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THE HIRE-PURCHASE ACT, 1972

Title : THE HIRE-PURCHASE ACT, 1972

Year : 1972



(1) Where a hirer makes more than one default in the payment of hire as provided in the hire-purchase agreement then, subject to the provisions of section 21 and after giving the hirer notice in writing of not less than-

(i) One week, in a case where the hire is payable at weekly or lesser intervals; and

(ii) Two weeks, in any other case, the owner shall be entitled to terminate the agreement by giving the hirer notice of termination in writing:

Provided that if the hirer pays or tenders to the owner the hire in arrears together with such interest thereon as may be payable under the terms of the agreement before the expiry of the said period of one week or. as the case may be, two weeks, the owner shall not be entitled to terminate the agreement.

(2) Where a hirer-

(a) Does any act with regard to the goods to which the agreement relates which is inconsistent with any of the terms of the agreement; or

(b) Breaks an express condition which provides that, on the breach thereof, the owner may terminate the agreement, the owner shall subject to the provisions of section 22, be entitled to terminate the agreement by giving the hirer notice of termination in writing.



Where a hire-purchase agreement is terminated under this Act, then the owner shall be entitled,-

(a) To retain the hire which has already been paid and to recover the arrears of hire due:

Provided that when such goods are seized by the owner, the retention of hire and recovery of the arrears of hire due shall be subject to the provisions of section 17;

(b) Subject to the conditions specified in clauses (a) and (b) of sub-section (2) of section 10, to forfeit the initial deposit, if so provided in the agreement;

(c) Subject to the provisions of section 17 and section 20 and subject to any contract to the contrary, to enter he premises of the hirer and seize the goods;

(d) Subject to the provisions of section 21 and section 22, to recover possession of the goods by application under section 20 or by suit;

(e) Without prejudice to the provisions of sub-section (2) of section 14 and of section 15, to damages for non-delivery of the goods, from the date on which termination is effective, to the date on which the goods are delivered to or seized by the owner.



(1) Where goods have been let under a hire-purchase agreement and the statutory proportion of the hire-purchase price has been paid, whether in pursuance of the judgment of a court or otherwise, or tendered by or on behalf of the hirer or any surely, the owner shall not enforce any right to recover possession of the goods from the hirer otherwise than in accordance with sub-section (3) or by suit.

Explanation.-In this section, "statutory proportion" means,-

(i) One-half, where the hire-purchase price is less than fifteen thousand rupees; and

(ii) Three-fourths, where the hire-purchase price is not less than fifteen thousand rupees:

Provided that in the case of motor vehicles as defined in the Motor Vehicles Act, 1039 (4 of 1939), "statutory proportion" shall mean,-

(i) One-half, where the hire-purchase price is less than five thousand rupees;

(ii) Three-fourths, where the hire-purchase price is not less than five thousand rupees but less than fifteen thousand rupees;

(iii) Three-fourths or such higher proportion not exceeding nine-tenths as the Central Government may, by notification in the Official Gazette, specify, where the hire-purchase price is not less than fifteen thousand rupees.

(2) If the owner recovers possession of goods in contravention of the provisions of sub-section (1), the hire-purchase agreement, if not previously terminated, shall terminate, and-

(a) The hirer shall be released from all liability under the agreement and shall be entitled to recover from the owner all sums paid by the hirer under the agreement or under any security given by him in respect thereof; and

(b) The surety shall be entitled to recover from the owner all sums paid by him under the contract of guarantee or under any security given by him in respect thereof.

(3) Where, by virtue of the provisions of sub-section (1), the owner is precluded from enforcing a right to recover possession of the goods, he may make an application for recovery of possession of the goods to any court having jurisdiction to entertain a suit for the same relief,

(4) The provisions of this section shall not apply in any case in which the hirer has terminated the agreement by virtue of any right vested in him.



Where the owner, after he has terminated the hire-purchase agreement in accordance with the provisions of sub-section (1) of section 18, institutes a suit or makes an application against the hirer for the recovery of the goods, and at the hearing of the suit or application, the hirer pays or tenders to the owner the hire in arrears, together with such interest thereon as may be payable under the terms of the agreement and the costs of the suit or application incurred by the owner and complies with such other conditions, if any, as the court may think fit to impose, the court may, in lieu of making a decree or order for specific delivery, pass an order relieving the hirer against the termination; and thereupon the hirer shall continue in possession of the goods as if the agreement had not been terminated.



Where a hire-purchase agreement has been terminated in accordance with the provisions of clause (a) or clause (b) of sub-section (2) of section 18, no suit or application by the owner against the hirer for the recovery of the goods shall lie unless and until the owner has served on the hirer a notice in writing,-

(a) Specifying the particular breach or act complained of; and

(b) If the breach or act is capable of remedy, requiring the hirer to remedy it, and the hirer tails, within a period of thirty days from the date of the service of the notice, to remedy the breach or act if it is capable of remedy.



(1) It shall be the duty of the owner to supply, free of cost, a true copy of the hire-purchase agreement, signed by the owner.-

(a) To the hirer, immediately after execution of the agreement; and

(b) Where there is a contract of guarantee, to the surety, on demand made at any time before the final payment has been made under the agreement.

(2) It shall also be the duty of the owner, at any time before the final payment has been made under the hire-purchase agreement, to supply to the hirer, within fourteen days alter the owner receives a request in writing from the hirer in this behalf and the hirer lenders to the owner the sum of one rupee for expenses, a statement signed by the owner or his agent showing-

(a) The amount paid by or on behalf of the hirer;

(b) The amount which has become due under the agreement but remains unpaid, and the date upon which each unpaid instalment became due, and the amount of each such instalment; and

(c) The amount which is to become payable under the agreement, and the date or the mode of determining the date upon which each future instalment is to become payable, and the amount of each such instalment.

(3) Where there is a failure without reasonable cause to carry out the duties imposed by sub-section (1), or sub-section (2), then, while the default continues,-

(a) The owner shall not be entitled to enforce the agreement against the hirer or to enforce any contract of guarantee relating to the agreement, or to enforce any right to recover the goods from the hirer; and

(b) No security given by the hirer in respect of money payable under the agreement or given by a surety in respect of money payable under such a contract of guarantee as aforesaid shall be enforceable against the hirer or the surety by any holder thereof, and, if the default continues for a period of two months, the owner shall be punishable with fine which may extend to two hundred rupees.

(4) Nothing in sub-section (3) shall be construed as affecting the right of a third party to enforce against the owner or hirer or against both the owner and the hirer any charge or encumbrance to which the goods covered by the hire-purchase agreement are subject.


Last updated on July, 2016

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