Motor Vehicle liability ~ after sale of vehicle but RC not getting transferred !! -legal position

Half a century ago, buying a Vespa or Bajaj Chetak was cherished dream for Indian middle class. Not any longer.  On every Indian city, you see so many new cars ~ many high end models too ! – yet buying a car is a cherished dream for the working class who would proudly display the photo of taking delivery of the car; or post the photo on Instagram / facebook and other social media.

Karakattakaran, released in 1989 directed by Gangai Amaran starring Ramarajan and Kanaka was a big hit with tickling comedy of Goundamani and Senthil.  The dancer team will own a very old car which many a times would have to be pushed.  In one such instance, Goundamani would reel off the earlier owners of the car trying to claim superiority – Senthil would ask him a Q on its erstwhile owner, which provoked peels of laughter !!!

The proof of ownership is ‘RC Book’ ~ the Registration Certificate.  The Motor Vehicles Act provides for the registration of all motor vehicles in the country. Each motor vehicle is assigned with a unique Registration Number.  Once the vehicle is registered, a certificate is issued to the owner of the vehicle. When the owner moves from one State to another, technically, the vehicle will have to re-registered.  .. .. and when people move up in the ladder, they sell their old car and buy a higher model.  The sale process is not complete by mere handing over the vehicle upon receipt of consideration. Name transfer in favour of buyer should be done ~ else there could be some trouble. [many sell their vehicles in Used car market or exchange their vehicle with the dealer and do not care to see what happens next] – in a recent instance, a person came for claiming NCB and upon checking Online, it was pointed to him that the old vehicle still stood in his name even after 2 ½ years !  

For transfer, one has to submit to Road Transport Authorities : Notice of transfer in Form-29 (in Duplicate);  Application in Form-30 in Duplicate; PAN or GIR or Form-60/61; surrender the original RC; Insurance Certificate, Proof of address; NOC from Financiers if vehicle has been under Hire purchase; tax payment proof.

There have been instances when the Court has held the Registered Owner responsible and liable to pay compensation to Third parties under Motor Vehicles Act, despite the proof of sale but transfer not effected in Registration Certificate.  Holding the former owner still liable  to third parties in respect of claims for insurance in motor vehicle accident, the Supreme Court held so, considering the question; " whether the liability of the recorded owner of the vehicle was coextensive and from the recorded owner it would pass on to the insurer of the vehicle?   In an earlier instance, the Supreme Court in Pushpa @ Leela v. Shakuntala declared the law in the following terms;  It is undeniable that notwithstanding the sale of the vehicle neither the transferor Jitender Gupta nor the transferee Salig Ram took any step for the change of the name of the owner in the certificate of registration of the vehicle. In view of this omission Jitender Gupta must be deemed to continue as the owner of the vehicle for the purposes of the Act, even though under the civil law he ceased to be its owner after its sale on February 2, 1993.   In another instance in (2001) 8 SCC 748  the Court observed and held  that despite oral evidence proving that the appellant was not the owner of the car on the date of accident, still foisted liability on the registered owner of the vehicle.  For this purpose, it makes sense to keep the Act Only liability insurance in force till transfer is effected and name change is registered. 

It is not so, in all jurisdictions.  In USA,  the certificate of title for a vehicle (also known as a car title or pink slip; or pinks in the plural) is a legal form, establishing a person or business as the legal owner of a vehicle. Vehicle titles normally specifies: Identifying information about the vehicle, normally at minimum its vehicle identification number, make, and year of manufacture; the license plate no.’ technical info of the vehicle; name & address of purchase or registered owner who would normally possess and use it.  In the United Kingdom, there is not an equivalent of a vehicle title. Instead, there is a document known as the 'vehicle registration document', and is issued by the Driver and Vehicle Licensing Agency (DVLA).  It is the  V5 document that records who the Registered Keeper of the vehicle is; it does not establish legal ownership of the vehicle. These documents used to be blue on the front. However, they were changed to red in 2010/11 after approximately 2.2 million blank blue V5 documents were stolen, allowing thieves to clone stolen vehicles much more easily.

Now read this interesting article in Times of India, Chennai edition of date :  Can a registered owner of a car be made liable to pay compensation in case of a road accident even if he had sold his vehicle to another person but continued to be the owner on paper?  The Supreme Court has agreed to adjudicate whether mere transfer of a vehicle without change of registered ownership would absolve the registered owner of the liability under the Motor Vehicles Act to pay compensation to a victim if the vehicle met with an accident.

A bench of Justices S A Bobde and Ashok Bhushan stayed the order of the Punjab and Haryana high court which held that the person who had purchased the car would be liable to pay compensation in case of an accident even if the vehicle is not registered in his name. The HC had directed one Naveen Kumar to pay compensation of `5.23 lakh to the family of a person who was killed after being hit by his car . Challenging the order of the HC, advocate Rishi Malhotra, appearing for Kumar , contended that the car was not registered in his name and he could not be asked to pay compensation.

Referring to the Motor Vehicles Act, Malhotra told the bench that law recognised registered the owner and not the `real owner' of the vehicle and only the registered owner could be made liable to pay compensation. He said the Motor Accident Claims Tribunal had rightly held that only registered owner be made liable to pay compensation and the HC erred in setting aside the tribunal's order by wrongly interpreting the Act. “The high court by its judgement created a third contingency which is not contemplated under the Act wherein mere transfer of a vehicle without change of registered ownership would absolve the registered owner from the liability under the Act,“ he said.

The bench after hearing his arguments agreed to look into it and issued notice to the registered owner of the offending vehicle.

With regards – S. Sampathkumar

17^th July 2016.