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Dalpat Rai Vs. Manohar Lal and Sons and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberCivil Revision No. 390 of 1971
Judge
Reported inAIR1974Raj61; 1973()WLN770
ActsTransfer of Property Act, 1882 - Sections 54; Contract Act, 1872 - Sections 74; Sale of Goods Act, 1930 - Sections 4
AppellantDalpat Rai
RespondentManohar Lal and Sons and ors.
Appellant Advocate Rewachand, Adv.
Respondent Advocate Akal Raj Mehta, Adv.
Cases ReferredIn Lee v. Butler
Excerpt:
.....right to terminate agreement and retake possession of machine given under agreement--whether it is hire purchase agreement.;so long as the hirer did not exercise his option of purchasing the machine by payment of its price or by paying the instalments for a sufficiently long time so as to make the full payment of the price mentioned in the agreement, the plaintiff had the right to terminate the hiring and re ake possession of the machine, so also the hirer was not bound to purchase and he could return the machine at any time during the hire. these conditions contained in the agreement leave no manner of doubt that the transaction in question was neither a sale nor an agreement to purchase but was a hire-purchase agreement with an option to the hirer to purchase if he was so pleased. - -..........plaintiff-non-petitioner no. 1 m/s manoharlal & sons entered into an agreement described as one of hire-purchase, with prakash chand non-petitioner no 2 as principal party and the petitioner dalpat raj and the non-petitioner no. 3 kushal raj as guarantors, according to which the plaintiff agreed to let to prakash chand (who will hereinafter be described as the hirer) a sewing machine valued at rs. 225/-. the hirer agreed to pay the plaintiff (who has been described as owner in the agreement) rs. 15/- every month in advance as rent. the agreement is dated 7-10-1960. the guarantors gave guarantee for the due performance and observance by the hirer of the terms and conditions of the agreement and to pay all or any sums of money which may be payable to the owner by the hirer. the plaintiff's.....
Judgment:
ORDER

C.M. Lodha, J.

1. This is a revision application by one of the defendants against the judgment and decree by the Additional Civil Judge. Jodhpur dated 21-10-1970 whereby the learned Judge upheld the judgment and decree of the trial court awarding Rs. 540/- to the plaintiff on account of hire charges of a sewing machine. The relevant facts are these:

The plaintiff-non-petitioner No. 1 M/s Manoharlal & Sons entered into an agreement described as one of Hire-purchase, with Prakash Chand non-petitioner No 2 as principal party and the petitioner Dalpat Raj and the non-petitioner No. 3 Kushal Raj as guarantors, according to which the plaintiff agreed to let to Prakash Chand (who will hereinafter be described as the hirer) a sewing machine valued at Rs. 225/-. The hirer agreed to pay the plaintiff (who has been described as owner in the agreement) Rs. 15/- every month in advance as rent. The agreement is dated 7-10-1960. The guarantors gave guarantee for the due performance and observance by the hirer of the terms and conditions of the agreement and to pay all or any sums of money which may be payable to the owner by the hirer. The plaintiff's case is that the hirer paid monthly hire charges at the rate of Rs. 157- for 9 months upto 6-7-1961 i.e. Rs. 135/- in all and thereafter ceased paying the same. Consequently, he filed the present suit in the Court of Munsiff City, Jodthpur against all the three defendants, namely, the hirer and the two guarantors for recovery of Rs. 540/- being the hire charges for 36 months only which were within limitation and gave up the rest of the amount. The petitioner Prakash Chand alone filed written statement and the suit against the other two defendants proceeded ex parte. Prakash Chand pleaded inter alia that the sewing machine was, as a matter of fact, sold to the defendant No, 1 and its price was agreed to be paid by instalments of Rs. 15/- per month. He repudiated the plaintiff's case of hiring out the machine to the defen-dent No. 1. Certain other pleas were also taken but I need not mention them as the only point which has been canvassed before me and which survives for decision is whether the transaction between the parties was one of sale or a hire, and purchase agreement

2. After recording the evidence produced by the parties the trial court came to the conclusion that the defendant No. 1 had hired the machine from the plaintiff by the agreement D/- 7-10-1960 marked Ex. 3 on a monthly hire of Rs. 15/- only. In this view of the matter he decreed the plaintiff's suit as prayed. The learned Additional Civil Judge, Jodhpur on appeal by the defendant. No. 1 Dalpat Raj came to the conclusion that the agreement Ex.-3 was a sale but since there was a condition incorporated in it that if the hirer failed to pay rent regularly in advance, the whole transaction would be treated as one of hire without any option to purchase, the plaintiff was entitled to maintain the claim for recovery of the hire charges and in this view of the matter he upheld the judgment and decree of the trial court.

3. Learned counsel for the petitioner has urged that the learned Additional Civil Judge has committed a material irregularity in exercise of his jurisdiction in upholding the plaintiff's claim for hire charges in spite of his having come to the conclusion that the transaction in question was a sale. It is contended by him that in case the transaction was a sale, the court had no jurisdiction to grant a decree for arrears of hire charges. In support, of his contention, that the transaction was one of sale out and out, learned counsel has relied upon Bhimji v. Bombay Trust Corporation Ltd. AIR 1930 Bom 306 and so also in support of his contention that the revision is maintainable, he has referred to Harakchand v. The State of Rajasthan 1970 Raj LW 320 (FB).

4. On the other hand learned counsel for the non-petitioner-plaintiff has urged that the interpretation put by the lower appellate court on the agreement Ex.-3 may be right or wrong or may not be in accordance with law, but it had jurisdiction to make the order which it did and, therefore, this court, has no jurisdiction under Section 115 C. P. C. to interfere with the judgment and decree of the learned Additional Civil Judge. In support of his contention he has relied upon D L. F Housing etc Co. v. Sarup Singh AIR 1971 SC 2324 and Hindustan Aeronautics v. Ajit Prasad. AIR 1973 SC 76, On the merits of the case his contention is that the transaction in question as evidenced by the agreement Ex.-3 is not a sale but one of hire purchase. For this point he has relied upon K. Narayan V. Laxmi Narasimmam AIR 1955 Hyd 104 (FB).

5. To appreciate the point canvassed before me it, is necessary to notice some of the important conditions of the agreement Ex. 3.

6. Clause (a) provides that the hirer agrees to pay the owners a rent of Ra 15/- payable on the day of every month in advance. Clause (b) further enjoins on the hirer to keep the machine in good order and at all times to allow the owners or his servants etc. to inspect the same. Clause (c) provides that the hirer shall keep the machine in his own custody at the address mentioned in the agreement and not to sell or pawn or dispose of or to deal with it in any way whatsoever Clause (d) says that if the hirer does not duly perform this agreement and fails to pay rent as stipulated, the owner may terminate the hiring and retake possession of the machine. Then comes a very important clause -- Clause (h) which reads as under:--

'(h) That if he (hirer) Mis to pay rent regularly in advance at their (owners) places of business the whole transaction would be treated as on Mrs. without any option to purchase.' It is further provided 'that the hirer may terminate the hiring by delivering: upto the owners at their places of business at Jodhpur the machine in thorough good order at his own expense and by paying all the arrears of hire due upto that, date.' There is yet another important clause which deserves to be noticed, and it is this 'that the hirer may, at any time during hire become the purchaser of the machine by payment in cash at their places of business at Jodhpur or hereon endorsed price provided the payments of hire are regularly and duly made.'

7. In AIR 1930 Bom 306, strongly relied upon by the learned counsel for the petitioner and also referred to by the learned Additional Civil Judge, while laying down certain broad principles on the subject which can be deduced from a consideration of all the English and Indian authorities, the learned Judge has observed:--

'If the hirer Is not bound to pay the full amount of the purchase price or if he can terminate the hiring any time by delivering the chattel to the other party the agreement is in fact as well as in form a true agreement for hire, and all that the hirer has obtained is an option to purchase.'

8. In Helby v. Mathews (1895) AC 471 the owner of a piano agreed to let it on hire the hirer to pay a rent by monthly instalments, on the terms that the hirer might terminate the hiring by delivering up the piano to the owner, he remaining liable for all arrears of hire; also that if the hirer should punctually pay all the monthly instalments, the piano should become his sole and absolute property, and that until such full payment the piano should continue the sole property of the owner. The House of Lords held that, the hirer was under no legal obligation to buy, and that the hirer could either return the piano or exercise his option to purchase the piano. Lord Herschell L. C. observed that he could not concur in the view of the Court of Appeal that upon the true construction of the agreement Brewster had 'agreed to buy. It was held that there was no legal obligation on Brewster to buy it. He might buy or not as he pleased All that he undertook was to make the monthly payments so long as he kept the piano. He had an option no doubt to buy it by continuing the stipulated payments for a sufficient length of time. If he had exercised that option he would have become the purchaser. In these circumstances it, was held that he cannot be said either to have bought, or agreed to buy the piano as he was left free to do so or not Lord Herschell L. C. distinguished this case from In Lee v. Butler (1893) 2 QB 318 where the purchase money was to be paid in two instalments but as soon as the agreement was entered into there was an absolute obligation to pay both of them, and further the person who obtained the furniture could not insist up-on returning the same, and so absolve himself from any obligation to make further payment.

9. In AIR 1955 Hyd 104 (FB), it was observed that the distinguishing mark of a hire purchase agreement both in English and Indian Law has been that where a person has a right to terminate the agreement for hire at his pleasure and is not bound to pay the value of the goods, it is a hire-purchase agreement. The option, however, must be real one and the hirer must not he compelled to the exercise of the option.

10. Now coining to the facts of the present case it would be clear from the relevant clauses of the agreement referred to above that the machine was let on periodical rental with the provise that the hirer may at any time luring hire become the purchaser of the machine by payment of its price provided the payment of hire was regularly and duly made. It is further dear that so long as the hirer did not exercise his option of purchasing the machine by payment of its price or by paying the instalments for a sufficiently time 'so as to make the full payment of the price mentioned in the agreement the 'plaintiff had the right to terminate the hiring and retake possession of the machine, so also the hirer was not bound to purchase and he could return the machine at any time during the hire. These conditions contained in the agreement leave no manner of doubt that the 'transaction in question was neither a sale 'nor an agreement to purchase but was a hire-purchase agreement with an option to the hirer to purchase if he was so [pleased.

11. The learned Additional Civil Judge has not properly scrutinised the contents of the agreement nor has properly read AIR 1930 Rom 306 and has abruptly come to the following conclusion:

'On a complete reading of this citation, it becomes crystal clear that the construction of such a deed of hire purchase agreement is that of a sale and it will he sale for the purposes that the hirer shall not be entitled to return the chattel to the owner subsequently.'

11-A. In view of the foregoingdiscussion I find 'it difficult to accede tothe submission of the Learned counsel forthe petitioner that the transaction in.question was a sale, and consequentlythe judgments and decrees of the courtsbelow do not call for any interference.My finding on this point obviates thenecessity of examining the questionwhether revision lies as I have agreedwith the learned Additional Civil Judge,that the suit for hire charges is maintainable Though on different grounds.

12. No doubt the present, is a hard case where the hirer has had to pay as hire charges an amount for in excess of the price of the machine but the learned counsel could not show me the way by which he can he relieved of the rigour of the transaction which he had entered into with open eyes.

13. Both the courts below have awarded costs to the non-petitioner. But the learned counsel for the non petitioner -- plaintiff has stated that My client has already recovered the decretal amount along with costs of the trial court, and that he would not now recover the costs of the first appellate court, nor would make any claim for further hire-charges or for the return of the machine In ,view of this statement, it is not necessary for me to address myself to these aspects of the case.

14. The result is that I dismiss this revision application but, without any order as to costs.


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