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TMI Blog2021 (2) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Separate Duty of Care of the Bank with regard to Locker Management - HELD THAT:- The 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 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 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch 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 1993-1994. 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 meaning since the dues were subsequently paid by the Appellant on 30.06.1994. 2.3 On 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder 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. (2000) 7 SCC 668 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 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 considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 50 N.Y.S 974 (N.Y. 1898) Mayer v. Brensigner, 54 N.E 159 (1899) National Safe Deposit Co. v. Stead. 95 N.E. 973 (1911). In Cussen v. Southern Cal. Savings Bank, 65 P. 1099 (1901) 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to guide the relationship between the bank and the locker 8https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=3196. 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). https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=3422 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 Informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, the locker service provided by the banks has evolved since the pre-independence 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, AIR 2003 P H 11 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 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. Consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serving 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) 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 specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 991 (1) C.P.C. 592 and Mahender Singh Siwach v. Punjab and Sind Bank, (2006) 4 CPJ 231 (NC) 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, 2015 SCC OnLine NCDRC 2832 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 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 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout 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 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 wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otection 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 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 ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber 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 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rer 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 guid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imated 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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