BANK OF CEYLON
SUPREME COURTDHEERARATNE, J.
WIJETUNGA J. ANDBANDARANAYAKE. J.
SC (APPEAL) No. 143/97CA(APPEALS)
NOS. 312/89: 313/89. 314(89) and 315/89DC (COLOMBO) NOS. 2667/ SPL andAND 2668/SPL215'JULY. 1999
Hire purchase agreement – Termination of agreement – Requisite notice -Conflict between terms of agreement and the provisions of the ConsumerCredit Act. No. 29 of 1982.
The plaintiff – appellant ("the appellant") had entered into a hire purchaseagreement on 27.2.1986 with the defendant – respondent ("therespondent”) in respect of a vehicle. The respondent informed theappellant in terms of the agreement that unless the appellant paida sum of Rs. 33.000/- being arrears of rent within 7 days, the respondentwill take steps to recover the arrears of rent. The respondent failed to paythe said sum. Thereafter the respondent seized the vehicle and arrangedto sell it. The appellant instituted an action in the District Court againstthe respondent for a declaration that the seizure of the vehicle was illegal.
The hire-purchase agreement had not been duly terminated in termsof section 18 of the Consumer Credit Act which required two weeksnotice of termination of agreement to be given and that section 18 of theAct prevailed over clause 11 of the agreement which stipulated 7 days’notice.
Per Bandaranayake, J.
"It is thus clear that none can contract outside the provisions of the Act"
Raymond Fernando u. Bank of Ceylon (Bandaranayake. J.)
APPEAL from the judgement of the Court of Appeal.
S. T. Gunawardena for appellant
SaleemMarsoof. P. C.. ASG with Uditha Egalahewa. S. C. for respondent.
Cur. ado. oult.
SHIRANI BANDARANAYAKE. J.The plaintiff-appellant (appellant) entered into a hirepurchase agreement on 27.02.1986 (PI) with the defendant-respondent (respondent) in respect of vehicle No. 26 Sri 8378.The respondent by letter dated 13.08.1986 (P2), requestedthe appellant to pay on or before 20.08.1986 a sum ofRs. 33,000/- which was due from him, by way of monthlyrental and arrears. He was also informed that, in the event ofany default, the respondent would be compelled to take stepsto recover the said sum of money. The apprellant failed to paythe said sum as requested. The respondent thereafter,without any further intimation, seized the said vehicle on
and sent a letter to the appellant stating thatunless a sum of Rs. 125,573/20, together with garage chargesat Rs. 40/- per day, from the date of seizure, was paid within14 days from the date thereof, the said vehicle would be sold.The appellant instituted action against the respondent on
seeking a declaration that the seizure of the saidvehicle was illegal and a declaration that the respondent is notentitled to sell or transfer the said vehicle. The appellant alsosought an order to deliver the said vehicle to him with damagesat Rs. 500/- per day from 31.08.1986 (P5).
The learned District Judge held that the Hire PurchaseAgreement had not been duly terminated in terms of section 18of the Consumer Credit Act (The Act). Since the trial judgemade no order in favour of the appellant in respect of damagesclaimed by him, he appealed against that judgement to the
Sri Lanka Law Reports
120001 l Sri LR.
Court of Appeal. The Court of Appeal held that section 18 ofthe Act is only directory and non-compliance of that section bythe respondent does not make the termination of the agree-ment invalid. The only question which arises in this appeal iswhether section 18 is applicable to the agreement entered intobetween the parties, or not.
Section 18 of the Act reads as follows :
"18. (1) Where a hirer makes more than one default inthe payment of hire as provided in a hire-purchase agreement then, subject to theprovisions of section 21 and after giving thehirer notice in writing of not less
one week, in a case where the hire ispayable at weekly or lesser intervals; and
two weeks in any other case,
the owner shall be entitled to terminate theagreement by giving the hirer notice of termina-tion in writing :
Provided that if the hirer pays or tenders to theowner the hire in arrear together with suchinterest thereon as may be payable under theterms of the agreement before the expiry of thesaid period of one week or two weeks, as thecase may be, the owner shall not be entitled toterminate the agreement.
(2) If a hirer –
does ^ny act with regard to the goods towhich the hire-purchase agreementrelates which is inconsistent with any ofthe terms of the agreement; or
Raymond Fernando v. Bank of Ceylon (Bandaranayake. J.)
breaks any express condition of theagreement which provides that on thebreach thereof the owner may terminatethe agreement,
the owner shall be entitled to terminate theagreement by giving the hirer not less than 30day's notice in writing specifying the particu-lars breach or act which entitles him toterminate the agreement:
Provided, however, that in case where the breachor act specified in the notice is capable of beingremedied by the hirer, it shall be the duty of theowner to require the hirer by such notice toremedy the breach or act complained of, beforethe expiry of the said period of thirty days, theowner shall not be entitled to terminate theagreement.”
Admittedly, the respondent gave only one week’s notice ofthe termination of the agreement, not two weeks notice asrequired by section 18. Learned Additional Solicitor Generalsubmitted that the notice of 7 days was given in terms of clause11 of the agreement PI. He contended that in the event of anyinconsistency between the stipulations in clause 11 of theagreement and provisions of section 18. the former mustprevail over the latter for several reasons. Firstly, he con-tended that the object of the Act was not to remove commonlaw or contractual rights of parties. Secondly, he contendedthat the object of the Act was to make supplementary provisionfor areas in a hire-purchase transaction where the commonlaw or the contract failed to make provision. Thirdly, hecontended that wherever the Act made provision whichintended to override any contractual stipulation, words“notwithstanding anything to the contrary contained in thehire-purchase agreement” or words of similar import wereused; our attention was drawn to sections 7(3), 9 and 10(5).
Sri Lanka Law Reports
1200011 Sri UR.
Learned Additional Solicitor General also submitted thatsection 25 of the Hire Purchase Act of the United Kingdomwhich corresponds to section 18 of the Sri Lankan Act.specifically provided that the provisions of that section “shalltake effect notwithstanding anything to the contrarycontained in the hire-purchase agreement."
If the learned Additional Solicitor General is correct, theConsumer Credit Act is a mere guide containing a series ofpious resolutions bereft of any force of law. The long title to theAct reads “An Act to define and regulate the duties of partiesto hire-purchase agreements and to provide for mattersconnected therewith or incidental thereto." Although “not-withstanding provisions" have been specified in some sectionsthrough perhaps an abundance of caution, section 2 of theAct is specific and pervasive when it states.
“The provisions of this Act shall apply in relation to allhire – purchase agreements entered into in Sri Lankaafter the coming into operation of this Act."
It is thus clear that none can contract outside the provi-sions of the Act.
For the above reasons, the appeal is allowed. We set asidethe judgement of the Court of Appeal and affirm the judgmentof the District Court. In all the circumstances we make noorder for costs.
DHEERARATNE, J. I agree.
WIJETUNGA, J. – 1 agree.
RAYMOND FERNANDO v. BANK OF CEYLON