AGREEMENT TO LEASE FINANCE
THIS AGREEMENT OF LEASE IS MADE and entered into at …………………………. the …………. day of …………. between …………………………. a company registered under the Companies Act and having its registered office at hereinafter referred to as "the Lessor" of the One Part and …………………. a company registered under the Companies Act and having its registered Office at …………………hereinafter referred to as "the Lessee" of the Other Part
WHEREAS the Lessor is carrying on the business inter alia of lease finance in terms of the memorandum of Association of the Lessor. AND WHEREAS the lessee intends to import certain technical equipment required for the manufacturing of ………………………….. and has placed order with the foreign importers and the particulars of which equipment are given in the First Schedule hereunder written and at the cost mentioned in the said Schedule AND WHEREAS the Lessee has no finance to pay the price of the equipment and has requested the Lessor to help him in importing the Equipment. AND WHEREAS the Lessor has agreed to purchase the said equipment by paying the price thereof to the Importer and to give it on a long lease to the Lessee so that the Lessee's purpose will be served AND WHEREAS the Lessor has therefore at the request of the Lessee agreed to give the equipment on lease and the Lessee has agreed to take the same on lease at the rent or consideration and on the terms and conditions hereinafter stated
NOW it is agreed between the Parties hereto as follows -
(1) The Lessor agrees to grant a lease and the Lessee agrees to take on lease the said equipment mentioned in the Schedule hereunder written as per particulars therein given when the said equipment is imported and delivered over to the Lessee as herein provided. The Lessee shall be deemed to be holding the same as Lessee of the Lessor on the terms and conditions hereinafter mentioned
(2) The period of the lease shall be …………………….. years commencing form the ……. day of ………. The said period may be extended at the option of the Lessee as hereinafter provided but not exceeding .………....... years.
(3) The Lessee shall pay a sum of Rs …………. per month as rent for the said equipment commencing from the date of delivery of the Equipment to the Lessee. The monthly rent will be paid on or before the 5th day of each month in advance for that month and it will be regularly paid. If however any instalment of rent is not paid on the due date the amount of such instalment shall carry interest at the rate of Rs . ………… per cent p.a. from the default till payment or recovery thereof.
(4) The rent will be paid in cash at the registered office of the Lessor or by cheque or drafts or bill of exchange delivered at the said office of the Lessor or by post so as to reach the Lessor on or before the due date. Dishonour of any cheque, draft or bill of exchange will be treated default in payment of rent.
(5) The said monthly rent is liable to be changed if the bank's lending rate is increased or if the benefit of depreciation allowable under the Tax Act is changed. The Lessor will inform the Lessee as and when such change occurs and the rent payable is varied and the same shall be binding on the Lessee. Such varied rent shall be deemed to be the monthly rent agreed to be paid by the Lessee under these presents.
(6) The Lessee shall on the execution of this agreement deposit a sum of Rs …………. with the Lessor as a security for complying with the terms and conditions of this agreement. The said deposit shall carry interest at the rate of ….…………….. per cent per annum and shall be accumulated from time to time to form part of the deposit. On the expiration of the period of the lease aforesaid or earlier termination thereof the said deposit with accruals will be refunded to the Lessee subject to the deduction of any liability payable by the Lessee under or by virtue of this agreement including any claim for loss or damages payable by the Lessee to the Lessor under this agreement or in law. If any such liability of the Lessee is not ascertained at the time of the termination of the agreement, the lessor may return the amount of deposit if the Lessee secures payment of such liability by a guarantee to the satisfaction of the Lessor.
(7) The Lessee covenants with the Lessor
(a) to obtain all licences, permissions, approvals for this agreement if any required from any authority and to keep them in force during the period of this lease.
(b) to keep and maintain the equipment in good order and condition and in due repairs until the same is returned to the Lessor under the terms of this agreement
(c) not to part with possession of the equipment to any other person and not to remove the same from the place where it will be installed.
(d) to allow the Lessor's authorised representatives to enter upon the premises where the equipment is kept and to inspect the condition thereof.
(e) to carry out such work of repairs, cleaning etc of the equipment as will be required by the Lessor at the Lessee's costs
(f) not to mortgage, hypothecate or pledge the same to secure any loan or liability of the Lessor or to transfer the same in any manner whatsoever n favour of any person
(g) to affix and maintain in good condition a name plate indicating that the equipment belongs to the Lessor.
(h) not to make any additions or alterations to the equipment and maintain the identity thereof or mix it with any other equipment or equipment.
(i) to hold the equipment as bailee with all the duties and obligations of a bailee.
(j) not to claim any lien on the equipment or to dispute the title of the Lessor to the equipment
(k) to pay all taxes and other dues payable to Govt. or any local authority or public body or other person payable in respect of the equipment.
(l) to use the equipment for the purpose for which it is intended and not for any other purpose
(m) to keep the equipment insured at all times during the subsistence of this agreement in the name of the Lessor with such insurer as the Lessor any desire against the risk of fire, theft or other accident and to pay the premium regularly thereon and to handover the policy and the insurance receipts as and when received by the Lessee and not to do or omit to do any act whereby such insurance shall be prejudiced.
(n) to intimate to the Lessor in writing as soon as the equipment receives any damage for any reason so as to enable the Lessor to make claim under the insurance policy and to inspect the damage and make report thereon.
(o) to allow the Lessor to repair the damage or replace any part thereof so damaged, without the Lessor being bound to do so and in that event to pay the Lessor all cost, charges and expenses incurred by the Lessor in repairing or replacing any part thereof on demand.
(p) not to allow the equipment to be attached by Court or any other authority in execution of a decree or order and in the event of such attachment or impending attachment to take immediate legal action to raise the attachment or to prevent the same at the Lessee's costs
(q) not to transfer by sale, lease or otherwise the Lessee's right to the premises in which the equipment is kept or installed and in case the Lessee intends to do so, the Lessee shall obtain the previous permission of the Lessor which may be granted with such conditions as the Lessor may think fit and proper.
(r) to submit to the lessor audited balance sheet and Profit and Loss Account of the Lessee every year and to submit any other financial statement about the business and affairs of the Lessee as the Lessor may require from time to time
(s) to indemnify and keep indemnified the Lessor for all the loss or damages that the Lessor may suffer or incur owing to any act of negligence on the part of the Lessee and its employees or agents or owing to the breach of any covenant by the Lessee herein contained or breach of any law, rule or Govt. order or the term of any licence or permit or due to any damage to the said equipment or otherwise during the subsistence of this agreement.
8. The Lessee confirms that the said equipment has been imported or purchased by the Lessor at the instance and with the approval of the specifications and quality thereof and is being delivered direct by the seller or supplier to the Lessee. The Lessor is not therefore responsible for any defect in the equipment or the quality or efficiency or suitability thereof and the Lessee will not make any claim against the Lessor in that behalf.
9. Notwithstanding the fixed period of the lease as aforesaid, the Lessor shall have right to terminate this agreement or lease by giving the Lessee's one month's previous notice in writing if
(i) the Lessee makes default in payment of any two monthly instalments of rent
(ii) the Lessee commits breach of any covenant given by the Lessee as aforesaid or of any other term of this agreement.
(iii) the lessee is ordered to be wound up by any Competent Court or goes into voluntary liquidation
(iv) any of the property of the Lessee including the said equipment is attached by the Court or any other authority
(v) If any statement or representation made by the Lessee in this application for lease is found to be incorrect
(vi) If the Lessee's financial position deteriorates or the Lessee's last profit and loss statement shows a loss or if there arises any dispute in the internal management of the Company
(vii) If the said equipment is damaged beyond repairs by any reason.
10. On the expiration of the said period of lease or earlier termination of this agreement by the Lessor on any of the grounds aforesaid the Lessee shall deliver the equipment to the Lessor at its own costs forthwith failing which the Lessor will be entitled to remove the same from whichever place it is lying at the cost of the Lessee and the Lessee shall not object to such removal. If however the Lessee fails to deliver the equipment as aforesaid and does not allow the Lessor to remove the same or otherwise makes it impossible for the Lessor to remove the same the Lessee shall be deemed to have converted the same and will be liable for such conversion to pay the Lessee Rs ……….. being the costs of the equipment less the depreciation costs allowed under the law. The certificate of the Lessors auditors as to the net costs payable by the Lessee shall be final.
11. If the said equipment is damaged beyond repairs due to any reason while it is in the possession of the Lessee then the Lessee shall be liable to make good the loss by paying to the Lessor the cost of the equipment as mentioned in the Schedule hereunder less the amount of any insurance claim received by the Lessor, on demand by the Lessor.
12. The Lessee shall have no right to terminate this agreement for any reason unless the Lessee pays to the Lessor the cost of the equipment as mentioned in the Schedule hereunder or in the alternative pays all the aggregate of the monthly instalments of rent for the remaining period of the lease and all other sums if any payable under this agreement as and by way of liquidate damages.
13. Apart from the monthly rent, if any other amount becomes payable by the Lessee to the Lessor under and by virtue of this agreement and the Lessee fails to pay the same on demand or when it becomes due, the Lessee will be liable to pay interest on such sum at the rate of Rs………………. per cent per annum from the due date till
payment or recovery thereof
14. All the terms and conditions agreed upon between the Lessor and the Lessee are incorporated in this agreement and no party shall plead or contend at any time that there were any other terms agreed upon between the parties orally or otherwise. In short this agreement shall be considered as the sole depository of the terms and conditions between the parties.
15. in the event of any dispute or difference of opinion arising between the Parties, each party and such arbitration shall be governed by the same shall be referred to Arbitration of two Arbitrators one to be appointed by each party and such arbitration shall be governed by the Act governing arbitration for the time being.
16. For all disputes between the Parties under this agreement the Courts in ……………. will have exclusive jurisdiction
17. Simultaneously with the execution of this agreement, the Lessee shall procure a guarantee of a person approved by the Lessor for guaranteeing payment of all moneys payable by the Lessee under this agreement to the Lessor including rent, damages and losses
18. Any notice to be given by one party to another shall be served personally or post at the Registered office of the party.
IN WITNESS WHEREOF the Parties have put their hands the day and year first hereinabove written.
Schedule above referred )
Signed for and on behalf of )
M/s. ………………. the Lessor, by its )
Managing Director duly authorised. )
Signed for and on behalf of M/s ………….. )
by its managing Director duly authorised. )