Making safe deposit lockers safer

As the name indicates, the safe deposit lockers in banks are supposed to safeguard the contents kept in the lockers. But if the number of complaints filed by customers in the Consumer Forums about loss of valuables kept in the bank lockers it appears that the very nomenclature appears to be a misnomer. Despite paying rent for the facility, consumers have found valuables missing. Yet they had no recourse to legal remedy as banks took shelter under law relating to bailment.

Consumer Forums, which decide complaints on summary trial basis, could not provide relief. Besides, consumers could not prove as to what they had kept in the lockers. Queries under the Right to Information Act have also revealed that banks have no liability for loss or damage of articles kept in the lockers.

Thanks to Supreme Court, in the case of Amitabha Dasgupta vs. Union Bank of India & Others it has decided that Banks are liable for their negligence in safeguarding the contents in the lockers. In this case, the customer was holding a locker in Union Bank of India, Kolkata Branch, since 1970s. He had kept seven ornaments in a sealed envelope in the locker. In June 1995, the customer went to collect the ornaments and found five of them missing. On questioning, the bank admitted to having inadvertently broken open the locker, though there were no outstanding dues and apologised for the same. The bank also said that the locker had only two ornaments.

Dasgupta filed a complaint in the District Consumer Forum, which directed the bank to return the seven ornaments that were in the locker or pay Rs 3 lakhs towards cost of jewelry and Rs 50,000 as compensation towards mental agony, harassment and cost of litigation. The appeal by the bank, the State Commission modified the District Forum’s order and reduced the compensation to Rs 30,000. With regard to the contents of the locker it said that the issue can only be decided upon elaborate evidence and was directed to approach the civil court for adjudication. Even the National Commission accepted the State Commission’s view. As a result, the case was taken to the Supreme Court.

In its 41-page judgment, the Supreme Court has observed that ‘there has 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’. Referring to several foreign and Indian cases and also the circulars with regard to safe deposit lockers issued by Reserve Bank of India, it said that ‘a combination of the bank’s key and the locker holder’s key is required for opening a locker, providing neither with complete access and such being the case the question arises whether the modern-day bank locker system would be guided by the laws of bailment.

In this case, the bank did not dispute the fact that they were negligent in breaking open the locker in spite of clearance of dues by the customer. The dispute was only with regard to number of ornaments. The Supreme Court did not go into this dispute and agreed that the customer must file a suit in a civil court. However, the SC observed that this does not mean that the customer is left without any remedy. It said that ‘banks are service providers under the Consumer Protection Act 1986 and 2019, and owe a duty of care to exercise due diligence in maintaining and operating their locker or safety deposit systems.

The Supreme Court has found that the present state of regulations on the subject is inadequate and muddled. Each bank is following its own set of procedures and there is no uniformity in the rules. It has said that ‘it seems that the banks are under the mistaken impression that not having knowledge of the contents of the locker exempts them from any liability for failing to secure the lockers in themselves as well’.

The best part of the Apex Court’s judgment is when it says ‘as 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 lockers, leaving it to the hapless customers to bear the costs’. It has said that the banks cannot wash off their hands and claim that they bear no liability towards their customers. Such actions will only violate the provisions of the CPA and also damage investor confidence. Having said this, the SC has directed the RBI to issue suitable rules and regulations about safe deposit lockers.

Further, the Court has directed the bank to pay to the customer Rs 5 lakhs as compensation and Rs 1 lakh as litigation expenses. The beauty of the judgment lies in the fact that this amount is to be recovered from the salary of the erring official.

(The writer is Founder of Consumer Rights Education and Awareness Trust, Bengaluru)