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Hire Purchase Act, 1972


7. Limitation of hire-purchase charges.-

(1) In this section:- 

(a) "Cash price installment", in relation to a hirer-purchase installment, means an amount which bears to the net cash price the same proportion as the amount of the hire-purchase installment 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 the clause (b).

(d) "Net-hire-purchase charges" in relation to a hire-purchase agreement for any goods, means the different between the net hire-purchase price and the net cash price of such goods.

(e) "Net 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 (1) of section 4 less.

(i) any amount which in payable to cover the express of delivering the goods or any of the them to or 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 agreements 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 hire-purchase agreement, means the aggregate of the amounts calculated in accordance with the provisions of sub-section (2) as statutory charges in respect of each of the cash price installments corresponding to each of the hire-purchase installments under the agreement.

(2) The statutory charges, in respect of a cash price installment, 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

Where SC.- represents the statutory charges,

C!,- represents the amount of cash price installment expressed in rupees fractions of rupees

R.- represents that rate, and

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 installment corresponding to the cash price installment 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.

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 notice in writing to the owner, either elect to treat the agreement as void or to have his liability reduced by the amount by which the net hire-purchase charges exceed the statuary charges aforesaid.

Where a hirer elects, in accordance with the provision 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.

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.



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