The Carriage by Road Act

By Aakash Kumbhat, National University of Advanced Legal Studies, Kochi

Editor’s Note: Carriage laws govern the transportation of goods for the eventual purpose of sale. Different legislations deal with different modes of carriage. The Carriage by Road Act, 2007 provides for carriage of goods by road transportation. This article discusses this Act in detail.

Introduction

For a Trader or a Manufacturer the goods are of great significance. Their existence, leave alone their profits depend on production and sales of the commodity. This involves moving from one to place to another either by way of sale or in the process stage itself. Movement of cargo is done by entrusting them to Carriers. The owners are extremely concerned about the safe movement of goods from one place to another and they require financial security to take care of perils that might impede such safe transportation. There would be a contract of sale between the Seller and buyer; the contract of transport entered with the transporter or Carrier and the contract of insurance, the protection obtained from the Insurer.

Thus to protect the interest of such traders as well as the carriers, the legislature has enacted the Carriage by Road Act of 2007 which thus is the central idea of this study.

The Carriage Act has had a long and chequered history. The earlier Carriers Act of 1865was via notification dated 29th Sept 2007 repealed by the Carriage by Road Act 2007.  The same has also been mentioned in Section 22 of the new Act. The existing Act of 1865 itself was based on the British Carriers Act of 1830 which in many ways was the first legislative intervention in the field of carriage of goods.  This Act of 1830 of UK originally applied to all common carriers operating by land, both road and railway carriage. And the Statute of 2007 was an Act to provide for the regulation of common carriers, limiting their liability and declaration of value of goods delivered to them to determine their liability for loss of, or damage to, such goods occasioned by the negligence or criminal acts of themselves, their servants or agents and for matters connected therewith or incidental thereto.

The Act of 1865 outlived its existence and with changing times amendments were necessitated.  The Carriage by Road Act 2007 though came in to being in 2007 could not be procedurally implemented for lack of rules. After nearly 3 years of the Act, the draft of Carriage by Road Rules 2010 were published vide GSR 505 (E) dated 15th June 2010 inviting objections, suggestions from all persons likely to be affected.

After passage of some more months, now the Ministry of Road Transport and Highways have notified the rules on 28th Feb 2011.  These rules are called “The Carriage by Road Rules 2011” and come into force from the date of publication in the Official Gazette.

On 10th March 2011 the Government published another Gazette Notification.  It was in fact a corrigendum. In the notification of 28th Feb 2011 the words ‘the draft of the Carriage by Road rules 2010’were present erroneously in the English version though it was no longer the draft but the version.  This was corrected by this notification.

The Carriage by Road Act 2007 as read with the Carriage by Road Rules 2011 is in many ways prejudicial to the interests of insurers and primarily those who utilize the services of transporters.  As one would appreciate, the contract of carriage is an agreement between the transports, carrier and the owner of the goods,consignor, consignee and insurers are not a direct party to the contract.  When goods are insured, they only enter as subrogees having a paid a claim.  It is this subrogation, more specifically, the extent of recovery which is threatened.

Those who have some knowledge of logistics and transportation or owning goods and transporting them are well aware that the value of the goods might pose no direct proportion to the value of freight that is paid for transportation.  Again, the value of goods would remain constant throughout the transportation and might not be affected by the distance involved but the cost of freight would be proportionate to the volume or weight of the consignment as also to the distance.

Purpose of the Act

The Carriage by Road Act, 2007 is an Act of the Parliament of India which provides for the regulation of common carriers of goods by roads. The Act was published on 29th September 2007.

It is basically an Act to provide for the regulation of common carriers, limiting their liability and declaration of value of goods delivered to them to determine their liability for loss of, or damage to,such goods occasioned by the negligence or criminal acts of themselves,their servants or and for matters connected there with or incidental thereto.

This Act explains the relationship, responsibility and legal liability of common carrier, transport company, goods booking agent, logistic firm with the consignor, trader in transportation of goods by road against payment of freight to the common carrier by the consignor or consignee in the country.

Provisions of the Act:

Following are a few important terms defined by this Legislation:

Common Carrier: A common carrier means a person engaged in the business of collecting, storing, forwarding or distributing goods to be carried by goods under a goods receipt or transporting for hire of goods from place to place by motorised transport on road, for all persons undiscriminatingly and includes a goods booking company, contractor, agent, broker and courier agency engaged in door-to-door transportation of documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles, but does not include the government[i].

Consignee: Consignee is the person named as consignee in the GFN[ii].

Consignor: Consignor is the person, named as consignor in the GFN, by whom or on whose behalf the documents, goods or articles covered by such forwarding note are entrusted to the common carrier for carriage thereof[iii].

Section 3(1) of the Act states that no person shall engage in the business of common carrier, after the commencement of the Act, unless a certificate of registration has been granted to him. Persons engaged in the business of common carrier before the commencement of the Act, were required to either apply for a registration within 90 days from the date of commencement of the Act[iv]or cease to engage in such business on the expiry of 180 days from the date of commencement of the Act[v].

The Act mandates that every consignor shall execute a GFN (hereinafter referred to as ‘GFN’) which would include a declaration about the value of the consignment and goods of dangerous and hazardous nature. Every common carrier is liable to the consignor for the loss or damage to any consignment in accordance with GFN.[vi]

As per Section 9 of the Act, the consignor on receiving or loading the consignment, as the case may be, issue a Goods Receipt[vii] in triplicate, the original of which shall be given to the consignor[viii]. This goods receipt shall contain the weight or measure and other particulars of the goods and the number of packages therein[ix] along with the undertaking by the common carrier about liability under Sections 10 and 11[x].

Liabilities of the Common Carrier:

Apart from the penalties discussed below, the common carrier has, per se, a general responsibility for the loss, destruction, damage or deterioration in transit or non-delivery of any consignment entrusted to him for carriage which is subject to a few exceptions such as act of god, act of war or public enemy, riots, arrest or seizure and order, restriction or prohibition[xi]. The carrier would however be liable for any loss or damage which is due to his negligence.[xii]

This liability of the common carrier commences from the moment of acceptance of goods either by him or through his authorised agent or employee[xiii] and continues up to the delivery to the consignee, actual or constructive, and not merely up to arrival at the destination[xiv]. But where the carrier’s agent receives the goods without the authority or in excess of authority or in breach of instructions, the carrier is not bound by such receipt unless it can be shown that he was holding out that person for that purpose.[xv]

Section 10 of the Act speaks about Liability of common carrier. As per sub-section (1) the liability of the common carrier for loss of, or damage to any consignment, shall be limited to such amount as may be prescribed having regard to the value, freight and nature of goods, documents or articles of the consignment, unless the consignor or any person duly authorized in that behalf have expressly undertaken to pay higher risk rate fixed by the common carrier under section 11.

As per sub-section (2) of the same, the liability of the common carrier in case of any delay up to such period as may be mutually agreed upon by and between the consignor and the common carrier and specifically provided in the GFN including the consequential loss or damage to such consignment shall be limited to the amount of freight charges where such loss, damage or delay took place while the consignment was under the charge of such carrier.

This is subject to the provision thatbeyond the period so agreed upon in the GFN, compensation shall be payable in accordance with sub-section (1) or section 11:

It has been further provided that the common carrier shall not be liable if he proves that such loss or damage to the consignment or delay in its delivery had not taken place due to his fault or neglect or that of his servants or agents thereof. Thus one can see by the wordings of this provision that the burden of proof for proving that the neglect of none of the above was involved falls upon the common carrier.

The liability of the common carrier has been also been talked upon the Carriage by Road Rules of 2011 and the same have been mentioned in the later part of this study.

Section 12 talks about conditions limiting exonerating the liability of the common carrier. Every common carrier shall be liable to the consignor for the loss or damage to any consignment in accordance with the GFN, where such loss or damage has arisen on account of any criminal act of the common carrier, or any of his servants or agents.[xvi] Thus the exonerating of the common carrier is limited as he is liable even for the criminal acts of his servants or agents which thus can be said to be an exceptional case of the application of the principle of vicarious liability in instances of criminal acts of the servant.

As per sub-section (3) of the same and the provision thereto, if the common carrier is able to prove that the contents of the GFN so prepared by the consignor are incorrect then the common carrier is not liable for any loss or damage caused due to a case of detention by a competent authority for examination and upon such examination certain prohibited goods or goods on which due tax was not paid were found and the same were not described in the GFN.[xvii]

Along with these liabilities arise certain rights conferred upon the common carrier as well. These rights are available to him only in instances where it is a fault on the consignee’s part. If the consignee fails to take delivery of any consignment of goods within a period of thirty days from the date of notice given by the common carrier, such consignment may be deemed as unclaimed.[xviii] This is subject to the provision that in case of perishable consignment it shall be deemed to be unclaimed after a period of twenty-four hours of service of notice. Now such an unclaimed consignment can be sold by the common carrier if it is of perishable nature.[xix] But if the consignment is not perishable in nature, the common carrier has the right to sell the goods, without a further notice to the consignee or consignor, only if a notice was served upon the consignee, or consignor if consignee is not available, requiring him to remove the goods within a period of fifteen days and he has failed to comply with such a notice.[xx] But out of the sale proceeds the common carrier has the right only to retain a sum equal to the freight, storage and other charges due including expenses incurred for such a sale and in case there is any surplus it shall be returned to the consignee or the consignor.[xxi] The common carrier also has the right to detain or dispose off the consignment in part or full to recover his dues if the consignee fails to make payment of the freight and other charges payable to the common carrier at the time of delivery.[xxii]

Thus if the consignee either refuses to receive the goods or if the consignee if not traceable at the address provided by the consignor, the liability of the carrier comes to an end. He would then be converted into a normal bailee to be liable only for negligence.[xxiii] On refusal by the consignee, the common carrier should inform the consignor. This is necessary for mutual convenience though there is no such obligation. Not is the carrier bound to return the goods at once to the consignor, he should wait for a reasonable period for instructions of the consignor.[xxiv]

Regarding the measurement of damages, apart from the Carriage by Road Rules, 2011, one should also note Halsbury’s Laws of England[xxv]. It has been said:

Where goods are entirely destroyed or lost by a common carrier, the measure of the damages recoverable from him is prima facie the value of the property lost. The owner is entitled to the value of goods dealt in by way of trade at the place to which they were consigned. If there is a market for that description of goods at that place, the damages are the market value of the goods there at the time when they ought to have been delivered; but if there is no market, then the damages are the cost price of the goods, together with the expenses of carriage, and such profits as might reasonably be expected to have been made in the ordinary course of business, provided the carrier had notice that the goods were brought for resale. If the consignor has declared the value of the goods before the carriage, he is bound by the declaration and is estopped from giving evidence that the goods have any higher value.”

As to carriage of goods of dangerous nature

A common carrier is restrained from carrying any goods of dangerous or hazardous nature to human life except in accordance with such procedure and after complying with such safeguards as may be prescribed.[xxvi] The common carrier carrying such goods of dangerous nature also has duty to ensure that the consignment is covered by at least one insurance policy in order to provide relief in case of death or injury to a person or damage to any property or the consignment in case of an accident.[xxvii] As regards the labelling of as to what goods are of hazardous or dangerous nature to human life, the Central Government has the power to make rules for the same.[xxviii]

The expression ‘dangerous goods’ thus includes goods which are dangerous to carrier’s vehicle or to the other goods in the vehicle.[xxix]

The Central Government also has the power to specify by notification in the Official Gazette the goods or class of gods which shall not be carried by a common carrier.[xxx] It also has the power to make rules for carrying out the provisions of this Act.[xxxi]

Section 18 of the Act has laid down the punishments for the contravention of the rules mentioned in Sections 3, 13 and 14. It says that upon a contravention of the provisions of the above mention Sections, a person shall be punishable with fine extending to five thousand rupees for the first offence and with fine extending to ten thousand rupees for the second or subsequent offence.[xxxii]

In exercise of the powers conferred by the Act, the Central Government of India made the Carriage by Road Rules 2011.

Carriage by Road Rules, 2011

In exercise of the powers conferred by the Carriage by Road Act, 2007, the Central Government of India made the Carriage by Road Rules, 2011. These Rules relate to the regulation of common carriers of goods by roads. The Rules came into force on 28th February 2011.

Conditions for grant of registration

A person applying for registration under Carriage by Road Rules shall comply with the following conditions:

  1. The applicant should produce registration certificates of two commercial vehicles registered in his name or in the name of an Organisation or in the name of a partner or proprietor or director, or a contract letter or workorder for carrying out functions as a common carrier, from a registered company;[xxxiii]
  2. The applicant should have net worth of minimum rupees five lakhs of his own or of any of the proprietor or partner or director. In case of applications for certificate of registration for providing service at a higher risk, the net worth of the applicant or of any of its proprietor or partner or director shall be minimum rupees twenty lakhs;[xxxiv]
  3. In case common carriers are proprietorship firms or partnership firms, the proprietors or partners should not have been blacklisted or deregistered earlier.[xxxv]

Grant or renewal of certificate of registration

The registering authority shall grant or renew the certificate of registration within a period of 30 days after

  1. Receiving the application
  2. Receiving the fees specified
  3. Satisfying that the applicant has complied with all the conditions required for grant of registration.[xxxvi]

Every holder of a certificate of registration needs to maintain a record of the transactions in a register, updated on a quarterly basis. The summary of the entries are to be submitted to the registering authority.[xxxvii] Every consignor needs to execute a GFN (GFN), carrying details of the goods, at the time of booking his goods. On receipt of GFN from the consignor for booking of goods to be transported, every common carrier shall issue a goods receipt.[xxxviii] For goods of dangerous or hazardous nature, the goods receipt shall be issued on a paper with upper left hand corners printed in red as “Dangerous and Hazardous Goods”.[xxxix]

Liability for loss of or damage to any consignment

Liability of the common carrier is limited to ten times the freight paid or payable, provided that the amount so calculated does not exceed the value of the goods as declared in GFN.[xl] In case of partial damage to the goods, the evaluation of damage may be done by an independent Government approved valuer or surveyor selected by the consignor out of the list notified by the common carrier and the cost of such evaluation is to be borne by the common carrier.[xli]The liability for loss of documents sent along with the consignment order should not exceed rupees five hundred.[xlii] In case of perishable goods, the consignor or the consignee should select the Government approved valuer or surveyor within a period of 24 hours from the time of report of the loss or deterioration of the goods, failing which the common carrier shall be free to select the said valuer or surveyor.[xliii] The delivery of the consignment by the common carrier is treated as prima facie evidence of delivery of the goods as described in the GFN unless notice of the general nature of loss of, or damage to, the goods is given in writing, by the consignee to the common carrier at the time of handing over of the goods to the consignee.[xliv] The responsibility of the common carrier is limited to the transit period, from the date of taking over the goods in his or her charge from the consignor to the date of arrival at the destination point plus three calendar days. The date of arrival of the consignment is taken as the day on which the goods physically arrive at the destination or the day when the consignee or consignor is informed of the arrival of the goods at the destination, whichever is later.[xlv]The liability of the common carrier is to be calculated on the actual freight collected or due or ninety per cent of total charges excluding the taxes shown on goods receipt, whichever is higher.[1]

Conclusion

Thus upon having a look at the Carriage by Road Act of 2007 along with the Carriage by Road Rules , 2011 one can come to the conclusion that it has potential to protect the interest of unwary traders and consignors, who very often are short changed or even cheated by unscrupulous elements among the road transport firms and their agents. The Act is alsoa serious challenge to the “fly by night” transporters in the road transport business of the country as it sort of controls the activities of the common carriers to a large extent. Though the Act seems to be sufficient when read by a person of ordinary prudence, but the same may not be for a person engaged in this trade. Thus the trading community must come forward to assist so that one can have a flawless law in this field of trade and commerce as they had when called upon to provide objections and suggestions in the drafting of the Carriage by Road Rules.

Bibliography

Statute Referred:

Carriage by Road Act, 2007.

Table of Cases:

  1. Bourne Gatliffe (1841) 3 Man & G 643;
  2. C Burley Ltd Stepney Corpn [1947] 1 All ER;
  3. Chapman Great Western Rly Co (1880) 5QBD 278;
  4. Farrant Barnes (1862) 11 CBNS 553;
  5. Gibbon Paynion (1769) 4 Burr 2298;
  6. Great Western Rly Co Crouch (1858) 3 H&N 183;
  7. Heugh London an NW Rly Co (1870) LR 5 Exch 51;
  8. Higginbatham Great Northern Rly Co (1861) 2 F&F 796;
  9. Hudson Baxendale (1857) 2 H&N 575;
  10. London & NW Rly Co Richard Hudson & Sons Ltd. [1920] AC 324 HL.
  11. Long Distric Messenger and Theatre Ticket Co Ltd 32 TLR 596;
  12. Shepherd Bristol and Exter Rly Co (1868) LR 3 Exch 189;
  13. Slim Great Northern Rly Co (1854) 14 CB 647: 23 LJ CP 166;
  14. Soanes London and SW Rly Co (1919) 88 LJKB 524 CA.;
  15. Stephenson Hart (1828) 4 Bing 476;
  16. Walker Jackson (1842) 10 M&W 161;
  17. Williams East India Rly Co. (1802) 3 East 192;

Book Referred:

Law of Carriage, Air, Land & Sea,4th Edition, 2005Avtar Singh, Eastern Book Company, Lucknow.

Edited by Sinjini Majumdar

[1] Rule 12(9)

[i] Section 2(a)

[ii] Section 2(b)

[iii] Section 2(d)

[iv] sub-clause (a) of Section 3(2)

[v] sub-clause (b) of Section 3(2)

[vi] Section 8

[vii] Section 9(1)

[viii] Section 9(2)

[ix]Section 9(3)

[x] Section 9(4)

[xi] Section 17

[xii]Higginbatham v. Great Northern Rly Co (1861) 2 F&F 796; London & NW Rly Co v. Richard Hudson & Sons Ltd. [1920] AC 324 HL.

[xiii]Long v. Distric Messenger and Theatre Ticket Co Ltd 32 TLR 596; Gibbon v.  Paynion (1769) 4 Burr 2298; Walker v. Jackson (1842) 10 M&W 161;

[xiv]Chapman v. Great Western Rly Co (1880) 5QBD 278; Shepherd v. Bristol and Exter Rly Co (1868) LR 3 Exch 189; Bourne v. Gatliffe (1841) 3 Man & G 643;

[xv]Slim v. Great Northern Rly Co (1854) 14 CB 647: 23 LJ CP 166; Soanes v. London and SW Rly Co (1919) 88 LJKB 524 CA.;

[xvi] Section 12(1)

[xvii] Section 12(3)

[xviii] Section 15(1)

[xix] Section 15(2)(a)

[xx] Section 15(2)(b)

[xxi] Section 15(3)

[xxii] Section 15(4)

[xxiii]Stephenson v. Hart (1828) 4 Bing 476; Heugh v. London an NW Rly Co (1870) LR 5 Exch 51; Great Western Rly Co v. Crouch (1858) 3 H&N 183;

[xxiv]Hudson v. Baxendale (1857) 2 H&N 575;

[xxv] Para 458, Vol 5, 4th Edn.

[xxvi] Section 13(1)

[xxvii] Section 13(3)

[xxviii] Section 13(2)

[xxix]C Burley Ltd v. Stepney Corpn [1947] 1 All ER; Farrant v. Barnes (1862) 11 CBNS 553; Williams v. East India Rly Co. (1802) 3 East 192;

[xxx] Section 14

[xxxi] Section 20

[xxxii] Section 18(1)

[xxxiii] Rule 4(i)

[xxxiv] Rule 4(ii)

[xxxv] Rule 4(iii)

[xxxvi] Rule 5

[xxxvii] Rule 8

[xxxviii] Rule 10

[xxxix] Rule 10(5)

[xl] Rule 12(1)

[xli] Rule 12(2)

[xlii] Rule 12(4)

[xliii] Rule 12(5)

[xliv] Rule 12(6)

[xlv] Rule 12(7)

1 thought on “The Carriage by Road Act”

  1. Want to understand that in case of a dispute which document is considered as proof of delivery .
    Consignee is supposed to give acknowledgement on LR / docket or acknowledgement given on Invoice . As in our case, we have a dispute where the consignee is saying he did not receive complete material and transporter is showing the LR where nothing is written by the customer. CUstomer is saying I have given that remark on the INvoice that is returned to the transporter.
    As per law what is the solution for this

    Reply

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