(1) Where any goods are entrusted to a railway administration for carriage, such carriage shall, except where owner’s risk rate is applicable in respect of such goods, be at railway risk rate.
(2) Any goods, for which owner’s risk rate and railway risk rate are in force, may be entrusted for carriage at either of the rates and if no rate is opted, the goods shall be deemed to have been entrusted at owner’s risk rate.
Simplified Explanation
Section 63 of the Railways Act, 1989, deals with the risk rates applied to the carriage of goods by the railway administration. It establishes two types of risk rates: the owner’s risk rate and the railway risk rate. This section outlines when each rate is applicable and what happens if a rate is not explicitly chosen by the consignor.
Key Provisions:
- Railway Risk Rate and Owner’s Risk Rate (Sub-section 1):
- Railway Risk Rate: The default rate for the transportation of goods is the railway risk rate. Under this rate, the railway administration assumes responsibility for the goods during transit. In case of loss, damage, or theft of goods, the railway administration would generally be liable.
- Owner’s Risk Rate: However, when the owner’s risk rate applies, the consignor (owner of the goods) assumes the risk for any loss or damage to the goods during transit. This may happen if the goods are considered more hazardous or if the consignor specifically chooses to assume the risk in exchange for a potentially lower rate.
- Unless the owner’s risk rate is applicable, the carriage of goods will be governed by the railway risk rate.
- Option to Choose Between Rates (Sub-section 2):
- If both the owner’s risk rate and the railway risk rate are available for certain goods, the consignor has the option to choose between them.
- If the consignor does not explicitly choose one of these rates, the goods will automatically be considered to have been entrusted at the owner’s risk rate. This means that in the absence of a clear choice, the consignor assumes responsibility for any loss or damage to the goods.
Application and Context:
- Risk Allocation: The main purpose of this section is to clearly allocate responsibility for the goods between the railway administration and the consignor. The railway risk rate typically offers the consignor more protection because the railway administration is responsible for any loss or damage to the goods during transit.
In contrast, choosing the owner’s risk rate typically results in a lower transportation cost for the consignor, but at the expense of assuming the risk for any potential damage or loss of the goods during transit. - Choice and Transparency: The provision of a choice between railway risk rate and owner’s risk rate provides flexibility for the consignor. If they prefer to reduce the cost of carriage by accepting the risk, they can opt for the owner’s risk rate. However, if they want to ensure that the railway administration takes responsibility for the goods, they should choose the railway risk rate.
The automatic application of the owner’s risk rate in the absence of a clear choice by the consignor ensures that there is no ambiguity or dispute about the terms of carriage, especially when the consignor has not made a decision.
Practical Examples:
- Example 1: A consignor ships a high-value product via rail and chooses the railway risk rate for the shipment. If the goods are lost or damaged during transit, the railway administration is liable for compensating the consignor, subject to the terms of the railway’s liability provisions.
- Example 2: A consignor ships fragile goods, like glassware, and chooses the owner’s risk rate to lower the cost of transport. In the event of damage during transit, the consignor will not be able to claim compensation from the railway administration and must bear the cost of damage.
- Example 3: If a consignor ships goods without specifying whether they want the owner’s risk rate or the railway risk rate, the goods will automatically be considered as being entrusted under the owner’s risk rate, and the consignor will bear the risk of any loss or damage.
Conclusion:
Section 63 of the Railways Act, 1989, governs the application of risk rates in the transportation of goods by rail. It provides that the railway risk rate is the default, meaning the railway administration is responsible for the goods during transit. However, the consignor has the option to choose the owner’s risk rate, which may lower the cost of transportation but at the expense of assuming responsibility for any damage or loss. This section ensures clear guidelines for the allocation of risk and responsibility between the consignor and the railway administration, protecting both parties’ interests.
