Orient Finance cuts claim by 75% in hire purchase case

By Lakmal Sooriyagoda

In a case before the Colombo District Court relating to a hire purchase agreement, the parties – the finance company and defendants, reached a significant settlement after agreeing to reduce the plaintiff company’s demand from Rs.2.4 million to Rs.600,000. 

This case revolved around a breach of a hire purchase agreement related to an AXIO motor vehicle.

Orient Finance initially pursued legal action to recover a total of Rs.4,747,866.84, which included arrears of Rs.2,987,375.00 along with legal interest up to the order date of July 19, 2024, under Debt Recovery Act No. 9 of 1994. The plaintiff, represented by Triple Oaths Chambers senior counsel Wasantha Fernando with Samudini Kaushalya, sought to enforce the terms of the hire purchase agreement, which the defendants had allegedly violated.

During the hearings, a settlement was proposed but faced procedural challenges. The defendants’ legal team, comprising Senior Counsel Ian Fernando, with Nirmal Perera and Amali Wijewardhana, noted that the proposed settlement terms were not formally tendered or recorded before the court and it was not with the plaintiff’s legal representatives. As a result, the court expressed dissatisfaction with the proposed settlement and instructed the plaintiff to formalise the agreement properly if one existed.

In response, the plaintiff’s representatives proposed a settlement of Rs.2.4 million, which the defendants found unreasonable. District Court Judge D.M.A. Senavirathna then ordered the plaintiff company to present the financial details underpinning this proposal. 

Meanwhile, the defendant’s legal team, in collaboration with the finance company’s representatives, engaged in further negotiations on July 7, 2024.  Whereby, defence counsel Ian Fernando inquired from the account officers from the finance company as to how they calculated Rs.2.4 million as the amount due and asked to tender an affidavit to the court by explaining the said figures to the court, otherwise they would be cross examined before court regarding the unreasonable calculation of claim. As a result of the said inquiry, the authorities of the finance company yielded to the settlement.

Ultimately, the parties reached a revised settlement agreement. The plaintiff’s demand was reduced from Rs.2.4 million to Rs.600,000. Upon payment of the Rs.600,000 settlement amount on July 15, 2024, the court was satisfied with the arrangement. Finally, by concluding the hire purchase agreement, the deletion papers were issued to the defendant on the same date. Consequently, the vehicle in question was successfully transferred into the defendant’s name. This settlement was successfully reached as a result of good correspondence, mutual trust and loyalty and honesty maintained between the client and the reputable finance company.