Full Judgment Text
CORRECTED
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3966 OF 2010
Amitabha Dasgupta ...Appellant
Versus
United Bank of India & Ors. …Respondents
J U D G M E N T
MOHAN M. SHANTANAGOUDAR, J.
1.
This appeal, by special leave, arises out of the judgment of
the National Consumer Disputes Redressal Commission
(‘National Commission’) delivered on 18.12.2008 dismissing the
Signature Not Verified
Revision Petition filed against the judgment of the State
Digitally signed by
GULSHAN KUMAR
ARORA
Date: 2021.06.17
15:08:53 IST
Reason:
1
Consumer Disputes Redressal Commission (‘State Commission’)
dated 12.10.2004.
2. The following are the facts out of which this appeal arises:
2.1 In the early 1950’s, the Appellant’s mother (since deceased)
took a locker on rent bearing No. A222 in the Deshapriya Park,
Kolkata Branch of the Respondent No. 1 Bank. In 1970, the
Appellant/Complainant was included as a joint holder of the
locker. On 27.05.1995, the Appellant visited the Respondent No.1
Bank to operate the locker and deposit the locker rent. However,
the Appellant was informed that the Bank had broken open his
locker on 22.09.1994 for nonpayment of rent dues for the period
of 19931994. Further, that the locker had subsequently been
reallocated to another customer.
2.2 On 29.05.1995 and 2.06.1995, the Appellant sent
communications to Respondent No. 1 claiming that such
breaking of his locker by the Bank was illegal since he had
cleared dues for 19941995 on 30.07.1994, i.e., prior to the
breaking of the locker. The Chief Manager of Respondent 1, who
is Respondent No. 3 in the present appeal, responded to the
communication and admitted to having inadvertently broken
open the locker, though there were no outstanding dues to be
paid, and apologized for the same. He stated as an ancillary point
2
that reminders for the payment of dues had been sent on
25.11.1993 and 23.02.1994. However, that these would have no
meaning since the dues were subsequently paid by the Appellant
on 30.06.1994.
2.3 On 17.06.1995, when the Appellant went to collect the
contents of the locker, it is alleged that he found only two (one
pair of bangles and one pair of ear pussa) of the seven ornaments
that had been deposited in the locker in a nonsealed envelope.
However, Respondent No.1 Bank contends that only those two
ornaments were found in the Appellant’s locker when it was
broken open. That the same is evident from the inventory
prepared by Respondent No. 1 when the locker was broken open
in the presence of an independent witness.
2.4 Subsequently, the Appellant filed a consumer complaint
before the District Consumer Forum (‘District Forum’) calling
upon Respondent No. 1 to return the seven ornaments that were
in the locker; or alternatively pay Rs. 3,00,000/ towards the cost
of jewelry, and compensation for damages suffered by the
Appellant.
2.5 The District Forum allowed the complaint and held
Respondent No. 1 liable for deficiency of service, relying upon
3
Respondent No. 3’s admission that the Bank had inadvertently
broken open the Appellant’s locker though there were no pending
rent dues. Further, on the claim for the cost of seven ornaments,
it was held that Respondent No.1 could not prove that there had
been only two ornaments in the locker since there were no
independent witnesses in the presence of whom the locker was
opened. Hence, Respondent No. 1 was directed to return the
entire contents of the locker, or alternatively pay the Appellant
Rs. 3,00,000/ towards cost of the jewelry and, Rs. 50,000/ as
compensation for mental agony, harassment, and cost of
litigation.
2.6 On appeal, the State Commission vide order dated
12.10.2004 accepted the District Commission’s findings on the
question of deficiency of service, though it reduced the
compensation from Rs. 50,000/ to Rs. 30,000/. However, with
respect to recovery of the cost of the ornaments, the State
Commission, relying upon the judgment of the National
1
Commission in UCO Bank v. RG Srivastava , observed that the
dispute on the contents of the locker can only be decided upon
provision of elaborate evidence. That the Consumer Forum was
not equipped to undertake this evaluation since it only has
1
1996 (1) CPR 97.
4
jurisdiction to conduct a summary trial. Therefore, the Appellants
were directed to approach the civil court for adjudication on the
contents of the locker.
2.7 The Revision Petition against the order of the State
Commission was dismissed vide the impugned order. The
National Commission by the impugned judgment, accepted the
State Commission’s holding on the limited jurisdiction of the
Consumer Forum to adjudicate on the recovery of the contents of
the locker.
Hence, the present appeal.
3. Learned counsel for the Appellant submitted that even if the
case is remitted to the civil court for adjudication on the issue of
the contents of the locker, it would be highly improbable to
ascertain the same since the contents of a locker are exclusively
known only to the locker holder. On the question of damages, he
2
relied on Charan Singh v. Healing Touch Hospital & Ors. to
argue that compensation must be awarded to bring a qualitative
change in the attitude of the service provider.
3.1 Per contra, learned counsel for the Respondents submitted
that the National Commission’s holding does not warrant
interference. He submitted that compensation for the loss of
2
(2000) 7 SCC 668.
5
jewellery can only be awarded after appreciation of evidence by
the trial court.
4. Heard Learned Counsel for both parties. Based on a perusal of
the record, the following issues arise for consideration in the
present appeal:
4.1 Whether the Bank owes a duty of care to
First,
the locker holder under the laws of bailment or any
other law with respect to the contents of the
locker? Whether the same can be effectively
adjudicated in the course of consumer dispute
proceedings?
4.2 irrespective of the answer to the
Second,
previous issue, whether the Bank owes an
independent duty of care to its customers with
respect to diligent management and operation of
the locker, separate from its contents ? Whether
compensation can be awarded for noncompliance
with such duty?
I. Relief with Respect to the Contents of the Locker
5. Disputes between banks and locker holders, pertaining to
loss of articles placed inside the locker, have been subject to
judicial consideration in various jurisdictions for nearly a
6
century. For a broader understanding of the subject, we find it
necessary to briefly refer to certain judgments of foreign
jurisdictions, before clarifying the position under Indian law.
5.1 The dominant view of courts around the globe has been that
the bank is in the position of a bailee with respect to the goods
placed inside the locker by the locker holder. In Roberts v.
3
, the defendant company
Stuyvesant Safe Deposit Co.
permitted the police under a search warrant, to confiscate the
articles that were inside the plaintiff’s locker. However, the
articles were subsequently stolen from police custody. A suit was
filed by the plaintiff, alleging that the defendant company failed
to comply with the duty of care required under the law by
permitting the police to take away articles that were not
mentioned in the search warrant. Affirming the plaintiff’s
contentions, the Court of Appeals of New York made the following
observations about the relationship of bailment between the
parties:
“The legal relationship which the defendant held to
the plaintiff, and out of which this controversy has
arisen, was that of a bailee or depositary for hire. The
fundamental question in the case is whether the
defendant, upon the undisputed evidence in the
record, discharged those duties and obligations to the
3
(1890) 123 N.Y 57.
7
plaintiff which the law imposed upon it in regard to
the care and custody of her property.”
(emphasis supplied)
It is pertinent to note the Court’s observation that whether
or not the defendant had discharged its obligations as a bailee
would have to be discerned 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 have
governed the law on the field such as Emma M. Lockwood v.
4
,
The Manhattan Storage & Warehouse Company Mayer v.
5 6
Brensigner , National Safe Deposit Co. v. Stead . In Cussen
7
, money kept by the plaintiff in
v. Southern Cal. Savings Bank
the bank’s safe deposit vault was lost. The Supreme Court of
California held that the bank was liable under the laws of
bailment. However, it observed that the plaintiff would have to
make a prima facie case that they had deposited the money inside
the locker, and that it was subsequently lost. The burden of proof
would then shift to the defendant bank to prove that it exercised
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).
8
the necessary care required under the laws of bailment for the
protection of its contents. Therefore, before applying the laws of
bailment, the court must first find on the facts of the case
whether the plaintiff had transferred possession of the articles to
the bank.
6. To identify if the relationship of bailment exists between the
bank and the locker holder under Indian law, it is necessary at
the outset to refer to the relevant provisions under the Indian
Contract Act, 1872 (‘Contract Act’):
“ —A
148. ‘Bailment’, ‘bailor’ and ‘bailee’ defined.
‘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. The person delivering the
goods is called the ‘bailor’. The person to whom they
are delivered is called the ‘bailee’.
149. Delivery to bailee how made.— The delivery to
the bailee may be made by doing anything which has
the effect of putting the goods in the possession of the
intended bailee or of any person authorised to hold
them on his behalf.”
Thus, from the aforementioned provisions, it can be inferred
that three components need to be fulfilled for the existence of
bailment. These are: (i) delivery of goods from one person to
another by transfer of possession, actual or constructive; (ii) an
9
express or implied contract for delivery; (iii) delivery should be for
accomplishment of a purpose.
7. Unfortunately, there is no substantive domestic legislation
or sectorspecific regulations which may throw light upon the
issue of whether banks are responsible under the laws of
bailment for the loss of articles placed inside the locker. On
4.12.2006, the Reserve Bank of India (‘RBI’) had issued a Draft
8
Circular on SafeDeposit Lockers (‘2006 Circular’). This circular
was only in the form of a proposal issued to the banks and hence
does not have any binding value. However, it is useful in
understanding the RBI’s position at that stage. Clause 2.1 of the
2006 Circular states:
“2. Security aspects relating to Safe Deposit Lockers:
2.1 It is clarified that the relationship between the
bank and the locker hirer is in the nature of a 'bailor
and bailee' and not 'landlord and tenant' though the
bank has no knowledge of the contents of the locker
and the bank is required to exercise due care and
necessary precaution for the protection of the lockers
provided to the customer.”
(emphasis supplied)
On perusal of the 2006 Circular, it is evident that at that
, the RBI had recommended that the laws of bailment
point in time
ought to guide the relationship between the bank and the locker
8
https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=3196.
10
holder, even if the bank has no knowledge of the contents of the
locker.
7.1 The RBI had also issued guidelines covering inter alia , the
subject of safe custody of articles placed inside the lockers
(Circular No. RBI/20062007/325) on 17.04.2007 (‘2007
9
Circular). There was no clause on the nature of the legal
relationship between the bank and the locker holder in the 2007
Circular. The only reference to the Contract Act was as follows:
“3.5 Banks are advised to be guided also by the
provisions of Sections 45 ZC to 45 ZF of the Banking
Regulation Act, 1949 and the Banking Companies
(Nomination) Rules, 1985 and the relevant provisions
of Indian Contract Act and Indian Succession Act.”
(emphasis supplied)
However, this observation was made in the specific context
of return of safe custody of articles to the survivors/legal heirs of
deceased locker holders and hence may not have much bearing
in the present case.
7.2 Subsequently, in response to a Right to Information (‘RTI’)
enquiry made in 2017, the RBI, and various public sector banks,
stated that as per the agreement entered into with the customers
who are hiring/leasing the lockers, the banks have no liability for
loss or damage of articles placed inside the bank lockers. Hence
the position of the RBI from 2006 to 2017 has undergone a sea
9
https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=3422.
11
change. The position adopted by the banks was challenged before
the Competition Commission of India (‘CCI’) as being in the
nature of an anticompetitive practice. The CCI dismissed the
10
claim, while making the following observations:
“7. In the instant case, there is no such material to
suggest any understanding/consensus/arrangement
amongst the Opposite Parties to have pursued any of
the aforesaid prohibited activities. Suspicion of a
cartel has been raised in the information as all the
Opposite Parties allegedly do not take responsibility
for any loss of valuables kept by customers availing
safety deposit locker facility from them. However, the
RTI replies of some of the Opposite Parties suggest
that they are not completely absolved for loss of
valuables kept in their locker. For instance, the reply
dated 7th October, 2015 of Bank of Baroda inter alia
states that in case of loss suffered by the lessee due
to theft or burglary etc. of safe custody locker, the
liability of the bank will depend upon the facts and
circumstances surrounding the burglary. Further, the
reply dated 13th October, 2015 of Dena Bank states
that the responsibility of the bank shall be governed
by the terms and conditions laid down in the
memorandum of hiring of locker and the guidelines
issued by RBI from time to time. Reply dated 19th
October, 2015 of Andhra Bank states that the
relationship between the 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
deposit locker will not be disclosed by the customer to
the bank and hence, the bank cannot take
responsibility for compensating any loss as the extent
of such loss cannot be assessed. It has been further
stated that the bank, however, takes all necessary
measures and precautions to safeguard the lockers
provided to the customers. Similarly, the reply dated
30th October, 2015 of Corporation Bank states that
10
Kush Kalra v. Reserve Bank of India, 2017 SCC OnLine CCI 41.
12
its liability in case of theft/loss of valuables kept in
its safety lockers depends upon the parameters on
which the bank takes insurance on the lockers and
the same parameters will be adopted while settlement
of claims in case of theft. Taking into consideration
all these replies and in the absence of any material
suggesting collusion amongst the Opposite Parties, it
cannot be said that a uniform practice is followed by
all the Opposite Parties to avoid
responsibility/liability for loss of valuables kept by
customers availing their safety deposit locker facility.”
(emphasis supplied)
Therefore, the CCI took notice of the fact that it is common
industry practice for banks to disclaim liability for loss of articles
placed inside the locker, though there are no uniform parameters
or policies guiding the same. Additionally, the banks have stated
that acceptance of responsibility for loss of articles placed in their
locker facility will depend upon the relevant facts and
circumstances of each case, such as the terms of the locker
hiring agreement, the circumstances under which the articles
were lost or stolen, and so on.
8. There has also not been any authoritative pronouncement
from this Court on the issue of whether banks are responsible as
bailees, or in any other capacity, for any loss or damage to the
contents of the lockers. However, there have been various High
Court judgments guiding the field. One of the notable cases in
13
which this issue arose was Jagdish Chandra Trikha v. Punjab
11
. In this case, the appellants had, before the
National Bank
partition of India, entrusted a sealed box of gold ornaments to the
respondent bank in Peshawar on the payment of a fee for
safekeeping. The box was moved to the Rawalpindi branch, then
subsequently to the Lahore branch, and finally to India in
November 1961 under the IndoPakistan Movable Property
Agreement. Upon presentation of the box, the Appellant refused
to take delivery since the appearance and weight of the box was
different from what it had been when it was deposited. A suit was
filed seeking delivery of the ornaments or alternatively recovery of
the market value of the ornaments. Referring to the relevant
common law authorities, the Delhi High Court held that the bank
would be liable in the capacity of a bailee for the loss of the
ornaments:
“71. The Box was entrusted to the defendant Bank at
Peshawar. The same was accepted by the Bank as a
bailee and it was expected that the usual care which
is demanded on such matters would be
undertaken...it is established that the defendant
Bank failed to discharge its duties as a bailee and did
not take care of the goods of the parents of the
plaintiff as one would under similar circumstances,
take of his own goods of the same bulk, quantity and
value as the goods bailed.”
11
AIR 1998 Delhi 266.
14
(emphasis supplied)
It is important to note that in the facts of Jagdish
(supra), the High Court found that there was
Chandra Trikha
complete entrustment of possession of the appellant’s
ornaments . The articles to be safeguarded were handed over by
the customer to the bank in a sealed box, which was then taken
to a safe place to be stored. Though the respondent bank claimed
it did not have any knowledge of the contents of the box, it was
proved from evidence that the appellant’s predecessors had
handed over a detailed list of the jewellery which was placed
inside the safe deposit box to the bank. It was further proved that
the customer did not have any access to the same after
entrustment to the bank. Hence the High Court considered it a fit
case to apply the laws of bailment.
8.1 However, the locker service provided by the banks has
evolved since the preindependence days. In that era, the bank’s
employee was entrusted with the relevant goods for safe keeping.
Complete access to the valuables, if any, remained with the bank
till the time the customer claimed return of the same. However,
due to modernization of the locker system, banks now provide
customers with partial access to the lockers. Under the current
15
system, the bank allocates a locker to the customer on the
payment of rent. The customer is then provided with a key to the
locker through which he can gain partial access to the locker.
The bank has a master key to the locker and the customer can
gain complete access to the locker only when the bank uses its
own key to the locker. Therefore, a combination of the bank’s key
and the locker holder’s key is required for opening a locker,
providing neither with complete access. In more advanced,
digitally operated locker systems, such ‘keys’ may not be physical
keys but may consist of passwords or data which is exclusively
known to the bank and the customer. Further, the bank may not
have any receipt of the exact particulars of the articles placed
inside the locker, as was the case in Jagdish Chandra Trikha
(supra). The question that therefore arises for consideration
before this Court is whether the modernday bank locker system
would be guided by the laws of bailment.
8.2 An important decision which has considered the modernday
bank locker system is that in Natioal Bank of Lahore Ltd. v.
12
. In that case, the appellant bank had
Sohan Lal Saigal
provided locker service for the safe custody of valuables. The
12
AIR 1962 P H 534.
16
locker could be operated jointly by the locker holder and the
bank’s custodian. However, the respondent locker 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 be
operated even without the locker holder’s personal key. Hence the
Civil Court concluded that the Manager had exclusive control
over the lockers. Consequently, referring to the decisions of the
13
Court of Appeals of Ohio in and the Supreme
Blair v. Riley
Court of Illinois in National Safe Deposit Company v. Stead,
14
Attorney General , the Punjab and Haryana High Court held
that the bailorbailee relationship applied. In this regard, the
High Court observed that:(Pg. 578)
“It may be that the person who hires a locker retains
some control over it by having one key with himself
but if the locker can be operated without any key, as
was possible in the lockers which were rented out to
the plaintiffs, then at once any impediment in the
way of control and possession of the Bank to whom
the locker belonged and in whose strong room it was
to be found, would be removed and it could well be
said that the bank was strictly in the position of the
bailee.”
(emphasis supplied)
The High Court further observed that the locker holders had
produced specific evidence in the form of lists of the articles of
13
175 N.E.R 210.
14
95 N.E.R. 973.
17
jewellery deposited inside the lockers so as to prove the extent of
loss they had suffered.
15
8.3 In Mohinder Singh Nanda v. Bank of Maharashtra ,
fortyfour safe keeping lockers in the Respondent bank were
broken open by miscreants and the contents were emptied. The
Punjab & Haryana High Court held that the bank would not be
liable for the loss of articles, if any, since the bank had no
knowledge of the contents of the locker:
“4. But there is no evidence on record to show that
the defendantBank had the knowledge of the articles
in the locker. Unless there is entrustment of the
property to the defendant Bank, the Bank cannot be
held responsible for the theft. The plaintiffs have
miserably failed to prove that there was entrustment
of the articles with the defendant Bank and that the
Bank authorities were aware of the articles placed in
the locker.”
(emphasis supplied)
8.4 Subsequently, the Punjab and Haryana High Court again
undertook a comprehensive look into the presentday locker
16
system in , which
Atul Mehra v. Bank of Maharashtra
pertained to the same bundle of facts as in Mohinder Singh
(supra). The appellant locker holders filed a suit alleging
Nanda
that due to the robbery, jewels worth Rs. 4,26,160/ were stolen
from his locker. It was claimed that the respondent bank had not
15
1998 ISJ (Banking) 673.
16
AIR 2003 P&H 11.
18
complied with the duty of care owed under the laws of bailment.
However, the trial court found that the knowledge of the weight
and value of the articles stored inside the locker was exclusive to
the customer, and the bank did not have notice of the same.
Further, the appellants had not produced any evidence at the
stage of trial to establish the contents of the locker.
Consequently, the Single Judge Bench of Nijjar J. opined that the
provisions with respect to bailment under the Contract Act would
not apply as follows:
“17…The respondent bank could only be fastened
with liability on the contents of the locker being
disclosed to it. In the absence of this information, it
would have to be held that there was no entrustment
of the goods to constitute bailment as required under
Section 148 of the Indian Contract Act, 1872.
18…These authorities are of no assistance to the
appellants in the present case. In all these cases,
exclusive possession of the property had been handed
over by the bailor to the bailee. I am of the considered
opinion that exclusive possession is a sine qua non
for bailment. Therefore, I have no hesitation in
coming to the conclusion that mere hiring of the
locker would not be sufficient to constitute a contract
of bailment as provided under Section 148 of the
Indian Contract Act, 1872. In order to constitute
bailment, as provided in Section 148 of the Act, it is
further necessary to show that the actual exclusive
possession of the property was given by the hirer of
the locker to the bank. It is only thereafter that the
question of reasonable care and quantum of damages
would arise. In the present case, it is impossible to
19
know the quantity, quality or the value of the jewelry
which was allegedly kept in the locker at the time
when the robbery occurred. ……… In the present
case, the plaintiffs alone had the knowledge of
contents of lockers, therefore, the plaintiffs had to
lead independent evidence to prove that jewelry was
actually in the locker on the date of the robbery. Even
if the plaintiffs had proved this peculiar fact; they
would still have to prove the value of the jewelry.”
(emphasis supplied.)
Therefore, the High Court concluded that mere leasing out
of the locker ipso facto would not establish a relationship of
bailment between the bank and the locker holder. In order to
establish exclusive possession, the claimant must prove that the
bank had knowledge of the contents of the locker . Alternatively,
where the locker holder alone has knowledge of the contents,
they must lead independent evidence to prove that their articles
or valuables were actually inside the locker, and the valuation of
the same.
8.5 However, Nijjar J. differentiated the holding in
Sohan Lal
Saigal (supra) by observing as follows:
20. “In that case, the learned trial court had held that
entrustment and the valuation of jewelry had been
proved…..On the twin grounds of exclusive
possession of the jewelry deposited in the locker and
entrustment thereof to the Bank, it has been held
that the Bank would be in the position of bailee.”
(emphasis supplied)
20
Therefore, in Sohan Lal Saigal (supra) entrustment of
jewelry was proved on production of elaborate evidence before the
trial court. However, in (supra) and
Mohinder Singh Nanda
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 obtaining relief. Nijjar J. further
observed that:
“22…Whatever property is deposited in the locker is,
undoubtedly in the custody and possession of the
bank. Merely because the locker can be operated only
in the presence of the locker hirer would not amount
to joint possession of the locker. The Banker can
always open the locker with a “master key”. The hirer
of the locker is not in a position to open the locker
without the assistance of the bank. The hirer has
access to the locker only during specified banking
hours. The banker has no such limitation. It must,
however, be noticed that the transaction of bailment
would only be established if the provisions of Section
148 of the Indian Contract Act are complied with.
With regard to this, it is the submission of Mr. Jagga
that the plaintiffs have miserably failed to prove that
the jewellery was kept in the locker as claimed in the
plaint. There being no entrustment or delivery of
possession, Section 148 of the Act cannot be invoked
by the plaintiffs.”
Therefore, the Court in was sympathetic to the
Atul Mehra
fact that the principles of bailment may be applicable even to the
contemporary dualkey locker system if the bank is in the
21
possession of a master key or has substantial degree of access to
the locker. However, the plaintiff would first have to prove that
they had indeed handed over possession of certain articles for
being deposited in the locker of the bank. If this requirement is
not satisfied, the Court is barred from going into other issues
such as whether the locker holder and the bank were in joint
possession, etc.
8.6 Having perused the aforementioned precedents, we find that
what was commonly contested in all these cases is whether
delivery of possession or entrustment of valuables from the locker
holder to the bank had taken place, for the purpose of Section
148 of the Contract Act. Even in the relevant foreign precedents
which we have noted, the application of the principles of bailment
was contingent on determining whether possession was
transferred in the facts of the case. This in turn requires factual
findings on whether the bank had knowledge of the contents of
the locker; or whether the locker holder had prepared any receipt
or inventory of the articles placed inside the locker or was
otherwise able to prove the particulars of the items deposited in
the locker. We are of the considered opinion that these questions
cannot be adjudicated upon in the course of proceedings before
22
the consumer fora. This aspect must be evaluated by the civil
court, upon appreciation of evidence led by the parties, as was
done in all the aforementioned decisions of
Jagdish Chandra
Trikha (supra), Sohan Lal Saigal (supra), Mohinder Singh
(supra) and (supra).
Nanda Atul Mehra
8.7 It is true that the National Commission has, in previous
decisions such as
Punjab National Bank, Bombay v. K.B.
17
Shetty , and Mahender Singh Siwach v. Punjab and Sind
18
, awarded the value of articles which have been stolen or
Bank
gone missing from bank lockers. Moreover, in Pune Zilla
Madyawarti Sahakari Bank Limited v. Ashok Bayaji
19
Ghogare , the National Commission has gone to the extent of
holding that the affidavit of the locker holder should ordinarily be
accepted for proving the contents of the bank locker, unless the
same stands impeached by way of cross examination. However, it
is relevant to note that in the facts of the aforementioned cases,
the complainants had produced detailed and precise
documentary proof for corroborating the extent of jewellery
17
1991 (1) C.P.C. 592.
18
(2006) 4 CPJ 231 (NC).
19
2015 SCC OnLine NCDRC 2832.
23
placed inside the locker, which has not been done in the present
case.
8.8 In (supra), similar situation arose as in the
UCO Bank
present case, wherein the respondent locker holder claimed that
his locker was tampered with and broken open, and valuables
were subsequently lost, due to the negligence of the bank. The
bank not only disputed the value of jewellery kept inside the
locker, but also denied any negligence in the breaking open of the
locker. The locker holder had only produced an affidavit in
respect of the value of the jewellery claimed by him. Hence the
National Commission held that it is appropriate that both these
issues should be remitted for determination in a civil suit in a
competent civil court, after adducing of elaborate evidence on
both sides.
8.9 In the recent case of
Mamta Chaudaha v. Branch
20
Manager/Head Manager, State Bank of India , the National
Commission again observed that the appellant locker holders had
not produced any evidence apart from a standard affidavit to
prove that they had kept a specified quantity of gold ornaments
inside the bank locker. Further, there was no evidence of forcible
20
(2020) 1 CPJ 276 (NC).
24
entry to the locker. Hence the complaint for recovery of value of
the ornaments was dismissed.
8.10 In light of the aforementioned conflicting decisions of the
National Commission, we find that the approach adopted by the
National Commission in the impugned judgment is the correct
approach. In the present case, the Respondent bank has not
disputed their negligence in breaking open the locker in spite of
clearance of rental dues by the Appellant. However, the number
of items originally deposited by the Appellant inside the locker is
a contested fact. Hence, we do not propose to record any
conclusions on whether the Appellant locker holder in the
present case is entitled to claim return or recovery of the value of
the ornaments alleged to have been deposited by him. We are in
agreement with the findings in the impugned judgment to the
extent that the Appellant must file a separate suit before the
competent civil court for seeking this relief and for proving that
the aforesaid items were actually in the custody of the bank. This
is especially inasmuch as the contents of the locker are disputed
by the Respondent bank. Hence it is clarified that all questions of
fact and law are left open before the civil court to decide on the
25
merits of the case, including as to whether the law of bailment is
applicable, or any other law as the case may be.
II. Separate Duty of Care of the Bank with regard to Locker
Management
9. As discussed supra, imposition of liability upon the bank
with respect to the contents of the locker is dependent upon
provision and appreciation of evidence in a civil suit for such
purpose. However, this does not mean that the Appellant in the
present case is left without any remedy. Banks as service
providers under the earlier Consumer Protection Act, 1986, as
well as the newly enacted Consumer Protection Act, 2019, owe a
separate duty of care to exercise due diligence in maintaining and
operating their locker or safety deposit systems. This includes
ensuring the proper functioning of the locker system, guarding
against unauthorized access to the lockers and providing
appropriate safeguards against theft and robbery. This duty of
care is to be exercised irrespective of the application of the laws
of bailment or any other legal liability regime to the contents of
the locker. The banks as custodians of public property cannot
leave the customers in the lurch merely by claiming ignorance of
the contents of the lockers.
9.1 In this regard, we may refer to the observations made by the
26
National Commission in the decisions discussed in Part I of our
opinion. In (supra), in addition to
Punjab National Bank
directing return of the cost of the ornaments lost, the National
Commission also made a separate finding on the negligence of
the bank in maintaining the security and safety of the locker:
“4. The last and the most important question is
whether the appellant Bank has been guilty of
negligence in ensuring the security and safety of the
locker. The State Commission has taken adverse
notice of the fact that the appellant Bank did not
probe departmentally when the locker had been
found open on the 9th June, 1988and treated the
matter as closed so far as the Bank is concerned. It
was content with lodging a report with the police. It is
a matter of common knowledge, the Master Key of the
locker is with the Bank; the locker can be opened
only with the Master Key and the Key with the locker
holder. The mechanism is, however, such that the
locker must get closed, if the locker holder takes out
his/her key. Further, a certificate is recorded by the
custodian of the Bank that all the lockers operated
during a day have been checked and found properly
locked. Such a certificate was also recorded on the
st
21 April, 1988. The State Commission, therefore,
come to the conclusion that the Bank was negligent,
in ensuring the security of the locker with the result
that it was found on the 9th June, 1988 to have been
opened unauthorized. For this the State Commission
has held that the Bank is squarely responsible and
therefore liable to make good the loss suffered by the
respondent complainant. This Commission fully
concurs with the findings of the State Commission.”
(emphasis supplied)
Accordingly, the bank was ordered to pay separate costs of
Rs 3,500/ by way of compensation to the locker holder.
27
9.2 In (supra) the bank negligently
Mahendar Singh Siwach
allowed a third party, who was the previous allottee of the locker,
to break 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 required formalities with respect to change of
allotment from the third party to the current allottee, i.e., the
appellant. The National Commission arraigned the gross
deficiency in service committed by the bank as follows:
“…We find that the record itself proves gross
negligence and deficiency in service on the part of the
opposite party Bank in rendering service. Firstly,
O.P.'s argument is that fraud committed by Mr.
Ramendra Singh Grover, the third party in removing
the contents of the locker comes under criminal
jurisdiction, has no relevance as regards enforcement
of civil liability against the opposite party Bank under
Consumer Protection Act. There is no other valid
argument given on behalf of the bank except to
contend that they did not know the details of the
contents of the locker and hence the Bank cannot be
made liable. The Bank officials admitted their mistake
and stated that they are liable to compensate for the
same. It is also interesting to see the evidence
produced on record, i.e. an extract from the order of
the Learned Sessions Judge, Meerut dated 22.4.1996
granting bail to Mr. Grover which is reproduced
hereunder:
“It appears that the alleged crime could not have been
committed without the connivance of the bank
authorities. If the locker in question was allotted to the
applicant in the year 1978, it is not clear how it could
be allotted to Mahendra Singh Siwach in the year
28
1979. Further, when Mahendra Singh Siwach has
been operating the locker for all these years having his
account No. 284 it is not understandable how the
Bank could without verifying from record, accept the
request of the applicant that the locker be broken open
as the key had been lost. It was necessary for the
bank authorities to have referred to the bank record
and should have also intimated Mahendra Singh
Siwach about this request of the applicant. Not only
this, the bank authorities in the
circumstances mentioned above should
have prepared an inventory of the articles and
have
should got them valued before handing over
the same to the applicant . It does not appear that
the police has taken any action against the concerned
delinquent bank official. The applicantaccused claims
that he was the owner of the property kept in the
locker and the locker belonged to him. In these
circumstances, when no action has been taken against
the bank authorities, I think it proper to release the
applicant also on bail.
xxx
It is very strange that the opposite party has not
referred to the duties cast on them under their own
instruction manual which is on the guidelines of the
Reserve Bank of India to support their case. Similar
Manual of Instructions of United Commercial Bank
on the guidelines of Reserve Bank of India filed by the
Complainant is reproduced hereunder:
“Maintenance of Record
6.1 Locker Register (Form G 126)
This Register should be maintained lockerwise in
serial order so as to facilitate locating the details of the
hirer from the locker number. All the details such as
the name(s), their addresses, operational instructions,
rent paid, etc., should be recorded. The name(s) of the
29
hirer(s) should be indexed in the Register according to
alphabetical order .
6.4 Locker Key Register
The branch should also maintain a Locker Key
Register. This should be maintained keywise to
lockerwise and lockerwise to keywise so as to
facilitate tracing the number of Locker from the Key
number and tracing the number of Key from the Locker
number. Moreover, when the locks of the lockers are
interchanged, such changes should be immediately
recorded in the Locker Key Register. It should be
marked ‘Strictly Private’ and should be kept in
personal custody of Custodian of locker cabinets. A
suggested proforma of Locker Key Register 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
in this Register. Date and time of operation should also
be recorded therein .
Branch should also maintain a pass book to keep
6.6
a record of total number of Lockers hired and number
of Lockers surrendered so that it is possible to find out
at a particular time the number of Lockers let out and
number of Lockers lying vacant .
At the time of half yearly closing, the stock of keys on
hand should be verified in reference to Lockers lying
.
vacant
12.3.1 Breaking Open of Locker Due to Loss of
Key
30
When intimation has been received from hirer(s) about
loss of key, the following procedure should be adopted
for breaking open the Locker :—
(a) An application should be obtained from hirer(s)
requesting for breaking open the Locker .
(b) The charges for breaking open the Locker should be
realized from the hirer in advance and kept in Sundry
Creditors Account .
(c) An appointment should be made with the agents of
the makers of lockers cabinet, to send their mechanic
to drill open the Locker in consultation with the hirer(s) .
Locker should be broken open in the presence of the
hirer(s), the Manager, Accountant and Custodian of the
locker cabinet, and one respectable witness. A suitable
remark about breaking open of Locker should be made
in Locker Register, Renewal Diary and Specimen
Signature Card .
xxx
The procedure laid down by the Reserve Bank of India
guidelines has been completely flouted by the
opposite party by not maintaining the locker register,
locker key register, nonpayment of rent dues and
lastly the procedure that should be adopted for
breaking open a locker etc.”
(emphasis supplied)
9.3 In Mamata Chaudaha (supra), though the National
Commission dismissed the complaint on the facts of that case, it
noted that the relationship between the bank and the locker
holders, who are also the account holders of the bank, will be
that of a service provider and consumer.
31
10. We may also refer to the circulars which the RBI has issued
on this subject from time to time. The 2007 Circular (supra) has,
inter alia, provided the following recommendations for facilitating
easy and safe operation of lockers:
“1.4 Banks are also advised to give a copy of the
agreement regarding operation of the locker to the
lockerhirer at the time of allotment of the locker.
2.1 Operations of Safe Deposit Vaults/Lockers
Banks should exercise due care and necessary
precaution for the protection of the lockers provided
to the customer. Banks should review the systems in
force for operation of safe deposit vaults / locker at
their branches on an ongoing basis and take
necessary steps. The security procedures should be
welldocumented and the concerned staff should be
properly trained in the procedure. The internal
auditors should ensure that the procedures are
strictly adhered to.
xxx
2.2 (ii) Where the lockers have not been operated for
more than three years for medium risk category or
one year for a higher risk category, banks should
immediately contact the locker hirer and advise him
to either operate the locker or surrender it. This
exercise should be carried out even if the locker hirer
is paying the rent regularly. Further, the bank should
ask the locker hirer to give in writing, the reasons
why he/she did not operate the locker. In case the
locker hirer has some genuine reasons as in the case
of NRIs or persons who are out of town due to a
transferable job etc., banks may allow the locker hirer
to continue with the locker. Further, banks should
ask the locker hirer to give in writing, the reasons
why he/she did not operate the locker. In case the
32
lockerhirer has some genuine reasons as in the case
of NRIs or persons who are out of town due to a
transferable job etc., banks may allow the locker hirer
to continue with the locker. In case the lockerhirer
does not respond nor operate the locker, banks
should consider opening the lockers after giving due
notice to him…
(iii) Banks should have clear procedure drawn up in
consultation with their legal advisers for breaking
open the lockers and taking stock of inventory . ”
(emphasis supplied)
Hence the RBI had issued clear directions as far back as in
2007 imposing duty of care in respect of protection of the bank
lockers and mandating transparency vis a vis the locker holder in
allotment and breaking open of the lockers. However, it has been
left to the discretion of the individual banks to formulate the
exact procedures for fulfilling this duty of care. The banks are
likely to draft the locker hiring agreements in a manner which is
favourable to their interests, including clauses to the effect that
the lockers are to be operated at the consumers’ own risk.
10.1. On 1.07.2015, the RBI issued a Master Circular No.
59/201516 on Customer Service in Banks which included
updated guidelines on locker operation. However, these were
more or less similar to what has already been stated in the 2007
Circular. Further, neither of the aforementioned Circulars
provide any guidance on the degree of care that needs to be
33
exercised by the bank for safeguarding the lockers or detail the
exact steps that should be taken in this regard.
11. It appears to us that the present state of regulations on the
subject of locker management is inadequate and muddled. Each
bank is following its own set of procedures and there is no
uniformity in the rules. Further, going by their stand before the
consumer fora, it seems that the banks are under the mistaken
impression that not having knowledge of the contents of the
locker exempts them from liability for failing to secure the lockers
in themselves as well. In as much as we are the highest Court of
the country, we cannot allow the litigation between the bank and
locker holders to continue in this vein. This will lead to a state of
anarchy wherein the banks will routinely commit lapses in proper
management of the lockers, leaving it to the hapless customers to
bear the costs. Hence, we find it imperative that this Court lays
down certain principles which will ensure that the banks follow
due diligence in operating their locker facilities, until the
issuance of comprehensive guidelines in this regard.
12. Thus, we emphasize that irrespective of the value of the
articles placed inside the locker, the bank is under a separate
34
obligation to ensure that proper procedures are followed while
allotting and operating the lockers:
(a) This includes maintenance of a locker register and
locker key register.
(b) The locker register shall be consistently updated in
case of any change in allotment.
(c) The bank shall notify the original locker holder
prior to any changes in the allotment of the locker,
and give them reasonable opportunity to withdraw the
articles deposited by them if they so wish.
(d) Banks may consider utilizing appropriate
technologies, such as blockchain technology which is
meant for creating digital ledger for this purpose.
(e) The custodian of the bank shall additionally
maintain a record of access to the lockers, containing
details of all the parties who have accessed the lockers
and the date and time on which they were opened and
closed.
(f) The bank employees are also obligated to check
whether the lockers are properly closed on a regular
basis. If the same is not done, the locker must be
35
immediately closed and the locker holder shall be
promptly intimated so that they may verify any
resulting discrepancy in the contents of the locker.
(g) The concerned staff shall also check that the keys
to the locker are in proper condition.
(h) In case the lockers are being operated through an
electronic system, the bank shall take reasonable
steps to ensure that the system 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. The relevant rules under the
Information Technology Act, 2000 will be applicable in
this regard.
(j) The bank has the power to break open the locker
only in accordance with the relevant laws and RBI
regulations, if any. Breaking open of the locker in a
manner other than that prescribed under law is an
illegal act which amounts to gross deficiency of service
on the part of the bank as a service provider.
(k) Due notice in writing shall be given to the locker
holder at a reasonable time prior to the breaking open
36
of the locker. Moreover, the locker shall be broken
open only in the presence of authorized officials and
an independent witness after giving due notice to the
locker holder. The bank must prepare a detailed
inventory of any articles found inside the locker, after
the locker is opened, and make a separate entry in the
locker register, before returning them to the locker
holder. The locker holder’s signature should be
obtained upon the receipt of such inventory so as to
avoid any dispute in the future.
(l) The bank must undertake proper verification
procedures to ensure that no unauthorized party gains
access to the locker. In case the locker remains
inoperative for a long period of time, and the locker
holder cannot be located, the banks shall transfer the
contents of the locker to their nominees/legal heirs or
dispose of the articles in a transparent manner, in
accordance with the directions issued by the RBI in
this regard.
37
(m) The banks shall also take necessary steps to
ensure that the space in which the locker facility is
located is adequately guarded at all times.
(n) A copy of the locker hiring agreement, containing
the relevant terms and conditions, shall be given to the
customer at the time of allotment of the locker so that
they are intimated of their rights and responsibilities.
(o) The bank cannot contract out of the minimum
standard of care with respect to maintaining the safety
of the lockers as outlined supra.
13. In the present case, it is undisputed that the Respondent
Bank inadvertently broke the Appellant’s locker, without any just
or reasonable cause, even though he had already cleared his
pending dues. Moreover, the Appellant was not given any notice
prior to such tampering with the locker. He remained in the dark
for almost a year before he visited the bank for withdrawing his
valuables and enquired about the status of the locker.
Irrespective of the valuation of the ornaments deposited by the
Appellant, he had not committed any fault so far as operation of
the locker was concerned. Thus, the breaking open of the locker
was in blatant disregard to the responsibilities that the bank
38
owed to the customer as a service provider. The alleged loss of
goods did not result from any force majeure conditions, or acts of
third parties, but from the gross negligence of the bank itself. It is
case of gross deficiency in service on the part of the bank.
14. Thus, looking to the facts and circumstances of the case, we
deem it appropriate to impose costs of Rs. 5,00,000/ on the
Bank which should 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 they are still in service. If the erring
officers have already retired, the amount of costs should be paid
by the Bank. Additionally, the Appellant shall be paid Rs.
1,00,000/ as litigation expense.
15. Before concluding, we would like to make a few observations
on the importance of the subject matter of the present appeal.
With the advent of globalization, banking institutions have
acquired a very significant role in the life of the common man.
Both domestic and international economic transactions within
the country have increased multiple folds. Given that we are
steadily moving towards a cashless economy, people are hesitant
to keep their liquid assets at home as was the case earlier. Thus,
as is evident from the rising demand for such services, lockers
39
have become an essential service provided by every banking
institution. Such services may be availed of by citizens as well as
by foreign nationals. Moreover, due to rapid gains in technology,
we are now transitioning from dual keyoperated lockers to
electronically operated lockers. In the latter system, though the
customer may have partial access to the locker through
passwords or ATM pin, etc., they are unlikely to possess the
technological knowhow to control the operation of such lockers.
On the other hand, there is the possibility that miscreants may
manipulate the technologies used in these systems to gain access
to the lockers without the customers’ knowledge or consent. Thus
the customer is completely at the mercy of the bank, which is the
more resourceful party, for the protection of their assets.
In such a situation, the banks cannot wash off their hands
and claim that they bear no liability towards their customers for
the operation of the locker. The very purpose for which the
customer avails of the locker hiring facility is so that they may
rest assured that their assets are being properly taken care of.
Such actions of the banks would not only violate the relevant
provisions of the Consumer Protection Act, but also damage
40
investor confidence and harm our reputation as an emerging
economy.
15.1 Thus it is necessary that the RBI lays down comprehensive
directions mandating the steps to be taken by banks with respect
to locker facility/safe deposit facility management. The banks
should not have the liberty to impose unilateral and unfair terms
on the consumers. In view of the same, we direct the RBI to issue
suitable rules or regulations as 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 upon the banks which are
providing locker or safe deposit facilities. It is also left open to the
RBI to issue suitable rules with respect to the responsibility owed
by banks for any loss or damage to the contents of the lockers, so
that the controversy on this issue is clarified as well.
16. The Appeal is disposed of accordingly.
................................................J.
(MOHAN M. SHANTANAGOUDAR)
...............................................J.
(VINEET SARAN)
NEW DELHI
FEBRUARY 19, 2021
41