Sunday, 21 February 2021

Supreme Court directions to the bank for the avoidance of mismanagement of bank locker of customer


 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

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


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

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.


(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.

 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3966 OF 2010

Amitabha Dasgupta  Vs United Bank of India


Author: MOHAN M. SHANTANAGOUDAR, J.

Dated: FEBRUARY 19, 2021

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

Revision Petition filed against the judgment of the State

Consumer Disputes Redressal Commission (‘State Commission’)

dated 12.10.2004.

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

1

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

that reminders for the payment of dues had been sent on

25.11.1993 and 23.02.1994. However, that these would have no

2

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

Respondent No. 3’s admission that the Bank had inadvertently

broken open the Appellant’s locker though there were no pending

3

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

Commission in UCO Bank v. RG Srivastava,1 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

jurisdiction to conduct a summary trial. Therefore, the Appellants

1 1996 (1) CPR 97.

4

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

relied on Charan Singh v. Healing Touch Hospital & Ors.2 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 First, Whether the Bank owes a duty of care to

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 Second, irrespective of the answer to the

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.

Stuyvesant Safe Deposit Co.,3 the defendant company

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.

The Manhattan 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 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’):

“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 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

Circular on SafeDeposit

Lockers (‘2006 Circular’).8 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

point in time, the RBI had recommended that the laws of bailment

ought to guide the relationship between the bank and the locker

8https://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

Circular).9 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 sea9

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

claim, while making the following observations:10

“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

National Bank.11 In this case, the appellants had, before the

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

Chandra Trikha (supra), the High Court found that there was

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.

Sohan Lal Saigal.12 In that case, the appellant bank had

provided locker service for the safe custody of valuables. The

12AIR 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

Court of Appeals of Ohio in Blair v. Riley13 and the Supreme

Court of Illinois in National Safe Deposit Company v. Stead,

Attorney General,14 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

13175 N.E.R 210.

1495 N.E.R. 973.

17

jewellery deposited inside the lockers so as to prove the extent of

loss they had suffered.

8.3 In Mohinder Singh Nanda v. Bank of Maharashtra,15

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

system in Atul Mehra v. Bank of Maharashtra,16 which

pertained to the same bundle of facts as in Mohinder Singh

Nanda (supra). The appellant locker holders filed a suit alleging

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

151998 ISJ (Banking) 673.

16AIR 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 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 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 Atul Mehra was sympathetic to the

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

Nanda (supra) and Atul Mehra (supra).

8.7 It is true that the National Commission has, in previous

decisions such as Punjab National Bank, Bombay v. K.B.

Shetty,17 and Mahender Singh Siwach v. Punjab and Sind

Bank,18 awarded the value of articles which have been stolen or

gone missing from bank lockers. Moreover, in Pune Zilla

Madyawarti Sahakari Bank Limited v. Ashok Bayaji

Ghogare,19 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 UCO Bank (supra), similar situation arose as in the

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

Manager/Head Manager, State Bank of India,20 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 Punjab National Bank (supra), in addition to

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

21stApril, 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 Mahendar Singh Siwach (supra) the bank negligently

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

should have 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 (G125)

Signature of the operator on Locker should be obtained

in this Register. Date and time of operation should also

be recorded therein.

6.6 Branch should also maintain a pass book to keep

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

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


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

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.


(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


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


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


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 13 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


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