Hirer, in a Hire-Purchase Agreement, simply pays for the use of the goods and for the option to purchase them. Until the option to purchase is exercised by Hirer, upon payment of all amounts agreed upon between Hirer and Financier, Financier continues to be owner of the goods covered by the Hire-Purchase Agreement. Till such time the Hirer remains a trustee and/or bailee of the goods. There is no impediment on Financier to take possession of the goods, subject of a Hire Purchase Agreement, when Hirer does not make payment of installments/hire charges in terms of the Hire-Purchase Agreement. However, such repossession cannot be taken by recourse to physical violence, assault and/or criminal intimidation.
Whether the service of proper notice on Hirer would be necessary, for repossession of the goods, would depend on the terms and conditions of the Hire-Purchase Agreement, some of which may stand modified by course of conduct. The repossession would not be vitiated, for want of notice, if the Hire-Purchase Agreement expressly provides for immediate repossession of the goods, without further notice to Hirer. Where the requirement to serve notice, before repossession, is implicit in the Hire-Purchase Agreement, non-service of proper notice would tantamount to ‘deficiency of service’ for breach of the Hire-Purchase Agreement.
– Hon’ble Justice Indira Banerjee, Magma Fincorp Ltd. v. Rajesh Kumar Tiwari, [Civil Appeal No. 5622 of 2019].