It is common knowledge that all consumers have maximum faith in Banks when they
park their hard earned money in the Bank Accounts/ Fixed Deposits or their
jewellery, cash & valuables in Bank Lockers. There are regular news/reports of
theft of valuables in the Bank Lockers in the event of Loot/ Dacoity or
negligence of the Bank Officials in maintaining safety norms of lockers.The Apex
Court has recently had an occasion to deal with these relevant issues and
legally address them. The Apex Court on February 19, 2021 in the case of Amitabha
Dasgupta vs United Bank Of India
(Civil Appeal No. 3966 of 2010) addressed these
The brief facts of the case are that the Appellant/Complainant had a bank
locker in the Deshapriya Park, Kolkata Branch as a joint holder with his mother.
On 27.05.1995, the Appellant visited the said Bank to operate the locker and
deposit the locker rent wherein he was informed that the Bank had broken open
his locker on 22.09.1994 for nonpayment of rent dues for the period of 1993-
It was also transpired that the said locker had been subsequently reallotted to another customer. The Appellant sent written communications to the
Bank claiming that such breaking of his locker by the Bank was illegal since he
had cleared dues for 1994-1995 on 30.07.1994 much prior to the breaking of the
locker. The Chief Manager admitted that he had inadvertently broken open the
locker although there were no outstanding dues towards locker rent and
apologized for the same.
When the Appellant went to collect the contents of the
locker, he found only one pair of bangles and one pair of ear pussa out of the
seven ornaments that had been kept in the locker. However, the Bank contended
that only those two ornaments were found in the Appellant's locker when it was
broken open as is evident from the inventory prepared by Bank when the locker
was broken open in the presence of an independent witness.
The Appellant filed a
consumer complaint before the District Consumer Forum pleading the Bank to
return the seven ornaments that were in the locker failing which to pay Rs. 3
lacs towards the cost of jewellery and to award compensation for damages
suffered by the Appellant. The District Forum allowed the complaint and held the
Bank liable for deficiency of service and directed the Bank to return the entire
contents of the locker, or alternatively pay the Appellant Rs. 3,00,000/
towards cost of the jewellery and also Rs. 50,000/ as compensation for mental
agony, harassment and cost of litigation.
The Bank filed an appeal against the award of the District Consumer Forum
before the State Commission which accepted the District Commission's findings on
the question of deficiency of service but reduced the compensation from Rs.
50,000/ to Rs. 30,000/. However, with respect to recovery of the cost of the
ornaments the State Forum observed that the Consumer Forum was not equipped to
undertake this evaluation since it only has jurisdiction to conduct a summary
Accordingly, the State Commission directed the present Appellant to
approach the civil court for adjudication on the contents of the locker. The
said order of the State Commission was upheld by the National Commission which
accepted the State Commission's finding on the limited jurisdiction of the
Consumer Forum to adjudicate on the recovery of the contents of the locker.
The Appellant feeling aggrieved by the order of the National Commission filed an
appeal against the verdict of the National Commission in the Apex Court pleading
that the case be not relegated to the civil court for adjudication on the issue
of the contents of the locker. It was also pleaded that exemplary
compensation/damages be awarded to the appellant to being in a qualitative
change in the attitude of the service provider as per the dictum of the Apex
Court in Charan Singh v. Healing Touch Hospital & Ors
.(2000) 7 SCC 668.
The questions posed before the Apex Court are as follows:
- 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?
- Whether the Bank owes an independent duty of care to its customers with
respect to diligent management and operation of the locker, separate from
- Whether compensation can be awarded for noncompliance with such duty?
- Whether any relief with respect to the contents of the locker can be
There have a plethora of cases throughout the globe wherein there have been
disputes between banks and locker holders pertaining to loss of valuables placed
inside the locker. The Courts have univocally held that the laws of bailment can
only be applied when the court finds that the plaintiff had transferred
possession of the articles to the bank. Applying the relevant provisions under
the Indian Contract Act, 1872, the Apex Court has held that the law of bailment
is not applicable to the instant facts.
It is pertinent that there is no
substantive domestic legislation on the issue of responsibility of banks under
the laws of bailment for the loss of articles placed inside the locker. It is
relevant that in response to a Right to Information enquiry made in 2017, the
RBI and various public sector banks have clarified 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.
However, the RTI replies by certain Banks state 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 while some Banks state 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.
Some Banks state 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 are not to 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. Some Banks state that the liability in case
of theft/loss of valuables kept in its safety lockers depends upon the insurance
parameters of the bank policies taken for the contents of the lockers.
The Apex Court observed that 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.
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. Therefore the modern day
bank locker system cannot be guided by the laws of bailment.
The Apex Court
approved the dictum of Punjab & Haryana High Court in Mohinder Singh Nanda v.
Bank of Maharashtra
1998 ISJ (Banking)673 wherein 44 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
Later, 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 wherein the facts were identical to Mohinder Singh Nanda
The appellant locker holder 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. Consequently, the Bench opined that the provisions with respect to
bailment under the Contract Act would not apply.
It is relevant that the National Commission has, in the case of Punjab National
Bank, Bombay v. K.B. Shetty.
1991 (1) C.P.C. 592 & 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. In the case of Pune Zilla
Madyawarti Sahakari Bank Limited v. Ashok Bayaji Ghogare
2015 SCC OnLine NCDRC
2832, the National Commission had held that the affidavit of the locker holder
should ordinarily be accepted for proving the contents of the bank locker.
However in the case of National Commission in UCO Bank v. RG Srivastava
CPR 97 it was held that the dispute on the contents of the locker can only be
decided upon provision of elaborate evidence and the Consumer Forum is not
equipped to undertake this evaluation since it only has jurisdiction to conduct
a summary trial. In this case the Appellant/locker holder had claimed that their
locker had been 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 matter.
In the aforesaid circumstances, the National Commission remitted the matter to
the competent civil court to decide both issues after adducing of elaborate
evidence on both sides. In the recent case of Mamta Chaudaha v. Branch
Manager/Head Manager, State Bank of India,
(2020) 1 CPJ 276 (NC), the National
Commission observed that the appellant locker holder 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 and there was no evidence of
forcible entry to the locker and therefore dismissed the complaint for recovery
of value of the ornaments.
The Apex Court approved the later decisions of the National Commission wherein
the matters were relegated to the the competent Civil Court for adducing
relevant evidence & documentary proof of possession & loss of jewellery as the
Consumer Forum proceedings are summary proceedings wherein elaborate evidences
cannot be adduced. In the present case, the Respondent bank has admitted their
negligence in breaking open the locker in spite of payment of rental dues by the
Appellant. However, the Court observed that the number of items originally
deposited by the Appellant inside the locker is a contested fact.
Apex Court did not do not record any conclusions on the claim for return or
recovery of the value of the ornaments alleged to have been deposited by him.
The Court ordered 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.
The Apex Court also dealt with the issue of Separate Duty of Care of the Bank
with regard to Locker Management and held Banks responsible for maintaining the
lockers and ensuring their safety and held thus:
"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."
The Apex Court was disappointed with the present state of regulations on locker
management of the Banks and termed the same as 'inadequate and muddled'. The
Court expressed discontent that every individual bank is following its own set
of procedures and there is no uniformity in the rules of all the banks. The
Court warned 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.
The Apex Court expressed fury at the state
of affairs & observed thus:
"......as we are the highest Court of the 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."
The Court set the following rules & procedures while allotting and operating the
- This includes maintenance of a locker register and locker key register.
- The locker register shall be consistently updated in case of any change
- 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.
- Banks may consider utilizing appropriate technologies, such as blockchain
technology which is meant for creating digital ledger for this purpose.
- 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.
- 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
- The concerned staff shall also check that the keys to the locker are in
- 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.
- 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.
- 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
- 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.
- 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.
- 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.
- 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.
- The bank cannot contract out of the minimum standard of care with
respect to maintaining the safety of the lockers as outlined supra.
Thus, the Apex Court summed up & held that 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 and the Bank grossly
erred in not having given any notice to the Appellant prior to such tampering
with the locker. The Court was irked by the fact that the Appellant 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. The Court observed that
the Appellant had not committed any fault so far as operation of the locker was
concerned & held thus:
"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."
The Court looking to the entirety of facts and circumstances of the case imposed
exemplary costs of Rs. 5,00,000/ on the Bank as compensation to the Appellant.
The Court ordered that the amount of costs/Compensation to 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 Court also awarded Rs. 1,00,000/ to be paid as litigation
The Court hailed the role of Banks in the modern economy and cautioned the Banks
to be more cautious & vigilant and observed thus:
"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."
The Apex Court finally directed the RBI to lay down comprehensive directions,
rules & regulations mandating the steps to be taken by banks with respect to
locker facility/safe deposit facility management within a period of six months
from the date of this judgment and issue suitable rules with respect to the
responsibility owed by banks for any loss or damage to the contents of the
lockers. This authoritative case should prove eye-opener for the careless banks
& its officials who show disregard to the valuable rights & privileges of the
Written By: Inder Chand Jain
Ph no: 8279945021, Email: [email protected]