UNITED BANK OF INDIA & ORS.
Civil Appeal No. 3966 OF 2010, Decided On February 19, 2021
Judges: Mohan M. Shantanagoudar & Vineet Saran JJ.
Facts: The Appellant’s (‘AD’) mother (since deceased) took a locker on rent the Respondent No. 1 (‘Bank/), AD was included as a joint holder of the locker. On 27.05.1995, the AD visited the Bank to operate the locker and deposit the locker rent. However, he was informed that the Bank had broken open his locker on 22.09.1994 for non-payment of rent dues for the period of 1993-1994.
Subsequently, AD filed a consumer complaint before the District Consumer Forum (‘District Forum’) calling upon the Bank to return the seven ornaments that were in the locker since, he was returned only 2 ornaments by the bank, as the bank claimed there were only 2 of those when the locker was broken; or alternatively pay Rs. 3,00,000/ towards the cost of jewellery, and compensation for damages suffered by the AD. The District Forum allowed the complaint and held the Bank liable for deficiency of service and was further, directed to return the entire contents of the locker, or alternatively pay AD Rs. 3,00,000/ towards cost of the jewellery and, Rs. 50,000/ as compensation for mental agony, harassment, and cost of litigation.
On appeal filed by the Bank, the State Commission (‘SC’) accepted the District Forum’s findings on the question of deficiency of service, though it reduced the compensation from Rs. 50,000/ to Rs. 30,000/. However, with respect to recovery of the cost of the ornaments, it observed that the dispute on the contents of the locker can only be decided upon provision of elaborate evidence and the Consumer Forum was not equipped to undertake this evaluation since it only has jurisdiction to conduct a summary trial.
The Revision Petition against the order of the SC was dismissed and the National Commission (‘NC’) by its judgment accepted the SC holding. The Supreme Court in appeal was in agreement with the findings in the judgment of the NC to the extent that the AD must file a separate suit before the competent civil court for seeking relief with regard to the contents of the locker and for proving that the said items were actually in the custody of the bank. Further, looking to the facts and circumstances of the case, the Supreme Court deemed it appropriate to impose costs of Rs. 5,00,000/on the Bank which was to be paid to the Appellant as compensation.
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?
The Supreme Court took note of the dominant view of courts around the globe that the bank is in the position of a bailee with respect to the goods placed inside the locker by the locker holder and observed that, before applying the laws of bailment, the court must first find on the facts of the case whether the plaintiff had transferred possession of the articles to the bank.
Further, the Court observed that that 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. However, the Court took note of the fact that there is no substantive domestic legislation or sector specific regulation 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.
Therefore, in conclusion with regard to is issue at hand the Supreme Court observed that, it 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. And thus, opined that 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
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 noncompliance with such duty?
Banks act as service providers under the earlier Consumer Protection Act, 1986, as well as the newly enacted Consumer Protection Act, 2019, and thus, owe a separate duty of care to exercise due diligence in maintaining and operating their locker or safety deposit systems. Which also 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 Supreme Court observed that the present state of regulations on the subject of locker management is inadequate and muddled. Hence, the Court found it imperative that the Court lays down certain principles which will ensure that the banks follow due diligence in operating their locker facilities, and issued certain guidelines in this regard.
Further, the Court held 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, and, 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.
In conclusion the Supreme Court, observed that 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, therefore, the Court directed the RBI to issue suitable rules or regulations as aforesaid within six months from the date of the judgment..