Demystifying the Carriage by the Road Act: A Comprehensive Guide

Transporting goods from one place to another is a major concern for manufacturers and traders. The safety and maintainability of goods is another critical aspect. Therefore, the standardisation of financial assistance and security is essential for protecting goods from perils arising during transportation. When buyers and sellers enter into a contract of sale, they simultaneously enter into a contract of insurance with any insurance company that will protect insured goods.

Therefore, to uphold the rights and interests of such traders and manufacturers, the Parliament enacted the Carriage by Road Act of 2007. The Act was enacted on 29 September 2007 and enforced in the form of The Carriage by Road Rules 2011 on 1 March 2011.

Carriage by Road Act 2007

The Carriage by Road Act of 2007 has a long and chequered history. The Act came into force after repealing the old Carriers Act of 1865 on 29 September 2007. The repealing provision has been underlined under Section 22 of the new Act.

The Earlier Carriers Act of 1865 was based upon the British Carriers Act of 1830 and was the first-ever legislative Act on carriers of goods. The previous Act applied to all carriers by road or railway carriage. However, the Act of 2007 is focused on common carriers, limits their liability and declaration on the value of goods delivered for determining the value and liability.

The Act of 2007 could not be effectively implemented due to some lacuna in rules. Therefore, the Act underwent several amendments. After 3 years, the Carriage by Road Rules 2010 was published by GSR 505 (E) dated 15 June 2010.

Amendments to the Carriage by Road Act

The Ministry of Road Transport and Highways has, by notification, provided specific rules on 28 February 2011. Such rules are called The Carriage by Road Rules 2011 and came into force from the date of notification in the Official Gazette (1 March 2011).

The Carriage by Road Act 2007 is to be read with the Carriage by Road Rules, 2011. The Act is prejudicial to the insurers’ rights and interests and the transport services’ beneficiaries. The contract of carriage is an agreement between the transporters, carrier, and the owner of the goods, consignor, consignee, and insurers. However, they are not a direct party to the contract.

Objective of the Act

The Act provides for the regulation of common carriers of goods through roads. Section 3 of the Act notifies that after the Commencement of the Act, a person shall not engage in the business of common carriers without a registration certificate. If any person harbours a business of common carriers before the commencement of the Act, he/she is required to either:

• Apply for a certificate of registration within 90 days from the date on which the Act commences or
• Cease to hold such business upon the expiry of 180 days from the date on which the Act commenced.

Under the Act, ‘Common Carriers’ have been defined as a person engaged in collecting, storing, transferring, or distributing goods by carriages under a goods receipt or transporting goods for hire from place to place by motorised transport on the road.

The Act also includes the goods booking company, contractor, broker, agent, and courier agency engaged in the door-to-door transportation of documents, goods, or articles, including the services of a person, either directly or indirectly.

The Act levies a duty upon the consignor to execute a goods forwarding note (GFN) that would include a declaration on the value of the consignment and goods of a dangerous and hazardous nature. Every duty about the loss or damage to any consignment of the common carrier is upon the consignor per GFN. The Central Government of India enforced the Carriage by Road Rules, 2011, to regulate all these functions.

Purpose of the Act

The primary purpose of the Act is as follows:

• To regulate Common carriers by road.
• Limits liability of the carriers.
• Declaration of value of goods delivered to them for determining their extent of liability for loss.
• Sets forth the legal liability, relationship and responsibility of common carriers, goods booking agents, transport companies, the relationship between the logistic firms and consignors, etc.
• Mandate single registration of one carrier.
• Punishment for offences of overloading by common carriers.

Provisions of the Act

Several provisions of the Act of 1865 were made obsolete as there was a drastic change over the last 142 years. The Act had a total of 22 sections. Specific essential provisions of the Act are as follows:

Section 3 provides a mandatory registration certificate for all business holders of common carriers.

Section 4 provides that if a person is carrying out or trying to carry out the business of a common carrier, he/she shall first apply for the grant or renewal of a certificate of registration for carrying on such business of a common carrier to the registering authority.

Section 5 provides that the certificate of registration may be cancelled after giving notice by registered post to the holder of a certificate of registration for rectification. The certificate of registration may be revoked on receipt of a complaint from the consignor against the carrier of goods regarding the following:

• Non-issuance of receipt of goods.
• Detention of goods for delivery without providing sufficient reasons.
• Non-disclosure of information regarding the goods to the consignor/consignee.
• Non-payment of charges agreed to be paid to truck owners.
• Asking for additional charges.

Liability of Common Carriers

Section 10

According to sub-section 1, the common carrier’s liability for any loss/damage to the consignment is limited to a certain amount with due regard to the nature of goods, value, freight, and consignment document. The provision shall not apply in cases that the consignor has undertaken to pay the higher risk rate as fixed by the common carrier.

Sub-section 2 states that in case of any delay up to a period mutually agreed upon by the consignor and common carrier in the GFN, the liability of the common carrier will be limited to the amount of freight charges where such loss or damage or delay took place when the consignment was under the authority of such carrier.

Section 11 states the liability of the common carrier in the cases in which high risk is undertaken by it. The payment of such high risk is as per the GFN agreed upon by both parties, that is, the carrier of goods and the consignor of goods.

Section 12 discusses the conditions limiting exoneration of the common carrier’s liability. Every common carrier is liable to the consignor for the loss or damage to any consignment following the GFN where such loss or damage has occurred due to any criminal act of the common carrier or by his servants or agents.

Section 13 provides for provisions for carriage of goods of dangerous or hazardous nature to human life. The Act states that the carrier of goods shall not carry any hazardous or dangerous goods except with the direction of the Central Government.

Section 14 states the Power of the Central Government to prohibit the carriage of certain classes of goods.

Section 15 provides for the right of common carriers due to the default of the consignee.

Exemption From Duties of Common Carrier- Section 17

The common carrier will be held responsible for all loss, damage, destruction, or deterioration in transit or failure in delivery of consignment, except the loss/damage is due to the following reasons:

• Act of God.
• Act of war/ public enemy.
• Riots and civil commotion.
• Arrest, seizure and restraint in civil prison.
• Order/ restriction/ prohibition by the Central Government, State Government, or any other subordinate officer.

Punishment for offences Under this Act – Section 18

According to Sub-section 1, when a person contravenes any provisions relating to the registration under this Act, for the first time conviction, he/she will be punished with a fine that may extend to Rs 5000. For the second or subsequent conviction, the penalty may extend to Rs 10000.

According to sub-section 2, if a company commits the aforementioned offence, then all persons in charge of the company at that time will be liable for the offence.

Carriage by Road Rules, 2011

The Carriage by Road Rules, 2011, was finalised by a working group under the Joint Secretary of Transport, Morth. The rules are made available on the Ministry’s website. The following are the rules provided by The Carriage by Road Rules, 2011:

• Form and manner of application for certificate registration or renewal of such registration, other eligibility criteria.
• Manner of filing of returns by common carrier to the Ministry’s Registering Authority and Transport Research Wing.
• The time period for revocation of the certificate of registration due to the common carrier’s failure to address the consignor’s grievances.
• Prescribe fees.
• Form and manner of submitting GFN by the consignee of the goods.
• Prescribe procedures and safeguard measures to be followed by the common carrier in case of hazardous and dangerous goods.

Registration

Section 3 provides a mandatory registration certificate for all business holders of common carriers. This sections further states that the certificate of registration may be granted within 30 days from the date of receipt of the application if the following conditions are satisfied:

• Upon receipt of the application by the parties.
• Payment of specified fees.
• The registering authority is satisfied that the applicant has followed the eligibility requirements for the certificate.

The holder of a certificate of registration must maintain a record of transactions by updating it on a register quarterly basis. Such entries are to be further submitted to the registering authority.

The consignor of goods is required to execute a GFN, including all the details regarding goods and the time of booking such goods. When the consignor issues the GFN to the carrier of goods, the counterparty is required to issue a goods receipt. In case of any dangerous or hazardous goods, the receipt of the goods shall contain a red note in its upper left corner as ‘Dangerous and Hazardous Goods’.

Conditions for Grant of Registration Certificate

A person applying for a grant of certificate of registration must fulfil the following criteria:

• The applicant must submit registration certificates of two commercial vehicles registered in his/her name or his/her organisation or in the name of a partner proprietor or director, or a contract letter or work order for carrying out functions as a common carrier from a registered company.
• The applicant should possess a net worth of a minimum of Rs 5 lakhs of his/her own or any proprietor partner or director.
• The proprietors or partners should not have been blocklisted or deregistered previously.

Conclusion

The Carriage by Road Act, 2007, read along with The Carriage by Road Rules, 2011, provides a streamlined procedure for registration by common carriers and consignors. Thus, the Act can potentially uphold the interest of unwarned traders and consignors prone to cheating and fraud by road transport firms and their agents.

The Act is a severe challenge to the ‘fly by night’ transporters of the road transport industry as the Act controls the activities of the common carriers to a certain extent. Thus, certain amendments should be made to the Act to enhance its proficiency.