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Mahabali Prasad Vs. H.N. Palmer - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1932All607
AppellantMahabali Prasad
RespondentH.N. Palmer
Excerpt:
.....the whole price or value of the goods was to be paid by the defendant by instalments, we therefore think it clear in law that the agreement in question is clearly an agreement for the sale of the coir matting and not a hire purchase agreement. : if i fail to pay hire in any one month in ad-van co the whole transaction will be treated purely on the hire system......the due date. under these circumstances the question that we have to decide is whether this is a hire purchase agreement or a bt.le of goods. there is no difficulty in construing a simple agreement of hire or an agreement for the sale of goode by instalments; the difficulty arises over agreements, whereby, one party agrees to hire to the other party certain goods at a certain rate with a condition that if so many months instalments are paid the property in the goods passes to the hirer. this latter agreement is called a hire purchase agreement.3. in england, the question of hire purchase agreements has been frequently considered by the courts. the leading cases are lee v. butler [1893] 2 q.b. 318 and helby v. mathews [1895] a.c. 471. on a consideration of these and other authorities,.....
Judgment:

Young, J.

1. This is an application in revision from the judgment of the Small Cause Court Judge of Allahabad. The plaintiff brought a suit for the recovery of money due under what he alleged to be a hire agreement, whereby the defendant agreed to hire certain coir matting. He claimed Rs. 150 as hire. An agreement was entered into between the plaintiffs and the defendant on 30th September 1928, in the following terms:

Received from Mahabalee and Son the under mentioned articles on hire valued at Rs. 92-8-0 (Ninety two annas eight) only, and I do hereby agree to pay to Mahabalee and Son at their business premises at Allahabad the sum of Rs. 9-4-0 (nine annas four) only as monthly hire of the articles month by month in advance (part of a month charged for entire month) on the following terms:

(1) To have the articles in my custody, and not to remove, sell, pawn or mortgage them without the proprietor's previous consent in writing and to keep them in good order (fair wear and tear will only be accepted, and damage by fire or any other cause and breakage will be at the hirer's risk) and at any time to allow an employee of the said firm to inspect the articles;

(2) That if I pay ten (10) months hire regularly in advance at Rs. 9-4-0 (nine atmas four) only per month, I shall become the purchaser of the articles (i.e., the articles will be my own property) without further payment and the full amount will be credited on the purchase system.;

(3) That if I fail to pay hire in any one month in advance the owner may cancel the transaction and terminate the hiring, and I shall immediately return the articles and if I do not do so Mahabalee and Son may take proceedings in Court for the balance of hire due, at the above rate of Rs. 9-4-0 per month with all attendant costs and damages.;

(4) Mahabalee and Son will not be bound to send monthly bill;

(5) If I fail to pay hire in any one month in advance the whole transaction will be treated purely on the hire system.;

(6) Unless and until such purchase be effected, articles will be considered the property of the owner and I shall remain bailee of the same. Received the articles, 54 yards coir matting.

2. It is to be noted that the agreement is headed by the value of the coir matting viz., Rs. 92-8-0, and that the defendant bound himself to pay to the plaintiff the sum of Rs. 9-4-0 as monthly hire of the articles month by month in advance. It was further agreed that if he paid 10 months' hire regularly on the due date, he should become the purchaser of the coir matting without further payment. If on the other hand he failed to pay regularly, the plaintiff had the option to cancel the transaction and terminate the hiring. It is important to note that nowhere in the agreement was the defendant given the option to terminate the hiring. In fact it appears to us that the effect c the agreement was that the defendant was bound to pay the full amount of the consideration, i.e., Rs. 92-8-0 by monthly instalments and that the only way he could terminate the agreement was to take advantage of Clause (2) and pay 10 instalments regularly in advance on the due date. Under these circumstances the question that we have to decide is whether this is a hire purchase agreement or a BT.le of goods. There is no difficulty in construing a simple agreement of hire or an agreement for the sale of goode by instalments; the difficulty arises over agreements, whereby, one party agrees to hire to the other party certain goods at a certain rate with a condition that if so many months instalments are paid the property in the goods passes to the hirer. This latter agreement is called a hire purchase agreement.

3. In England, the question of hire purchase agreements has been frequently considered by the Courts. The leading cases are Lee v. Butler [1893] 2 Q.B. 318 and Helby v. Mathews [1895] A.C. 471. On a consideration of these and other authorities, it appears to us that the distinguishing mark of a true hire purchase agreement as distinguished from a sale is that the hirer should have a right to terminate the agreement at his pleasure, and that the distinguishing mark of an agreement which is a sale and not a hire purchase agreement is that the hirer should be bound to pay the full value of the goods by way of instalments without any option to cancel the agreement, if he so wished, before the full value of the goods is paid. These are the two criteria upon which all the decisions in England have turned. Lord Shand in Helby v. Mathews [1895] A.C. 471 said:

It is true that by that agreement Brewster undertook to pay to the appellant not only a first instalment of 10s. 6d. described as a 'rent or hire instalment,' but to pay the same amount on the 23rd of each succeeding month and that it was provided that on the payment of 36 monthly instalments the piano should become his property. If these stipulations had been unqualified there would have been an absolute obligation or agreement by Brewster to acquire the instrument in property, and by purchase, although the instalments were described as for rent or hire, and tbe case of Lee v. Butler [1893] 2 Q.B. 318 would have directly applied. But the whole obligations by Brewster were qualified by the stipulation : 'That the hirer may terminate the hiring by delivering up to the owner the said instrument.' This provision appears to me to make it clear that there was no purchase and no agreement to purchase. The hirer need not continue the hiring a day longer than he desired; and he need not allow the transaction to become one of purchase unless he desired to do so.

4. The matter has been summed up in Vol. 1, Halsbury's Laws of England, at p. 554 in the following words:

The difference between a contract of sale at a price payable by instalments and a contract of hire purchase is that in the former the purchaser has no option to terminate the contract and return the chattel, whereas, in the latter the hirer has. In the former there is an agreement to purchase, whereas, in the latter there is none. In each case, the substance of the transaction or the agreement must be looked at and not mere words : see also Bhimji N. Dalai v. Bombay Trust Corporation Ltd. A.I.R. 1930 Bom. 306.

5. Applying therefore the principles laid down above, we find in the agreement in this revision, that the defendant had no option of terminating the contract and returning the chattel. We find, too, that the whole price or value of the goods was to be paid by the defendant by instalments, We therefore think it clear in law that the agreement in question is clearly an agreement for the sale of the coir matting and not a hire purchase agreement. Counsel for the applicant has argued strenuously that the English cases can be distinguished, in that there is in this agreement Clause (5), viz.:

If I fail to pay hire in any one month in ad-van co the whole transaction will be treated purely on the hire system.

6. We do not think that this clause in any way distinguishes this case. The mere fact that the words used are 'the hire system' does not make it in law a hire system. There still would be no right in the 'hirer' to terminate the contract. The whole tenor of the agreement according to the decided cases is that of a 'purchase' and riot 'hire purchase.' That being so, the plaintiff is entitled only to that part of the purchase price which has not been paid. The learned Judge of the Small Cause Court has not come to a finding upon this. We have ourselves looked at the evidence and we find that the defendant has sworn that he has paid nine instalments. The plaintiff on the other hand admits the payment of eight. The defendant says he paid one instalment on the signing of the agreement to the plaintiff's son, who is now dead. We are of opinion that an instalment certainly would have been paid upon the signing of the agreement, and therefore we believe the defendant's version. There has therefore been nine instalments paid and there is due to the plaintiff one instalment. The decree of the Court below will be varied and there will be a decree for the plaintiff for Rs 9-4-0 with interest at six per cent. The application in revision therefore is dismissed with costs in both Courts.


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