Report No. 168
2.30. Section 25.-
Section 25 provides for a situation where the hirer becomes insolvent. The Amendment Bill proposes to insert a proviso to sub-section (2) of section 25 as under:-
"provided that before any such permission is granted, the insolvency Court, or the court, as the case may be, in which the winding up proceedings are pending, shall grant the owner an opportunity of being heard in the matter."
2.30.1. While the Federation has not taken any objection to sub-section (1) of section 25, it has asked for substantial changes both in sub-section (2) as well as in the proviso proposed to be added thereto by the Amendment Bill. Sub-section (2), as it stands, reads: "The Official Receiver or the liquidator, as the case may be, may with the permission of the Insolvency Court or the Court in 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 all the rights and be subject to all the obligations of the hirer under the agreement."
The Federation wants sub-section (2) to be substituted altogether. The substituted provision suggested by the Federation makes no reference to the Court. At the same time, it creates an obligation upon the official Receiver or liquidator to inform the owner within 7 days of his taking charge about the insolvency of the hirer and also to intimate the owner whether he intends to continue to make the periodic payments under the agreement or return the goods subject to rebate provided by section 9. While the substitution suggested by the Federation cannot be accepted in its entirety, it must be conceded that there is some force in its submissions.
Accordingly, it is recommended that after sub-section (1), a new sub-section, namely, sub-section (1A), may be inserted, which shall read as follows:
"(1A) The Official Receiver or liquidator, as the case may be, shall, subject to the orders of the Insolvency Court or the Court, if any, inform the owner, as soon as he takes possession of the hired goods, of the fact of his taking possession of the hired goods and shall also intimate the owner whether he proposes to continue to make the payments in accordance with the hire-purchase agreement. On receiving such intimation, it shall be open to the owner to approach the Insolvency Court or the Court, as the case may be, for appropriate directions."
2.30.1. With the incorporation of the aforesaid sub-section (1A), the objections of the Federation with respect to section 25 would be substantially met. Accordingly, sub-section (2) along with its proviso proposed to be amended by the Amendment Bill, and the 'Explanation' shall remain unchanged.