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Report No. 168

4. Amendment of section 7.-

In section 7 of the principal Act,-

(a) for sub-section (1), the following sub-section shall be substituted, namely:- "

(1) In this section:

(a) "Cash price of goods" means the price at which a prospective buyer may, at the date of the hire-purchase agreement, purchase the goods for cash;

(b) "deposit" means any sum payable by the hirer under the hire-purchase agreement by way of deposit or other initial payment 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) "hire-purchase charges" means the difference between the balance hire-purchase price and the balance cash price of the goods;

(d) "balance cash price of goods" means the cash price of goods less any deposit;

(e) "balance hire-purchase price" means the hire-purchase price less any deposit;

(f) "statutory hire-purchase charges" means the amount as determined by the formula contained in sub-section (2);"

(b) for sub-section (2), the following sub-section shall be substituted, namely:-

"(2) The statutory hire-purchase charges shall be an amount calculated (at the rate of eighteen per cent= per annum, or if a lower rate is specified under sub-section (3) at such lower rate) in accordance with the following formula:-

SC= NCxRxT
100

where S.- represents the statutory hire-purchase charges;

N.- represents the net cash price; R- represents the rate; and

.- represents the time expressed in years and fractions of years, that elapses between the date of the agreement and the date on which the last hire-purchase instalment is payable under the agreement.

Illustration to sub-sections (1) & (2).-A, a hirer purchases a car from B, the owner, on hire-purchase basis. The cash price of the car is Rs. 65,000. A pays a deposit of Rs. 15,000 on the date of hire-purchase agreement which means that Rs. 50,000 is the balance cash price of the car. The rate of interest permitted by this section is 18% per annum. The period of agreement between the parties is five years and the balance hire-purchase price is payable in 60 equal monthly instalments. Accordingly, applying the above formula, the statutory hire-purchase charges in this case would be Rs. 45,000 arrived at in the following manner-

50,000x18x5
100
=Rs.45,000

The hire-purchase charges cannot exceed the statutory hire-purchase charges. Thus in this illustration, the hire-purchase price is Rs. 1,10,000 i.e., Rs. 65,000 plus Rs. 45,000. The balance hire-purchase price is Rs. 95,000, i.e., Rs. 1,10,000 minus Rs. 15,000 (deposit). This sum of Rs. 95,000 is payable in 60 monthly instalments.

Further this amount of Rs. 45,000 being the statutory hire-purchase charges should be worked out by the parties on the date of entering into the hire-purchase agreement and should be mentioned in the agreement as such."

(c) in sub-section (3),-

(i) the words ", being a rate which shall not be less than ten per centum per annum," shall be omitted;

(ii) for the words "statutory charges", the words "statutory hire-purchase charges" shall be substituted;

(d) sub-sections (4), (5) and (6) shall be omitted.



The Hire-Purchase Act, 1972 Back




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