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Bank owes independent duty of care to its customers for diligent management and operation of locker

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. (Para 9)

Amitabha Dasgupta v. United Bank of India & Ors.

Civil Appeal No. 3966 of 2010.

Decided on February 19, 2021.

A two-judge bench of the Supreme Court comprising of Justice Vineet Saran and Justice Mohan M Shantanagoudar decided the present case. The Court allowed the appeal and ordered that the appellant must be paid Rs 5,00,000 as compensation from the bank.

The Appellant's mother (now deceased), took a locker on rent from the Respondent's Bank, with the appellant being its joint holder. On 27.05.1955, the Appellant went to the bank to operate the locker and was informed that due to non-payment of the locker rent for the period of 1993-1994, it was broken open by the bank and all the items in the locker were within the possession of the bank and it was allocated to another user. The Appellant sent a communication to Respondent No.1, claiming that the opening of the locker was done illegally as he had already paid the rent of the locker long before it was broken open. The Chief Manager, Respondent No.3, apologized to the appellant.

When the appellant went to collect the contents of the locker, he found only two out of the seven ornaments, that had been deposited in the locker in a non­-sealed envelope. Respondent No.1 stated that there were only 2 ornaments when the locker was broken in the presence of an independent witness, which led to the Appellant filing a consumer complaint before the District Consumer 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 jewellery, and compensation for damages suffered by the Appellant. The District Forum allowed the appeal. The State Commission on appeal reduced the amount of compensation and stated that Consumer Forum only has jurisdiction to conduct a summary trial. The Revision Petition against the order of the State Commission was dismissed vide the impugned order, and 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, which aggrieved the appellant and the present case is before this Court.

Based on a perusal of the record, the following issues arise for consideration in the present appeal: 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?

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 non­ compliance with such duty? (Para 4)

The learned Counsel for the Appellant submitted that the contents of a locker are exclusively known only to the locker holder and relied upon the judgement of the Charan Singh v. Healing Touch Hospital & Ors (2000) 7 SCC 668, and stated that compensation must be awarded to bring a qualitative change in the attitude of the service provider.

On the other hand, the learned Counsel for the Respondents argued that the National Commission’s holding does not warrant interference and the compensation for the loss of jewellery can only be awarded after appreciation of evidence by the trial court.

The Court stated 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 in as much 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 merits of the case, including as to whether the law of bailment is applicable, or any other law as the case may be. (Para 8)

The Court laid down certain principles for banks to follow while operating locker facilities, until issuance of guidelines, since the present state of regulations on the subject of locker management is inadequate and muddled. It emphasized 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.

The Court held that this case is of gross deficiency in service on the part of the bank.

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. (Para 13)

Finally, the Court stated:

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. (Para 15.1)

The Court dismissed the appeal.

Utkarsh Kumar Jayaswal