New rules for Locker management: Supreme Court
[Amitabha Dasgupta v. United Bank of India, CIVIL APPEAL NO. 3966 OF 2010]
“Customer is completely at the mercy of the bank, which is the more resourceful party, for the protection of their assets.”
The Supreme Court dealt with an appeal wherein the United Bank of India inadvertently broke the Appellant’s locker, without any just or reasonable cause, even when there’s no pending due on him.
On February 19, 2021 the Bench of Mohan M Shantanagoudar and Vineet Sarana, JJ imposed a costs of Rs. 5,00,000/ on the Bank to be paid to the Appellant as compensation.
- If the erring officers are in service, the amount of Rs. 5,00,000/ shall be deducted from their salary.
- In case if the erring officers have retired, the amount of costs should be paid by the Bank.
- In addition, the Appellant shall be paid Rs. 1,00,000/ as litigation expense.
- Court directed the RBI to issue suitable rules or regulations within six months.
“Banks cannot wash off their hands and claim that they bear no liability towards their customers for the operation of the locker.”
Court stated that banks to follow due diligence in operating their locker facilities, until the issuance of comprehensive guidelines in this regard.
Court, 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:
(a) This includes maintenance of a locker register and locker key register.
(b) The locker register shall be consistently updated in case of any change in allotment.
(c) 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.
(d) Banks may consider utilizing appropriate technologies, such as block chain technology which is meant for creating digital ledger for this purpose.
(e) 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.
(f) 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.
(g) The concerned staff shall also check that the keys to the locker are in proper condition.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
(l) 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.
(m) 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.
(n) 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.
(o) The bank cannot contract out of the minimum standard of care with respect to maintaining the safety of the lockers as outlined supra.