Liability cover on transporters on lost, damaged goods

Mamuni Das
Deepak Goel

New Delhi, Dec. 4

The Law Ministry has asked the Ministry of Road Transport and Highways to reconsider its views on limiting the liability cover on transporters for goods lost or damaged in transit at Rs 10,000.

The Road Transport Ministry had taken this view in a Cabinet note floated for the Carriage by Road Bill covering the commercial road transport sector. It had said that the liability cover for goods lost or damaged in transit on transporters or common carriers must be increased to Rs 10,000 from Rs 100 (as defined in Carriers Act 1865).

In order to move goods with higher liability limits, transporters can charge higher tariffs from their customers - but they will be required to publish it.

While the Road Transport Ministry did leave an option to increase the liability cover, some sections feel that the liability cover should be fixed mutually by transporters and consignors.

Following the recommendation of the Road Transport Ministry, some insurance firms had reportedly raised objection to the issue. They had pointed out that the premium for high value goods would be very high if the law limits the liability for transporters at Rs 10,000.

Incidentally, before the Road Ministry gave this recommendation, the Parliamentary Standing Committee formed for the Bill had taken a view against limiting the liability at Rs 10,000. It had suggested that the liability of common carriers in case of any loss/damage to consignment or delay in delivery should be limited to the amount mutually agreed upon by the consignor and the common carrier. Moreover, it had said that the mutually agreed upon amount should be reflected in the goods receipt or the forwarding note, which in turn would ensure that there is no ambiguity on the value of compensation to be paid for the loss of goods. Now, the Law Ministry has asked the Road Ministry to explain the rationale behind not going by the parliamentary standing committee's recommendation on the issue of fixing liability of the transporters, it is learnt.

Chambers' views sought

The Road Ministry had recently invited apex chambers such as CII, FICCI and Assocham to discuss the issue. While CII and FICCI could not attend the meeting, Assocham has supported the view taken by the Road Ministry. All transporters' associations back the Road Ministry's stand. Meanwhile, the Confederation of All-India Traders, a traders body, has written to the Road Ministry asking it to go by the standing committee recommendations. The Carriage by Road Bill was introduced in Parliament in December 2005. It was then referred to the standing committee. Following its recommendations, the Road Ministry floated a Cabinet note on the Bill a few months ago.

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(This article was published in the Business Line print edition dated December 5, 2006)
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