The Supreme Court has ruled that the owner of a vehicle who transfers it to another person is also liable to pay compensation in case of an accident unless the sale is reflected in one way or the other in the Regional Transport Authority (RTA) 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 bench of Justices U.U. Lalit and D.Y. Chandrachud said in a recent judgment.

“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 bench added.

A vehicle’s sale ought to be registered by the RTO within 30 days. Section 50(1) of the Motor Vehicles Act, 1988, makes its mandatory for a car owner to report the transfer of ownership within 14 days to the RTA authorities where the car was originally registered.

If an accident for which compensation is claimed is made within the 30-day period or the records do not reflect the sale of the car because of no fault of the original owner, then the receipt slip issued by the RTA would be admissible in court as an argument in favour of not being liable to pay compensation.

The Supreme Court passed the verdict while dismissing the appeal filed by Prakash Chand Daga challenging a Punjab and Haryana High Court judgment of April 5, 2018, which had upheld a Chandigarh Motor Accidents Claims Tribunal order asking him and the person to whom he sold his car to jointly pay a compensation of Rs 12.47 lakh to accident victim Rakesh Kumar.

The compensation of Rs 12.47 lakh will also carry an interest at the rate of 7.5 per cent per annum from the date of filing the petition till the final order, the tribunal had held.

Although Daga had sold his Hyundai Santro to Saveta Sharma on September 11, 2009, neither had got the transfer of ownership registered.