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No longer at owner's risk

Rosy Kumar | December 13, 2003

If asked for damages, transporters usually point to the "At owner's risk" clause in their agreements. But that doesn't offer blanket protection as Vijay Goods Transport Company has just discovered.

In a recent decision, the National Consumer Disputes Redressal Commission held Vijay Goods liable for the loss suffered by a consignor whose goods it had failed to deliver.

"At owner's risk" is a term which appears in every goods receipt or consignment note issued by transporters to whom goods are entrusted.

Transporters often maintain that this term completely exonerates them from liability if the goods don't arrive or are damaged.

They plead that the consignors have agreed to the terms and have not insured the goods by paying additional charges, so they cannot hold the transporters responsible. Even the Supreme Court has had to go into this question on several occasions.

Rungta Brothers had booked a consignment of Kota Stone with Vijay Goods Transport Company to be delivered from Kota to Bharauch in Gujarat on January 28, 1994.

The goods were not delivered and Rungta Brothers filed a complaint before the district consumer disputes redressal forum.

Vijay Goods pleaded that the complainant had no right to claim damages as the goods receipt had clearly stipulated that the goods were transported on the responsibility of the complainant.

It argued that it was liable only if the consignor had paid an extra premium and the goods were insured. The district forum dismissed the complaint, agreeing with the transport company.

An appeal was filed against this order before the Rajasthan State Commission, which held the carrier responsible for the loss, holding that the clauses of the goods receipt were not clearly communicated to the consignors.

Against this order of the State Commission, the transport company filed a revision petition before the National Consumer Disputes Redressal Commission.

In its order dated February 18, 2003 the National Commission held the transporter liable to make good the loss suffered by the complainant.

The commission observed that the responsibility of the transporter is akin to that of an insurer and therefore it cannot escape from its liability to the owner.

In holding the transport company responsible for the loss of goods, the National Commission relied on the ruling of the Supreme Court delivered recently in the case of Nath Brothers versus Best Roadways Limited (2000).

In that case Nath Brothers had booked a consignment of 77 packages of mulberry/natural silk garments with Best Roadways Limited to be carried from Noida (UP) to Mumbai.

On March 24, 1994 Nath Brothers received a letter from the transport company stating that the consignment which was stored at a godown in Bhiwandi was destroyed in a fire.

Nath Brothers demanded that the transport company compensate it with a sum of Rs 36,12,847.60 which was the cost of the goods with interest at 18 per cent.

The transport company refused to do so, stating that the loss had occurred due to a sudden fire in the adjoining building which spread to the godown where goods were stored.

Nath Brothers filed a complaint before the National Consumer Disputes Redressal Commission where the transport company pleaded that the goods were carried at 'Owner's Risk' and since special premium was not paid, it was not responsible for the loss.

The National Commission dismissed the claim, which led to the filing of an appeal before the Supreme Court.

In its judgement dated March 27, 2000 the Supreme Court held that the liability of a carrier to whom goods are entrusted is that of an insurer and is absolute in the sense that the carrier has to deliver the goods safely, undamaged and without loss to the destination indicated.

So long as the goods are in the custody of the carrier, he would be liable if any loss or damage was caused to the goods on account of his own negligence or criminal act or that of his agents and servants.

While consignors are well advised to insure precious goods transported through transporters, the mere fact that the goods receipt mentions that the goods were despatched at "owner's risk" should not deter consignors from claiming compensation from transporters.

This term does not absolve the transporters from their liability. What it really means is, "at the risk of the owner, minus the liability of the carrier for the misconduct of himself or servants."

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