Sunday, January 19, 2020

How Accountable Is A Bank For What You Keep In The Bank Locker?

Most, if not all, of us have bank accounts. And, one of the most common facilities that a customer opts in the bank where he/she has an account is availing the "Locker" facility. But, what if one day, somehow mysteriously your stuff in the locker go missing? Can you hold a bank accountable? Can you ask them to compensate you? Or, are you left to cry in a corner?

A banker and a customer share many types of relationships depending on what type of service the customer avails. When you have a locker in your bank branch, the locker is treated as a fixed, immovable property, thus creating a lessor-lessee relationship between a banker and a customer. A lessor is someone who leases or lets out a property to another. To put simply, bank is like the landlord for that cubical space of the locker you keep your stuff in, and you are just using the leased out property. 

Section 105 of the Transfer of Property Act defines the term "lease". There are four key criteria for an act to qualify as a valid lease.

1. Lease can be with respect to ONLY immovable property. Here, as already said, the vault/locker is treated in law as a fixed and immovable property. 

2. Possession of the immovable property must be transferred from the lessor to the lessee. Now, how is this happening in the case of the bank locker? All of you who have a locker facility in a bank, or have seen the locker of a bank, would be aware that when you avail a locker facility, the bank provides you with a vault wherein there are two keys, or a double lock which has to be opened. One, is a key that you would possess, and the other is a key that the bank will keep. It is virtually impossible for the bank to open your locker without you and your key. Thus, this is qualified to be called a "transfer of possession" under law as you have the access to the vault and the bank does not. 

3. Possession is transferred for peaceful enjoyment for a specific duration. Simple enough. When you have a locker, you are allowed to keep whatever you wish so long it is not anything illegal. And, this facility is not forever. You are bound by a specific duration as agreed by the contract signed between you and the bank at the time of availing such facility. 

4. Possession can be transferred only in favour of some rent/premium. The bank doesn't offer their locker for charitable purposes. Nor do they give it to you for free because you are their valuable customer. If they did, it wouldn't qualify as a lease. The bank charges the facility usually through premiums, or periodical rents. 

Satisfying all the conditions required by the Transfer of Property Act, there is no question or doubt on the fact that the locker facility is a lease. Then, if there is anything missing from what you kept in your locker in the bank, is the bank responsible?

The law says no. A lessor is not responsible for anything that happens in the immovable property when the possession and enjoyment of the property is with the lessee. Unlike a pawnor-pawnee relationship, or a bailor-bailee relationship, the lessor-lessee relation gives more freedom to the lessee to do what he/she wants with the property, but at the same time reduces the liabilities of the lessor. So, if there is something gone missing, what is to be done? An FIR or stolen/missing property can be filed by the bank and the customer, and wait for the investigations to come. But, a customer can't proceed with any action against the bank, unless negligence from the bank's side can be proven. If, for example, the bank had allowed access to your vault negligently without confirming identity to someone who is not you, then maybe there is a chance to make a case against the bank. Unless you can pin on something that is under the bank's control and which the bank ought to have done, there is no way a bank would compensate for your loss.

Then, why do so many people avail the bank locker facility? I guess it's because there is a general feeling that the property you keep in bank lockers are definitely more safe than keeping at home, because of the additional security there, which makes sense as the banks account and keep track of every move of those accessing lockers. 

To conclude, it is important to know the various different rights you have with your bank, and also know what rights you don't have. 

10 comments:

  1. A good analysis of lessor and lessee ( banker and customer relationship)
    Valuable information provided for those in possession of bank lockers.
    ....N.Ramakrishnan, Retd.Bank officer

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  2. In depth study of lessor and lessee ( banker- customer relationship ) has been done.
    Very useful information for those holding bank lockers.
    ...N. Ramakrishnan, Retd.Bank officer.

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  3. Informative.Written in a simple and clear style.

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  4. Very well explained in simple terms.
    Those holding bank lockers will get valuable information.
    ....R.Indira, Retd. Banker

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  5. Thanks for these inputs. Great substance with absolute clarity. Pls do attempt regularly

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  6. Here is a counter/question that I got from my Dad's friend. A valid doubt, though implicitly answered in the post.
    His locker rent one portion is for safety and not mere rent. So, whether he agrees as per contract or not, the bank insures his assets. The essential portion of rent is for safety and security only. He has placed the goods in bank not because there is no space in his home, but only for the safety. Irrespective of the contract, how can the bank wash off its hands?

    Now, here's the answer: Whether a bank offers and charges for the safety solely and solely depends on the contract that the customer has signed with the bank at the time of availing the locker facility. Rights not available usually can be born through contract, and duties that exist usually can be shed through contract. The bank may have a clause that they insure the stuff kept in the locker, but that is not irrespective of their contract but completely dependent on it. Now, why is it so? That is what the whole post is about.

    In the eyes of law, it doesn't matter that we go and keep for safety. What matters is the kind of relationship that arises due to the act, and the rights and liabilities that are attached to such a relationship. In the absence of a clause that charges or ensures the safety of goods, there is no law that asks the lessor to be responsible for the loss/damage of goods, unless there is a proven negligence on the part of the bank.

    The bank is responsible if there is negligence on their part. But apart from that, the relationship created by law through their service of a locker facility does not impose any duty on them to compensate if there is a loss unlike what the law does when we bail goods/pledge goods. Now if there is a question whether it is a lease? Yes, it is, without a doubt! And that's what I have explained in the post.

    So, it is not true that irrespective of the contract, bank insures your goods kept in the locker. And, the rent does not include the security charges. Rent is simply the consideration for leasing out the locker. But, there may be a total charge of rent+security charges, where the bank may insure the goods and assure you safety!

    Hope I answered your question! And, further questions/doubts/challenges are welcome!

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  7. Very informative substance, keep writing...

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  8. It's good! Please treat this as below. In a lessor lessee deal the entire property is held by the lessee. But in a bank locker two things are to be noted.
    1. The possession is not entirely with the lessee. It's jointly operated, both by the bank and the lessee, as one of the two keys is with the bank, and he is partly responsible. There's an intervention by the lessor.
    2. Though the immovable property is supposed to be held by the lessee he has only restricted access, as the immovable property is situated inside the immovable property of the bank.
    It's like the hotel saying that they are not responsible for the damages or the loss of the vehicles, parked there or on valley parking. Courts have held the hotel responsible.

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  9. Quite a informative blog.
    Best wishes.
    N Ramanan
    SCM Consultant.

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