The publication of the piece in Bar & Bench (Trapped in the Registry: Unfair Liability of Registered Owners under the Motor Vehicles Act, 1988), struck a chord with countless readers. The article identified the vexed issue of how sellers of motor vehicles, despite parting with possession and ownership through a valid sale, continue to be unfairly exposed to liability for accidents merely because the purchaser fails to update the registration records.
Responders aplenty sought suggestions to resolve the issue. Multiple instances were brought home where sellers were facing the wrath of law, for no fault on their part. The recent decision in Brij Bihari Gupta v. Manmet dated August 8, 2025 from the Supreme Court has exacerbated the problems of bona fide sellers. Some querists were direct. What is the point in disturbing our peace of mind? Why not suggest remedial measures, if you can zero in on the problem? they rightfully asked. That triggered this sequel.
The outpouring of responses was overwhelming. But identification alone is not cure. Suggesting viable solutions became the need of the hour. This follow-up piece is written with that context: to propose crisp, workable amendments to the Motor Vehicles Act that protect bona fide sellers, preserve third-party rights and align India’s framework with international best practice.
Section 2(30) of the Motor Vehicles Act defines “owner” to mean the person in whose name the vehicle stands registered. The Supreme Court in Naveen Kumar v. Vijay Kumar (2018) affirmed that liability for third-party claims continues to rest on the registered owner, regardless of any actual transfer.
While well-intentioned to protect innocent victims, this creates a cruel paradox. Sellers who have lawfully sold their vehicles, handed over possession and even received payment remain trapped in the legal registry. Accidents caused long after the sale still drag them into liability loops — civil, and sometimes even criminal.
Tinkering with only Section 2(30) will not suffice. Section 50 — the procedural limb dealing with transfer of ownership — must be amended in tandem. Without a robust reporting and acknowledgment mechanism, sellers remain unprotected.
The twin changes proposed below strike a balance between protecting third parties and safeguarding honest sellers.
1. Amendment of Section 2(30):
Introduce a proviso that once a seller duly intimates the registering authority of the transfer, with proof of sale and transferee particulars, the transferee shall be deemed the “owner” for liability purposes from the date of transfer. Sellers who comply stand discharged from all liabilities post-sale.
2. Amendment of Section 50:
Insert sub-sections mandating the registering authority to immediately record the seller’s intimation, endorse the date of transfer and issue an acknowledgment. From that date, liability shifts conclusively to the transferee. Sellers who fail to intimate remain liable until they do so; transferees who delay updating registration face penalties, including suspension of registration.
3. Safeguard for victims:
Nothing in these changes disturbs the liability of insurers to satisfy third-party claims. Victims remain protected; insurers retain their right of recovery against defaulting owners.
These amendments are rooted in fairness. They:
(i) shield bona fide sellers from post-sale liabilities;
(ii) incentivise timely compliance from buyers;
(iii) preserve insurers’ obligations towards victims;
(iv) bring India closer to global models such as the UK’s “notice of disposal” and the US “release of liability” mechanism.
The law as it stands today punishes the innocent seller for another’s indifference. Recognising the injustice is only half the battle. Correcting it legislatively is imperative. The Motor Vehicles (Amendment) Bill, 2025 provides that corrective: a fair apportionment of responsibility, a clean discharge for compliant sellers and undiminished protection for third-party victims.
Parliament now has the opportunity to unshackle countless citizens from being perpetually trapped in the registry.
Narasimhan Vijayaraghavan is a practicing advocate in the Madras High Court.