Are banks liable for locker thefts?

One month ago there was a theft from a locker in the Punjab National Bank's branch at Safdarjang Enclave. Is the bank liable for the contents of the locker?

This is a question that has come up on numerous occasions. Indian banks have consistently fended off all claims on the grounds that the relationship between a bank and the person hiring the locker is one of landlord and tenant.

The legal argument taken by the banks is that there is no 'entrustment' of contents placed in lockers by the depositor to the bank. Therefore, the banks aren't responsible for its contents. This is exactly what the Punjab National Bank is stating in the latest case as well. Is this plea justified and/or sustainable?

Recent decisions have gone against the banks. The National Consumer Disputes Redressal Commission examined this contention in a case reported as 2001 CTJ 352 (CP). The facts of the case were that three women Jyoti Satya, Neena Satya and Sunita Satya had hired lockers at the Bank of Maharashtra's Amritsar branch.

A robbery took place and all the valuables in the lockers were removed. The bank refused to take any responsibility for the theft. As a result the three women filed complaints with the Punjab State Consumer Disputes Redressal Commission, Chandigarh. During the hearings the bank argued that the depositors were the only tenants of the lockers and hence the bank could not be held liable for any loss suffered by them.

The commission rejected the bank's plea and this resulted in a revision petition by the bank before the National Commission at New Delhi.

After going into the matter, the National Commission by its order dated July 11, 2000 rejected the Bank of Maharashtra's contention and held that "the depositors had taken the lockers on rent only because of the security provided by the bank and it is not simply a landlord and tenant relationship. The depositors have kept jewellery and other valuable articles on the assurance that the bank will provide complete security..."

"Another important aspect of the case is that the depositors cannot have access to the lockers except with the help of the bank because one key is retained by the bank and unless both keys are used the depositors cannot open the lockers. We have consistently held that the relationship between the bank and depositor is not that of the landlord and the tenant. We hold that the argument of the bank is without any substance."

Ugam Singh's predicament was even worse. Before going abroad, he took a locker in the State Bank of India and kept all his valuables there. When he returned to India after a year and a half he found that all the jewellery and the other valuables in the locker were missing.

Here also the consumer court extended a helping hand and awarded compensation to him (Ugam Singh vs G.M., State Bank of India (1996) 1 CPR 188). It rejected the bank's argument that it was not responsible because its relationship with the hirer is only that of landlord and tenant.

Then, there are the observations made by the Gujarat State Consumer Disputes Redressal Commission's observations in Manjulaben D Lalwala vs Surat Safe Deposit Vaults (P) Ltd. In that case too, gold ornaments worth Rs 125,000 were found missing after the locker was broken into.

Holding the safe vault company liable to reimburse the aforesaid amount to Manjulaben, the commission observed that "persons hire lockers in safe deposit vault to keep their valuable articles and documents therein for their safety. There is risk of valuable articles and documents being stolen in residential or office premises. Therefore, it is to keep them safe from theft or burglary that persons hire lockers in safe deposit vault. Since the company has undertaken the business of running safe deposit vault and hiring lockers, it is its duty to ensure security and safety of lockers."

The above rulings handed down by the courts go to indicate in no uncertain terms that the banks' defence that the provision of lockers is based on a landlord-tenant relationship will not be sustainable.

Instead, they must improve on their security arrangements, to prevent thefts. Consumers keep their lifetime savings in lockers -- for which they now pay stiff fees -- and banks on their part must ensure foolproof security.