If a bank is given actual and exclusive possession of the property inside a locker by the person who hired the locker, only then can bailment under Section 148 can be presumed. One of the key ingredients emphasized on by this definition is the delivery of possession of the goods from the bailor to the bailee. Once the possession is handed over to the bailee, a contract of bailment arises regardless of the manner in which it was entered into.

Thus, the SC held the National Commissions’ judgment of leaving the question of law and fact upon civil courts as correct. The same goods that were bailed must be returned to the bailor in the same condition after the accomplishment of purpose as they were handed over to the bailee in the beginning. If an animal gives birth during the period of bailment, the bailee must return the animal with the offspring at the conclusion of the bailment. As per Section 149 , the delivery can also be made to the bailee by doing anything which has the effect of putting the bailed goods in the possession of the intended bailee or any person authorized by him for this purpose. Bailment is a type of special contract and thus, all basic requirements of contract like consent of parties, competency, etc are applicable to any contract of Bailment.

Whether the modern day bank locker system would be guided by the laws of bailment?

It is the duty of the bailor to indemnify the bailee for the cost incurred due to the defective title of goods bailed to the bailee. Non-gratuitous bailment is one where consideration passes between the bailor and the bailee. Gratuitous bailment is one where no consideration passes between the bailor and the bailee. Section 148 of the Indian Contract Act, 1872 – Definition of bailment, bailor and bailee. The Hon’ble Supreme Court imposed costs of Rs. 5,00,000/­ on the Bank which is to be paid as compensation from deducting from the salary of the erring officers, if still in service. The Hon’ble Supreme Court opined that the approach adopted by the National Commission was the correct approach as the number of items originally deposited by the Appellant inside the locker was a contested fact.

• They have contended that the alleged strong room was made up the affair and it was made only of plywood, whereas it ought to have been made of iron and concrete.
• Until such Rules are issued, the principles stated in this judgment, in general and at para 13 in particular, shall remain binding upon the banks which are providing locker or safe deposit facilities.
• Additionally, to protect your own interest you can insist on the following measures…
• Consequently, the appellant approached District Consumer Forum for returning seven ornaments or compensation for damage of Rs. 3,00,000/­.

In case a bailee is not bound to return the goods to the bailor, then the relationship between them is not of bailment. It was also left open to the RBI to issue suitable rules with respect to the responsibility owed by banks for any loss or damage to the contents of the lockers, so that the controversy on this issue is clarified as well and the Appeal is disposed of accordingly. In bailment, the delivery of goods is upon a contract and once the purpose is done, such goods shall be returned to the bailor. This means there should be a contract between two parties for transaction of delivery and subsequent return. If there is no possession of goods obtained by someone other than contract, there should be no bailment.

Therefore, the Appellant must file a separate suit before the Civil Court for seeking desired relief. It is the duty of the bailor to accept the goods after the purpose for which such bailed goods were bailed is accomplished. Also, the bailor is under the duty to pay the extraordinary expenses acquired by the bailee for such bailment. And laid down the proposition that a relationship of bailment cannot arise without the bailee knowing and controlling the goods exclusively.

THE COURT FURTHER DIRECTED RBI:

Though we have filed complaint with police for the safety of your money we request you to not fall prey to such fraudsters. You can check about our products and services by visiting our website You can also write to us at , to know more about products and services. The banks cannot wash off their hands and claim that they bear no liability towards their customers for the operation of the locker.

Defines bailment as the conveyance of commodities from one person to another for a certain purpose. However, the State Commission held that a Consumer Forum has a limited jurisdiction to adjudicate on the recovery of the contents of the locker and the National Consumer Forum also held this impugned judgment. Delivery of possession, as required for bailment, can be made in two ways – Actual or Constructive. Bailment can also be described as ‘the delivery of goods to another person for a particular use’. The hiring agreement between the two parties provides for a written notice of termination. Moreover, the Appellant was not given any notice prior to such tampering with the locker.

The Supreme Court held that clearly, the relationship between the bank and locker holder is in the nature of the bailor and bailee, even though the bank was not privy to the contents of the locker. Here the delivery of goods means delivery of possession which is essential for bailment. The transfer of possession of the bailed goods from bailor to bailee for whatever is the purpose of bailment must be distinguished from mere custody. That the Consumer Forum is not equipped to undertake such evaluation since it only has jurisdiction to conduct a summary trial. Therefore, the appellant was directed to approach the civil court for adjudication on the contents of the locker. Against the claim of seven items of jewellery, the bank claimed that only two pieces were found in the locker when it was broken open which was evident from the inventory prepared in the presence of an independent witness.

There is no proof of any is hiring of bank locker bailment kind to show the value of the jewelry which was kept in the locker. No expert witness has been produced to show that the jewelry mentioned in the plaint would be worth the amount claimed. Each bank follows its own set of procedures and there is no uniformity in the rules when it comes to rules concerning lockers. Banks are under the mistaken impression that not having knowledge of the contents of the locker exempts them from liability for failing to secure the lockers themselves as well.

BAILMENT

The relationship between the bank and the person hiring the locker is not that of a landlord and tenant. That means the bank is not aware about the contents of the locker and that is something only the individual knows. A bailor-bailee relationship obviously means that the bank does not take responsibility for the contents of the safe deposit locker is hiring of bank locker bailment and that continues to be the sole liability of the individual. The locker can only be opened by the person who has kept the valuables in the locker combined with the master key of the bank. In any unforeseen circumstance like theft, burglary, war or civil strife, the bank is absolved of any responsibility pertaining to the contents of the locker.

However, the right of lien arises only when the bailee uses skill and labor on the goods to confer an additional value on the goods. Stay updated with the latest Current affairs and other important updates regarding video Lectures, Test Schedules, live sessions etc.. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month. Indiankanoon.org needs to review the security of your connection before proceeding. The National Consumer Disputes Redressal Commission dismissed the Revision Petition filed against the judgment of the State Consumer Disputes Redressal Commission.

The Bench, comprising of Justice S. Nijjar, has held that exclusive possession of the goods is sine qua non for bailment. Therefore, mere hiring of a locker would not be sufficient to constitute a contract of bailment as provided under Section 148 of the Indian Contract Act, 1872. He has added that the question of reasonable care and quantum of damages would arise only after it has been shown that actual exclusive possession of the property was given by the bailee to the bailor, i.

Even if the landlord-tenant argument of the bank is to be taken into consideration, the respondent had a responsibility to safeguard the premises of the bank, including the strong room, just as a landlord would be expected to protect the premises of the property given on rent. The bank should not have been able to get away merely because there was no “explicit responsibility” on its part. For instance, a guest, having the “physical custody” of a glass during a party, cannot be said to have “possession” of the same, and hence, a bailor-bailee relationship does not exist between the guest and the host. This distinction becomes significant in answering the questions regarding the legal status of the relationships between the customers of the safe deposit box services and these service providers. The Supreme Court finally held that, at this juncture, it was pertinent for the RBI to lay down comprehensive directions mandating the steps to be taken by banks with respect to locker facility or safe deposit facility management. In view of the same, they directed the RBI to issue suitable rules or regulations within six months from the pronouncement of the judgment.

Lastly, this proposition held by the courts might provide an escape to the banks who are generally the drafters of such agreements. Late nineteenth century was the time period when it became commonplace for banks to provide safe deposit services and most of them did so in a casual manner, without getting involved in much documentation. Where the relationship between these parties was not described, whether in writing or in oral form, it was almost held invariably by the courts that their relationship was that of bailment. It was reasoned that the innate nature of the transaction and the primary cause for which safe-deposit boxes are taken on rent, impose upon the service providers, such duties which might have been imposed if it were a case of bailment. In actual delivery, the physical possession of the goods is handed over to the bailee while in constructive delivery the possession of the goods remains with the bailor upon authorization of the bailee.

In IOB in Chennai account holders were so shocked by a daring daylight robbery that there was a literal clamor to withdraw their savings and empty their lockers in the branch. In this case the safe deposit box provider company was held liable for “being negligent in exercising the amount of care that was diligently required on their part”, for allowing government officials to seize the contents of the safe deposit box. The banks should not have the liberty to impose unilateral and unfair terms on the consumers. Therefore, mere leasing out of the locker would not establish a relationship of bailment between the bank and the locker holder. In order to establish exclusive possession, the claimant must prove that the bank had knowledge of the contents of the locker. Alternatively, where the locker holder alone has knowledge of the contents, they must lead independent evidence to prove that their articles or valuables were actually inside the locker, and the valuation of the same.

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In 1995, the Appellant visited the Bank to operate the locker and deposit the locker rent. He was informed that the Bank had broken open his locker in 1994 for non-payment of rent dues for the period of 1993 to 1994. As per of the Companies Act, 2013, the person appointed as an auditor of a company shall sign the auditor’s report or sign or certify any other document of the company, in accordance with the provisions of Section 141. A gratuitous bailment is terminated by the death either of the bailor or of the bailee.

Asked for her experience with a private bank where she has a locker, a south Delhi housewife, Anouhita Banerjee, said it had been good so far. Unless otherwise indicated, all materials on these pages are copyrighted by Kalyan Krishna MediaZ Private Limited. By continuing past this page, you agree to our Terms of Service, Cookie Policy, Privacy Policy and Content Policies. The locker register shall be consistently updated in case of any change in allotment.

The liability of the contents of a bank locker is placed on the customer itself as long as he has a part in accessing the lockers while the liability would undoubtedly shift to the bank in case of breach of trust on any of employee’s parts. In fact, nowadays banks are insisting that anyone opting for a bank safety vault facility should first get the valuables insured before placing them in the safe deposit locker. That becomes an additional cost to the individual on top of the locker rent, which has to be anyways https://1investing.in/ paid to the bank. There is, however, no substantive domestic legislation or sector specific regulation, which may throw light upon the issue of whether banks are responsible under the laws of bailment for the loss of articles placed inside the locker. In 2006, the Reserve Bank of India had issued a Draft Circular on Safe-deposit Lockers . Even in the relevant foreign precedents, the application of the principles of bailment was contingent on determining whether possession was transferred in the facts of the case.

The delivery of the goods is done to the premises of the bank and not to the bank itself. This legal relationship is analogous to the relationship between a landlord and a tenant. A landlord cannot be said to have a control over the personal property of the tenant, but merely provides the tenant with a place to store their property. Therefore, even though the landlord might be obligated to exercise ordinary care to protect the premises of the rented property, the landlord cannot be expected to extend this care to protecting the personal property of the tenant.