Exam Solutions
Exam Solutions
Exam Solutions
Preamble
An Act to define and regulate the rights and duties of parties to hire
purchase agreements and for matters connected with or incidental thereto.
Chapter I - Preliminary
(2) It extends to the whole of India except the State of Jammu and Kashmir
(3) It shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint.
2. Definitions -
(b) "hire" means the sum payable periodically by the hirer under a hire-
purchase agreement.
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(ii) the property in the goods is to pass to such person on the payment
of the last of such instalments, and
(iii) such person has a right to terminate the agreement at any time
before the property so passes.
(d) "hire-purchase price" means the total sum payable by the hirer under
a hire-purchase agreement in order to complete the purchase of, or the
acquisition of property in, the goods to which the agreement relates and
includes any sum so payable by the hirer under hire-purchase agreement by
way of a deposit other initial payment, or credited or to be credited to him
under such agreement on account of any such deposit or payment, whether
that sum is to be a or has been paid to the owner or to any other person or
is to be or has been discharged by payment or money or by transfer or
delivery of goods or by any other means but does not include any sum
payable as a penalty or as compensation or damages for a breach of the
agreement.
(e) "hirer" means the person who obtains or has obtained possession of
goods from an owner under a hire-purchase agreement, and includes a
person to whom the hirer’s rights or liabilities under the agreement have
passed by assignment or by operation of law.
(f) "owner" means the person who lets or has let, delivers or has delivered
possession of goods, to a hirer under a hire-purchase agreement and
includes a person to whom the owners property in the goods or any of the
owners rights or liabilities under the agreement has passed by assignment or
by operation of law.
(g) each of the words and expressions used and not defined in this Act but
defined in the Indian Contract Act, 1872 ( 9 of 1872) or the Sale of Goods
Act, 1930 (3 of 1930) shall have the meaning assigned to it in that Act.
3. Hire –
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(2) A hire-purchase agreement shall be void if in respect thereof any of the
requirements specified in sub-section (1) has not been complied with
(b) The cash price of the goods, that is to say, the price at which
the goods may be purchased by the hirer for cash,
(2) Where any part of the hire-purchase price is, or is to be, paid otherwise
than in cash or by cheque, the hire-purchase agreement shall contain a
description of the part of the hire-purchase price.
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Where by virtue of two or more agreements in writing, none of which by
itself constitutes a hire-purchase agreement, there is a bailment of goods
and the bailee has an option to purchase the goods and the requirements of
section 3 and section 4 are satisfied in relation to such agreements, the
agreements shall be treated for the purposes of this Act as a single hire-
purchase agreement made at the time when the last of the agreements was
made.
(a) That the hirer shall have and enjoy quiet possession of the goods,
and
(b) That the goods shall be free from any charge or encumbrance in
favour of any third party at the time when the property is to pass.
(a) An implied condition on the part of the owner that he has a right to
sell the goods at the time when the property is to pass.
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(iv) If the goods are second-hand goods and the agreement
contains a statement to the effect.
(a) has made known to the owner the particular purpose for which the
goods are required, or
(4) Where the goods are let under a hire-purchase agreement by reference
to a sample there shall be-
(a) an implied condition on the part of the owner that the bulk will
correspond with the sample in quality, and
(b) an implied condition on the part of the owner that the hirer will
have a reasonable opportunity of comparing the bulk with the sample.
(5) Where the goods are let under a hire-purchase agreement by description
there shall be an implied condition that the goods will correspond with the
description, and if the goods are let under the agreement by reference to a
sample as well as by description, it shall not be sufficient that the bulk of the
goods correspond with the sample if the goods do not also correspond with
the description.
(7) Nothing in this section shall prejudice the operation of any other
enactment or rule of law whereby any condition or warranty is to be implied
in any hire-purchase agreement.
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same proportion as the amount of the hire-purchase instalment bears
to the total amount of hire-purchase price.
(b) "Deposit" means any sum payable by the hirer under the hire-
purchase agreement by way of deposit or other initial payment or
credited or to be credited to him under the agreement on account of
any such deposit or payment whether that sum is to be or has been
discharged by payment of money or by transfer or delivery of goods or
by any other means.
(iii) any amount which is payable for insurance (other than third
party insurance) in respect of the goods and which is specified in
the agreement as included in the hire-purchase price.
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(2) The statutory charges, in respect of a cash price instalment, shall be an
amount calculated at the rate of thirty per centum per annum or, if a lower
rate is specified under sub-section (3) as such lower rate, in accordance with
the following formula: -
Cl x RxT
SC = ____________
100
T,- repress the time, expressed in years and fractions of years, that
elapses between the date of the agreement and the date on which the
hire-purchase instalment corresponding to the cash price instalment is
payable under the agreement.
(3) The Central Government may, by notification in the Official Gazette, and
after consultation with Reserve Bank of India, specify the rate per centum
per annum, being a rate which shall not be less than ten per centum per
annum, at which statutory charges may be calculated under sub-section (2)
and different rates may be so specified in respect of hire-purchase
agreements relating to different classes or sub-classes of goods.
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Where the hirer elects have his liability reduced by the amount referred to in
sub-section (4), his liability shall be reduced by that amount and that
amount may be set off by the hirer against the amount that would otherwise
be due under the agreement and, to the extent to which it is not so set off,
may be recovered by the hirer as a debt due to him by the owner.
8. Passing of property -
Subject the provision of this Act, property in the goods to which a hire-
purchase agreement relates shall pass to the hirer only on the completion of
the purchase in the manner provided in the agreement.
(1) The hirer may, at any time during the continuance of the hire-purchase
agreement and after giving the owner not less than fourteen days notice in
writing of his intention so to do, complete the purchase of the goods by
paying or tendering to the owner of the hire-purchase price or the balance
thereof as reduced by the rebate calculated in the manner provided in sub-
section (2).
The rebate for the purposes of sub-section (1) shall be equal to two-thirds of
an amount which bears to the hire-purchase charges the same proportion as
the balance of the hire-purchase price not yet due bears to the hire-
purchase price.
(1) The hirer may, at any time before the final payment under the hirer-
purchase agreement falls due, and after giving the owner not less than
fourteen days, notice in writing of his intentions so to do and re-delivering or
tendering the goods to the owner, terminate the hire-purchase agreement
by payment or tender to the owner of the amounts which have accrued due
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towards the hire-purchase price and not been paid by him, including the
sum, if any, which he is liable to pay under sub-section (2).
Where the hirer terminates the agreement under sub-section (1), and the
agreement provides for the payment of a sum named on account of such
termination, the liability of the hirer to pay that sum shall be subject to the
following conditions, namely: -
Where the sum total of the amounts paid and the amounts due in respect of
the hire-purchase price immediately before the termination exceeds one-half
of the hire-purchase price, the hirer shall be liable to pay the difference
between the said sum total and the said one-half, or the sum named in the
agreement whichever, is less.
Nothing in sub-section (2) shall relieve the hirer from any liability for any
hire, which might have accrued due before the termination.
Nothing in the section shall prejudice any right of a hirer to terminate a hire-
purchase agreement otherwise than by virtue of this section.
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(1) The hirer may assign his right, title and interest under the hire-purchase
agreement with the consent of the owner, or if his consent is unreasonably
withheld, without his consent.
Where on a request being made by a hirer in this behalf the owner fails or
refuses to give his consent to an assignment under sub-section (1) the hirer
may apply to the court for an order declaring that the consent of the owner
to the assignment has been unreasonably withheld, and where such an order
is made the consent shall be deemed to be unreasonably withheld.
(4) As a condition of granting such consent, the owner may stipulate that all
defaults under the hire-purchase agreement shall be made good and may
require the hirer and the assignee to execute and deliver to the owner an
assignment agreement, in a form approved by the owner, whereby, without
affecting the continuing personal liability of the hirer in such respects, the
assignee agrees with the owner to be personally liable to pay the
installments of hire remaining unpaid and to perform and observe all other
stipulations and conditions of the hire-purchase agreement during the
residue of the term thereof and whereby the assignee indemnifies the hirer
in respect of such liabilities.
(5) The right, title and interest of a hirer under a hire-purchase agreement
shall be capable of passing by operation of law to the legal representative of
he hirer but nothing in this sub-section shall relieve the legal representative
from compliance with the provisions of the hire-purchase agreement.
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Subject to the provisions of this Act, a hirer shall be bound - to pay the
hirer in accordance with the agreement, and otherwise to comply with the
terms of the agreement.
(2) The hirer shall be liable to make compensation to the owner for any
damage caused by failure to take care of the goods in accordance with the
provisions of sub-section (1).
If the hirer makes any use of the goods to which the hire-purchase
agreement relates which is not according to the conditions of the agreement,
the hirer shall be liable to make compensation to the owner for any damage
arising to the goods from or during such use.
If the hirer fails without reasonable cause to give said information within
fourteen days of the receipt of the notice, he shall be punishable with fine
which may extend to two hundred rupees.
(1) Where the owner seizes under clause (c) of section 19 the goods let
under a hire-purchase agreement, the hirer may recover from the owner the
amount, if any, by which the hirer-purchase price falls short of the
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aggregate of the following amount, namely: - the amounts paid in respect of
the hire-purchase price up to the date of seizure.
For purposes of this section, the value of any goods on the date of seizure is
the best price that can be reasonably contained for the goods by the owner
on that date less the aggregate of the following amounts, namely: - The
reasonable expenses incurred by the owner for seizing the goods, any
amount reasonably expended by the owner on the storage, repairs or
maintenance of the goods.
If the owner fails to pay the amount due form him under the provisions of
this section or any portion of such amount, to the hirer within a period of
thirty days form the date of notice for the payment of the said amounts is
served on him by the hirer the owner shall be liable to pay interest on such
amount at the rate of twelve per cent, per annum from the date of expiry of
the said period of thirty days.
Where the owner has sold the goods seized by him the onus of proving that
the price obtaining by him for the goods was the best price that could be
reasonably obtained by him on the date of seizure shall lie upon him.
(1) Where a hirer makes more than one default in the payment of hire as
provided in the hire-purchase agreement then, subject to the provisions of
section 21 and after giving the hirer notice in writing of not less than - one
week, in a case where the hire is payable at weekly or lesser intervals, and
two weeks, in any other case, the owner shall be entitled to terminate the
agreement by giving the hirer notice of termination in writing.
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Provided that if the hirer pays or tenders to the owner the hire in arrears
together with such interest thereon as may be payable under the terms of
the agreement before the expiry of the said period of one week or, as the
case may be, two weeks, the owner shall not be entitled to terminate the
agreement.
Provided that when such goods are seized by the owner, the retention of
hire and recovery of the arrears of hire due shall be subject to the provisions
of section 17.
Subject to the conditions specified in clauses (a) and (b) of sub-section (2)
of section 10, to forfeit the initial deposit, if so provided in the agreements.
Subject to the provisions of section 17 and section 20 and subject to any
contract the contrary, to enter the premises of the hirer and seize the goods.
(1) Where goods have been let under a hire-purchase agreement and the
statutory proportion of the hire-purchase price has been paid, whether in
pursuance of the judgement of court or otherwise, or tendered by or on
behalf of the hirer or any surety, the owner shall not enforce any right to
recover possession of the goods from the hirer otherwise than in accordance
with sub-section (3) or by suit.
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three-fourths, where the hire-purchase price is not less than fifteen
thousand rupees.
Provided that in the case of motor vehicles as defined in the Motor Vehicles
Act, 1939 (4 of 1930), ":statutory proportion" shall mean - one-half
where the hire-purchase price is less than five thousand rupees.
Three-fourths, where the hire-purchase price is not less than five thousand
rupees but less than fifteen thousand rupees.
The surety shall be entitled to recover from the owner all sums paid by him
under the contract of guarantee or under any security given by him in
respect thereof.
The provisions of this section shall not apply in any case in which the hirer
has terminated the agreement by virtue of any right vested in him.
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the termination, and thereupon the hirer shall continue in possession of the
goods as if the agreement has not been terminated.
If the breach or act is capable of remedy, requiring the hirer to remedy it,
and the hirer fails, within a period of thirty days from the date of the service
of the notice, to remedy the breach or act if it is capable of remedy.
(1) It shall be the duty of the owner to supply, free of cost, a true copy of
the hire-purchase agreement, signed by owner.-
To the hirer, immediately after execution of the agreement, and where there
is a contact of guarantee to the surety, on demand made at any time before
the final payment has been made under the agreement.
it shall also be the duty of the owner, at any time before the final payment
has been made under the hire-purchase agreement, to supply to the hirer,
within fourteen days after the owner receives a request in writing from the
hirer in this behalf and the hirer tenders to the owner the sum of one rupees
of expenses, statement signed by the owner or his agent showing.- the
amount paid by or on behalf of the hirer, the amount which has become due
under the agreement but remains unpaid, and the date upon which each
unpaid instalment became due and the amount of each such instalment, and
the amount which is to become payable under the agreement, and the date
or the mode of determining the date upon which each future instalment is to
become payable, and the amount of each such instalment.
Where there is failure without reasonable cause to carry out the duties
imposed by sub-section (1), or sub-section (2), then , while the default
continues,- The owner shall not be entitled to enforce the agreement against
the hirer or to enforce any contract of guarantee relating to the agreement,
or to enforce any right to recover the goods from the hirer, and no security
given by the hirer in respect of money payable under the agreement or
given by a surety in respect of money payable under such a contract of
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guarantee as aforesaid shall be enforceable against the hirer or the surety
by the holder thereof.
And, if the default continues for a period of two months, the owner shall be
punishable with fine which may extend to two hundred rupees.
Chapter VI - Miscellaneous
Where an owner has agreed that any part of the hire-purchase price may be
discharged otherwise than by the payment of money, and such discharge
shall, for the purposes section10, section 11, section 17, section 20 and
section 23, be deemed to be a payment of the part of the hire-purchase
price.
25. Insolvency of hirer, etc.-
(1) Where, during the continuance of the hire-purchase agreement, the hirer
is adjudged insolvent under any law with respect to insolvency for the time
being in force, the Official Receiver or where the hirer is a company, then in
the event of the company being wound up, the liquidator, shall have in
respect of the goods which are in the possession of the hirer under the
agreement, the same rights and obligations as the hirer had in relation
thereof.
The Official Receiver or the liquidator, as the case may be, may, with the
permission of the Insolvency Court or which the winding up proceedings are
pending, assign the rights of the hirer under the agreement, to any other
person, and the assignee shall have the rights and be subject to all the
obligations of the hirer under the agreement.
Where goods have been let under a hire-purchase agreement, and at any
time thereafter the owner makes a subsequent hire-purchase agreement
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with the hirer, whether relating exclusively to other goods or to other goods
together with the goods to which the first agreement relates, any such
subsequent hire-purchase agreement shall not have effect is so far as it
affects prejudicially any right which the hirer would have had by virtue of
section 20 under the first agreement, if such subsequent hire-purchase
agreement had not been made.
(1) Where, in a suit or application by an owner of goods which have been let
under a hire-purchase agreement, to enforce a right to recover possession of
the goods from the hirer, the owner proves that, before the commencement
of the suit or application and after the right to recover possession of the
goods accrued, the owner made a request in writing to the hirer to surrender
the goods, the hirer’s possession of the goods shall, for the purpose of the
owner’s claim to recover possession thereof, be deemed to be adverse to the
owner.
Nothing in this section shall affect a claim for damages for conversion.
Where the Central Government is satisfied that having regard to the short
supply of any goods or class of goods, or the use of intended use of any
goods or class of goods and the person by whom such goods or class of
goods are used or are intended to be used, or the restrictions imposed upon
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the trade or commerce in any goods or class of goods, or any other
circumstances in relation to any goods or class of goods.
The act shall not apply in relation to any hire-purchase agreement made
before the commencement of this Act.
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