SC: Even after sale of vehicle, seller liable for accidents till RTO records not updated.

The Hon’ble Supreme Court, on 14th December, 2018, in the matter of Prakash Chand Daga v. Saveta Sharma & Ors. pronounced that where an accident occurs within the period prescribed for reporting the fact of transfer of vehicle after sale, the transferor shall be liable to third person until the time he stands as an owner in the RTO records.

The Hon’ble Supreme Court observed that:

It is true that in terms of Section 50 of the Act, the transfer of a vehicle ought to be registered within 30 days of the sale. Section 50(1) of the Act obliges the transferor to report the fact of transfer within 14 days of the transfer. In case the vehicle is sold outside State, the period within which the transfer ought to be reported gets extended. On the other hand, the transferee is also obliged to report the transfer to the registering authority within whose jurisdiction the transferee has the residence or place of business where the vehicle is normally kept. Section 50 thus prescribes timelines within which the transferor and the transferee are required to report the factum of transfer. As per Sub-Section 3 of said Section 50, if there be failure to report the fact of transfer, fine could be imposed and an action under Section 177 could thereafter be taken if there is failure to pay the amount of fine. These timelines and obligations are only to facilitate the reporting of the transfer. It is not as if that if an accident occurs within the period prescribed for reporting said transfer, the transferor is absolved of the liability. (Para 5)

Chapter XII of the Act deals with Claims Tribunals and as to how applications for compensation are to be preferred and dealt with. While considering such claims, the Claims Tribunal, in case of an accident is required to specify the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the accident or whether such amount be paid by all or any of them, as the case may be. It is well settled that for the purposes of fixing such liability the concept of ownership has to be understood in terms of specific definition of ‘owner’ as defined in Section 2(30) of the Act. (Para 6)

In Para 7 of the judgement, the Hon’ble Supreme Court reiterated its decision in the matter of P.P. Mohammed vs. K. Rajappan and Ors. (2008) 17 SCC 624, wherein it was held that:

Even though in law there would be a transfer of ownership of the vehicle, that, by itself, would not absolve the party, in whose name the vehicle stands in RTO records, from liability to a third person. Merely because the vehicle was transferred does not mean that such registered owner stands absolved of his liability to a third person. So long as his name continues in RTO records, he remains liable to a third person. (Para 4)

Copy of judgement:Judgement 14th-Dec-2018

-Tushar Kaushik

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