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  1. Sold your car and didn’t change ownership? You will be liable for compensation claims

Sold your car and didn’t change ownership? You will be liable for compensation claims

Have you sold your car and forgot to change the ownership in registration records? If yes, you have invited trouble for yourself.

By: | Updated: February 20, 2018 11:18 AM
car sale, change ownership, car accident, compensation claims, registration records, supreme court ruling, Motor Vehicles Act, The Motor Accident Claims Tribunal, car insurance, The decision of the Supreme Court has far-reaching consequences in case of those owners who have sold the vehicles and not intimated about the purchaser to the registering authority.

Have you sold your car and forgot to change the ownership in registration records? If yes, you have invited trouble for yourself. For, it is you – the original owner – who would be liable for compensation claims arising from any accident involving the car even if it is now being owned and driven by another person, as per a recent ruling by the Supreme Court.

Experts say that the market for secondary sale of cars has accelerated with the advent of Uber, Ola and similar agencies since it is cheaper to travel using their services rather than owning the vehicle. The ownership of car brings along headache of finding day and night parking, regular maintenance, and to top it, if the car is involved in an accident, botheration associated with the ownership.

“Most of the owners, while selling their car, deal with brokers or intermediates who facilitate the sale of the car, arranges to pay the sales consideration and obtain signature of the seller on transfer forms. The owners are contended with the Delivery note given by the purchaser that they have taken possession of the vehicle for a consideration as well as the copy of the transfer forms. Many a times, however, the transfer forms are not filled completely as the agent or dealer may trade in the car multiple times before it is finally registered in the name of the final owner,” says Sandeep Shah, Partner, N. A. Shah Associates LLP.

The question to be asked is: Whether the owner of the car should be happy that sales consideration has been received and the purchaser has given the delivery note mentioning that possession from the seller has been obtained? Sadly NO. The Supreme Court recently, in case of Naveen Kumar vs Vijay kumar and others, had occasion to consider the legal liability of the owner in whose name the car continued to be registered even after it was sold. The matter was relating to the vehicle being involved in an accident resulting in injury to one person and death of the other person.

Under the Motor Vehicle Act, 1988, the owner of the vehicle is a person in whose name the vehicle is registered unless in case of agreements relating to Hire purchase/ lease/ hypothecation, where the owner will be deemed to be the person in whose possession the vehicle is and not the Hire Purchase/ Lessor Company / Bank.

“In case before the Supreme Court, the seller of the car gave transfer forms duly signed but did not take any steps to ensure that the ownership of the car was transferred in the records of the registering authorities as required by Section 50 of the Motors Vehicle Act. The original purchaser of the vehicle instead of transferring the vehicle in its name, sold it to another buyer, who in turn sold to another buyer. The vehicle changes hands multiple times whereas the original owner continued to be the registered owner in the records. The vehicle at the time of accident was also not insured,” informs Shah.

The Motor Accident Claims Tribunal awarded compensation to the injured as also to the family of the deceased person. The tribunal held that the registered owner and the driver who was involved in the accident were jointly responsible to pay the compensation. The order of the Tribunal was reversed by the High Court holding that the original owner was not responsible as the possession was with the subsequent owner who purchased it. The purchaser filed an appeal before the Supreme Court contending that it is the original registered owner who is responsible to pay the compensation and not the purchaser.

The Supreme Court after analyzing the provisions under the Motor Vehicles Act, 1988 relating to ownership and the responsibility cast on the owners as also purchaser to intimate change of ownership to the registering authority, held that the registered owner is liable to pay the compensation as he failed in his duty and continued to remain the owner.

“This decision of the Supreme Court has far-reaching consequences in case of those owners who have sold the vehicles and not intimated about the purchaser to the registering authority. It will now be in the interest of the owners to check whether the purchaser has been recorded as the owner of the vehicle sold by them and if not so done by the purchaser, immediately file a copy of transfer forms with the registering authorities,” says Shah.

In case of sale of vehicles, thus, the idiom ‘Buyer be aware’ does not hold true. It is, in fact, ‘Seller be aware’!

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