Report No. 168
Statement of Objects and Reasons
The Hire-purchase Act, 1972 was enacted, in pursuance of the recommendation of the Law Commission contained to ,its Twentieth Report, mainly to regulate the rights and duties of parties to hire-purchase agreements. As the developmental activities undertaken by organistions in the small scale industrial sector are mainly through the device of letting out machinery, implements, etc., on hire-purchase basis and as the provisions of the Hire-purchase Act involved devising of new forms and hire-purchase agreements, etc.
It was decided to allow sufficient time for the various organizations, the trade and the public to realise the implications and impact of the legislation and to make the necessary adjustments in their affairs by the time, the Act was brought into force. However, before the Act could be brought into force, several representations were received from the public against bringing the Act into force on account of certain difficulties pointed out from several quarters in the implementations thereof.
This matter was also examined, inter alia, by the Banking Law Committee appointed by the Reserve Bank of India. The Committee on Petitions of the Rajya Sabha had occasion to consider the question of bringing into force the Hire-purchase Act and recommended that immediate steps be taken to notify and implement the Hire-purchase Act without any further delay. In view of this, it is felt that the Act, should be brought into force as early as possible after meeting the main difficulties noticed.
2. The subject dealt with by the Act is of a highly technical nature with far-reaching consequences. The difficulties are mainly in respect of matters relating to the limiting of hire-purchase charges, the right of hirer to purchase at any time with rebate, the modifications necessary to bring the Hire-purchase Act in harmony with the present economical and other conditions and the absence of any provision for making rules for bringing out more clearly the implications of some of the provisions of the Act and particularly those which involve mathematical calculations.
These difficulties appeared to be felt more in respect of hire-purchase agreements providing for obtaining credit for such assets as are intended for generating income of a business. For the purpose of removing these difficulties, the proposed legislation makes suitable amendments in the parent Act on the analogy of similar legislations in various other countries.
3. Certain other amendments of administrative or procedural nature which would be helpful and beneficial particularly to the hirers, are also proposed. In view of the highly technical nature of the subject-matter of the parent Act, a provision is also being included, on usual pattern, empowering the Central Government to remove difficulties by making a suitable orders.
4. This Bill seeks to achieve the above objectives.
The 6th April, 1989.