A public carrier is liable to compensate the shipper for the losses suffered by it on account of damage of goods if the reason for the accident is a ‘patent’ defect — a defect that could have been detected and rectified given reasonable care — in the mechanical system of the truck.

Only a latent defect — which must be the defence taken in the pleadings if the cause of accident was indeed a latent defect — can absolve the carrier of his liability because it does not come to light despite reasonable efforts at proper maintenance of the vehicle. So held the Delhi High Court in Pick up Carriers v. National Insurance Co. Ltd. & Anr.

Honda Ltd had despatched motor cycles to Chindwara Madhya Pradesh by hiring the services of the appellant-carrier. The truck met with an accident in the Sagar-Nagpur highway damaging both the truck and the motorcycles therein that were being transported.

On the refusal of the Appellant to pay up, Hero Honda, the second respondent, got its claims settled with its insurer, the first respondent, and subrogated all its rights against the transporter to it.

The Delhi High Court upheld the claim of the insurer and rejected the plea of the transporter that the accident was unavoidable inasmuch as the driver lost control when the steering became free following the sudden slippage of a vital part called push road end, resulting in the truck getting imbalanced and dashing against a roadside tree. The court pointed out that since the plea of latent defect was not taken in the pleadings, the presumption was that it was a ‘patent’ defect that could have been rectified and accident and the resultant compensation averted.

(The author is a New Delhi-based chartered accountant)

(This article was published on July 29, 2012)
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