A road carrier in India answers for lost goods up to ten times the freight, unless a higher risk rate was agreed

A common carrier of goods by road in India is responsible under the Carriage by Road Act, 2007 for loss or damage in transit unless a cause listed in section 17 applies, but section 10(1) limits the liability to an amount fixed by rule, which rule 12(1) of the Carriage by Road Rules, 2011 makes, for total loss, ten times the freight, never above the value declared in the goods forwarding note. The limit falls away only if the consignor undertook to pay a higher risk rate under section 11. No suit lies without written notice within 180 days of booking (section 16), and suit lies within three years under Article 10 or 11 of the Schedule to the Limitation Act, 1963, from the loss or from when the goods ought to have been delivered. The Act repealed the Carriers Act, 1865, and an export under one multimodal transport contract, by two or more modes, can bring in the Multimodal Transportation of Goods Act, 1993.

Who is a common carrier, and what did the 1865 Act say?

Section 2(a) defines a common carrier as a person engaged in the business of collecting, storing, forwarding or distributing goods under a goods receipt, or transporting them for hire by motorised road transport, undiscriminatingly, including a booking company, contractor, agent, broker and courier agency, but not the Government. Section 3(1) bars the business without registration, but the liability sections speak of the "common carrier" as defined, not of a registered one.

Section 22 repeals the Carriers Act, 1865, with the saving in section 6 of the General Clauses Act, 1897. The old Act excused a carrier from liability for scheduled goods above INR 100 in value unless their value and description were expressly declared (section 3), and required notice within six months of the plaintiff learning of the loss (section 10). The 2007 Act came into force on 20 July 2010, as India Code records it, and the Rules on publication under G.S.R. 176(E) of 28 February 2011.

What do the goods forwarding note and the goods receipt do?

Section 8(1) requires the consignor to execute a goods forwarding note in the prescribed form, with a declaration of the value of the consignment and of any dangerous or hazardous goods. The consignor answers for the particulars (section 8(2)) and indemnifies the carrier against damage from an incorrect or incomplete note (section 8(3)).

Section 9 obliges the carrier to issue a goods receipt. The receipt is prima facie evidence of weight or measure, the other particulars and the number of packages (section 9(3)), and carries the carrier's undertaking about liability under section 10 or 11 (section 9(4)). Under rule 12(6), delivery to the consignee is prima facie evidence of delivery as described in the note unless the consignee gives written notice of the general nature of the loss or damage at handing over. Where it is not apparent, the proviso says sub-rules (1) to (6) do not apply unless written notice is given within six days of actual handing over.

What is the carrier liable for, and up to what amount?

Section 17 makes the carrier responsible for loss, damage, deterioration or non-delivery in transit from any cause except an act of God, war or public enemy, riots and civil commotion, arrest, restraint or seizure under legal process, and a government order or restriction; the carrier is not relieved if due diligence and care would have avoided the result. Section 12(2) spares a plaintiff from proving negligence.

Section 10(1) limits liability for loss of or damage to a consignment to an amount prescribed having regard to the value, freight and nature of the goods. Rule 12(1) prescribes, for total loss, ten times the freight paid or payable, with a proviso that the sum shall not exceed the value declared in the goods forwarding note. Rule 12(9) calculates liability on the actual freight collected or due, or ninety per cent of the total charges on the goods receipt excluding taxes, whichever is higher. The note reads rule 12(9) as fixing the freight on which rule 12(1) multiplies; the Rules do not link the two in terms. For partial damage, rule 12(2) allows evaluation by an independent Government-approved valuer or surveyor chosen by the consignor from the carrier's list, at its cost; for partial loss, rule 12(3) makes the liability the amount that valuer or surveyor assesses. Delay within a period agreed in the note, with consequential loss, is limited to the freight (section 10(2)); beyond it the first proviso sends compensation to section 10(1) or 11, and the second proviso excuses the carrier that proves no fault or neglect of its own or its servants or agents.

When does the ten-times ceiling not apply?

Section 10(1) applies "unless" the consignor or an authorised person has expressly undertaken to pay the higher risk rate fixed under section 11. That section lets the carrier charge a higher rate, with liability following the terms agreed, but only if it has exhibited notice of the rate at its place of business. A declared value does not by itself lift the ceiling: rule 12(1) uses it only as a second cap.

What must the consignor do about dangerous goods?

Beyond the declaration in section 8(1), rule 10(2) calls for the note on paper with the upper left hand corners printed in red (printed "expand goods"), and rule 10(5) for the receipt on paper with them printed in red as "Dangerous and Hazardous goods". Section 13(3) requires the carrier to ensure the consignment is insured against death or injury to a person or damage to property or the consignment, and the proviso to rule 12(9) requires a policy under the Public Liability Insurance Act, 1991.

What are the notice and limitation periods?

Section 16 allows no suit or other legal proceeding against a common carrier for loss of or damage to a consignment unless written notice was served on the carrier before the suit and within 180 days from the date of booking. The Act sets no period for the suit; the Limitation Act, 1963 does. Article 10 of its Schedule gives three years against a carrier for losing or injuring goods, from when the loss or injury occurs, and Article 11 three years for non-delivery or delay, from when the goods ought to be delivered. Section 12(1) excludes the day from which the period is reckoned.

What changes where the goods leave India by more than one mode?

The Multimodal Transportation of Goods Act, 1993 covers carriage by at least two different modes of transport, whether road, air, rail, inland waterway or sea, under a multimodal transport contract from a place of acceptance in India to a place of delivery outside India (section 2(k)), by a registered operator (section 2(m)(iii)). A domestic movement, or a road leg under a separate contract, stays under the Carriage by Road Act. Where neither nature nor value was declared and the stage of damage is unknown, the operator's liability is capped at two Special Drawing Rights per kilogram or 666.67 Special Drawing Rights per package or unit, whichever is higher (section 14(1)). If the stage is known, section 15 applies that mode's law, here the Carriage by Road Act. Action must be brought within nine months of delivery or the due date (section 24).

How is a claim against the carrier different from a claim on transit insurance?

A claim against the carrier turns on the note and receipt, sections 10, 12 and 17, and rule 12, and is capped as described. A claim on transit insurance is made on a contract between insured and insurer, and turns on the policy's sum insured, perils and conditions, not on section 10 or rule 12, so the two can yield different sums for one loss.

What does the arithmetic look like?

An illustration. The consignment, amounts and dates below are hypothetical: machinery worth INR 80 lakh is booked with a registered carrier from Bengaluru to Pune.

Freight, excluding tax, collected                         INR 60,000
Total charges on the goods receipt, excluding tax         INR 70,000
Ninety per cent of total charges (rule 12(9))             INR 63,000
Higher figure, read here as the rule 12(1) base          INR 63,000
Ten times that base (rule 12(1))                          INR 6,30,000

Total loss, goods forwarding note declares INR 80 lakh,
no higher risk rate undertaken
  Lesser of INR 6,30,000 and INR 80,00,000                INR 6,30,000
  Shortfall against the value                             INR 73,70,000

Total loss, no value declared
  Ten times the base, on the reading that the proviso
  has no declared value to bite on                        INR 6,30,000

Total loss, higher risk rate undertaken under section 11
  Section 10(1) limit does not apply; liability follows
  the agreed terms, up to INR 80,00,000 if they so provide

Partial damage, valuer assesses repair at INR 25,00,000
  Rule 12(2) assessment, if no ceiling applies            INR 25,00,000
  If the section 10(1) limit is read to cap it            INR 6,30,000

Dates (goods delivered damaged)
  Booking                                                 10 March 2027
  Damage in transit                                       14 March 2027
  Delivery                                                16 March 2027
  Notice of non-apparent damage (rule 12(6), six days)    22 March 2027
  Last day for the section 16 notice (180 days from
  booking, excluding the booking day)                     6 September 2027
  Three years from the loss (Article 10)                  14 March 2030
  If never delivered, Article 11 runs three years from
  when the goods ought to have been delivered

What remains unsettled?

Five points.

Whether rule 12(1), which speaks of total loss, caps partial damage. Rule 12(2) and (3) provide for a valuer's assessment of partial damage and partial loss without the ten-times figure.

What the proviso to rule 12(1) does when no value was declared. It caps the sum at the declared value, and section 8(1) requires a declaration, but neither says whether its absence leaves ten times the freight as the whole limit.

How sections 10, 12 and 17 sit together. Section 17 excuses only listed causes, the second proviso to section 10(2) excuses on proof of no fault, and the Act does not say whether a criminal act under section 12(1) escapes section 10(1).

Who may sue, and how section 16 runs. Section 12(1) speaks of liability to the consignor, and section 2(b) defines the consignee only as the person named in the note. Section 9 of the General Clauses Act, 1897 excludes the booking day, since section 16 runs "from" it; whether section 16 reaches non-delivery and delay, which it does not name, is open.

What the proviso to rule 12(6) does to the limit. It says sub-rules (1) to (6) do not apply where non-apparent loss is not notified within six days, and does not say whether that leaves the carrier with no cap or the consignee with no claim under the Rules.