Duty of care under law of bailment.

  

The Apex Court of India  held that breaking open of the Customer’s locker by the Bank ,  inspite of dues already been cleared, without prior notice is a blatant disregard to the responsibilities that the bank owed to the customer as a service provider. It is a case of gross deficiency in service on the part of the bank.

The Hon’ble Supreme Court comprising of Justices, Mohan M. Shantanagoudar and Vineet Saran, after referring to catena of judgements,  awarded  compensation  of Rs. 5,00,000/- and Rs. 1,00,000/-  as litigation cost to the Appellant in a  Civil Appeal no. 3966 of 2010 to be payable by respondent, United Bank of India  in an Appeal  filed before the Supreme Court on the impugned Judgement of the National Consumer Disputes Redressal Commission passed on 18.12.2008, which dismissed the Revision Petition filed against the judgment of the State Consumer Disputes Redressal Commission delivered on 12.10.2004.

           

FACTS

The fact of the case is that in early 1950’s, the Appellant’s mother took a locker on rent in the Kolkata Branch of the Respondent, the bank. Later in 1970, the Appellant was made the joint holder of the locker. 0n 27.05.1995, when Appellant visited the Bank to operate the locker and to pay locker rent, he was informed that the locker had been opened on 22.09.1994 for non-payment of rent dues for the period of 1993-1994. The locker was subsequently reallocated to another customer.

            On 17.06.1995, when the Appellant went to collect the contents of the locker, it is alleged that he found only one pair of bangles and on pair of pussa of the seven ornaments that had been deposited in the locker in a non-sealed envelope by Appellant’s mother. Moreover the Respondent Bank contended that only two ornaments were found in the Appellant’s locker when it was broken open. It is evident from the inventory prepared by Respondent Bank when the locker was broken open in the presence of an independent witness. The Appellant sent two communications on 29.05.1995 and 2.06.1995, claiming that breaking of his locker by the Bank was illegal and since he had cleared dues for 1994-1995 on 30.07.1994. The Respondent Banker responded to the communications and admitted to have broken open the locker and inadvertently though there was no outstanding dues to be paid and apologized for the same.

            The Appellant filed a complaint in the District Consumer Forum calling upon the Respondent to return the seven ornaments that were in the locker, or pay Rs. 3,00,000/- , the cost of jewelry and also compensation for damages suffered by the Appellant.

            The District Forum  allowed the complaint and held Bank liable for deficiency of service simply relying upon the Chief Manager, one of the Respondent in the case, admission that the Bank had inadvertently broken open the locker seven after locker rent had been paid in full. The Bank was directed to return the entire contents of the locker or pay the Appellant Rs. 3,00,000/- towards the cost of jewelry and Rs. 50,000 as compensation for mental agony and harassment suffered and cost of litigation.

            On Appeal by Bank, the State Consumer Forum accepted the findings of the District Forum but reduced the compensation  from Rs. 50,000/-  to Rs. 30,000. However with respect to cost of ornaments, the State Forum relied on case of UCO Bank vs. R.G Srivastava (1996) that consumer forum is not equipped to undertake evaluation since it has jurisdiction to conduct a summary trial. The dispute on the contents of the locker require elaborate evidence and thus the dispute must be decided by the competent civil court. On Revision Petition, the National Commission accepted the decision of the State Commission and dismissed the petition holding that the consumer forum has limited jurisdiction.

SUBMISSIONS BY APPELLANT’S LEARNED COUNCIL

            The Learned Counsel submitted that 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 locker are known exclusively by the locker holder.

            As for the compensation, the Ld. Counsel relied on Charan Singh Vs. Healing Touch Hospital & Ors (2000). He argued that the compensation must be awarded to bring a qualitative change in the attitude of the service provided.

SUBMISSIONS BY THE RESPONDENT’S LEARNED COUNSEL

            The Respondent Counsel submitted that the National Commission’s holding does not warrant interference. He submitted that compensation for the loss of jewelry can only be awarded after appreciation of evidence by the trial court.

            After hearing both the parties at length, the Hon’ble Supreme Court put the following question before deciding the case

1.     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 disputes proceedings.

2.     Irrespective to the answer of the previous question, whether the Bank owes an independent duty of care to its customers with respect to the diligent management and operation of the locker. Whether compensation can be awarded for non-compliance with such duty.

 

1.                 RELIEF WITH RESPECT TO THE CONTENTS OF THE LOCKER.

The Hon’ble Supreme Court on the first question raised the issue that whether the law of bailment  is applicable with respect to the contents of the locker. The Court on perusal of case, Atul Mehra vs. Bank of Maharastra AIR 2003 held that the law of bailment is applicable between bank and locker holder even in the contemporary dual key holder system if the bank is in the possession of a master key or has substantial degree of access to the locker. However, the plaintiff/locker holder would first have to prove that they had handed over possession if certain articles for being deposited in the locker of the bank. If this requirement is satisfied, the civil court is barred from going  into other issues such as whether the locker holder and the bank were in joint possession etc.

The Supreme Court before clarifying the position under Indian Law with respect to the loss of contents of the locker took the help of certain judgements  of foreign jurisdictions, Roberts vs. Stuyvesant Safe Deposit Co. (1890) and Cussen vs Southern Cal Saving Bank (1901).

 The Supreme Court was of the view that before applying the laws of bailment, the court must find on the facts of the case whether the plaintiff had transferred possession of the articles to the bank. To identify if the relationship of bailor and bailee exist between locker holder and bank under Indian law, it is necessary to understand Sections 148 and 149 of the Indian Contract Act, 1872.

Section 148 provides the definitions of bailment, bailor and bailee.

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.

Section 149 provides for the method of delivery.

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 authorized to hold them on his behalf.

            So in view of the above sections, relationship of bailor and bailee under Indian contract Act exist only in the case if the bailor/locker holder is able to prove the contents of the locker when delivered in possession and complete entrustment to the bailee/bank through independent evidence.

            Therefore  the Apex Court observed that the present case requires factual findings whether  the bank had knowledge of the content 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 cannot be adjudicated in the consumer forum. This aspect must be evaluated by the Civil Court as was done in the Atul Mehra case, UCO Bank case

            After evaluating the array of previous decisions of the Supreme Court, the Court held that the decision of the National Commission was correct and Appellant/locker holder must file a separate civil suit before the competent jurisdiction for seeking the relief and for proving the items were actually in the custody of the bank.

 

2.     SEPARATE DUTY OF CARE OF THE BANK WITH REGARD TO LOCKER MANAGEMENT.

The Hon’ble Supreme Court held irrespective of the fact that the locker holder could not prove the contents of the locker, this does not mean that the Appellant does not have any remedy. The Court opined that Bank as service providers under the Consumer Protection Act, 1896 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 functioning of the locker system, guarding against unauthorized access to the locker 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 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 Court relied on the judgement of National Commission in case of Mamta Chaudaha vs. Branch Manager/Head Manager, State Bank of India (2020). The Commission dismissed the complaint on the facts of the case notifying that the relationship between the bank and the locker holders  will be that of a service provider and consumer.

                        The Court also referred to the circular of Reserve Bank of India issued in 2007 which provided for facilitating easy and safe operation of locker.

            Before concluding, the Hon’ble Court, giving importance to the subject matter of the present Appeal, the advent of globalization, rising significance of banking institution, directed the Reserve Bank of India to lay comprehensive direction mandating the steps to be taken by the banks with respect to locker facility/safe deposit facility management by issuing suitable rules or regulations within six months from the date of judgement i.e. from February 19, 2021 and also rules with respect to the responsibility to be owed by banks for any loss or damage to the contents of the locker.

Case : Amitabha Dasgupta versus United Bank of India ( Civil Appeal No. 3966 of 2010

Date of Judgement : February 19, 2021.