Banks As Service Providers Owe A Distinct Duty Of Care In Maintaining & Operating Locker Facility: Supreme Court Issues Guidelines For Locker Regulations
The Top Court while hearing an appeal against judgment of NCDRC dated 18.12.2008, laid down principles to be adhered by banks operating locker facilities and further observed, “Banks as custodians of public property cannot leave the customers in the lurch merely by claiming ignorance of the contents of the lockers.”
A Division Bench of Justice Mohan M. Shantanagoudar and Justice Vineet Saran, directing RBI to issue suitable rules concerning locker facility in banks, held, “… 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.”
- Whether 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 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?
Relief with respect to the contents of the locker
Court granted liberty to file a suit before the Civil Court proving that the contents of locker were in the custody of bank, as the said fact is disputed as per the findings of the Consumer Forum.
Separate Duty of Care of the Bank with regard to Locker Management
Court observed that the imposition of liability upon the Bank in the instant case would depend on the Trial in Civil Court. However, this cannot leave the appellant without any remedy. “Banks as service providers under the earlier Consumer Protection Act, 1986 and the newly enacted Act of 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 and providing appropriate safeguards against theft and robbery. This duty of care is to be exercised irrespective of the application of laws of bailment or any other legal liability regime to the contents of the locker”, the bench said.
- Maintenance of a locker register and locker key register.
- Locker key register to be consistently updated in case of any change in allotment.
- Bank to 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.
- Banks to consider utilizing appropriate technologies such as block chain meant for creating digital ledger for this purpose.
- Custodian of bank to additionally maintain a record of access to the lockers, containing details of all the parties who have accessed the lockers and date/time on which they opened and closed.
- Bank employees also obligated to ensure rightful access, including open/close, from time to time.
- Concerned staff to check if keys to the locker are in proper condition.
- In case it is operated through electronic means, the Bank should ensure that the system is protected against hacking and breach of other security practices.
- Personal Sensitive Data, including Biometrics cannot be shared with third parties.
- Bank has the authority to break open the locker only in accordance with relevant RBI regulations.
- 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 in the presence of the authorized officials and independent witness after giving due notice. An inventory of articles found must be made.
- Bank must undertake proper verification procedures to ensure that no unauthorized party gains access to the locker.
- Banks shall also take necessary steps to ensure that the space in which the locker facility is located is adequately guarded at all times.
- Copy of locker hiring agreement, containing relevant terms and conditions to be given to the customer at the time of allotment.
- Banks cannot contract out the minimum standard of care with respect to maintain the safety of the lockers
Court imposed costs of Rs 500000 on the Bank, directing it to be paid as a compensation to the Appellant from the salary of the erring officers.
As a concluding remark, the Court added that, As we are moving towards a technologically advanced era, where there are chances of miscreants to manipulate and gain access wrongfully, customers being completely left at the mercy of the banks as a more resourceful party for protection of assets, Banks cannot wash of their hands and claim that they bear no liability towards their customers for the operation of the locker.
Case Title: Amitabh Dasgupta v. United Bank of India & Ors. | CIVIL APPEAL NO. 3966 of 2010.