Relief at Last: Amending Legislature to Alleviate Liability Burden for Registered Owners
In a groundbreaking move, a proposed amendment to the Motor Vehicles Act is gaining attention for its potential to address a long-standing issue that has left many sellers of motor vehicles liable for accidents even after a valid sale. The issue, highlighted in the article "Trapped in the Registry: Unfair Liability of Registered Owners under the Motor Vehicles Act, 1988" published in Bar & Bench, has been a topic of concern for many.
The crux of the problem lies in Section 2(30) of the Motor Vehicles Act, which defines "owner" as the person in whose name the vehicle stands registered. This definition has led to the Supreme Court's decision in Naveen Kumar v. Vijay Kumar (2018) that affirms liability for third-party claims rests on the registered owner, regardless of any actual transfer.
Narasimhan Vijayaraghavan, in a bid to rectify this situation, has proposed amendments to the Motor Vehicles Act. These amendments aim to protect bona fide sellers from post-sale liabilities, safeguard third-party rights, and align India’s legal framework with international best practices.
The proposed amendment to Section 2(30) would make the transferee the "owner" for liability purposes from the date of transfer, if the seller duly intimates the registering authority of the transfer with proof of sale and transferee particulars. This change would shift the liability from the seller to the transferee, providing a fair apportionment of responsibility.
Furthermore, the proposed amendment to Section 50 would require a robust reporting and acknowledgment mechanism to protect sellers. This mechanism would ensure that the registering authority immediately records the seller's intimation, endorses the date of transfer, and issues an acknowledgment. From the date of acknowledgment, liability shifts conclusively to the transferee.
Sellers who fail to intimate the registering authority remain liable until they do so. However, the amendments also incentivize timely compliance from buyers, as the proposed changes bring India closer to global models such as the UK’s "notice of disposal" and the US "release of liability" mechanism.
The Motor Vehicles (Amendment) Bill, 2025, is seen as a corrective measure that ensures a clean discharge for compliant sellers, undiminished protection for third-party victims, and preserves insurers' obligations towards third-party victims, as they retain their right of recovery against defaulting owners.
The recent Supreme Court decision in Brij Bihari Gupta v. Manmet (August 8, 2025) has worsened the situation for bona fide sellers. However, with these proposed amendments, India is taking a significant step towards ensuring justice for all parties involved in motor vehicle transactions.
Readers have asked for suggestions to resolve this issue, and these proposed amendments offer a promising solution. By clarifying seller responsibilities, enhancing third-party compensation mechanisms, and standardizing vehicle transaction regulations, India can move closer to a fair and efficient motor vehicle regulatory system.
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