Supreme Court says banks must inform locker holders in writing before breaking them open

NEW DELHI: The Supreme Court on Friday ruled that banks cannot break open lockers without written notice to locker holders or deny any liability for the loss of contents kept in lockers.

Breaking open a locker without following the legal procedure would be construed as gross negligence on the part of the bank, a top court bench said.

The bench, which included Justices Mohan M. Shatanagoudar and Vineet Saran, asked the RBI to frame uniform rules for all banks regarding locker management within 6 months.

The banks should not have the liberty to impose unilateral and unfair terms on the consumers.

The RBI may also issue suitable rules with respect to the responsibility owed by banks for any loss or damage to the contents of the lockers for the sake of clarity.

It appears to us that the present regulations are inadequate and muddled. Each bank is following its own set of procedures, it said.

Further, going by their stand before the consumer for a, it seems the banks are under the mistaken impression that not having knowledge of the contents of the lockers exempts them from liability for failing to secure the lockers in themselves, it noted.

“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 proper functioning of the locker system, guarding against unauthorised access to the lockers and providing appropriate safeguards against theft and robbery,” the bench said. Banks as custodians of public property cannot leave the customers in the lurch by merely claiming ignorance of the contents of the lockers, it said.

The court granted a customer rs 500000 compensation for the negligence, mental agony and harassment and another 100000 as litigation costs as the bank had tampered with his locker without giving him notice or informing him of it for well over a year despite his locker dues being paid.

The state consumer disputes commission had found the bank guilty of gross negligence but had reduced his compensation. He had appealed to the National Consumer Disputes Redressal Commission but to no avail. He then approached the top court in appeal.

Till the RBI frames such rules, the court laid down the procedure that would govern safe deposits with banks irrespective of the value of the articles placed in it.

Banks will have to maintain a locker register and locker key register and consistently update any change in allotment.

Banks shall 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 if they so wish.

Banks may consider utilizing appropriate technologies, such as blockchain technology which is meant for creating digital ledger for this purpose.

The custodian of the bank shall additionally maintain a record of access to the lockers, containing details of all the parties who have accessed the lockers and the date and the time on which they were opened and closed.

Bank employees are also obligated to check whether the lockers are properly closed on a regular basis. If it is not done, the locker must be immediately closed and the locker holder shall be promptly intimated so that they may verify any discrepancy in the contents.

The concerned staff shall also check that the keys to the locker are in proper condition.

In case the lockers are being operated through an electronic system, the bank shall take reasonable steps to ensure that the system is protected against hacking or any breach of security.

Customers’ personal data, including their biometric data, cannot be shared with third parties without their consent.

The bank has the power to break open the locker only as per existing laws and procedure.

Breaking open of the locker in a manner other than that prescribed under law is an illegal act which amounts to gross deficiency of service on the part of the bank as a service provider.

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 only in the presence of authorized officials and an independent witness after giving due notice to the locker holder.

The bank must prepare a detailed inventory of any articles found inside the locker, after the locker is opened, and make a separate entry in the locker register, before returning them to the locker holder.

The locker holder’s signature should be obtained upon the receipt of such inventory so as to avoid any dispute in the future.

The bank must undertake proper verification to ensure that no unauthorised party gains access to the locker. In case the locker remains inoperative for a long period of time, and the locker holder cannot be located, the banks shall transfer the contents to the nominees/legal heirs or dispose of the articles in a transparent manner.

The banks shall also take necessary steps to ensure that the locker facility is adequately guarded at all times.

A copy of the locker hiring agreement shall be given to the customer at the time of the allotment of the locker. The bank cannot contract out of the minimum standard of care regarding maintaining safety of lockers.


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