Transport Ministry proposes new reform to make used car dealers ‘deemed’ owners of vehicles

We have come across several cases in the past, where the vehicles sold through used car dealers remain under the name of the original owner and they face the risk of getting challans for traffic rules violations. At time, such cars have even involved in crimes. This would soon change as road transport ministry is now working on a proposal which would make the sale and purchase of such used car more transparent. This proposal would make the authorised used car sellers as the deemed owners of such vehicle and thus save the original owner of the car from legal problems in future.

As of now, there are no regulations that would put the responsibility of such traffic rule violations and crimes on the used car dealers. That is one of the reason why transport ministry has proposed such a change in the Central Motor Vehicle Rules. The proposal comes at a time when the used car business in India has been showing positive signs of growth. The reform or the notification will impact a large number of used car dealers and vehicle owners.

The registration such used car dealers will be done online. Irrespective of the size of the organization, a used car dealer can apply for authorisation from state transport department. Once the authorisation has been granted, the dealer is allowed to sell and purchase vehicles. As per the proposal which is being put forward, the original owner of the vehicle will have to intimate the RTO electronically as soon as the vehicle has been handed over to the used vehicle dealer.

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The dealer will also have to put in his signatures. After this, the authorised dealer will be the deemed owner of the vehicle. From then on, the dealer would be responsible for any vehicle related incident, when it is under his custody. The dealer can apply for fitness, duplicate RC, NOC and also initiate transfer of ownership. Although, the used vehicle dealer is the temporary owner of the vehicle, he or she is not supposed to use them on public roads except for test drives for potential buyer, maintenance or painting.

The reform might come into implementation by the end of this year. We feel this is a good move from the government as this takes away the risk from the original owner of the vehicle. As the dealer would be the temporary owner of the vehicle and would be responsible for any incident related to the vehicle, he or she would be more careful with the vehicle and he would also proactively ensure that the ownership of the vehicle is transferred to the new owner. Reports also suggest that the conditions for granting the authorisations would be clearly defined to the dealers and if any of these dealers are found violating the conditions, it would directly result in heavy penalty and the authorities can also cancel the authorisation of the dealer. The fine amount is currently not specified and is likely to be revealed when it gets implemented.

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