SC Tells RBI to Lay Down Rules for Banks to Safeguard Lockers

SC asked RBI to mandate rules within 6 months that make banks liable to their customers to safeguard lockers.

The Supreme Court of India. 

(File Photo: IANS)

In a significant judgment, the Supreme Court on Friday, 19 February, directed the Reserve Bank of India to lay down regulations within six months to facilitate banks to safeguard locker facility management, reported PTI.

“The banks cannot wash off their hands and claim that they bear no liability towards their customers for the operation of the locker. This will lead to a state of anarchy wherein the banks will routinely commit lapses in proper management of the lockers, leaving it to the hapless customers to bear the costs,” the bench observed, reported Hindustan Times.

Such actions of the banks would not only be a violation of the Consumer Protection Act but also damage investor confidence and harm the reputation of our emerging economy, the bench reportedly added.

A bench of Justices Mohan M Shantanagouder and Vineet Saran noted that the country is moving towards a cashless economy due to which people are hesitant to keep their liquid assets at home.

The top court observed that banks, under the Consumer Protection Act, have a "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 unauthorised access to the lockers and providing appropriate safeguards against theft and robbery,” quoted PTI.

The demand for locker services has increased because of globalisation, making lockers an essential service that can be availed by both citizens and foreign nationals, observed the SC bench.

The Case

The top court was ruling on a case of a customer of the United Bank of India’s Kolkata branch, who alleged that in September 1994, his locker was broken open by the bank over non-payment of rent.

The petitioner, Amitabha Dasgupta, appealed in the SC against an order of National Consumer Disputes Redressal Commission before whom he had filed a complaint seeking direction to ask the bank to return seven ornaments in the locker, or pay Rs 3 lakh and additional compensation charges, reported PTI.

The National Consumer Disputes Redressal Commission ruled that the Consumer Forum has limited jurisdiction in this matter, added the report.

The Bank had accepted its mistake that the petitioner had paid the dues before his locker was broken into. Thereafter, the SC observed that the bank must submit a written notice to the customer, providing sufficient time to pay before breaking open the locker.

The top court added that there must be independent witnesses when the locker is opened, since, in this case, the petitioner alleged he was returned 2 out of the 7 ornaments he had kept. The SC bench asked the petitioner to file a separate civil suit and provide the relevant evidence there to investigate this specific matter.

What Did the Court Say?

The court held that the bank’s actions to open the locker was in “blatant disregard” to the responsibilities it owes its customers as a service provider, and awarded Rs 5 lakh to the petitioner as compensation, and Rs 1 lakh towards litigation, reported Hindustan Times.

The Court opined that India is “transitioning from dual key­ operated lockers to electronically operated lockers”, which may open up the possibility of miscreants manipulating technology to gain access into the lockers without the consent or awareness of the customer, added the PTI reporter.

Thereafter it ruled that the customer is at the mercy of the banks for protection of assets and that, “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”, added the report.

The top court directed the RBI to lay down comprehensive directions within six months mandating the banks to safeguard locker facility and safe deposit facility management.

(With inputs from PTI and Hindustan Times)