The Supreme Court of India recently clarified that the transfer of ownership of a vehicle by itself would not absolve the transferor from liability to a third person as long as transferor’s name continues in the government records.
“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”, the Court ruled.
“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”, the Court added.
The Court said that in view of the definition of the expression “owner” in Section 2(30) of the Motor Vehicles Act, 1988, it is the person in whose name the motor vehicle stands registered would be treated as the “owner”. “Parliament has consciously introduced the definition of the expression “owner” in Section 2(30), making a departure from the provisions of Section 2(19) in the earlier 1939 Act. “The principle underlying the provisions of Section 2(30) is that the victim of a motor accident or, in the case of a death, the legal heirs of the deceased victim should not be left in a state of uncertainty. A claimant for compensation ought not to be burdened with following a trail of successive transfers, which are not registered with the Registering Authority. To hold otherwise would be to defeat the salutary object and purpose of the Act”, it added.