Mere transfer of ownership of vehicle does not absolve the registered owner from liability to a third person

The Supreme Court held that a registered owner cannot wriggle out of liability towards a third person in event of an accident, on the mere pretext of the ownership of the vehicle being transferred, if he still continues to be the recorded owner as per RTO records.

The said judgment was passed by the Supreme court in the case of Prakash Chand Daga Vs. Saveta Sharma & Ors., Civil Appeal No. 11369 of 2018 decided on 14.12.2018.


The appellant in the present case was the original owner of a Santro Car sold to Respondent No. 1 on 11.09.2009. After receiving due consideration, the possession of the said car was transferred to Respondent No. 1. An accident occurred on 09.10.2009 in which one Rakesh Kumar, Respondent No. 2, received injuries.

The Motor Accident Claims Tribunal fastened liability on the driver and first respondent which was further challenged by them in the High Court by filing FAO No.7010/2011. The High Court concluded that despite the sale of the vehicle on 11.09.2009, no transfer of ownership, in accordance with Section 50 of the Motor Vehicles Act,1988 was effected and as such the appellant continued to be the owner in terms of definition as incorporated in Section 2(30) of the Act.

It was claimed by the appellants that the accident had occurred within thirty days of the transfer when the statutory period as prescribed under Section 50(1)(b) of the Act had not expired and as such the liability could not be fastened on the present appellant.


The Supreme Court noted that in terms of Section 50 of the Act, the transfer of a vehicle ought to be registered within 30 days of the sale. Section 50 further prescribes timelines within which the transferor and the transferee are required to report the factum of transfer. The Court further recorded that these timelines and obligations are only to facilitate the reporting of the transfer. It was further held that it is not as if that if an accident occurs within the period prescribed for reporting said transfer, the transferor is absolved of the liability.

The Supreme Court reiterated that for the purposes of fixing such liability the concept of ownership has to be understood in terms of specific definition of ‘owner’ as defined in Section 2(30) of the Act. The Court concluded that 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. 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.