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Monday, December 21, 2009

CARRIAGE BY ROAD ACT 2007 - When will it see the 'light' ?

The movement of goods is an important and integral part of the economic development of the country and is of great relevance to transport industry as also Insurers. For long remained Carriers Act 1865 – the statute governing the rights and liabilities of common carrier. Very many years have rolled by since and from pure carriers, market came to dominated by middlemen in various avatars called freight brokers, agents and so on. The Act held the liability of common carrier at Rs.100/- which was utopian.

After decades, Carriage by Road Bill was introduced in the Parliament which inter-alia prescribed : mandatory registration of common carrier, liability of carrier to have regard to value, freight and nature of goods, consignors having to execute Goods forwarding note, single registration for a common carrier, common carrier liable for overloading inviting penalty under Sec 194 of MV Act, force majeure clause exonerating the carrier from liabilities etc.,

The present Act clearly defines ‘common carrier; as a person other than the Govt., engaged in the business of collecting, storing, forwarding or distributing goods to be carried by goods carriages under a goods receipt from place to place by motorized transport on road, for all persons without any discrimination and includes goods booking company, contractor, agent, broker and courier agency engaged in 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 but does not include the Govt - a far flung activity definition than what was contemplated in the earlier Act.

This Act called ‘The Carriage by Road Act 2007” received Presidential assent on 29th Sept 2007 and was enacted by Parliament in the Fifty eigth year of the Republic of India. The Act extends to the whole of India, except the State of Jammu & Kashmir and came into force from the date of notification in Official Gazette which was done on 1.10.2007.

Subsequent to this, ‘The Carriage by Road Act 2007” came into being and repealed the time tested ‘Carriers Act 1865’.

But……………….- it not all over and working at this stage due to administrative reasons (!) After the notification, the Ministry of Transport and Highways initiated the process of framing rules under the Act and a working group under the chairmanship of Shri S.K. Dash, Joint Secretary (Transport) has been constituted to suggest draft Carriage by Road Rules 2007.

Though Insurers are not a party to the contract of carriage, they step in as security providers to goods under inland transit insurance policies. The modifications do affect the Insurers at large and GIC had also filed their suggestions in consultation with all Insurers. Their primary concern is that the contract should not in any way limit the liability of the carrier which will affect the recovery, even where caused by the negligence or mistake of the carriers. The wafer thin margin at which the Insurance Companies are operating presently would be affected in a large manner.

The proposition of limitation of common carrier to Rs.10000/- or the value mentioned in the consignment ntoe whichever is less, unless higher risk rate fixed by common carrier under Sec 11 is invoked is prejudicial to the interests of the Insurer. Already there are many instances of consignor blindly acceding to the conditions imposed by the carriers including absolving them of all their liabilities.

Alas, more than two years after the Presidential assent of the Statute, the rules under the Act are yet to be finalized. A recent meeting of transporters, representatives of Road transport, Finance and Law Ministires and research body IFTRT turned acrimonious as there was strong objection to deregistration of transporters as a penalty for repeated offences. The bone of contention was the liability of common carriers for goods lost in their custody and the conditions for deregistration, especially when the term carrier encompasses all intermediaries that handle goods.

Thus the Act which was framed with aim to bring in reforms in the not so organized commercial road transport sector is yet to be implemented. All concerned will have to wait with concerns for the formulation of rules and their implementation, which have a long and bumpy road ahead.

Interestingly there still exists a statute ‘Hackney-Carriage Act 1879’ which is an act for the regulation and control of hackney carriages. Dictionary has it that hack is a horse for riding or driving / a horse or pony kept for hire. Hackney carriage also includes automobile for hire. There is also a derivation that it is from village Hackney, now part of London. The Act interprets the clause to mean any wheeled vehicle drawn by animals and used for conveyance of passengers

With regards - S. Sampathkumar.


  1. That was a very interesting article Sir. Can you update us on the current status of this Act. We find several transport agreements already referring to this Act.

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