The recent Red Fort blast put an unexpected spotlight on a compliance issue many car owners overlook. The white Hyundai i20 that caught fire on 10 November had reportedly changed hands multiple times, yet the registration certificate still showed the name of its original owner from 2014.
It is a reminder that thousands of cars in India are sold and resold every month without a formal transfer of ownership. For sellers, this lapse can create significant legal, financial, and reputational risk.
A market that remains largely unregulated
In many cities, used-car transactions continue to operate on informal practices. Dealers openly admit that vehicles often circulate between multiple buyers without completing the transfer process.
At a dealership in Delhi’s Rohini, one dealer explained that it is common for the registration certificate to reflect the first owner even when the vehicle has changed hands two or three times. While some dealers follow due process – Aadhaar verification, matching VINs, and ensuring payment to the registered owner – many others do not.
One practice that exposes sellers to undue risk is the use of blank sale letters. Sellers are asked to sign partially filled transfer forms, with the buyer’s name added later. This helps dealers preserve the car’s resale value by not increasing the “number of owners” on paper.
But this convenience comes at a cost. If the car is later involved in an accident or a criminal investigation, the police can only trace it back to the individual whose name appears on the RC, even if they sold it years ago.
Transfers often break down across state borders
Another source of complications is interstate resale. A car registered in Delhi and sold in another city must be re-registered with a new number. Many buyers do not want to undergo this process, resulting in the previous owner remaining liable for unpaid challans, misuse, or legal proceedings.
To prevent these lapses, the Ministry of Road Transport introduced new rules in 2022. These require used-car dealers to obtain an authorisation certificate, maintain digital trip records and take responsibility for notifying the RTO when a vehicle enters their possession.
However, enforcement remains inconsistent.
Seller experiences show the risks are real
Several recent cases highlight why diligence is essential. One seller from Gurgaon reported receiving calls from unknown individuals across states after her documents were allegedly shared without consent by an intermediary handling the sale of her 10-year-old vehicle.
Such incidents underline that the sale of a car is not only a financial transaction but a legal one. According to a former RTO official, sellers must notify the RTO within 14 days by submitting Form 29 and insist on completing Form 30, which records the transfer. Both steps are crucial to formally releasing liability.
Practical steps to protect yourself
Chartered accountants frequently advise clients that an incomplete ownership transfer can expose them to tax issues, challans, civil liabilities, and police scrutiny. The following steps can safeguard both sellers and buyers:
For sellers
- Verify Aadhaar and PAN directly using government apps
- Never sign blank sale letters or partially filled forms
- Transfer a token amount to confirm the account holder matches the RC
- Submit Form 29 and Form 30 to the RTO immediately
- Obtain a stamped acknowledgement from the RTO
- Follow up until the new RC is issued
- If a buyer becomes unresponsive, file a written complaint with the local police station
For buyers
- Match the VIN number on the car and registration certificate
- Check pending challans, loan liens, and NOCs online
- Confirm the vehicle has no accident or theft records
- Use a written sale agreement and proper receipts
- Prefer registered, authorized dealers
- Avoid intermediaries who operate without documentation
A compliance issue that needs wider attention
While the 2022 regulations were a step forward, the pre-owned vehicle ecosystem still has gaps. Strengthening dealer registration, enforcing digital records, and improving interstate coordination will reduce risks for all parties.
For now, the Red Fort incident serves as a timely reminder. A vehicle sale is not complete until the ownership transfer is formally recorded. Completing these steps protects sellers from exposure long after the car has left their possession.