The Allahabad High Court has ruled that even if a vehicle has been sold, the person whose name continues to appear as the registered owner in transport department records will remain legally liable to pay accident compensation. Dismissing an appeal filed by an insurance company, the court upheld the order of the Employee Compensation Commissioner, reiterating that statutory liability flows from registration records and not from private sale arrangements.
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The ruling came in a motor accident compensation case arising from a fatal road accident that occurred on February 26, 2015, in which a car driver lost his life while in the course of employment. The Commissioner at Moradabad had earlier directed payment of ₹8,26,495 as compensation to the deceased worker’s family. Challenging this order, the insurer approached the High Court, arguing that the vehicle had already been sold prior to the accident and that the employer–employee relationship had ceased.
The insurance company contended that the original owner had transferred the car to another individual before the accident, and therefore neither the registered owner nor the insurer could be held liable. It was also argued that since ownership had changed hands, responsibility for the driver no longer rested with the previous owner.
The High Court rejected these arguments after examining the official transport records. The court noted that on the date of the accident, the vehicle continued to be registered in the name of the original owner. As a result, for the purpose of liability under compensation law, the registered owner remained responsible, along with the insurer covering the vehicle at the relevant time.
Relying on settled legal principles and earlier rulings of the Supreme Court of India, the court observed that compensation claimants cannot be expected to trace a chain of private vehicle transfers to identify the actual possessor at the time of the accident. “In law, the registered owner and the insurer are liable so long as the registration has not been formally transferred,” the court noted, adding that any internal or private arrangements between seller and buyer cannot defeat statutory liability.
The judgment underscored that motor accident compensation law is intended to provide speedy and effective relief to victims and their families. Shifting the burden onto claimants to determine the true owner through multiple unrecorded transactions would undermine the very object of the legislation, the court said.
With these observations, the High Court dismissed the appeal filed by the Oriental Insurance Company and affirmed the compensation award passed by the Employee Compensation Commissioner. The insurer was directed to comply with the award in accordance with law.
Broader implications for vehicle owners
Legal experts say the ruling serves as a cautionary reminder for vehicle owners to ensure that ownership transfers are promptly reflected in official records. Merely handing over possession or executing a sale agreement does not absolve the registered owner of legal responsibility in the event of an accident.
The judgment also reinforces the consistent position taken by courts that transport department records are decisive in fixing liability, especially in compensation matters involving third parties and employees. Until a transfer is formally endorsed in registration documents, the registered owner continues to bear statutory obligations arising out of the use of the vehicle.
Part of a series of firm judicial messages
The decision comes amid a series of recent High Court rulings emphasising procedural clarity and legal accountability in compensation and service-related matters. Courts have repeatedly stressed that technical objections and internal arrangements cannot be used to deny rightful benefits to victims or their families.
By upholding the compensation award and rejecting the insurer’s appeal, the High Court has once again prioritised victim-centric justice, making it clear that compliance with statutory procedures—such as timely transfer of vehicle registration—is not optional but essential.
The ruling is expected to have a significant bearing on similar pending cases, particularly those where insurance companies or vehicle owners seek to avoid liability on the ground that a vehicle had been sold but not officially transferred before an accident occurred.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
