Wanchoo, J. - (1.) These two appeals on certificates granted by the Madras High Court raise common questions and will be dealt with together. The appellant is a financing company consisting of a number of partners. Its main business is to advance money to persons who purchase motor vehicles but are themselves not in a position to find ready money to pay the price. The course of business followed by the appellant is to enter into hire-purchase agreements with those who want to purchase motor vehicles. It is necessary to refer to the terms of hire-purchase agreements which are on a set pattern in order to understand the points raised in these appeals.
(2.) Any person desirous of acquiring a motor vehicle makes the selection of the make and type and fixes the price therefor with the motor dealer. Such person then approaches the appellant for financial assistance on a hire-purchase basis. Sometimes an initial payment is made to the motor dealer which is taken into account at the time of the hire-purchase agreement while at others the payment is made in a number of instalments to the appellant. In either case the appellant pays the price or the balance thereof to the dealer and thereafter the hire-purchase agreement is entered into between the appellant and the person who wants to purchase the motor vehicle. The appellant is described in the agreement as the owner of the vehicle and the person who wants to purchase it as the hirer.
(3.) The material terms of the agreement may be summarised here. The agreement provides that the owner (namely, the appellant) will let and the hirer (namely, the person who wants to purchase the vehicle) will take on hire the vehicle in question for such period as may be fixed in each case (cl. 1). The hirer has to pay a certain amount per month to the owner and where an initial deposit is made this amount is larger for the first month and other monthly payments are smaller. The hirer has to pay during the period of hire the montly instalment, the vehicle is registered in the name of the owner and the hirer is forbidden to represent himself as the owner thereof or to do anything to suggest that he is the owner thereof; the hirer has to keep the vehicle in good and serviceable repair, order and condition to the satisfaction of the owner, and he is also to insure and keep insured the vehicle against loss or damage by fire, accident and third party risks and punctually pay premia and all moneys payable in respect of such insurance:(see cl. 3). The hirer has further to pay all taxes, licence fees, duties, fines, registration charges and other charges payable in respect of the vehicle and all rents and out goings payable by the hirer in respect of the premises where the vehicle is kept or garaged when the same respectively becomes due:(see cl. 3 (e)). He has also to satisfy the owner about all the above things having been duly done. He cannot sell, charge, pledge, assign or part with possession of the vehicle (cl. 3(g)). The hirer has also to make good all damages to the vehicle, (fair wear and tear excepted) and pay the owner the full value of the vehicle in the event of total loss, whether the damage or loss be caused accidentally or otherwise and to keep the vehicle at the sole risk of the hirer until the hirer purchases the vehicle or returns it to the owner:(cl. 5). If the hirer makes default in the payment of any rent for seven days, the hiring immediately determines and the owner may without notice retake possession of the vehicle, and it shall be at the option of the owner to reinstate the contract on such conditions as it deems fit after the determination of the hiring as aforesaid:(cl. 14). Upon the determination of the hiring as above, all arrears of rents up to the date of determination and all costs and expenses incurred by the owner in the exercise of the powers conferred by the agreement shall be paid by the hirer, and the hirer-shall not be entitled to any repayment of any sum previously paid and all such rents and sums shall belong to the owner absolutely, (cl. 15). The hirer may determine the hire at any time by delivering the vehicle to the owner and by paying him any part of the current rent due up to the date of such delivery and all other sums, if any, which up to such date the hirer may have become liable to pay the owner under the agreement:(cl. 18). Cl. 20 of the agreement, which is important for our purposes reads thus:- "If the hirer shall duly observe and perform all the conditions and stipulations herein contained and on his part to be observed and performed and shall duly pay to the owner all rents hereby reserved during the term of hiring together with all other sums, if any payable by him to the owner under the provisions of this agreement, then and at the termination of the hiring, the hirer may purchase the vehicle from the owner for a sum of Re., 1." Clause 21 provides that the hirer may at any time determine the hiring and become purchaser of the vehicle by paying to the owner such sum as together with the sums previously paid will amount to the total sum payable by way of rent thereunder together with all sums (if any) payable to the owner and in addition a sum of Re. 1. clause 22 provides that - "if the hirer fails to observe and perform the conditions and stipulation herein contained and fails to exercise the option of purchasing the vehicle in accordance with the provisions of the last preceding clause, and the vehicle is not returned to the owner on the termination of the hiring, the hirer shall pay the owner a certain sum every month until the vehicle is handed over to the owner by the hirer." Clause 23 provides that until the vehicle shall have become the property of the hirer under the provisions of the agreement it shall remain the absolute property of the owner, and the hirer shall have no right or interest in the same other than as the hirer under the agreement. The agreement is not assignable:(cl. 24). It is unnecessary to refer to other clauses of the agreement as they are immaterial for our purposes. After such an agreement has been made, the hirer takes possession of the vehicle and if all its terms are carried out, the hirer becomes the owner of the vehicle when he exercises his option to purchase the vehicle after paying the sum of Re. 1 including the instalments then outstanding, if any.;