Draft rules to be notified making dealer liable once vehicle is sold

once a car is handed over with due intimation, the dealer would be deemed the owner and held liable for any incidents during possession, According to the draft rules

On December 13, 2001, a white Ambassador with a fake ministry sticker rolled into Parliament, carrying five armed men who launched a deadly terror attack. Investigations later revealed the car had changed hands several times, but the regional transport office (RTO) records still listed it under a prominent leasing and financial services firm. The paperwork had never caught up with reality. 

Something similar, though with financial consequences, played out for Naveen Kumar. He had sold his motorcycle in 1994, only to be jolted more than two decades later when the Supreme Court, in 2018, held him liable for a 1999 accident — because the registration certificate (RC) still carried his name. In law, the “owner” is whoever appears on the RC — and owners pay. 

This legal position collides with the messy reality of India’s pre-owned vehicle market. Transfer forms (29 and 30) are officially required, but sellers are often asked to sign them blank, with names and dates added later. Vehicles often pass through unrecorded hands. Dealers avoid updating registration—not to save a few hundred rupees, but to dodge the two-to-four -  week RC transfer process that eats into margins. 

Personal experience confirms this. When selling my car recently to a nationwide online marketplace, I was asked to sign blank transfer forms — despite their stated policy of filled-in forms. They insisted that both the buyer’s name and date be left blank. I refused, and after threatening to walk away, they let me fill in the date (but not the name). I also demanded full payment before handing over the car. The marketplace complied but withheld ₹2,000 to ensure my “cooperation” in the transfer. Weeks later, a stranger called asking for an OTP to complete the process. I refused until the marketplace confirmed it. I hope the car is no longer in my name. To this day, I have received neither official intimation of transfer nor refund of the ₹2,000.

 

In the US  television series The Rookie, police officers pull over cars, run the licence plate (check in their database), and instantly see the registered owner’s name, address, and insurance. Internet research shows that in the US vehicles rarely float in limbo between owners. In California, the seller must notify the Department of Motor Vehicles (DMV) within five days and the buyer must register it within 10. Until both are done, the vehicle cannot be legally driven. In contrast, transfers are delayed for weeks or months in India, leaving liability squarely on the seller. 

India has tried to address this. In September 2022, the transport ministry issued draft rules (bit.ly/46zij6F) to streamline the pre-owned vehicle market. According to it, dealers are to obtain authorisation, formally record delivery from owners, and maintain digital registers of inventory and usage. Most crucially, once a car is handed over with due intimation, the dealer would be deemed the owner and held liable for any incidents during possession. By empowering dealers to handle RC renewals and transfers while holding them accountable, the draft aims to protect both sellers and buyers. Effectively, the RC transfer process is to be digitised and made real-time. Yet three years on, the rules remain unnotified. 

Truth be told, no seller wants to see the car they sold splashed across newspapers as the one used in a bomb blast, nor does any buyer want to depend on a seller who delays RTO intimation to squeeze out more money. With nearly 6 million vehicles resold each year — many passing through multiple dealers — the risk goes beyond financial disputes to potential misuse for criminal ends. It took 21 years after the Parliament attack, and countless court rulings against sellers like Naveen Kumar, for draft rules to emerge. It is time they are notified and enforced — so sellers are freed from unfair liability and the country is safer from the dangers of untraceable vehicles. Let us not wait for another terrorist attack to bring in these overdue changes. 

The writer heads Fee-Only Investment Advisors LLP, a Sebi-registered investment advisor; X: @harshroongta