The Supreme Court has directed the RBI to lay down comprehensive directions mandating the steps to be taken by banks with respect to locker facility/safe deposit facility management.
The bench comprising Justices M. Shantanagoudar and Vineet Saran observed, “The banks should not have the liberty to impose unilateral and unfair terms on the consumers.”
In the present case, the bank inadvertently broke open the appellant’s locker for the purpose of recovering “unpaid” dues which was later proven by the appellant to be false and that the dues were paid in full. 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.
The Court thus observed,
“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”.
The bench further clarified that until the RBI comes out with comprehensive directions for banks providing locker or safe deposit facilities, the following rules shall remain binding upon the banks:
• Maintenance of a locker register and locker key register.
• The locker register shall be consistently updated in case of any change in allotment.
• The bank 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 time on which they were opened and closed.
• The bank employees are also obligated to check whether the lockers are properly closed on a regular basis. If the same is not done, the locker must be immediately closed and the locker holder shall be promptly intimated so that they may verify any resulting discrepancy in the contents of the locker.
• 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.
• The customers’ personal data, including their biometric data, cannot be shared with third parties without their consent. The relevant rules under the Information Technology Act, 2000 will be applicable in this regard.
• The bank has the power to break open the locker only in accordance with the relevant laws and RBI regulations, if any. 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 procedures to ensure that no unauthorized 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 of the locker to their nominees/legal heirs or dispose of the articles in a transparent manner, in accordance with the directions issued by the RBI in this regard.
• The banks shall also take necessary steps to ensure that the space in which the locker facility is located is adequately guarded at all times.
• A copy of the locker hiring agreement, containing the relevant terms and conditions, shall be given to the customer at the time of allotment of the locker so that they are intimated of their rights and responsibilities.
• The bank cannot contract out of the minimum standard of care with respect to maintaining the safety of the lockers
The court also spoke about the importance of the subject matter of the instant case and observed “With the advent of globalization, banking institutions have acquired a very significant role in the life of the common man. Both domestic and international economic transactions within the country have increased multiple folds. Given that we are steadily moving towards a cashless economy, people are hesitant to keep their liquid assets at home as was the case earlier. Thus, as is evident from the rising demand for such services, lockers have become an essential service provided by very banking institution. “
“.In such a situation, 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.”