LIABILITY OF ROAD CARRIERS IN MARINE INSURANCE CLAMS

Many a times Transporters, Vehicle Owners undertaking carriage of goods are reluctant to offer ‘Damage Certificate’ or accept ‘letters of Monetary Claim’ lodged onto them by the Insured after a loss for preserving the Right of Recovery of the Insurers, citing “Carriage at Owners risk” as ground for their denial.

The highlighted part of the paragraphs are worth noting for reference by all concerned in the chain of transportation and insurance for carriage of goods by road.

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.

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.

The Act defines a “common carrier” as a person engaged in the business of collecting, storing, forwarding or distributing goods to be carried by goods carriages under a goods receipt or transporting for hire of goods from place to place by motorized transport on road. It also includes a goods booking company, contractor, agent, broker and courier agency engaged in the door-to-door transportation of documents, goods or articles utilizing the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles.

The Act mandates that every consignor shall execute a goods forwarding note (GFN) which would include a declaration about the value of the consignment and goods of dangerous and hazardous nature. When the consignor issues the GFN to the carrier of goods, the counterparty is required to issue a goods receipt. Every common carrier is liable to the consignor for the loss or damage to any consignment in accordance with GFN.

Section 12 & 17 of The Act is worth noting in this regard.

Section 12 in The Carriage By Road Act, 2007:  Conditions limiting exonerating the liability of the common carrier

(1) Every common carrier shall be liable to the consignor for the loss or damage to any consignment in accordance with the goods forwarding note, where such loss or damage has arisen on account of any criminal act of the common carrier, or any of his servants or agents.

(2) In any suit brought against the common carrier for the loss, damage or non--delivery of consignment, it shall not be necessary for the plaintiff to prove that such loss, damage or non-delivery was owing to the negligence or criminal act of the common carrier, or any of his servants or agents.

(3) Where any consignment has been detained for examination or scrutiny by a competent authority and upon such examination or scrutiny it is found that certain prohibited goods or goods on which due tax not paid or insufficiently paid have been entrusted to the common carrier by the consignor which have not been described in the goods forwarding note, the cost of such examination or scrutiny shall be borne by the consignor and the common carrier shall not be liable for any loss, damage or deterioration caused by such detention of the consignment for examination or scrutiny:

Provided that the onus of proving that such incorrect description of goods in the goods forwarding note was received from the consignor shall be on the common carrier.

Explanation. For the purposes of this section, competent authority means any person or authority who is empowered to examine or scrutinise goods by or under any law for the time being in force to secure compliance of provisions of that law.

17. General responsibility of common carrier.—Save as otherwise provided in this Act, a common carrier shall be responsible for the loss, destruction, damage or deterioration in transit or non-delivery of any consignment entrusted to him for carriage, arising from any cause except the following, namely:—

(a) act of God;

(b) act of war or public enemy;

(c) riots and civil commotion;

(d) arrest, restraint or seizure under legal process;

(e) order or restriction or prohibition imposed by the Central Government or a State Government or by an officer or authority subordinate to the Central Government or a State Government authorised by it in this behalf:

Provided that the common carrier shall not be relieved of its responsibility for the loss, destruction, damage, deterioration or non-delivery of the consignment if the common carrier could have avoided such loss, destruction, damage or deterioration or non-delivery had the common carrier exercised due diligence and care in the carriage of the consignment.

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.

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.

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. The liability for loss of documents sent along with the consignment order should not exceed rupees five hundred. 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. 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. 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. 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.

In view of the above governing clauses of The Carriage by Road Act, 2007 & Carriage by Road Rules, 2011, Refusal to offer Damage Certificate or accept letters of Monetary Claim has no legal standing.

 The above interpretation is absolutely personal in nature and is not binding on any of the parties in particular.