THE HIRE-PURCHASE ACT, 1972
[Act, No. 26 of 1972]1
[8th June, 1972]
An Act to define and regulate the rights and duties of parties to hire-purchase agreements and for matters connected therewith or incidental thereto.
BE it enacted by Parliament in the Twenty-third Year of the Republic of India as follows:--
|1. Published in the Gazette of India, Extra., Pt. II, Sec. 1, dated 8th June, 1972.|
Section 1. Short title, extent and commencement
(1) This Act may be called the Hire-purchase Act. 1972.
(2) It extends to the whole of India except the State of Jammu and Kashmir.1
(3) It shall come into force on such date2as the Central Government may, by notification in the Official Gazette, appoint.
|1. The Act has not been extended to the State of Sikkim.|
2. This Act was to come into force on 1st June, 1973, vide GSR 222 (E), dated 30th April, 1973, but this notification was rescinded by GSR 288 (E) dated 31st May, 1973 and the Act was made effective from 1-9-1973 but this notification was also rescinded by GSR 402 (E) dated 30th August 1973. This Act has not come into force as yet.
Section 2. Definitions
In this Act, unless the context otherwise requires,--
(a) "contract of guarantee", in relation to any hire-purchase agreement, means a contract whereby a person (in this Act referred to as the surety) guarantees the performance of all or any of the hirer's obligations under the hire-purchase agreement;
(b) "hire" means the sum payable periodically by the hirer under a hire-purchase agreement;
(c) "hire-purchase agreement" means an agreement under which goods are let on hire and under which the hirer has an option to purchase them in accordance with the terms of the agreement and includes an agreement under which
(i) possession of goods is delivered by the owner thereof to a person on condition that such person pays the agreed amount in periodical instalments, and
(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 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 the hire-purchase agreement by way of a deposit or 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 or has been paid to the owner or to any other person or is to be or has been discharged by payment of 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 owner's property in the goods or any of the owner's 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 ContractAct, 1872 (9 of 1872) or the Sale of Goods Act, 1930 (3 of 1930) shall have the meaning assigned to it in that Act.
Section 3. Hire-purchase agreements to be in writing and signed by parties thereto
(1) Every hire-purchase agreement shall be--
(a) in writing, and
(b) signed by all the parties thereto.
(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.
(3) Where there is a contract of guarantee, the hire-purchase agreement shall be signed by the surety also, and if the hire-purchase agreement is not so signed, the hire-purchase agreement shall be voidable at the option of the onwer.
Section 4. Contents of hire-purchase agreements
(1) Every hire-purchase agreement shall state--
(a) the hire-purchase price of the goods to which the agreement relates;
(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;
(c) the date on which the agreement shall be deemed to have commenced;
(d) the number of instalments by which the hire-purchase price is to be paid, the amount of each of those instalments, and the date, or the mode of determining the dale, upon which it is payable, and the person to whom and the place where it is payable; and
(e) the goods to which the agreement relates, in a manner sufficient to identify them.
(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 that part of the hire-purchase price.
(3) Where any of the requirements specified in su b-section (1) or sub-section (2) has not been complied with, the hirer may institute a suit for getting the hire-purchase agreement rescinded; and the court may, if it is satisfied that the failure to comply with any such requirement has prejudiced the hirer, rescind the agreement on such terms as it thinks just, or pass such other order as it thinks fit in the circumstances of the case.
Section 5. Two or more agreements when treated as a single hire-purchase agreement
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.
Section 6. Warranties and conditions to be implied in hire-purchase agreements
(1) Notwithstanding anything contained in any contract, in every hire-purchase agreement there shall be an implied warranty--
(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.
(2) Notwithstanding anything contained in any contract, in every hire-purchase agreement there shall be--
(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;
(b) an implied condition that the goods shall he of merchantable quaiity, but no such condition shall be implied by virtue of this clause--
(i) as regards defects of which the owner could not reasonably have been aware at the time when the agreement was made, or
(ii) as regards defects specified in the agreement (whether referred to in the agreement as defects or by any other description to the like effect), or
(iii) where the hirer has examined the goods, or a sample thereof, as regards defects which the examination ought to have revealed, or
(iv) if the goods are second-hand goods and the agreement contains a statement to that effect.
(3) Where the hirer, whether expressly or by implication,--
(a) has made known to the owner the particular purpose for which the goods are required, or
(b) in the course of any antecedent negotiations, has made that purpose known to any other person by whom those negotiations were conducted, there shall be an implied condition that the goods shall be reasonably fit for such purpose.
(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 tinder the agreement by reference to a sample as well as by description, it shall not be sufficient mat the bulk of the goods correspond with the sample if the goods do not also correspond with the description.
(6) An owner shall not be entitled to rely on any provision in a hire-purchase agreement excluding or modifying the condition set out in sub-section (3) unless he proves that before the agreement was made the provision was brought to the notice of the hirer and its effect made clear to him.
(7) Nothing in this section shall prejudice the operation of any other enactment or rule of iaw whereby any condition or warranty is to be implied in any hire-purchase agreement.
Section 7. Limitation on hire-purchase charges
(1) In this section, --
(a) "cash price instalment", in relation to a hire-purchase instalment, means an amount which bears to the net cash price the 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;
(c) "net cash price", in relation to goods comprised in a hire-purchase agreement, means the cash price of such goods as required to be specified in the hire-purchase agreement under clause (b) of sub-section (1) of section 4, less any deposit as defined in clause (b);
(d) "net hire- purchase charges", in relation to a hire-purchase agreement for any goods, means the difference between the net hire-purchase price and the net cash price of such goods;
(e) "not hire-purchase price", in relation to goods comprised in a hire-purchase agreement, means the total amount of" hire-purchase price of such goods as required to be specified in the hire-purchase agreement under clause (a) of sub-section (I) of section 4 less, --
(i) any amount which is payable to cover the expenses of delivering the goods or any of them to or to the order of the hirer and which is specified in the agreement as included in the hire-purchase price;
(ii) any amount which is payable to cover registration or other fees under any law in respect of the goods or the agreement or both and which is specified in the agreement as included in the hire-purchase price; and
(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:
(f) "statutory charges", in relation to a hire-purchase agreement, means the aggregate of the amounts calculated in accordance with the provisions of subsection (2) as statutory charges in respect of each of the cash price instalments corresponding to each of the hire-purchase instalments under the agreement.
(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:--
SC = ClxRxT
where,--SC,-- represents the statutory charges;
Cl.--represents the amount of cash price instalment expressed in rupees or fractions of rupees;
R.--represents the rate; and
T.--represents 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 the 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.
(4) Where the net hire-purchase charges in relation to a hire-purchase agreement exceed the statutory charges in relation to such agreement calculated in accordance with the provisions of sub-section (2), the hirer may, by notice in writing to the owner, either elect to treat [he agreement as void or to have his liability reduced by the amount by which the net hire-purchase charges exceed the statutory charges aforesaid.
(5) Where a biter elects, in accordance with the provisions of sub-section (4), to treat the hire-purchase agreement as void, the agreement shall be void, and the amount paid or provided whether by cash, cheque or other consideration, by or on behalf of the hirer in relation to the agreement shall be recoverable by the hirer as a debt due to him by the owner.
(6) Where the hirer elects to 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.
Section 8. Passing of property
Subject to the provisions of this Act, the 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.
Section 9. Right of hirer to purchase at any time with rebate
(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 the hire-purchase price or the balance thereof as reduced by the rebate calculated in the manner provided in sub-section (2).
(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.
Explanation.--In this sub-section "hire-purchase charges" means the difference between the hire-purchase price and the cash price as stated in the hire-purchase agreement.
(3) The provisions of this section shall have effect notwithstanding anything to the contrary contained in the hire-purchase agreement, but where the terms of the agreement entitle the hirer to a rebate higher than that allowed by this section, the hirer shall be entitled to the rebate provided by the agreement.
Section 10. Right of hirer to terminate agreement at any time
(1) The hirer may, at any lime before the final payment under the hire-purchase agreement falls due, and after giving the owner not less than fourteen days' notice in writing of his intention 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 towards the hire-purchase price and have not been paid by him, including the sum, if any, which he is liable to pay under sub-section (2).
(2) Where the hirer terminates the agreement under sub-section (I), 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:-
(a) 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 not be liable to pay the sum so named;
(b) where the sum total of the amounts paid and the amounts due in respect of the hire-purchase price immediately before the termination does not exceed 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.
(3) Nothing in sub-section (2) shall relieve the hirer from any liability for any hire which might have accrued due before the termination.
(4) Any provision in any agreement, whereby the right conferred on a hirer by this section to terminate the hire-purchase agreement is excluded or restricted, or whereby any liability in addition to the liability imposed by this Act is imposed on a hirer by reason of the termination of the hire-purchase agreement by him under this section, shall be void.
(5) Nothing in this section shall prejudice any right of a hirer to terminate a hire-purchase agreement otherwise than by virtue of this section.