A curious case of regulating the regulated

When regulators too need regulation

The logistics sector in India is valued upwards of US$ 100 billion. The private courier industry is indubitably one of the fastest growing service sectors in the country, consistently growing at an estimated rate of about 25% per year.

On account of sections 4 and 5 of the Indian Post Office Act, 1898, private couriers were expressly forbidden to collect, carry, tender or deliver letters, or to receive letters for the purpose of carrying or delivering them, from one place to another, or performing all the incidental services of receiving, collecting, sending, dispatching and delivering all letters, and the exclusive privilege of conveying letters, was granted/ reserved to the Central Government. With the enactment of the Carriage by Road Act, 2007 effective from 1st March 2011, private couriers were/ are permitted door-to-door transportation of documents, goods and articles and the business regulated.

The Carriage by Road Act, 2007, repealed the antique Carriers Act, 1865. The Carriers Act, 1865 regulated carriage/ transportation of goods by any form of transport whether by road, air or water. The main purpose of the Carriers Act, 1865 was to define and limit liability of common carriers for loss or damage to consignments entrusted to them in the course of its transportation either on account of their negligence or fault. The Carriage by Road Act, 2007 was enacted keeping in mind contemporary requirements, challenges, needs and changes of transport and trade by road. The Carriage by Road Rules, 2011 framed under the Carriage by Road Act, 2007, was notified on 28th February 2011 and made effective from 1st March 2011.

The Carriage by Road Act, 2007 is laudatory in its objective to provide for regulation of common carriers, limiting their liability and requiring declaration of value of goods delivered to them to determine their liability for loss of, or damage to such goods occasioned by negligence or criminal acts of themselves, their servants or agents and for matters connected therewith or incidental thereto. The Carriage by Road Act, 2007 and the Carriage by Road Rules, 2011 are aimed at curtailing or holding accountable if not eliminating fraudsters, unscrupulous elements and “fly by night” operators in the logistics and road transport business of the country as it seeks to control the activities of common carriers to a large extent and will benefit customers, consignors, consignees, common carriers and courier companies.

With section 2(a) of the Carriage by Road Act, 2007, courier agency is considered as common carrier. Section 2(a) defines “common carrier” as a person engaged in the business of collecting, storing, forwarding or distributing goods to be carried by goods carriages under a goods receipt or transporting for hire of goods from place to place by motorised transport on road, for all persons un-discriminatingly and includes a goods booking company, contractor, agent, broker and courier agency engaged in the door-to-door transportation of documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles, but does not include the Government. The inclusion of courier agency within the definition of common carrier, and compulsory registration thereof with “registering authority” being State Transport Authority or Regional Transport Authority constituted under section 68 of the Motor Vehicles Act, 1988, in accordance with section 3(1) of the Carriage by Road Act, 2007, achieved two objectives in one stroke - ridding the embargo under the Indian Post Office Act, 1898 and regulating courier agencies.

Section 3(1) of the Carriage by Road Act, 2007 provides that no person shall engage in the business of a common carrier, after the commencement of the act, unless he has been granted a certificate of registration. By virtue of section 3(2) of the Carriage by Road Act, 2007, any person who is engaged, whether wholly or partly, in the business of a common carrier, immediately before the commencement of the act, shall apply for a registration within ninety days from the date of such commencement, or cease to engage in such business on the expiry of one hundred and eighty days from the date of such commencement unless he has applied for registration and the certificate of registration has been granted by the registering authority. The Carriage by Road Act, 2007 and rules thereunder, require compliance with various norms, formalities and forms including issuance of goods receipt in triplicate in prescribed format, maintenance of registers and records, and stipulates liability for loss of consignment for loss of, or damage to any consignment. Section 10 of the Carriage by Road Act, 2007, provides 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 of the Carriage by Road Act, 2007. Section 11 of the Carriage by Road Act, 2007, provides that a 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 the common carrier exhibits 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.

The Carriage by Road Act, 2007 empowers the registering authority to revoke the certificate of registration on account of non-compliance with provisions of section 4(7) of the Carriage by Road Act, 2007, to redress complaints against and impose fines

on common carriers on account of: i. non-issuance of receipt of goods; ii. non-disclosure of the whereabouts of the goods in transit when asked by the consignor or consignee; iii. detention of goods for delivery without valid reasons; or iv. demand for unreasonable additional charges at the time of delivery, which were neither disclosed nor agreed upon between the consignor and the consignee earlier; or v. non-payment of charges agreed and payable to truck-owners.

Section 18 of the Carriage by Road Act, 2007, prescribes the penalty to be imposed by the registering authority on account of contravention of the provisions of the Carriage by Road Act, 2007, and also provides that whoever contravenes the provisions of section 3 requiring registration shall be punishable for the first offence with fine which may extend to five thousand rupees, and for the second or subsequent offence with fine which may extend to ten thousand rupees.

In spite of requirement of private couriers to be registered to engage in business, nearly a decade since the coming into force of the Carriage by Road Act, 2007, not a single courier company stood registered with any Road Transport Authority within the

country, as elicited in responses to RTI applications.

With the private domestic courier industry having captured more than 50% of the market share of mail services, the number of complaints relating to deficiency in service, non-delivery, loss of or damage to consignments, has grown disproportionately, weighing down an overburdened system. The redress mechanisms available to customers unaware of the provisions of the Carriage by Road Act, 2007, for complaints against private courier companies, in case their consignments are lost or damaged or not delivered, are: filing complaint before the consumer court under the Consumer Protection Act, 1986 seeking compensation for loss suffered due to negligence; instituting suit before the civil court seeking compensation for loss suffered; filing criminal complaint under sections 405, 420 of the Indian Penal Code, 1860, which are fraught with drawbacks/ limitations. The onus of proving negligence of a private courier company whenever a consignment is lost or damaged, is on the customer/ consignor in complaints filed with consumer dispute redressal forums. The customer has to prove negligence of the private courier company, as section 14(1)(d) of the Consumer Protection Act, 1986 speaks of compensation arising out of loss or injury suffered due to the negligence of the opposite party. According to section 101 of the Indian Evidence Act, 1872, whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts, which he asserts, must prove that those facts exist and that when a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. Further, in a civil suit seeking compensation, the customer is required to produce documents such as goods forwarding note, contract, etc. to show some form of agreement between the customer and private courier company, which invariably would be drafted in a manner advantageous to the private courier company or to absolve them of all liability. In criminal proceedings there is limited or no scope for recovery of value of consignment and no provision for compensation for value of consignment. However, the Carriage by Road Act, 2007, at first blush appears to have partially resolved the muddle in that while it not only provides checks and balances with accountability features but also affixes liability through a grievance redressal mechanism.

The number of courier companies/ agencies operating in India as on date can be estimated by perusing numerous online directory services and search engines online. Though no official data is readily available, the number of courier companies/ agencies

operating in India can be guesstimated to be in the hundreds if not thousands.

Through RTI filed with the Ministry of Road Transport and Highways (Morth), it was learnt that a representation was filed by Express Industry Council of India (ECIC) to exclude courier agencies from the definition of the Carriage by Road Act, 2007, which was referred to Chairman of the Committee constituted by Morth to look into operation difficulties faced by the transporters under the enactment. ECIC through its representations sought stay of application of certain provisions which bring courier companies with the ambit of the Carriage by Road Act, 2007 and rules thereunder till such time as it was suitably modified on grounds that by including courier services in the definition of Common Carriers under the Carriage by Road Act, 2007, the authorities have made courier companies similar to transportation of goods business; that courier companies function in distinct manner from purely road transportation companies and are already governed by pre-existing legislations viz. the Courier Imports and Exports (Clearance) Regulations, 1998 and the Finance Act, 1994. The Committee constituted by Morth suggested few modifications in the Carriage by Road Act, 2007 but no amendments were made to the enactment.

On a representation made in the year 2017 by two public spirited brothers, Rizwan Mohammad Kasim Khan and Imran Mohammad Kasim Khan, an attempt was made to draw the government’s attention to non-implementation of the Carriage by Road Act, 2007 to goad them to action. With no response forthcoming, Public Interest Litigation was filed with the Hon’ble Bombay High Court, drawing the courts attention to failure of Central Government and the Maharashtra State to fully, properly, fairly and effectively implement provisions of the Carriage by Road Act, 2007 and rules thereunder in utter contempt of the legislative intent of the enactment, and consequent loss to the exchequer as well as inconvenience and loss to consumers, consignees, consignors and the public at large. The PIL sought full, proper and effective implementation of the provisions of the Carriage by Road Act, 2007 and rules thereunder, more specifically section 3 requiring registration of courier agencies operating in the State of Maharashtra.

Meanwhile, TNT India Private Limited by Writ Petition filed before the Hon’ble Karnataka High Court, challenged order passed by the Regional Transport Authority, Bangalore Urban District, imposing penalty of INR 5000/-, for not having registered as a Common Carrier under the Carriage by Road Act, 2007 and holding it bound to be registered thereunder. One of the grounds of the challenge were that TNT India Private Limited was not a common carrier defined under section 2(a) of the Carriage by Road Act, 2007, since it was not involved in transportation of goods exclusively by road and did not issue goods receipt. TNT India Private Limited submitted that its business was outside the ambit of the act as the company is engaged in the business of courier i.e. transportation of goods only by air, both domestic and international and that the company issues air consignment note as provided by the Carriage by Air Act, 1972. The Regional Transport Authority, Bangalore Urban District submitted that since TNT India Private Limited admitted that it was a courier company with part of transportation of goods taking place by road, the Carriage by Road Act, 2007 was applicable. Hon’ble Karnataka High Court by Judgment, set aside the order of the Regional Transport Authority, Bangalore Urban District with direction to consider the submission of TNT India Private Limited.

The Hon’ble Bombay High Court by its Order and Judgment in the PIL referred (supra), while holding that courier agency would be liable to obtain registration under the Carriage by Road Act, 2007, recorded submission of the Maharashtra State that courier

agencies carrying on business in the State of Maharashtra have not obtained any registration under the Act and disposed of the Petition with directions to the State Government or the Competent Authority nominated or constituted by the State Government to proceed under section 18 of the Act by initiating prosecution against the courier agencies and the individuals who are in-charge of the business of the courier agencies within six weeks from date of the Judgment.

The Judgment of the Hon’ble Bombay High Court received publicity and subsequently Morth issued instructions to all its authorities requiring courier companies and freight carriers to register themselves and obtain certificate of registration. The Road Transport Authorities of the State Maharashtra issued notices to various courier agencies referring to the Judgment of the Hon’ble Bombay High Court in the PIL referred (supra), requiring them to show cause as to why they are not registered. The imminent implementation of the Carriage by Road Act, 2007 is a win-win for all.

Jacob Kadantot

Advocate