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Report No. 168

2.35. Section 31.-

Section 31 merely states that the Act shall not apply in relation to any hire-purchase agreement made before the commencement of the Act. No objections are urged with respect to this section. Similarly, no objections are urged with respect to sections 32 and 33 proposed to be inserted by the 1989 (Amendment) Bill. Section 32 confers the rule-making power upon the Government and section 33 contains, what is called, the 'removal of difficulties clause'. For obvious reasons, the Federation has not raised any objections to these sections. No comments are called for from the Law Commission on these provisions.

Before concluding, the Law Commission is of the opinion that new sections be inserted in the Act, one dealing with the insurance of the goods which are the subject-matter of a hire-purchase agreement and the other regarding the application of law relating to illegal contracts. The new sections, numbered 28A and 28B shall read as follows:-

"28A. Insurance.-(1) The owner may require any goods comprised in a hire-purchase agreement to be insured, and at all times during the period of the agreement kept insured, in the names of the owner and the hirer against any risk that the owner thinks fit at the expense of the hirer.

(2) Where in respect of the insurance of goods comprised in a hire-purchase agreement, the insurer allows a no-claim rebate or a rebate of a similar nature, the hirer under the agreement is entitled to the benefit of the rebate, and any person who knowingly pays or allows any such rebate to the owner under the agreement shall not be relieved of his obligation towards the hirer.

(3) Nothing in this section shall limit or restrict the right of the owner to provide insurance without charge to the hirer."

The Commission thinks it equally advisable, in the interest of both the hirer and the owner that the Act should specifically provide for the enforceability of the agreements which contravene any of the provisions of the Act. Accordingly, the following provision be inserted as section 28B:

"28B. Application of law relating to illegal contracts.-If an agreement has been entered into in contravention of any of the provisions of this Act or an act which contravenes any of the provisions of this Act, is committed in the course of the performance of an agreement, it shall not make the agreement illegal and the agreement shall be and shall continue to be binding and enforceable except with respect to the provisions inconsistent with the Act."

We recommend accordingly. For the sake of convenience, the Amendment Bill to be introduced in the Parliament is appended herewith (Annexure A). The appended Bill incorporates the provisions of the Hire-Purchase (Amendment) Bill, 1989, as well as those suggested by the Law Commission, to the Hire-Purchase Act, 1972 and the Hire-Purchase (Amendment) Bill, 1989.

For the sake of convenience and ready reference again, we have set out in Annexure B the Hire-Purchase Act, 1972 incorporating the amendments proposed in the Hire-Purchase (Amendment) Bill, 1999 (Annexure A). In other words, if all the amendments suggested by the Law Commission are accepted by Parliament, the Hire-Purchase Act, 1972 would read as set out in Annexure B.

Mr. Justice B.P. Jeevan Reddy (Retd.), Chairman.

Ms. Justice Leila Seth (Retd.), Member.

Dr. N.M. Ghatate, Member.

Dr. Subhash C. Jain, Member-secretary.

Dated: 17th March, 1999.

The Hire-Purchase Act, 1972 Back

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