June 01, 2023

SC Directs RBI To Frame Rules For Locker Management

By A Special Correspondent
First publised on 2021-02-20 06:04:44

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In a landmark order that will bring relief to thousands of bank customers who face, or have faced, problems in maintaining safe deposit lockers with banks, the Supreme Court today ruled that since banks are custodians of public property, there liability does not cease by claiming that they do not know the contents of the locker and that no bank can break open a customer's locker without informing him or her.

The case before the bench was about a customer of United Bank of India's Kolkata branch whose locker was broken open by the bank officials on the plea that he had not paid rent for a year. The locker was allotted to someone else. When the customer proved he had paid the rent, the bank admitted its mistake. But when the customer wanted his contents back, the bank could only return 2 pieces of jewelry instead of the 7 the customer claimed were kept inside the locker.

The customer chose to move the district consumer forum and was granted a compensation of Rs 3lakh as cost of jewelry and Rs 50000 for mental harassment. But the National Consumer Disputes Redressal Commission reduced the amount to just Rs 30000. Aggrieved by that, the customer approached the Supreme Court, leading to the above order.

The Supreme Court said that "Banks are under the mistaken impression that not having knowledge of the contents of the locker exempts them from (the) liability for failing to secure the lockers in themselves as well." It also said that banks "cannot impose unilateral and unfair terms on consumers."

It awarded the customer Rs 5 lakh as compensation and Rs 1 lakh as legal costs. It directed the bank to recover Rs 5 lakh from the erring officials if they were still in service. Observing that the "present state of regulations on locker management is inadequate and muddled" the court also laid down a 15-point guideline for locker operations and asked the RBI to frame new rules for the same within 6 months. The court directed that these rules will have to be followed by all banks in India.

But it has to be considered that this case was 25-years old. Since then, there has been some transparency in locker management and banks usually do not break open a locker before giving notice to customers if rents remain unpaid. Even if they have to break open any locker, it is done in the presence of two bank officials and one or two independent witnesses, usually any other customers of the bank. A complete inventory of the contents found inside the locker is made and signed by those present. Still, different banks follow different rules. Hence, the Supreme Court has done the right thing to direct the RBI to frame comprehensive rules that will be followed by all banks. 

pic courtesy: indiamart.com