Clarification Needed on RTO Fine for delivery to Consignee Address in different state

This query is : Resolved

CA Sabir Shaikh (Querist)
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25 June 2024 A case from the client :

We are a manufacturing company from Maharashtra specializing in fire extinguishers; we received an order from a client based in Tamil Nadu, with a consignee address in Pondicherry, Karnataka, and despite dispatching the order as per the client's provided address and receiving payment, our transport vehicle was fined ₹10,000 by the RTO for incorrect material ownership, even though both the buyer's and consignee's addresses were mentioned on the invoice.

In this case who should be liable Buyer or Seller ?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 In the situation described, where a manufacturing company from Maharashtra received an order from a client in Tamil Nadu, with a consignee address in Pondicherry, Karnataka, the liability for the RTO fine generally depends on the specifics of the transaction and the ownership transfer terms agreed upon between the buyer and seller. Here are some considerations:

1. **Ownership Transfer Terms**: The liability for fines related to transport and ownership typically rests with the party responsible for the goods at the time of transport. This is usually determined by the terms of sale agreed upon between the buyer and the seller. If the terms state that ownership transfers to the buyer upon dispatch from the seller's premises, then the buyer would typically be liable for any issues related to transport, including fines.

2. **Invoice and Documentation**: If the invoice clearly states the consignee's address and the buyer's responsibility for the goods begins upon dispatch from the seller's premises, then the buyer might be responsible for ensuring that the transport vehicle is compliant with local regulations and that ownership and material possession are correctly documented.

3. **Legal Ownership Transfer Point**: In many transactions, ownership of goods transfers at a specific point agreed upon between the buyer and seller, often documented in the terms of sale or contract. This could be at the seller's premises, upon loading onto the transport vehicle, or upon delivery to the buyer's premises.

4. **Seller's Responsibility**: However, if the terms of sale or the contract stipulate that ownership transfers to the buyer upon delivery at the buyer's premises or after the goods are unloaded, the seller might retain responsibility until that point.

5. **Legal Advice**: Given the complexity and potential legal implications, it's advisable for both parties to review the terms of their contract and seek legal advice if necessary to determine liability accurately.

In conclusion, the liability for the RTO fine would typically depend on the terms of sale agreed upon between the buyer and seller, particularly regarding the point at which ownership and responsibility for the goods transfer from the seller to the buyer. Clear contractual terms and documentation are crucial in determining liability in such cases.