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Old 19th June 2020, 16:28   #1
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Default SC: Person in whose name vehicle is registered on accident date to be treated as owner

In a recently delivered judgement, the Supreme Court has held that the person in whose name the vehicle was registered shall be treated as the owner.

Even if a contract of sale had been entered into by the parties, and the buyer had taken possession of the vehicle, in case of an accident, the seller is responsible as long as he is the registered owner of the vehicle.

This judgement was delivered in the case of Surendra Kumar Bhilawe vs. The New India Assurance Company.

Brief facts as follows, though a PDF of the reportable judgement has been attached. I would recommend my fellow BHPians to go through it once, it is only 37 pages.

Our petitioner, Mr. Bhilawe, sold his truck to a Mr. Ansari, but the Registration was not updated to reflect the sale, even though the possession had been transferred to the buyer. The truck, while carrying some goods, swerved to avoid a cow and fell into the nearby river. To reiterate, on the day of the accident, the Registration had not been transferred.

The Court, among other provision and precedents, looked into the difference between the definition of owner in Sec 2(30) of the Motor Vehicles Act, 1988 as opposed to the definition in Sec 2(19) of the MV Act, 1939, which was replaced by the 1988 Act.

Under the old Act, 'owner' meant the person in possession of the vehicle.

Under the new act, the Legislature consciously changed the definition to mean the person in whose name the motor vehicle stands registered.

The Court did look into other facts and precedents, but for the sake of keeping it simple, I have decided to omit the other facts of this case and focus on just the ratio decidendi. The facts were a bit more complicated, but for our purposes, the ratio remains the same.

So, my fellow BHPians, keep this in mind when you sell your old vehicle.

Last edited by Balthazar : 19th June 2020 at 16:43. Reason: Some typos
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Old 19th June 2020, 17:01   #2
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Default re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

What would be the situation for vehicles sold to outside state and not yet registered in new state with new plates although NOC has been obtained.

Vahan portal clearly says 'NOC issued as vehicle sold" for vehicles where NOC has been obtained.
But would the previous owner be still be liable even if new owner hasn't gotten the vehicle registration done in New state?
Clearly in this case there would be no clear registered owner, as previous owner has gotten NOC and hence currently is not anymore the owner, or the name on NOC be treated as the registered owner.

Last edited by aviral2122 : 19th June 2020 at 17:07.
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Old 19th June 2020, 18:21   #3
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Default re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

Excellent article on the subject and correct outcome!

For those who don't have the time to go through the document, here's a quick summary

- first owner enters an agreement to sell the truck to second owner

- partial payment done, second owner's driver starts using the vehicle

- vehicle still under loan (and hypothecation), first owner is still paying emis

- no transfer process initiated with RTO

- insurance covers been taken up in the name of first owner every year

- driver has an accident, total loss case, FIR raised, proper process followed

- insurance firm evaluates the claim, all is as per process

- firm rejects claim stating the vehicle ownership was transferred hence claim not valid

- first owner raises legal case at district level, and wins the case as insurer is not able to prove legally that the sale was legal (no proper documentation)

- case re-raised to state level, again insurer loses the case. Asked to pay total loss amount + interest + penalty

- insurer takes to national commission who surprisingly voids the earlier two decisions and rules in favor of insurer

- owner takes the case to Supreme Court who rules that the original decision was correct and reinstates the first decision for the insurer to pay total loss amount + higher interest rate + penalty + 1L for legal expenses.
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Old 19th June 2020, 18:43   #4
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Default re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

Quote:
Originally Posted by ninjatalli View Post
Excellent article on the subject and correct outcome!
There were articles on the subject, but they were a bit more academic, and looked into all the facts, I assumed the average reader here isn't legally inclined.

That is why I decided to write a short case summary myself, while keeping only the most pertinent provision in mind, Section 2(30) of MVA, 1988, the definition of owner for the purposes of the act.

But if we go through the judgement, the Court examined a lot of other factors to arrive at the judgement, like the fact that the Seller was still paying the premium on the vehicle even after the possession had been transferred.

I did not focus on the fact that there was a delay while filing an FIR after the accident, because that was irrelevant, and the Court thought so as well, dismissing it by saying after a traumatic accident, delay in filing an FIR can't be grounds for refusing the claim.


Thanks for the brief facts, you did a wonderful job, short and sweet, just how it is supposed to be.

Quote:
Originally Posted by aviral2122 View Post
What would be the situation for vehicles sold to outside state and not yet registered in new state with new plates although NOC has been obtained.

Vahan portal clearly says 'NOC issued as vehicle sold" for vehicles where NOC has been obtained.
But would the previous owner be still be liable even if new owner hasn't gotten the vehicle registration done in New state?
Clearly in this case there would be no clear registered owner, as previous owner has gotten NOC and hence currently is not anymore the owner, or the name on NOC be treated as the registered owner.
As far as I know, in inter state transfers, the vehicle is unregistered from the sellers state, the seller gets a proportional refund on the tax that was paid, and the vehicle is then re-registered at the buyers state, with the remaining tax being paid again, and new number plates being issued.

Now, considering it can take upto 4 to 8 weeks to get an NOC at the RTO, it would depend on the facts.
If you have applied for NOC, but the money and the vehicle have changed hands, an argument could be made for transfer of ownership since there was an intention to re-register the vehicle.

In this case, even though the vehicle had changed hands, the seller was still paying the insurance premium, was still paying the EMIs, because he was waiting for the NOC from the bank. For all intents and purposes, he was deemed to be the owner because of the assumption that the registration could only be legally transferred after receiving the NOC from the Bank.

Last edited by BlackPearl : 19th June 2020 at 19:47. Reason: Edited. Thanks.
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Old 19th June 2020, 21:40   #5
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Default re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

The remedies availiable to the seller to save himself from a fall into the "liability trap", if the buyer is callous or is wilfully delaying/avoiding to transfer the motor vehicle in his name.

(1) If transfer has been unduly delayed, please send registered/speed post letters with A/D to the buyers address as a reminder, asking him to execute the transfer of ownership of the sold motor vehicle within two weeks from the date of receipt of the letter.

(2) A second reminder to him after about 30 days, if he has not yet executed the transfer of ownership stating that if he does not do so within 7 days, the seller will be constrained to file a civil suit to pray for direction from a competent court to execute the transfer of ownership of the motor vehicle and claim costs and incidentals.

(3) If there is no positive reaction from the buyer, it will be pertinent for the seller to file a civil suit (as stated above in sl.no. (2)). Interim directions can be prayed for from the competent court to direct the buyer to transfer ownership of the sold motor vehicle which the court can consider on an urgent basis. The civil suit can drag on after such interim order is issued.

The seller needs to use his judgment, wisdom and also consider the value of the transaction, the potential risks and hazards from the incompletely executed deal, prior to taking a legal recourse. He needs to thoroughly analyse the situation as to whether the civil suit will actually be the proper recourse to indemnify him from future wrongs, if any, that can be committed by the buyer . The civil suit can however save the seller from any future legal hassles.

Last edited by anjan_c2007 : 19th June 2020 at 21:44.
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Old 20th June 2020, 00:05   #6
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Default re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

Quote:
Originally Posted by anjan_c2007 View Post
The remedies availiable to the seller to save himself from a fall into the "liability trap", if the buyer is callous or is wilfully delaying/avoiding to transfer the motor vehicle in his name.

(1) If transfer has been unduly delayed, please send registered/speed post letters with A/D to the buyers address as a reminder, asking him to execute the transfer of ownership of the sold motor vehicle within two weeks from the date of receipt of the letter.

(2) A second reminder to him after about 30 days, if he has not yet executed the transfer of ownership stating that if he does not do so within 7 days, the seller will be constrained to file a civil suit to pray for direction from a competent court to execute the transfer of ownership of the motor vehicle and claim costs and incidentals.

(3) If there is no positive reaction from the buyer, it will be pertinent for the seller to file a civil suit (as stated above in sl.no. (2)). Interim directions can be prayed for from the competent court to direct the buyer to transfer ownership of the sold motor vehicle which the court can consider on an urgent basis. The civil suit can drag on after such interim order is issued.

The seller needs to use his judgment, wisdom and also consider the value of the transaction, the potential risks and hazards from the incompletely executed deal, prior to taking a legal recourse. He needs to thoroughly analyse the situation as to whether the civil suit will actually be the proper recourse to indemnify him from future wrongs, if any, that can be committed by the buyer . The civil suit can however save the seller from any future legal hassles.
Right on, very short, and to the point. Excellent.

I would however only change one thing, after sending the first letter, you only need to wait for 14 days from the date of acknowledgement. Ideally, one shouldn't wait for a month. Also, you need to send a letter to your RTO informing them that the buyer has refused to register the vehicle. The MV Act, 1988 specifies that the change in ownership should be reflected in the RC within 14 days.

Send the second letter along, and if you don't get a satisfactory response within week after the date of acknowledgement of the second letter, file a suit for breach of contract.

I say it's unwise to wait for a month because of the settled position in the case of Naveen Kumar vs. Vijay Kumar & ors.

Here, possession was transferred multiple times, but registration was not. The car was involved in an accident and unfortunately, a person was killed and another injured.

The SC directed the original owner to reimburse the family of the deceased and the injured.

The settled legal position regarding liability is quite clear.

Last edited by Balthazar : 20th June 2020 at 00:13. Reason: Typos
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Old 20th June 2020, 07:37   #7
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Ideally there should be an option for the seller to upload details of the vehicle, buyer, seller and sale online in a specific RTO website which absolves him of any further responsibility regarding the vehicle. The RTO office should have the responsibility to initiate action if the buyer doesn't register the vehicle within a particular time period.
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Old 20th June 2020, 12:08   #8
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Default re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

Currently with COVID-19, RTO Mumbai is not transferring vehicle registration and is not going to do so till at least September/October 2020 as per two agents. They are supposedly working with only ten percent work force and cannot handle this. They are only registering new vehicles for now.

In the above scenario what can a person who wants to sell his vehicle now do? Sell only after checking with the RTO in September/October 2020 or is there some workaround.

Experts please enlighten.

Thanks in advance.

Cheers
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Old 22nd June 2020, 10:30   #9
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Default Re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

Quote:
Originally Posted by Balthazar View Post
In a recently delivered judgement, the Supreme Court has held that the person in whose name the vehicle was registered shall be treated as the owner.
Time and time again, this has been the case. But for a change, this time around, not transferring the ownership saved the day I would say.

Apart from that, one must remember that, when it comes to commercial vehicles, doing an agreement sale is quite the norm. Infact, my aunt did it for one Indica taxi which was sold within 1 year of purchase. Since the car can't be sold as excise refund was received on it, we made an agreement on stamp paper to the effect that the car has been leased to the other fellow for xx amount and he would be liable for all expenses and responsibilities. We also ensured to deduct a portion of the agreed amount to pay towards the insurance as technically my aunt was still the registered owner.

Also commercial vehicles have permits and all, which are usually tied up to the owner. Hence selling a commercial vehicle is not so simple.

Coming back to our guy, all this happens because of the cumbersome nature of registration. It's not easy to get things done and even today, with online systems in place, transfers take a while. Less said about transactions across the states.

I think as BHPians, we should take a strong stand on this. While the aggregators like CashmyCar, Cars24 etc, promise you hassle free ownership transfer, let me tell, you if thing go south, it will be a terrible issue. Here is a lesson for all - We used to own a Maruti 800 back in Delhi, (UP reg). It was sold to a dad's colleague. Couple of years back I just thought of checking ownership of the car (on vahan) and was shocked to see my dad's name on it. Since realising it, we now take a 3rd party policy on it religiously as we don't know if the owner even bothers about it.

Last edited by blackwasp : 22nd June 2020 at 10:34.
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Old 28th June 2020, 12:02   #10
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Default Re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

How can we enforce registration? For example, If we have sold a car to an out of state buyer and at time of sale of they have made the full payment and taken the signed documents for NOC and RTO with them. How can I as an individual make them register the Vehicle and avoid liability?
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Old 28th June 2020, 12:26   #11
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Default Re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

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Originally Posted by showboat View Post
How can we enforce registration? For example, If we have sold a car to an out of state buyer and at time of sale of they have made the full payment and taken the signed documents for NOC and RTO with them. How can I as an individual make them register the Vehicle and avoid liability?
May depend on the state, but the general course of action is

Written complaint to
  1. the RTO where you registered the bike
  2. your police station
  3. buyers police station

Keep all the documents and signed forms, like the sale agreement, buyers address proof and a copy of his ID, forms 28, 29 and 30 where applicable, RC, tax papers, Insurance and most importantly, the DD or the Cheque or proof of RTGS or NEFT (I tend to advise my friends to avoid cash only payments) and attach copies on demand. It can be argued that after this, you are no longer liable, or your liability is greatly diminished. Do still follow up regularly till the transfer has been reflected in the records nonetheless, our Babus are not known for their sense of urgency.

The Ownership transfer Application has to be submitted within 14 days of the sale. You really should be on top of this, and if the registration has not been completed within the time frame, do not dally.

Quote:
Originally Posted by Cyborg View Post
Sell only after checking with the RTO
Depends, if you need to sell your vehicle immediately, just check with your RTO now. They should be able to give you the best advice in this case.

If it can wait, why not wait and let the pandemic subside? The market may or may not go down in the future, but atleast you will be safe.

Last edited by moralfibre : 28th June 2020 at 15:17. Reason: Updating as requested.
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Old 29th June 2020, 12:54   #12
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Default Re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

I read this judgment and it leaves me with one question. What happens when the car is sold to a used-car dealer? We sold two of our vehicles in the last few months and my worry is with test drives from a prospective buyer. We have seen one too many of those examples which have gone wrong in this forum and heavy-footed 'prospective customers' are a dime a dozen.

Though the car(s) is still registered in my father's name, we have taken an acknowledgment from the dealer that the car is sold to that person. Do you think this would be enough?
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Old 29th June 2020, 13:46   #13
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Default Re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

I am not debating the correctness of the judgment in the context of the law.

But I feel the law on this point should be as follows:

In cases where possession is transferred together with all associated documents and complete payment towards legal transfer of ownership, the risk and reward of ownership must move to the person in whose name this is under transfer and who is now in possession of the vehicle. This can be further refined by permitting an interim agency like used car dealer to have that obligation for a period of time exonerating seller from rights as well as liabilities. On matters of insurance the benefit should be capable of vesting with the new possessor via endorsement.
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Old 29th June 2020, 13:58   #14
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Default Re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

I have a question.
Say a vehicle is 15 years old, but is still in my name.
Will I still be treated as the owner, after the RC has expired?

Last edited by turbo : 29th June 2020 at 14:03.
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Old 29th June 2020, 14:12   #15
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Default Re: SC: Person in whose name vehicle is registered on accident date to be treated as owner

I had sold my car about 4 years ago. I can still see that the car is still not transferred by the buyer. I had the deal through a dealer. Now, the dealer has moved out of the current premises and also the buyer seems to have moved out from his last known address.

I keep getting traffic violation letters regularly. I am quite perplexed as to how to proceed further. Will it help if I register a police complaint or will it make things worse?
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