Delhi High Court Dismisses Appeal Challenging Liability of Registered Owner Despite Sale of Vehicle: “Liability Exists Until Name is Removed from RTO Records”

Court’s Decision

The Delhi High Court dismissed the appeal filed by the registered owner of a vehicle involved in a fatal accident, reiterating that the liability for third-party claims remains with the registered owner until their name is formally removed from the Regional Transport Office (RTO) records. The court emphasized that even if the vehicle was sold, the registration in the RTO records determines liability for compensation to third parties under the Motor Vehicles Act, 1988.

Facts

1. Incident: The case arose from a fatal road accident on October 21, 2018, leading to the death of a young man, aged 23 years and 5 months.
2. Tribunal Award: The Motor Accident Claims Tribunal (MACT) awarded compensation of ₹38,55,100 along with 9% annual interest to the claimants, holding the appellant (registered owner) and another respondent jointly liable for payment.
3. Appellant’s Position:
   • The appellant, the registered owner of the vehicle, argued that he had sold the vehicle to one Mr. Ajit Singh (Respondent No. 3) prior to the accident and thus should not be held liable.
   • He also claimed improper service of summons, alleging that the summons were received by his brother, who did not reside with him. As a result, he argued that he was not properly served and thus the tribunal’s award against him should be set aside.

Issues

1. Whether the registered owner of a vehicle remains liable for compensation despite having sold the vehicle before the accident.
2. Whether improper service of summons invalidates the award by the MACT.

Petitioner’s Arguments

1. Sale of Vehicle: The appellant contended that since he had sold the vehicle to Mr. Ajit Singh, the liability for the accident rested solely with the purchaser.
2. Improper Service: The appellant argued that he was not served summons by the tribunal as required by law. He claimed that his brother, who received the summons, did not reside with him, and thus, he was unaware of the proceedings.

Respondent’s Arguments

The respondents, including the claimants, maintained that the appellant, as the registered owner, was liable to pay the compensation since his name continued to appear in the RTO records at the time of the accident.

Analysis of the Law

1. Registered Owner’s Liability:
   The court highlighted that under Section 2(30) of the Motor Vehicles Act, the term “owner” includes the person in whose name the vehicle is registered. Even if the vehicle has been sold and possession transferred, the registered owner remains liable for third-party claims unless the registration is updated.
2. Legal Precedents:
   • In Prakash Chand Daga v. Saveta Sharma (2019) 2 SCC 747, the Supreme Court held that registered owners are liable for third-party claims until their name is removed from the RTO records.
   • Similarly, in T.V. Jose v. Chacko P.M. (2001) 8 SCC 748, the court ruled that sale or transfer of a vehicle does not absolve the registered owner of liability unless the registration reflects the change of ownership.
   • The Madhya Pradesh High Court in Ashok Kumar Mishra v. Durgavati & Ors. MANU/MP/0161/2007, reiterated these principles.
3. Improper Service of Summons:
   The court observed that if the appellant believed he was not properly served, the correct remedy was to file an application under Order IX Rule 13 of the Civil Procedure Code (CPC) for setting aside the award. Raising this issue as a ground in the appeal was not tenable.

Precedent Analysis

The court relied on multiple precedents to substantiate its reasoning:

1. Prakash Chand Daga v. Saveta Sharma – Confirmed the principle that registered owners are liable until the RTO records are updated.
2. T.V. Jose v. Chacko P.M. – Established that transfer of possession does not absolve the registered owner of liability for third-party claims.
3. Ashok Kumar Mishra v. Durgavati & Ors. – Reinforced the necessity of updating RTO records to transfer liability.

These cases collectively affirm the principle that registered ownership, as recorded in the RTO, is conclusive for determining liability in third-party claims.

Court’s Reasoning

1. Improper Service:
   The court dismissed the appellant’s argument regarding improper service, noting that the appropriate remedy was an application under Order IX Rule 13 CPC, not an appeal.
2. Registered Owner’s Liability:
   The court clarified that liability for third-party claims persists with the registered owner as long as their name remains in the RTO records. The sale or transfer of the vehicle, even with supporting documents, does not absolve liability until the name is officially removed from the records.

Conclusion

The appeal was dismissed. The court held that:

• The appellant, as the registered owner, is liable to pay the compensation awarded by the MACT.
• The argument regarding improper service was not tenable as the appellant did not pursue the appropriate legal remedy.

Implications

1. For Registered Owners:
   This judgment reinforces the importance of ensuring timely updates to RTO records upon selling a vehicle to avoid liability for future third-party claims.
2. For Third Parties:
   The decision ensures clarity and certainty in compensation claims, as victims can rely on RTO records to identify the liable party.
3. Legal Precedent:
   The ruling reaffirms established principles in motor accident liability cases and strengthens the obligation of registered owners to comply with procedural formalities post-sale.

This detailed judgment underscores the principle that statutory compliance with vehicle registration laws is crucial for avoiding unforeseen liabilities.

Also Read – Delhi High Court Quashes FIR in Matrimonial Dispute Following Amicable Settlement: “No Useful Purpose Shall Be Served by Keeping the Case Pending When Chances of Conviction Are Bleak”