashlesseconomy, people are hesitant to keep their liquid assets at home as wasthe case earlier. Thus, as is evident from the rising demand for suchservices, lockers have become an essential service provided by everybanking institution. Such services may be availed of by citizens as wellas by foreign nationals. Moreover, due to rapid gains in technology, weare now transitioning from dual key-operated lockers to electronicallyoperated lockers. In the latter system, though the customer may havepartial access to the locker through passwords or ATM pin, etc., theyare unlikely to possess the technological know-how to control the operationof such lockers. On the other hand, there is the possibility that miscreantsmay manipulate the technologies used in these systems to gain access tothe lockers without the customers’ knowledge or consent. Thus thecustomer is completely at the mercy of the bank, which is the moreresourceful party, for the protection of their assets.

In such a situation, the banks cannot wash off their hands andclaim that they bear no liability towards their customers for the operationof the locker. The very purpose for which the customer avails of thelocker hiring facility is so that they may rest assured that their assets arebeing properly taken care of. Such actions of the banks would not onlyviolate the relevant provisions of the Consumer Protection Act, but alsodamage investor confidence and harm our reputation as an emergingeconomy.

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AThus it is necessary that the RBI lays down comprehensivedirections mandating the steps to be taken by banks with respect tolocker facility/safe deposit facility management. The banks should nothave the liberty to impose unilateral and unfair terms on the consumers.In view of the same, we direct the RBI to issue suitable rules orregulations as aforesaid within six months from the date of this judgment.BUntil such Rules are issued, the principles stated in this judgment, ingeneral and at para 12 in particular, shall remain binding upon the bankswhich are providing locker or safe deposit facilities. It is also left open tothe RBI to issue suitable rules with respect to the responsibility owed bybanks for any loss or damage to the contents of the lockers, so that theCcontroversy on this issue is clarified as well.

16. The Appeal is disposed of accordingly.

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Divya Pandey

Appeal disposed of.

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