Finance Leasing

(a) is a licensed commercial bank or a licensed specialized bank within the meaning of the Banking Act, No. 30 of 1988 ;

(b) a finance company within the meaning of the Finance Companies Act. No. 78 of 1988 ; or

(c) a public company incorporated under the Companies Act. No. 17 of 1982 having such minimum issued and paid up capital as may be prescribed.

(1) An application for registration under this Act shall be made to the Director in such form as may be provided for that purpose by the Director, and shall be accompanied by-

(2) The Director may where he considers it necessary, require an applicant to furnish such further information or particulars for the determination of the application.

(3) A person who makes any statement in an application made or in any document submitted under subsection (1), or any information or particulars furnished under subsection (2), which to the person’s knowledge is false or misleading in any material particular, shall be guilty of an offence under this Act.

(1) Where the Director, on a consideration of the information contained in an application made and the documents, information and particulars furnished under section 4 and after such investigation as the Director may deem necessary, is satisfied that the applicant is fit and competent to carry on finance leasing business, the Director may having regard to the interests of the national economy-

(2) Every person registered under subsection (1) shall be referred to as a “registered finance leasing establishment” (hereinafter referred to as a “registered establishment”).

(3) Every registered establishment shall exhibit the certificate of registration issued to it in a conspicuous place at the principal place of business of such establishment.

(4) The Director shall keep and maintain in the prescribed form a register of every registered establishment.

(a) the period of duration of a finance lease :

(b) the method of recovery of the payments due on the finance lease ;

(c) the protection by the lessor of the right of the lessee against claims in respect of the equipment provided under the finance lease ;

(d) the disposal of such equipment after the expiration of the finance lease ; and

(e) such other particulars as may be prescribed.

(a) alter or deviate from the particulars contained in the operating manual submitted under paragraph (d) of subsection (I) of section 4 : or

(b) where such establishment is a company, alter its Memorandum and Articles of Association.

(1) The registration of a registered establishment may be suspended or cancelled by the Director on any one or more of the following grounds :-

(2) The Director may. for one or more of the grounds specified in subsection (1)-

(1) The Director shall, before suspending or cancelling the registration of a registered establishment on any one or more of the grounds specified in section 9, serve a notice in writing on the establishment, informing it of such fact and specifying the ground for the proposed suspension or cancellation.

(2) A registered establishment may, within fourteen days of receipt of a notice under subsection (1), show cause as to why its registration should not be cancelled or suspended.

(3) Where a registered establishment fails to show cause within the period specified in subsection (2), the Director may suspend or cancel, as the case may be, the registration.

(4) Where the registered establishment in compliance with notice issued to it under subsection (1) shows cause within the specified period, the Director may. alter considering the reasons submitted-

(5) The decision of the Director under subsection (3) or subsection (4), shall be served on the registered establishment and shall take effect on the date on which such decision is served on the establishment.

(1) Subject to the provisions of subsection (2), a lessee has a right to the undisturbed and peaceful possession of the equipment provided to the lessee under a finance lease, and it shall be the duly of a lessor to ensure the protection of such right.

(2) The provisions of subsection (1) shall not apply where a lessee has. by reason of any act or omission of the lessee, ceased to be entitled to the right to undisturbed and peaceful possession of the equipment.

(a) take proper care of the equipment provided under the finance lease ;

(b) use it for the purpose for which it is provided ; and

(c) subject to fair wear and tear and to any modifications agreed to by the parties to the finance lease, keep it in the condition in which it was delivered to the lessee.

(1) Where an equipment specified in a finance lease has not been delivered to a lessee at or before the time fixed under such lease for its delivery, or has been delivered after such time, or where the equipment delivered does not conform to the terms, conditions, warranties or specifications in the supply agreement relating to such equipment, the lessee may, subject to the provisions of subsection (2), reject the equipment and terminate such finance lease.

(2) Where a lessee terminates a finance lease under subsection (1), the lessee may withhold the payment under such finance lease and further shall be entitled to recover from the lessor any money paid under the finance lease, less any reasonable sum withheld by the lessor in respect of-

(3) Where an equipment specified in a finance lease delivered to a lessee within the time fixed for its delivery, does not conform to the terms, conditions, warranties or specifications in the supply agreement relating to such equipment, or where the lessor has reason to believe that the equipment may not be supplied within the time fixed for its us delivery, the lessor may supply to the lessee another equipment in conformity with the terms, conditions, warranties or specifications in the supply agreement, and the lessee shall unless the finance lease provides otherwise, accept the equipment as if the lessee had agreed to accept delivery of the equipment from the lessor.

(4) Where a lessee has accepted an equipment specified in a finance lease notwithstanding that it has not been delivered within the time specified for its delivery, or it had been delivered after such lime, or does not conform to the terms. conditions, warranties or specifications in the supply agreement relating to such equipment, the lessee shall not thereafter have the right under subsection (1) to either reject the equipment or terminate the lease, as the case may be.

(5) The lessor shall not except as provided for in this section, incur any liability to the lessee by reason of the non delivery or late delivery of an equipment by a supplier or of the non-conformity of such equipment with the terms, conditions, warranties or specifications in the supply agreement unless such non-delivery, late delivery or non-conformity was due to an act or omission on the part of the lessor.

(1) A lessee shall not terminate or rescind a supply agreement without the consent of the lessor.

(2) The rights conferred on a lessee under this Act in relation to a supply agreement, shall not be affected by any variation of a term, condition, warranty or specification in such agreement, unless the lessee has consented in writing to such variation.

(1) A lessor shall not enter into a supply agreement with a supplier for the supply of an equipment under a finance lease, until the lessee agrees in writing with the terms, conditions, warranties and specifications specified in such agreement.

(2) Where a lessor has entered into a supply agreement in accordance with the provisions of subsection (1) and the equipment specified in the agreement is delivered at or before the time fixed under such agreement, the lessee shall accept the equipment supplied, if the equipment conforms to the terms, conditions, warranties and specifications specified in the agreement.

(1) Where a lessor enters into a supply agreement for the supply of an equipment to a lessee, the lessee shall also have the right to enforce such agreement as if the lessee party to it.

(2) Where the supplier discharges the liability under a supply agreement to either the lessor or lessee, the supplier shall be released from the liability to the other, and the provisions of subsection (1) shall not be construed as imposing on the supplier, any liability to both the lessor and the lessee in respect of the same matter or thing under such agreement, in such instance.

(1) A lessor shall not incur any liability to the lessee any loss suffered by the lessee in respect of the equipment provided under the finance lease, except to the extent of any arising out of the lessee’s reliance on the lesson’s skill and judgement on the selection of the equipment or in the lesson’s intervention in the selection of the supplier or in the specification of the equipment.

(2) Subject to the provisions of subsection (1), the lessor shall not. in the capacity of a lessor, be liable to any person for any loss suffered by death, personal injury or damage to property caused by any equipment provided under the finance lease or its use.

(3) The provisions of subsection (2) shall not affect the liability of a lessor for the toss referred to in that subsection in a capacity other than as a lessor.

(a) require the lessee to make accelerated payment of the monies due under the lease, where the lease so provides ; or

(b) where a lessee fails to make accelerated payments as required under paragraph (a), terminate the finance lease and-

(1) A lessor shall, prior to enforcing the right to accelerated payment or to the termination of a finance lease under section 20, serve by registered post a notice on the lessee-

(2) Where a lessee fails to remedy the failure specified in a notice served under subsection (1) on or before the dale appointed in the notice, or fails to give a reasonable cause for such failure, the lessor may act in accordance with the provisions of section 20.

(1) A lessor may with written notice to the lessee. transfer or assign all or am of the lesson’s rights under a finance lease or in relation to an equipment provided under such lease, to any other registered establishment.

(2) A transfer or assignment under subsection (1) shall not relieve the transferor or assignor of its duties –

(1) A lessee shall not. except with the written permission of the lessor and subject to any rights of third parties, transfer the right lo the possession and use of an equipment under a finance lease lo any other person.

(2) For the purposes of subsection (1), a “third party” means a person who is not a party to the finance lease in relation to the equipment.

(1) The rights of a lessor under this Act may he enforced against a trustee in bankruptcy of the lessee, or against any creditor of a lessee, including any creditor who has obtained an attachment in execution of such equipment.

(2) For the purposes of subsection (1) “a trustee in bankruptcy'” includes a liquidator, administrator or other person appointed to administer the estate of a lessee for the benefit of the lessee’s creditors.

(a) notify such right to the officer-in-charge of the police station for the area within which the equipment is found :

(b) obtain the assistance of a police officer of that police station to prevent a breach of the peace in the exercise of that right ; and

(c) recover possession of the equipment from the place where it is found, if possession could be obtained without resistance from the person in possession of the equipment or where it is not in the possession of any particular person, without resistance from any person.

(1) Where a lessor fails to recover possession of an equipment under section 27 or where a lessor has reasonable grounds to believe this it is impracticable to obtain possession under they section, the lessor may make an application to the District Court within whose jurisdiction the finance lease had been entered into, for an order of possession of the equipment.

(2) An application under subsection (1), shall be made by way of petition and affidavit to which the lessee shall be made a respondent, and which shall contain the following information –

(3) The petition shall be accompanied by a certified copy of the finance lease,

(4) The District Court on consideration of the petition and affidavit and the documents attached thereto, and being satisfied that the petitioner is prima facie entitled to obtain possession of the equipment, shall make an interim order of possession compelling the respondent to deliver possession of the equipment to the petitioner.

(5) A copy of the interim order made under subsection (4) shall be served on the respondent and –

(6) A permanent order made under subsection (5), shall be executed in the same manner as if it were a decree for the recovery of movable properly,

(1) In an application under section 28, a lessor may. in addition to praying for an order of possession, also pray for an order for recovery of any monies due under the finance lease, and in that event shall specify in the petition and affidavit filed the sum due and such other facts as may be necessary for the determination of such matter.

(2) The provisions of subsections (4) and (5) of section 28 shall, mutatis mutandis, apply to an order under subsection (1) of this section, and the court may in the interim order and the permanent order made under those subsections, include an order for recovery of the sum of money sought to be recovered.

(3) A permanent order made under subsection (2), shall be executed in the same manner as if it were a decree for the recovery of money.

(1) The Director or any officer authorised by The Director may require by notice issued in that behalf to any person whom the Director has reason to believe is carrying on finance leasing business without obtaining a registration under this Act to furnish such information including the production of any documents as the Director may consider necessary, in order to ascertain such fact.

(2) Where the Director or the officer authorised, after considering the information furnished and inspecting any documents furnished under subsection (1), is satisfied that the person concerned is carrying on finance leasing business without being registered under this Act. the Director shall by written notice issued in that behalf, require that person to immediately cease carrying on such finance leasing business.

(3) Where a person to whom a notice is issued under subsection (2) fails to comply with the requirements of the notice within the time specified therein, the Director may take necessary measures to (a) prosecute such person for an offence under this Act: and (b) apply to the High Court of the Province in which such person is carrying on finance leasing business to obtain an order for an injunction restraining such person from continuing to carry on finance leasing business, until a valid registration is obtained For that purpose under this Act.

(4) Every such application shall be made by petition in writing addressed to such High Court and shall be heard and determined in accordance with the procedure laid down in Chapter XXIV of the Civil Procedure Code.

(5) The High Court of the Province shall after consideration of an application made under subsection (3) and where it is satisfied that the person concerned is carrying on finance leasing business without being registered under this Act. issue an injunction restraining such person from continuing to carry on such business until a valid registration is obtained by him under this Act for they purpose.

(1) The Director or any officer authorised by the Director shall have the power to. examine the books and accounts of a registered establishment, at such time and place as may be specified by him.

(2) For the purposes of exercising the power under subsection (1) the Director or the authorized officer may require a registered establishment to produce for inspection at such place as may be notified, any books, records or documents relating to the affairs of the establishment and any registered establishment winch fails to comply with such requirement shall be guilty of an offence under this Act.

(a) maximum rate of payments to be levied by registered establishments ;

(b) matters concerning the method of collecting payments ;

(c) form and manner in which the books of accounts or other records or documents arc to be maintained ;

(d) terms and conditions of finance leases ;

(e) minimum paid up capital and the reserves a registered establishment shall have, having regard to the value of its finance leases ;

(f) having regard to the paid up capita] and the reserves of a registered establishment, the maximum value of finance leases that may be granted to any one person, group of persons, or category of persons as may be specified by the Director ;

(g) capital and reserves of registered establishments ;

(h) minimum initial payment required to be made by a lessee for any equipment or different categories of equipment, such minimum to be expressed as a percentage of the value of the equipment ; or

(i) provisions for bad and doubtful debts.

(1) The Minister may make regulations in respect of any matter required by this Act, to be prescribed or in respect of which regulations arc authorised by this Act, to be made.

(2) Every regulation made by the Minister shall be published in the Gazette and shall come into operation on the date of publication or on such later date as may be specified in the regulation.

(3) Every regulation made by the Minister shall as soon as convenient after its publication in the Gazette be brought before Parliament for approval. Any such regulation which is not so approved shall be deemed be rescinded as from the date of its disapproval but without prejudice to any thing previously done thereunder.

(4) Notification of the date on which any regulation made by the Minister is so deemed to be rescinded shall be published in the Gazette.

(a) when required to do so-

(b) in the performance of his duties under this Act; or

(c) in order to comply with any of the provisions of this Act or any other law.

(a) wilfully makes, or causes to be made, a false entry in any book or record of office registered establishment;

(b) wilfully omits to make an entry in any book or record of a registered establishment or wilfully causes any such entry to be omitted : or

(c) wilfully alters, abstracts, conceals or destroys an entry in any book or record of the registered establishment or wilfully causes any such entry lo be altered, abstracted, concealed or destroyed. shall be guilty of an offence under this Act.

(1) Any person who is found guilty of an offence under this Act shall be liable on conviction after summary trial by a Magistrate, to imprisonment of either description for a term not exceeding two years or to a fine not less than rupees ten thousand and not exceeding rupees two hundred and fifty thousand or to both such imprisonment and;

(2) Where an offence under this Act is committed by a body of persons, then –

(1) The Director may with the approval of the Monetary Board and having regard to the circumstances in which an offence under this Act was committed, compound such offence for a sum of money not exceeding one hundred thousand rupees.

(2) The compounding of any offence under this section shall have the effect of an acquittal of the accused.

(a) for the possession and use by the lessee for an initial period of not less than one year from the date of the agreement, of an equipment specified by the lessee and either provided by the lessor or a supplier selected by the lessee :

(b) for the payment by the lessee to the lessor for possession and use of such equipment of such sums to be calculated so as to take into account in particular the amortization of the whole or substantial part of the cost of the equipment;

(c) which, after the acceptance of the equipment by the lessee, is not terminable by the lessee during the initial period set out in paragraph (a) ; and

(d) which, though not a hire purchase agreement within the meaning of the Consumer Credit Act, No. 29 of 1982. may or may not provide for the extension of the initial period set out in paragraph (a) or for hick purchase by the lessee of the equipment after the expiration of the initial period set out in paragraph (a) or the period extended under this paragraph ;

(1) Every person who is carrying on finance leasing business on the appointed date, may, notwithstanding the provisions of section 2 of this Act, continue to carry on such business for a period not exceeding one year from such appointed date, but shall within that period apply for and obtain a certificate of registration under this Act to carry on such finance leasing business.

(2) Where a person referred to in subsection (1) –