Consumer Protection Act, 1986 – Deficiency in service – Dispute w.r.t contents of locker of the appellant with respondentBank which it broke open inadvertently – District Commission allowed the appellant’s complaint – State Commission inter alia accepted the finding on deficiency of service, however held that Consumer forum has limited jurisdiction on recovery of the locker’s contents and directed appellant to approach civil court – Revision petition – Dismissed by NCDRC – On appeal, held: Respondent has not disputed their negligence in breaking open the locker in spite of clearance of rental dues by the appellant – But the number of items originally deposited by the appellant inside the locker is a contested fact – Appellant must file a separate suit before the competent civil court for seeking relief as to whether he is entitled to claim return/recovery of value of the ornaments allegedly deposited by him and for proving that the said items were actually in the custody of the bank – However, breaking open of the locker was in blatant disregard to the responsibilities that the bank owed as a service provider – It is gross deficiency in service on the part of the bank – Bank to pay costs of Rs.5,00,000/- as compensation and Rs.1,00,000/- as litigation expense to the appellant – Contract Act, 1872 – ss.148, 149.
Consumer Protection:
Bank and locker holder – Relationship between – Indian Law vis-à-vis foreign law – Discussed – Contract Act, 1872 – ss.148,
149. Locker management – Separate duty of care of Banks – Discussed – Consumer Protection Act, 1986 – Consumer Protection Act, 2019.
Directions by Supreme Court:
Locker management – Due diligence by Banks – Procedures laid down – Information Technology Act, 2000.
Locker facility/Safe deposit facility management – Direction to RBI – Held: RBI to issue suitable rules or regulations mandating the steps to be taken by banks with respect to locker facility/safe deposit facility management within six months from the date of the present judgment – Until such Rules are issued, the principles stated herein, to remain binding upon the banks providing locker or safe deposit facilities – Consumer Protection.
Disposing of the appeal, the Court
HELD 1.1 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 express or implied contract for delivery; (iii) delivery should be for accomplishment of a purpose. There is no substantive domestic legislation or sector specific 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. However, what has been commonly contested in various High Court judgments guiding the field 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, 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. These questions cannot be adjudicated upon in the course of proceedings before the consumer fora. This aspect must be evaluated by the civil court, upon appreciation of evidence led by the parties. [Paras 6, 7, 8.6][915-A-B; 922-G-H; 923-A-B] Jagdish Chandra Trikha v. Punjab National Bank AIR 1998 Delhi 266; National Bank of Lahore Ltd. v. Sohan Lal Saigal AIR 1962 P H 534; Mohinder Singh Nanda v. Bank of Maharashtra 1998 ISJ (Banking) 673; Atul Mehra v. Bank of Maharashtra AIR 2003 P&H 11;
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); Pune Zilla
Madyawarti Sahakari Bank Limited v. Ashok Bayaji Ghogare 2015 SCC OnLine NCDRC 2832 – referred
to.
1.2 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. No conclusions are being recorded 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. This Court is 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 merits of the case, including as to whether the law of bailment is applicable, or any other law as the case may be. [Para 8.10][924-B-E]
2.1 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. 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-à-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. On 1.07.2015, the RBI issued a Master Circular No. 59/2015-16 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 exercised by the bank for safeguarding the lockers or detail the exact steps that should be taken in this regard. [Paras 9, 10, 10.1][924-F-H; 925-A; 930-A-D]
2.2 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 being the highest Court of the country, this Court 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, it is found 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. 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. Procedures enumerated. [Paras 11, 12][930-D-G]
2.3 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 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. Costs of Rs. 5,00,000/- imposed on the Bank to be paid to the Appellant as compensation. Additionally, the Appellant be paid Rs. 1,00,000/- as litigation expense. [Paras 13, 14] [932-F-H; 933-A-B]
2.4 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. 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 12 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. [Para 15.1][934-A-C]
Charan Singh v. Healing Touch Hospital & Ors.(2000)
7 SCC 668 : [2000] 3 Suppl. SCR 337 – referred to. UCO Bank v. RG Srivastava 1996 (1) CPR 97; Mamta Chaudaha v. Branch Manager/Head Manager, State Bank of India (2020) 1 CPJ 276 (NC) – referred to.
Roberts v. Stuyvesant Safe Deposit Co. (1890) 123 N.Y 57; Emma M. Lockwood v. The Manhattan Storage & Warehouse Company 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); Cussen v. Southern Cal. Savings Bank 65 P. 1099 (1901); Blair v. Riley
175 N.E.R 210; National Safe Deposit Company v. Stead, Attorney General 95 N.E.R. 973 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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