Amitabha Dasgupta vs United Bank Of India . on 19 February, 2021


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Supreme Court of India

Amitabha Dasgupta vs United Bank Of India . on 19 February, 2021

Author: Mohan M. Shantanagoudar

Bench: Mohan M. Shantanagoudar, Vineet Saran

                                                                          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




                                            JUDGMENT

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

Revision Petition filed against the judgment of the State

Consumer Disputes Redressal Commission (‘State Commission’)
Signature Not Verified

Digitally signed by
GULSHAN KUMAR
ARORA

dated 12.10.2004.

Date: 2021.02.19
15:26:24 IST
Reason:

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 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

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 (G­

125)

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

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 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

41



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