Liability of Common Carriers under the Indian Law

International Trade Law

N. A.

1

INDEX

Pg no.

CHAPTER I

INTRODUCTION

1.1. Introduction 10

1.2. History of Common Carriage Laws in India 11

CHAPTER II

ESSENTIAL CHARACTERISTICS OF COMMON CARRIERS

2.1 Essential Features of Common Carriers. 12

2.2 Exceptions to the Rule 13

CHAPTER III

GENERAL LIABILITY OF A COMMON CARRIER

3.1 General Liability of a Common Carrier 14

CHAPTER IV

2

LEGISLATIONS GOVERNING LIABILITY OF COMMON CARRIERS IN INDIA

4.1. Legislations Governing Liability of Common Carriers in India 15

CHAPTER V

ANALYSIS OF LEGISLATED PROVISIONS

5.1. Liability of the Common Carrier 16

5.2. Limitations on Exonerating Liability 17

5.3. Rights of the Common Carrier 18

5.4. Measurement of Liability 19

CHAPTER VI

CONCLUSION

6.1. CONCLUSION 21

BIBLIOGRAPHY 22

RESEARCH METHODOLOGY

3

Aim and Objective:The objective of this project is to analyze the rights and liabilities of common carriers under the Indian law in accordance with provisions of The Carriage by Road Act, 2007.

Scope of the Project:

The scope of the project is restricted to the study of liabilities of Common carriers under

Indian law and shall be limited to the carriage of goods by land and shall not cover

carriage by any other means such as air or sea.

Significance

This study emphasizes on the balance between the liabilities and rights available to

common carriers provided for under the Carriage by Road Act, 2007.

Hypothesis:

The project is based on the hypothesis that the provisions of the Carriage by Road Act,

2007 are adequately sufficient with regard to a Common Carrier’s rights and liabilities.

Research Question:

Whether the Carriage by Road Act, 2007 adequately provides for a balance between the

rights and liabilities of a common carrier?

Research Methodology:

The project is based purely on doctrinal research methodology. The primary source for

the purpose of this project is The Carriage by Road Act, 2007 and the secondary sources

of research include textbooks, commentaries, articles, law reviews, law journals and web

sources.

Review of Literature:

The Literature of the concerned issue limits to the study of text books and articles. A

substantial source for analysis of the concept along with relevant cases has been the text

4

book-Law of Carriage, Air, Land & Sea by Dr. Avtar Singh. The Project bases its

substantive researcher on the legislations and the judicial pronouncement.

Abstract

5

The term ‘Common Carriers’, in accordance with Section 2 of The Carriers Act, 1865 may be

defined as any individual, firm or company other than the government, who or which transports

goods as a business, for money, from place to place, over land or inland navigation, for all

persons indiscriminately, provided that the freight chargeable by him is paid to him; there is

accommodation on his conveyance; and there is nothing objectionable or illegal about the

carrying of goods of a particular consignor.

The objective of this project is to analyze the rights, duties and liabilities of common carriers

under the Indian law in accordance with provisions of The Carriers Act, 1865 with the help of

relevant case law. The scope of the project is restricted to the study of liabilities of common

carriers under Indian law and does not elaborate on the laws of other nations. The study shall be

limited to the carriage of goods by land and shall not cover carriage by any other means such as

air or sea.

The project is based purely on doctrinal research methodology. The primary source for the

purpose of this project is The Carriers Act, 1865 and the secondary sources of research include

textbooks, commentaries, articles, law reviews, law journals and web sources.

6

CHAPTER I

INTRODUCTION

1.1 Introduction

Movement of goods or property is an important and integral part of the economic development

of the country. In today’s modern world transport is no longer a personal affair. Carriers cater to

the needs of the general public for hire or reward. Almost no businessman or business enterprise

can carry out its business effectively without utilizing the services of carriers. 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 repeals the previous enactment The Carriers Act, 1865 in a

bid to accommodate the necessary changes with time. 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.

The term ‘Common Carriers’ may be defined as ‘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 government1.’ A common carrier in common-law countries is

1 Section 2(a) of the Carriage by Road Act, 2007

7

a person or company that transports goods or people for any person or company and that is

responsible for any possible loss of the goods during transport. A common carrier offers its

services to the general public under license or authority provided by a regulatory body. The

regulatory body has usually been granted authority by the legislation which created it. The

regulatory body may create, interpret, and enforce its regulations upon the common carrier with

independence and finality, as long as it acts within the bounds of the enabling legislation.

1.2 History of Common Carriage Laws in India

The law of common carriage in India has had a long and chequered history. The earlier Carriers

Act was repealed by the Carriage by Road Act 20072. 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. Prior to the passing of the Carriers Act, 1865

there was no codified law governing such liability in India. The liability of the Carrier was

determined under English Common Law as administered by the courts in India. Under English

Common Law the carrier has strict liability with respect to goods entrusted to his care. A

common carrier has traditionally been defined as one which holds itself out as being ready, upon

demand and without discrimination, to carry goods for the public at large, for hire or

reward. Common law doctrines applicable to common carriers have two distinct sources. The

first is an aspect of the law of bailment and is concerned with the responsibilities of carriers for

goods in their possession. The second is an aspect of the law of franchises and is concerned with

government control of enterprises exercising exclusive privileges. There are some features in

common, but the underlying policy considerations defining the liability of common carriers are

quite different.

2 Sec. 22 of The Carriage by Road Act 2007

8

CHAPTER II

ESSENTIAL CHARACTERISTICS OF COMMON CARRIERS

A carrier is a person who agrees to carry goods or passengers from one place to another.

While a Common Carrier is a person or an association or a body of persons other than the

government engaged in the business of transporting of goods for hire by land for any one

indiscriminately.

2.1 Essential Features of Common Carriers

The basic features and characteristics of a common carrier can be listed as:

Common Carrier :-

A common carrier may be one person, a firm, a company or association of persons.

Railway being owned by the government cannot be called a common carrier.

Regular Business :-

If any carrier does not carry the goods regularly it is not called common carrier. To earn

money a common carrier should carry the goods as a regular business.

Carrier Charges :-

If the goods are transported from one place to another free of charge it is not a common

carrier. It charges the fare for transporting the goods from one place to another.

Services For All :-

A common carrier provides the services of transportation to all the people. It cannot

refuse any person without any reasonable cause. If it reserves the right of rejection then it

cannot be called a common carrier.

Carriage of Goods Only :-

Only goods are carried by the common carrier. Passengers are not allowed. If it carriers

passengers then it is not a common carrier.

9

Carriage By Land :-

The act of common carrier does not apply by sea. The carriage must be made by land.

2.2 Exceptions to the Rule

However, there may be certain instances of exception where the Common carrier may lawfully

refuse carriage, such as :

If goods are not packed properly.

If reasonable charges are not paid.

If the goods are of a dangerous nature.

If there is no space in the carrier.

If goods are tendered at an unreasonable time.

The basic features that describe the nature of Common carriers are firstly, their duty to serve all

without any discrimination, secondly, their duty to use care for the goods in the carrier's custody

and lastly, the lack of liability as a result of harm due to the goods being carried. It is important

to note that most of the carriage laws are applicable only to carriage of goods by a common

carrier and not to carriage of passengers.

CHAPTER III

10

GENERAL LIABILITY OF COMMON CARRIER

3.1. General Liability of Common Carrier

The rationale for holding the carrier liable for damage to goods is that, having entrusted his

goods to the owner for carriage, the owner leaves the control and care of the goods to the carrier

who may deal with them as he thinks fit so long as they remain in his custody. If the goods are

lost or damaged when in the custody and control of the carrier, the owner suffers a loss without

his own fault. The goods are handed over to the carrier with an expectation that he would deliver

them at the destination in the same order and condition in which he took them from the owner at

the place of departure. It is therefore, just and reasonable that the carrier should pay

compensation for the loss or damage sustained in his custody unless such damage is owing to

certain circumstances beyond his control. Under English Common Law the carrier was held

liable as an insurer and his liability was absolute. He was strictly liable for loss or damage to

goods unless the loss or damage was owing to Act of God or act of King’s enemies. However,

the liability of a carrier should not be unlimited. The carrier may be able to limit his liability in

certain cases by special contract. Yet, a contract to limit the Carrier’s liability should not provide

protection to the carrier for loss or damage occasioned by the negligence or fraud committed by

the carrier or his agents and servants.

CHAPTER IV

11

LEGISLATIONS GOVERNING LIABILITY OF COMMON CARRIERS IN INDIA

4.1. Legislations Governing Liability Of Common Carriers In India

A situation regarding the liability of the Common carriers arose where either the Carriers

undertook complete liability or were completely absolved from liability by virtue of special

contracts. Thus in order to strike a balance between the two extreme positions regarding the

liability of the Carrier the Carriers Act, 1865 was enacted. The purpose of this Act is twofold.

Firstly it enables the common carrier to limit his liability for loss or damage to goods delivered

to him for carriage. Secondly, it declares that the common carrier shall be liable for loss or

damage to goods occasioned by the negligence or criminal act of himself or his agents or

servants and such liability cannot be excluded by any special contract. This act was applicable to

carriage by land or inland navigation only. Though lasting over a century, the act eventually

outran its course and on realizing the inadequacy of the Carriers Act-1865 to meet the present-

day requirements of trade and industry, the Union Govt. decided to take a fresh look at the Act.

The Carriers Act-1865 had defined the relationship between common carriers and transport

intermediaries and the consignors. After a good deal of deliberation over several years, the

Government succeeded in enacting a new law, namely the Carriage by Road Act, in September

2007. The new enactment, among other things, requires that every common carrier and its agents

and transport intermediaries be registered with the regional transport authority in the respective

State to be permitted to transport goods by road. It further provides for the rights and liabilities of

common carriers in case of loss or damage to goods and for punishment for contravention of the

provisions of the Act. Further, 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 and came into force on 28th

February 2011.

12

CHAPTER V

ANALYSIS OF LEGISLATED PROVISIONS

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 prohibition3. The carrier would however be liable for any loss or damage

which is due to his negligence4.

5.1. Liability of the Common Carrier

This liability of the common carrier commences from the moment of acceptance of goods either

by him or through his authorized agent or employee5 and continues up to the delivery to the

consignee, actual or constructive, and not merely up to arrival at the destination6. 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 purpose7.

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.

3 Sec 17 of Carriage by Road Act, 20074 Higginbatham v. Great Northern Rly Co (1861) 2 F&F 796; London & NW Rly Co v.Richard Hudson & Sons Ltd. [1920] AC 324 HL.5 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 1616 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;7 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.;

13

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 goods forwarding note 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 that beyond the period so agreed upon in the goods forwarding

note, 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 carrier8.

5.2. Limitations on Exonerating Liability

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 agents9. 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.

8 Road Transport Corporation v. Kirloskar Brothers Limited AIR 1981 Bom 299, (1981) 83 BOMLR 173; New India Assurance Company Limited v. Chinar Goods Carriers9 Section 12(1)

14

5.3. Rights of the Common Carrier

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 part10. 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. 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. 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. 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. The common carrier also has the right to detain or

dispose of 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.

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 negligence11. On refusal by the consignee, the

common carrier should inform the consignor. This is necessary for mutual convenience though

there is no such obligation. The carrier is not bound to return the goods at once to the consignor;

he should wait for a reasonable period for instructions of the consignor12.

10 Section 15 of the Carriage by Road Act, 200711 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;12 Hudson v. Baxendale (1857) 2 H&N 575;

15

5.4. Measurement of Liability

With regards to the measurement of liability for loss or damage to consignment, the Carriage by

Road Rules, 2011 come into play. 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 higher13.

Regarding the measurement of damages, apart from the Carriage by Road Rules, 2011, one

should also note Halsbury’s Laws of England14. 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

13 Rule 12(9) of the Carriage by Road Rules, 201114Para 458, Vol 5, 4th Edn.

16

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.”

17

CHAPTER VI

CONCLUSION

6. 1. Conclusion

Thus upon analyzing the provisions of the Carriage by Road Act, 2007 along with the Carriage

by Road Rules, 2011, one can determine the Liabilities and Rights provided for the Common

Carrier indeed strike a balance. A common carrier is one who carries or transports goods for hire

or charge on a regular basis for all persons indiscriminately. They have a duty to care for the

goods they carry and shall be liable in case of loss or damage to goods. The liability of common

carriers along with their right to seek exemption from liability has been clearly and distinctly

provided for in the Act. The major changes brought with the enactment of these legislations were

that any entity, be it an individual or a body of carriers by road would have to register themselves

to be legally enabled to carry on with the practice of common carriage by land within the bounds

of India. Further, it differed from the prior legislation such that it excluded inland navigation

from within its ambit. This act confers certain rights but also enables action to be taken against

common carriers when held liable.

18

BIBLIOGRAPHY

STATUTES REFERRED:

The Carriers Act, 1865

Carriage by Road Act, 2007

Carriage by Road Rules, 2011

BOOK REFERRED:

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

Lucknow.

NEWS PAPER ARTICLE:

http://www.thehindubusinessline.com/industry-and-economy/logistics/road-act-lost-in-

enforcement/article2565304.ece

WEBSITE:

Ministry of Road Transport and Highways http://morth.nic.in/index1.asp?linkid=135&langid=2

19

20