What is the liability of the carrier for cargos when these are in his care and custody? The step by step procedure is given as under:-

1. When cargo is damage; there may be two scenarios; it may be insured cargo or uninsured cargo.
2. In case of uninsured cargo, the carrier settles with the cargo owner by paying them 50 to 60% of cargo value.
3. In case of insured cargo, the party obtained damage certificate from the transporter and submit it to the insurance company to take their claim from them.
4. After making payment to the insured, the insurance company appoints recovery agents to recover from the transporter under subrogation rights or they file a suit in the court of Law for recovery directly.
5. Some carriers settle the matter amicably and other refuse to pay to the insurance company.
6. In case no amicable settlement, the insurance company files a suit against the carrier in legally sound cases

What is a legal scenario?

Section 10 of Carriage By Road Act 2017

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.

Section 11

• Every common carrier may require payment for the higher risk undertaken by him in carrying a particular consignment at such rate of charge as he may fix and correspondingly, his liability would be in accordance with the terms as may be agreed upon with the consignor.

• Provided that to entitle such carrier to claim payment at a rate higher than his ordinary rate of charge, he should have exhibited a printed or written notice, in English and the vernacular language of the State, of the higher rate of charge in the place or premises where he carries on the business of common carrier.

Highlights:-

1. The liability of the carrier which will be as per value of cargo, freight and nature of goods (absolute liability) in ordinary course of transaction.

2. For Risky Shipment, the liability of the carrier can be limited by mutually agreed terms with the consignor/consignee through an agreement.

3. The carrier should have exhibited a printed or written notice, in English and the vernacular language of the State, of the higher rate of charge in the place or premises where he carries on the business of common carrier.

Where is confusion ?

1. The interpretation of Section 10, some transporters are of the view that the Act has limited their liability to 10 times of the freight paid or payable

2. The sentence that " the liability of the carrier will be limited to 10 times of freight paid or payable is available under section 12 of Carriage By Road Rule 2017.

3. But if you go through all sections of this ACT you will nowhere find this sentence in whole Act.

What is difference between ACT and RULE?

Act is a Law which is passed by Parliament of India while the Rule is made by concerned Ministry.

What will happen if any section of rule contradicts with the ACT?

In that scenario, the ACT will supersede

Present Scenario

The Carriage By Road Act 2007 has been implemented with effect from 28th February 2011 and now almost 10 years have passed. During this period I do not have any knowledge in which the liability of carrier has been limited to 10 times of the freight paid or payable by any court in India. During this period I read many judgments but I did not across any order which passed considering the liability of the carrier 10 times of the freight paid or payable.

Can Insurance Company move to Consumer Forum against the carrier for recovery?

This is very much burning question even today. In 2000 to 2005, many complaints were filed by insurance companies which were admitted and decided by Consumer Forums across country.

Later H 'able Supreme Court of India ruled that "the insurance company is not a consumer, hence can not go to the Consumer Forums for relief.

Now I came across in a very interested case in which State Consumer Forum passed a judgement in favour of Bajaj Allianz General Insurance Co Ltd and against Globe Eco logistics Pvt Ltd.

Case Tittle GE India Industrial Pvt Ltd V/s Globe Ecologistics Pvt Ltd. Key Points:-

The complaint was filed by the cargo owner making Bajaj as a joint complainant in 2013 for damage of their material in tune of Rs. 75,00,000/- . The Court gave their findings by framing following issues:-

Issue No.1: Whether complainants are consumers of opponent under the provisions of Consumer Protection Act?

Court Observation: Hence, I am of the opinion that complainant no.1 is to be considered as consumer of opponent under the provisions of Consumer Protection Act. Complainant no.2 is beneficiary of complainant no.1. Hence, both the complainants are the consumers of opponent, and they are entitled to file this consumer complaint against opponent.

Issue No.2: Whether opponent has given deficiency in service to complainants?

Court Observation: Yes, the opponent has given deficiency in service to the complainants.

Issue No.3: Whether complainants are entitled to get damages from opponent as claimed?

Court Observation: Yes, the complainants are entitled to get this amount from opponent.

Order:

Opponent is hereby directed to pay amount of Rs.75,00,000/- to complainant no.2 along with interest @18% per annum from the date of accident i.e. from 05/03/2013 till realisation of amount by complainant no.2 from opponent.

This order was pronounced on 20.09.2021 by State Consumer and Redressal Forum.

Solution

On the basis of my more than 20 years experience in dealing recovery matters of almost all insurance companies, my recommendation to the transport industry would be as under:-

1. Reserve some amount for liability which may occur any time
2. Think twice before giving any damage certificate to the insured as later the liability comes from insurance company
3. If any insurance company or party goes in the Court of Law against you, try to settle the matter amicably at early stage.
4. Transfer this risk to insurance company by buying Carrier's Legal Liability Insurance

Carrier's Legal Liability Insurance Policy

Earlier, this policy was not available for small carrier and even the insurance company were reluctant to give this cover to big transporter. Earlier there were many clauses in this policy in which there was next to impossible to recover claim from insurance company under Carriers Legal Liability Insurance. But when we formed our company, our main focus was to get this product customized according to the real need of transport industry. Earlier they did not give cover if you use hired vehicle or have third party truck insurance policy or carry hazardous cargo or ODC Cargo.

Now we have convinced them to issue a comprehensive CLL policy in which all type of commodity and all type of vehicles are covered. Once you take this policy you do not need to settle the claim with recovery agents or with any insurance company. Your insurer will settle all your claims. To know more about this product you can contact me directly through my mobile no. 9999682324 or my email id at abad@bimasathi.in