Issue Involved:
If you hand over your car and keys to a dealer to find a buyer but retain the car registered in your name with the RTO (Regional Transport Office), you remain legally responsible for any incidents involving the vehicle. Here’s why:
Legal Ownership and Liability:-
According to the Motor Vehicles Act, 1988, the "owner" of a vehicle is defined as the individual listed on the vehicle’s registration with the RTO. This means that even if a dealer has taken possession of the car, until the RTO officially updates the registration to reflect the new owner, you—as the registered owner—bear responsibility for any liabilities (such as accidents or violations) associated with the vehicle.
Third-Party Liability in Accidents:-
If your car, still registered in your name, is involved in an accident that causes injury or damage to a third party, you may be held liable. The Hon'ble Supreme Court of India has reinforced this interpretation in several rulings, affirming that liability stays with the registered owner regardless of who has physical possession of the vehicle. Notable cases, including Prakash Chand Daga v. Savita Sharma & Ors and Naveen Kumar v. Vijay Kumar & Ors, establish that the individual whose name appears in RTO records is liable for third-party damages, even if they no longer have the vehicle.
Steps to Transfer Ownership and Limit Liability:-
To avoid the risk of being held responsible for incidents involving a vehicle you've handed over, you should ensure that the transfer of ownership is completed promptly:
- Notify the RTO: File a transfer application with the RTO within 14 days if the vehicle is being sold within the same state, or within 45 days if it’s out-of-state.
- Ensure Buyer or Dealer Cooperation: The buyer or dealer must also complete their part of the registration transfer within 30 days.
- Maintain Insurance: Keep the car’s third-party insurance active until the RTO officially updates the registration with the new owner’s name. This is a legal requirement that helps cover potential liabilities during the transfer process.
Conclusion:
One must ensure that once you find a suitable buyer to sell your car, you must submit a transfer application to the RTO as this step ensures that your liability ceases once the RTO reflects the new owner’s name in their official records and one must also ensure third party insurance coverage is active to comply with legal requirements and avoid penalties.
Disclaimer:
This article is intended for educational purposes only and does not constitute legal advice.
Author:
Advocate Saurabh Pandya
Mob: 8080005045
Email: [email protected]