# AMITABHA DASGUPTA v. UNITED BANK OF INDIA & ORS

- **Citation:** [2021] 1 S.C.R. 905
- **Court:** Supreme Court of India
- **Decided:** 2021-02-19
- **Case number:** Civil Appeal No. 3966 of 2010
- **Bench:** Mohan M. Shantanagoudar, Vineet Sareen
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/amitabha-dasgupta-v-united-bank-of-india-ors-34807
- **Pages:** 30

## Headnote

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.
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[2021] 1 S.C.R.
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
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Lal Saigal AIR 1962 P H 534; Mohinder Singh Nanda
v. Bank of Maharashtra 1998 ISJ (Banking) 673; Atu

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 [2021] 1 S.C.R. 905
905
AMITABHA DASGUPTA
v.
UNITED BANK OF INDIA & ORS.
(Civil Appeal No. 3966 of 2010)
FEBRUARY 19, 2021
[MOHAN M. SHANTANAGOUDAR
AND VINEET SAREEN, JJ.]
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.
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[2021] 1 S.C.R.
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
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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
AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.
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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
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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]
AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.
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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.
Case Law Reference
[2000] 3 Suppl. SCR 337
referred to
Para 3
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3966
of 2010.
From the Judgment and Order dated 18.12.2008 of the National
Consumer Disputes Redressal Commission, New Delhi in Revision
Petition No. 389 of 2005.
Parijat Sinha, Devesh Mishra, Ms. Pallak Bhagat, Rudra Dutta,
Ms. Reshmi Rea Sinha, Rajesh Kumar-I, Anant Gautam, Nipun Sharma,
M/S. Mitter & Mitter Co., Advs. for the appearing parties.
The Judgment of the Court was delivered by
MOHAN M. SHANTANAGOUDAR, J.
1. This appeal, by special leave, arises out of the judgment of the
National Consumer Disputes Redressal Commission ('National
Commission') delivered on 18.12.2008 dismissing the Consumer Disputes
Redressal Commission ('State Commission') dated 12.10.2004.
2. The following are the facts out of which this appeal arises:
In the early 1950's, the Appellant's mother (since deceased) took
a locker on rent bearing No. A-222 in the Deshapriya Park, Kolkata
Branch of the Respondent No. 1 Bank. In 1970, the Appellant/
Complainant was included as a joint holder of the locker. On 27.05.1995,
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the Appellant visited the Respondent No.1 Bank to operate the locker
and deposit the locker rent. However, the Appellant 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. Further, that the locker had
subsequently been reallocated to another customer.
2.2 On 29.05.1995 and 2.06.1995, the Appellant sent
communications to Respondent No. 1 claiming that such breaking of his
locker by the Bank was illegal since he had cleared dues for 1994-1995
on 30.07.1994, i.e., prior to the breaking of the locker. The Chief Manager
of Respondent 1, who is Respondent No. 3 in the present appeal,
responded to the communication and admitted to having inadvertently
broken open the locker, though there were no outstanding dues to be
paid, and apologized for the same. He stated as an ancillary point that
reminders for the payment of dues had been sent on 25.11.1993 and
23.02.1994. However, that these would have no meaning since the dues
were subsequently paid by the Appellant on 30.06.1994.
2.3 On 17.06.1995, when the Appellant went to collect the contents
of the locker, it is alleged that he found only two (one pair of bangles and
one pair of ear pussa) of the seven ornaments that had been deposited in
the locker in a non-sealed envelope. However, Respondent No.1 Bank
contends that only those two ornaments were found in the Appellant's
locker when it was broken open. That the same is evident from the
inventory prepared by Respondent No. 1 when the locker was broken
open in the presence of an independent witness.
2.4 Subsequently, the Appellant filed a consumer complaint before
the District Consumer Forum ('District Forum') calling upon Respondent
No. 1 to return the seven ornaments that were in the locker; or alternatively
pay Rs. 3,00,000/- towards the cost of jewelry, and compensation for
damages suffered by the Appellant.
2.5 The District Forum allowed the complaint and held Respondent
No. 1 liable for deficiency of service, relying upon Respondent No. 3's
admission that the Bank had inadvertently broken open the Appellant's
locker though there were no pending rent dues. Further, on the claim for
the cost of seven ornaments, it was held that Respondent No.1 could not
prove that there had been only two ornaments in the locker since there
were no independent witnesses in the presence of whom the locker was
opened. Hence, Respondent No. 1 was directed to return the entire
contents of the locker, or alternatively pay the Appellant Rs. 3,00,000/-
AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.
[MOHAN M. SHANTANAGOUDAR, J. ]
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towards cost of the jewelry and, Rs. 50,000/- as compensation for mental
agony, harassment, and cost of litigation.
2.6 On appeal, the State Commission vide order dated 12.10.2004
accepted the District Commission'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,
the State Commission, relying upon the judgment of the National
Commission in UCO Bank v. RG Srivastava,1 observed that the dispute
on the contents of the locker can only be decided upon provision of
elaborate evidence. That the Consumer Forum was not equipped to
undertake this evaluation since it only has jurisdiction to conduct a
summary trial. Therefore, the Appellants were directed to approach the
civil court for adjudication on the contents of the locker.
The Revision Petition against the order of the State Commission
was dismissed vide the impugned order. The National Commission by
the impugned judgment, accepted the State Commission's holding on the
limited jurisdiction of the Consumer Forum to adjudicate on the recovery
of the contents of the locker.
Hence, the present appeal.
3. Learned counsel for the Appellant submitted that even if the
case is remitted to the civil court for adjudication on the issue of the
contents of the locker, it would be highly improbable to ascertain the
same since the contents of a locker are exclusively known only to the
locker holder. On the question of damages, he relied on Charan Singh
v. Healing Touch Hospital & Ors.2 to argue that compensation must
be awarded to bring a qualitative change in the attitude of the service
provider.
3.1 Per contra, learned counsel for the Respondents submitted
that the National Commission's holding does not warrant interference.
He submitted that compensation for the loss of jewellery can only be
awarded after appreciation of evidence by the trial court.
4. Heard Learned Counsel for both parties. Based on a perusal of
the record, the following issues arise for consideration in the present
appeal:
11996 (1) CPR 97.
2 (2000) 7 SCC 668.
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4.1 First, 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?
4.2 Second, irrespective of the answer to the previous issue,
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 non-compliance with such duty?
I. Relief with Respect to the Contents of the Locker
5. Disputes between banks and locker holders, pertaining to loss
of articles placed inside the locker, have been subject to judicial
consideration in various jurisdictions for nearly a century. For a broader
understanding of the subject, we find it necessary to briefly refer to
certain judgments of foreign jurisdictions, before clarifying the position
under Indian law.
5.1 The dominant view of courts around the globe has been that
the bank is in the position of a bailee with respect to the goods placed
inside the locker by the locker holder. In Roberts v. Stuyvesant Safe
Deposit Co.,3 the defendant company permitted the police under a search
warrant, to confiscate the articles that were inside the plaintiff's locker.
However, the articles were subsequently stolen from police custody. A
suit was filed by the plaintiff, alleging that the defendant company failed
to comply with the duty of care required under the law by permitting the
police to take away articles that were not mentioned in the search warrant.
Affirming the plaintiff's contentions, the Court of Appeals of New York
made the following observations about the relationship of bailment
between the parties:
"The legal relationship which the defendant held to the plaintiff,
and out of which this controversy has arisen, was that of a bailee
or depositary for hire. The fundamental question in the case is
whether the defendant, upon the undisputed evidence in the record,
discharged those duties and obligations to the plaintiff which the
law imposed upon it in regard to the care and custody of her
property."
(emphasis supplied)
3(1890) 123 N.Y 57.
AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.
[MOHAN M. SHANTANAGOUDAR, J. ]
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It is pertinent to note the Court's observation that whether or not
the defendant had discharged its obligations as a bailee would have to be
discerned from the undisputed evidence on the record.
5.2 The position of law stated in Stuvyesant Safe Deposit Co.
(supra) has been reiterated in subsequent precedents which have
governed the law on the field such as Emma M. Lockwood v. The
Manhattan Storage & Warehouse Company,4 Mayer v. Brensigner,5
National Safe Deposit Co. v. Stead.6 In Cussen v. Southern Cal.
Savings Bank,7 money kept by the plaintiff in the bank's safe deposit
vault was lost. The Supreme Court of California held that the bank was
liable under the laws of bailment. However, it observed that the plaintiff
would have to make a prima facie case that they had deposited the
money inside the locker, and that it was subsequently lost. The burden of
proof would then shift to the defendant bank to prove that it exercised
the necessary care required under the laws of bailment for the protection
of its contents. Therefore, 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.
6. To identify if the relationship of bailment exists between the
bank and the locker holder under Indian law, it is necessary at the outset
to refer to the relevant provisions under the Indian Contract Act, 1872
('Contract Act'):
"148. 'Bailment', 'bailor' and 'bailee' defined.-A 'bailment'
is the delivery of goods by one person to another for some purpose,
upon a contract that they shall, when the purpose is accomplished,
be returned or otherwise disposed of according to the directions
of the person delivering them. The person delivering the goods is
called the 'bailor'. The person to whom they are delivered is called
the 'bailee'.
149. Delivery to bailee how made.-The delivery to the bailee
may be made by doing anything which has the effect of putting
the goods in the possession of the intended bailee or of any person
authorised to hold them on his behalf."
4 50 N.Y.S 974 (N.Y. 1898).
5 54 N.E 159 (1899).
6 95 N.E. 973 (1911).
7 65 P. 1099 (1901).
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Thus, from the aforementioned provisions, it can be inferred 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.
7. Unfortunately, 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. On 4.12.2006, the Reserve Bank of
India ('RBI') had issued a Draft Circular on Safe-Deposit Lockers ('2006
Circular').8 This circular was only in the form of a proposal issued to the
banks and hence does not have any binding value. However, it is useful
in understanding the RBI's position at that stage. Clause 2.1 of the 2006
Circular states:
"2. Security aspects relating to Safe Deposit Lockers:
2.1 It is clarified that the relationship between the bank and the
locker hirer is in the nature of a 'bailor and bailee' and not 'landlord
and tenant' though the bank has no knowledge of the contents of
the locker and the bank is required to exercise due care and
necessary precaution for the protection of the lockers provided to
the customer."
(emphasis supplied)
On perusal of the 2006 Circular, it is evident that at that point in
time, the RBI had recommended that the laws of bailment ought to guide
the relationship between the bank and the locker holder, even if the bank
has no knowledge of the contents of the locker.
7.1 The RBI had also issued guidelines covering inter alia, the
subject of safe custody of articles placed inside the lockers (Circular
No. RBI/2006-2007/325) on 17.04.2007 ('2007 Circular).9 There was
no clause on the nature of the legal relationship between the bank and
the locker holder in the 2007 Circular. The only reference to the Contract
Act was as follows:
"3.5 Banks are advised to be guided also by the provisions of
Sections 45 ZC to 45 ZF of the Banking Regulation Act, 1949 and
8 https://www.rbi.org.in/Scripts BS_CircularIndexDisplay.aspx?Id=3196.
9 https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=3422.
AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.
[MOHAN M. SHANTANAGOUDAR, J. ]
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the Banking Companies (Nomination) Rules, 1985 and the relevant
provisions of Indian Contract Act and Indian Succession Act."
(emphasis supplied)
However, this observation was made in the specific context of
return of safe custody of articles to the survivors/legal heirs of deceased
locker holders and hence may not have much bearing in the present
case.
7.2 Subsequently, in response to a Right to Information ('RTI')
enquiry made in 2017, the RBI, and various public sector banks, stated
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. Hence the position of the RBI
from 2006 to 2017 has undergone a sea-change. The position adopted
by the banks was challenged before the Competition Commission of
India ('CCI') as being in the nature of an anti-competitive practice. The
CCI dismissed the claim, while making the following observations:10
"7. In the instant case, there is no such material to suggest any
understanding/consensus/arrangement amongst the Opposite
Parties to have pursued any of the aforesaid prohibited activities.
Suspicion of a cartel has been raised in the information as all the
Opposite Parties allegedly do not take responsibility for any loss
of valuables kept by customers availing safety deposit locker
facility from them. However, the RTI replies of some of the
Opposite Parties suggest that they are not completely absolved
for loss of valuables kept in their locker. For instance, the reply
dated 7th October, 2015 of Bank of Baroda inter alia states 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. Further, the
reply dated 13th October, 2015 of Dena Bank states 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. Reply dated 19th
October, 2015 of Andhra Bank states 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
10 Kush Kalra v. Reserve Bank of India, 2017 SCC OnLine CCI 41.
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deposit locker will not 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. Similarly, the reply dated 30th October, 2015 of
Corporation Bank states that its liability in case of theft/loss of
valuables kept in its safety lockers depends upon the parameters
on which the bank takes insurance on the lockers and the same
parameters will be adopted while settlement of claims in case of
theft. Taking into consideration all these replies and in the absence
of any material suggesting collusion amongst the Opposite Parties,
it cannot be said that a uniform practice is followed by all the
Opposite Parties to avoid responsibility / liability for loss of
valuables kept by customers availing their safety deposit locker
facility."
(emphasis supplied)
Therefore, the CCI took notice of the fact that it is common industry
practice for banks to disclaim liability for loss of articles placed inside
the locker, though there are no uniform parameters or policies guiding
the same. Additionally, the banks have stated that acceptance of
responsibility for loss of articles placed in their locker facility will depend
upon the relevant facts and circumstances of each case, such as the
terms of the locker hiring agreement, the circumstances under which
the articles were lost or stolen, and so on.
8. There has also 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.
However, there have been various High Court judgments guiding the
field. One of the notable cases in which this issue arose was Jagdish
Chandra Trikha v. Punjab National Bank.11 In this case, the appellants
had, before the partition of India, entrusted a sealed box of gold ornaments
to the respondent bank in Peshawar on the payment of a fee for
safekeeping. The box was moved to the Rawalpindi branch, then
subsequently to the Lahore branch, and finally to India in November
1961 under the Indo-Pakistan Movable Property Agreement. Upon
presentation of the box, the Appellant refused to take delivery since the
11 AIR 1998 Delhi 266.
AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.
[MOHAN M. SHANTANAGOUDAR, J. ]
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appearance and weight of the box was different from what it had been
when it was deposited. A suit was filed seeking delivery of the ornaments
or alternatively recovery of the market value of the ornaments. Referring
to the relevant common law authorities, the Delhi High Court held that
the bank would be liable in the capacity of a bailee for the loss of the
ornaments:
"71. The Box was entrusted to the defendant Bank at Peshawar.
The same was accepted by the Bank as a bailee and it was
expected that the usual care which is demanded on such matters
would be undertaken...it is established that the defendant Bank
failed to discharge its duties as a bailee and did not take care of
the goods of the parents of the plaintiff as one would under similar
circumstances, take of his own goods of the same bulk, quantity
and value as the goods bailed."
(emphasis supplied)
It is important to note that in the facts of Jagdish Chandra Trikha
(supra), the High Court found that there was complete entrustment of
possession of the appellant's ornaments. The articles to be safeguarded
were handed over by the customer to the bank in a sealed box, which
was then taken to a safe place to be stored. Though the respondent
bank claimed it did not have any knowledge of the contents of the box, it
was proved from evidence that the appellant's predecessors had handed
over a detailed list of the jewellery which was placed inside the safe
deposit box to the bank. It was further proved that the customer did not
have any access to the same after entrustment to the bank. Hence the
High Court considered it a fit case to apply the laws of bailment.
8.1 However, the locker service provided by the banks has evolved
since the pre-independence days. In that era, the bank's employee was
entrusted with the relevant goods for safe keeping. Complete access to
the valuables, if any, remained with the bank till the time the customer
claimed return of the same. However, due to modernization of the locker
system, banks now provide customers with partial access to the lockers.
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.
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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.
In more 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, as was the case in Jagdish Chandra Trikha (supra). The
question that therefore arises for consideration before this Court is whether
the modern-day bank locker system would be guided by the laws of
bailment.
8.2 An important decision which has considered the modern-day
bank locker system is that in National Bank of Lahore Ltd. v. Sohan
Lal Saigal.12 In that case, the appellant bank had provided locker service
for the safe custody of valuables. The locker could be operated jointly
by the locker holder and the bank's custodian. However, the respondent
locker holder was able to prove before the Civil Court that the Manager/
custodian of the bank had tampered with the locker such that it could be
operated even without the locker holder's personal key. Hence the Civil
Court concluded that the Manager had exclusive control over the lockers.
Consequently, referring to the decisions of the Court of Appeals of Ohio
in Blair v. Riley13 and the Supreme Court of Illinois in National Safe
Deposit Company v. Stead, Attorney General,14 the Punjab and
Haryana High Court held that the bailor-bailee relationship applied. In
this regard, the High Court observed that:(Pg. 578)
"It may be that the person who hires a locker retains some control
over it by having one key with himself but if the locker can be
operated without any key, as was possible in the lockers which
were rented out to the plaintiffs, then at once any impediment in
the way of control and possession of the Bank to whom the locker
belonged and in whose strong room it was to be found, would be
removed and it could well be said that the bank was strictly in the
position of the bailee."
(emphasis supplied)
The High Court further observed that the locker holders had
produced specific evidence in the form of lists of the articles of jewellery
12 AIR 1962 P H 534.
13175 N.E.R 210.
14 95 N.E.R. 973.
AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.
[MOHAN M. SHANTANAGOUDAR, J. ]
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deposited inside the lockers so as to prove the extent of loss they had
suffered.
8.3 In Mohinder Singh Nanda v. Bank of Maharashtra,15
forty-four 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
locker:
"4. But there is no evidence on record to show that the
defendant-Bank had the knowledge of the articles in the locker.
Unless there is entrustment of the property to the defendant Bank,
the Bank cannot be held responsible for the theft. The plaintiffs
have miserably failed to prove that there was entrustment of the
articles with the defendant Bank and that the Bank authorities
were aware of the articles placed in the locker."
(emphasis supplied)
8.4 Subsequently, the Punjab and Haryana High Court again
undertook a comprehensive look into the present-day locker system in
Atul Mehra v. Bank of Maharashtra,16 which pertained to the same
bundle of facts as in Mohinder Singh Nanda (supra). The appellant
locker holders 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 Single Judge Bench
of Nijjar J. opined that the provisions with respect to bailment under the
Contract Act would not apply as follows:
"17...The respondent bank could only be fastened with liability
on the contents of the locker being disclosed to it. In the absence
of this information, it would have to be held that there was no
entrustment of the goods to constitute bailment as required under
Section 148 of the Indian Contract Act, 1872.
151998 ISJ (Banking) 673.
16AIR 2003 P&H 11.
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18...These authorities are of no assistance to the appellants in
the present case. In all these cases, exclusive possession of the
property had been handed over by the bailor to the bailee. I am of
the considered opinion that exclusive possession is a sine qua non
for bailment. Therefore, I have no hesitation in coming to the
conclusion that mere hiring of the locker would not be sufficient
to constitute a contract of bailment as provided under Section 148
of the Indian Contract Act, 1872. In order to constitute bailment,
as provided in Section 148 of the Act, it is further necessary to
show that the actual exclusive possession of the property was
given by the hirer of the locker to the bank. It is only thereafter
that the question of reasonable care and quantum of damages
would arise. In the present case, it is impossible to know the
quantity, quality or the value of the jewelry which was allegedly
kept in the locker at the time when the robbery occurred. .........
In the present case, the plaintiffs alone had the knowledge of
contents of lockers, therefore, the plaintiffs had to lead independent
evidence to prove that jewelry was actually in the locker on the
date of the robbery. Even if the plaintiffs had proved this peculiar
fact; they would still have to prove the value of the jewelry."
(emphasis supplied.)
Therefore, the High Court concluded that mere leasing out of the
locker ipso facto would not establish a relationship of bailment between
the bank and the locker holder. In order to establish exclusive possession,
the claimant must prove that the bank had knowledge of the contents of
the locker. Alternatively, where the locker holder alone has knowledge
of the contents, they must lead independent evidence to prove that their
articles or valuables were actually inside the locker, and the valuation of
the same.
8.5 However, Nijjar J. differentiated the holding in Sohan Lal
Saigal (supra) by observing as follows:
20. "In that case, the learned trial court had held that entrustment
and the valuation of jewelry had been proved.....On the twin
grounds of exclusive possession of the jewelry deposited in the
locker and entrustment thereof to the Bank, it has been held that
the Bank would be in the position of bailee."
(emphasis supplied)
AMITABHA DASGUPTA v.UNITED BANK OF INDIA & ORS.
[MOHAN M. SHANTANAGOUDAR, J. ]
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Therefore, in Sohan Lal Saigal (supra) entrustment of jewelry
was proved on production of elaborate evidence before the trial court.
However, in Mohinder Singh Nanda (supra) and Atul Mehra (supra)
no evidence was led to prove the entrustment of jewelry to the bank,
and hence the claimant locker holders were unable to succeed in obtaining
relief. Nijjar J. further observed that:
"22...Whatever property is deposited in the locker is, undoubtedly
in the custody and possession of the bank. Merely because the
locker can be operated only in the presence of the locker hirer
would not amount to joint possession of the locker. The Banker
can always open the locker with a "master key". The hirer of the
locker is not in a position to open the locker without the assistance
of the bank.