Lease Deed to lease Plant and Machinery to Lessee for a fixed term.

Format of Lease Deed to lease Plant and Machinery to Lessee to use for specific term.

Plant and Machinery Lease agreement is a contractual agreement where the lessor, who is the owner of the Plant and Machinery, allows the lessee to use the equipment for a specified period in exchange for periodic payments. The subject of the lease may be Plant and Machinery with all accessories. Once the lessor and lessee agree to the terms of the lease, the lessee gets the right to use the equipment and, in return, makes periodic payments during the duration of the lease. However, the lessor retains ownership of the equipment and has the right to cancel the equipment lease agreement if the lessee contravenes the terms of the agreement or engages in an illegal activity using the equipment.

Sample Format of Lease Deed of Plant and Machinery is given below.

 

LEASE AGREEMENT FOR PLANT AND MACHINERY

This agreement is made this __th day of _____ 20__

between

__________ Financial Services Ltd., a company registered under the Companies Act 1956 and having its Registered office at__________ __________ __________(hereinafter referred to as the lessor which term shall include its successors and assigns) of the One Part

And

____________________ Ltd., a company registered under the Companies Act 1956 and carrying on business of __________ having its Registered office at __________ __________ __________ (hereinafter called the lessee which term shall include its successors and assigns) of the Other Part.

Whereas the lessor carries on business as Lease Financing and leasing-out equipment and the lessee carries on business as manufacturer of and dealer in Hosiery goods and intends to take on lease certain plant and machinery from the lessor.

And whereas the lessor has agreed to give on lease such plant and machinery that may be required by the lessee.

And whereas the lessee has selected the plant and machinery from the manufacturer and seller thereof.

Now these presents witnesseth and the parties hereby agree as follows:

1. The lessee hereby agrees to lease out to the lessee and the lessee agrees to take on lease from the lessor the plant and machinery described in Schedule I hereunder.

2. The lessee hereby admits that the lessor has paid for the plant and machinery mentioned in Schedule I hereunder to the supplier thereof and the said plant and machinery have been installed in the factory of the lessee and are working satisfactorily. The lessee admits that the lessor is the sole owner of said plant and machinery.

3. The lease of the said plant and machinery shall be for a period of three years which may be renewed for another three years by mutual agreement.

4. The lessee agrees to pay the lease rentals at the rates specified in Schedule II hereunder. The lease rentals would be paid by lessee within 10 days of the same becoming due and payable.

5. In default of payment on due date, interest at 3% per month on each installment due would be charged on the outstanding amount. The time for payment of the installment is understood by the parties to be of the essence of the Lease Agreement.

6. The lessee expressly declares that the lessee has made the selection of plant and machinery based upon its own judgment and has not relied upon any statement or representation of the lessor.

7. The lessee undertakes to be responsible for all repairs, service defects and smooth running of the plant and machinery. The lessee will, however, be entitled to the benefits of the manufacturer's warranties in respect of the plant and machinery.

8. No right, title or interest in the plant and machinery shall pass to the lessee by virtue of these presents and the leased-out plant and machinery mentioned in Schedule I hereunder shall remain the property of the lessor and the lessee undertakes not to sell, assign, sub-let, sub-lease, pledge or hypothecate or otherwise encumber or suffer lien upon or against any interest in the leased-out plant and machinery or in this agreement. The lessee further undertakes not to remove except for purposes of repairs the leased- out plant and machinery from the factory where they have been installed except with the prior written consent of the LESSOR and further undertakes not to allow any third person to use as the licensee or otherwise the said plant and machinery without the written consent of the lessor.

9. The lessee agrees and undertakes to comply with all laws and regulations and orders relating to the possession of, operation and use of leased-out plant and machinery and assumes all risks, responsibilities and liabilities arising from or pertaining to the possession, operation or use of the leased- out plant and machinery. The lessee hereby agrees and undertakes to keep the lessor fully indemnified against and harmless from any claims, costs, expenses damages and liabilities, whether civil, criminal or of any other nature whatsoever arising from or pertaining to the use, possession, operation or transportation of the leased-out plant and machinery.

10. The lessee undertakes to pay all fees, taxes, levies or other lawful charges and in default if the lessor has to pay the same, the lessee undertakes to reimburse the lessor of such payment. The Indemnity hereby granted by the lessee to the lessor shall operate in respect of all risks, or liabilities arising from possession, use, operation or storage of the plant and machinery and for injuries or deaths of persons or damages to property arising from possession, use or anything to do with the leased-out plant and machinery. Such indemnity shall survive the termination of this agreement.

11. The lessee will cause the leased-out plant and machinery to be operated in accordance with manufacturer's Manuals and Instructions by competent and duly qualified personnel and in accordance with the applicable government regulations and for the lessee's business purposes only.

12. During the term of the lease, the lessee shall at its own cost and expense keep the plant and machinery in good repair and working condition.

13. The lessee shall keep the plant and machinery fully insured and in case of loss, theft or damages beyond repair, the lessee shall pay the balance lease rentals forthwith and the lessor shall transfer its right title or interest in plant and machinery to the lessee so that the lessee could recover the insurance money. The lessee undertakes to keep the plant and machinery fully insured for the value thereof plus 10% and regularly pay the renewal premium.

14. During the term of this Agreement, the lessee shall furnish to the lessor Annual Audited Accounts duly reflecting the said plant and machinery taken on lease and the lease rentals payable for same.

15. The lessee agrees to bear and pay all extra or additional or new taxes or levies in relation to plant and machinery on leasing out the same to the lessee.

16. Upon expiry of the lease period or in case of default on termination of the lease by the lessor, the lessee undertakes to deliver up possession of plant and machinery to the lessor at specified storage space intimated by the lessor at the cost and expense of the lessee and in good and working condition.

17. In the event the lessee fails to pay the stipulated lease rent on the due dates in respect of two installments or fails to perform or observe any covenant, condition or undertaking contained herein or becomes commercially insolvent or winding-up petition is filed against the lessee, the lessor shall be at liberty to terminate the agreement and declare the outstanding lease rentals, the late payment charges and quantum of interest at 30% per annum and future rentals payable by the lessee, and the lessee shall have option to pay the entire amounts due discounted at the rate of 12% per annum within 30 days of receipt of such declaration. If the lessee does not pay the outstanding amount due so discounted at 12% per annum within 30 days then the lessor will have the liberty to take action for recovery of the outstanding dues as liquidated damages for loss of bargain and not as penalty of the said total amount together with interest at 36% per annum. On any default in payment of any lease rental or breach of any of the terms and conditions hereof the lessor would be entitled to take possession of plant and machinery mentioned in Schedule I hereunder and take such action as are permissible in law for recovery of the dues. The waiver of any particular default or breach of the lessee by the lessor shall not be treated as waiver of any other default or breach of the terms and conditions of this agreement.

18. Any notice of demand required to be given shall be given by post or by hand-delivery to the addresses of the parties given hereinabove.

19. The lessee agrees and undertakes that its obligations to pay all lease-rentals and any other amount owing hereunder shall be absolute and unconditional. The lessee shall not be entitled to cancel or terminate this agreement without paying the entire lease-rentals.

20. All disputes and differences claims and questions whatsoever which could arise either during the subsistence of this agreement or afterwards between the parties and/or their respective representatives touching these Presents or any clause or thing herein contained or otherwise in any way relating to or arising from these Presents shall be referred to Arbitration of Mr. __________ of and shall be subject to the jurisdiction of the High Court. Such Arbitration shall be in accordance with and subject to the provisions of the Arbitration and Conciliation Act 1996 or any statutory modification thereof for the time being in force.

Schedule I
Automatic Vests Knitting Machines, Colour Motif, colour-in-colour, floating pattern, mesh pattern, plating horizontal and vertical stripes, etc. And other particulars.

Schedule II
Total worth of rentals payable by the lessee……….Rs. __________

And other particulars.

Lease rentals and due date

Rs. __________ payable quarterly beginning from __th ____ 20__ and thereafter on __th of every third month and the entire amount would be paid by __th ________ 20__.

The Lease Rentals is in addition to the Lease Management fee of Rs. __________ payable at the time of signing of the agreement.

In witness whereof the parties herein have signed, sealed and delivered these presents on the day, month and year first above-written.

WITNESSES

Signed, sealed and delivered by Mr __________

Pursuant to Board Resolution of __ _____20__ of __________ Ltd.

1.

Signed, sealed and delivered by Mr. _________

pursuant to Board Resolution of __ _____ 20__ of __________ Ltd.

2.

   

Relevant Sections of Transfer of Properties Act 1882

Section 107 "Leases how made"

107. A lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.
All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:

Provided that the State Government may, from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.

 

Section 108 "Rights and liabilities of lessor and lessee"

108. In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following or such of them as are applicable to the property leased :-


A. Rights and liabilities of the Lessor
(a) the lessor is bound to disclose to the lessee any material defect in the property, with reference to its intended use, of which the former is and the latter is not aware, and which the latter could not with ordinary care discover;

(b) the lessor is bound, on the lessee's request to put him in possession of the property;

(c) the lessor shall be deemed to contract with the lessee that, if the latter pays the rent reserved by the lease and performs the contract binding on the lessee, he may hold the property during the time limited by the lease without interruption.

The benefit of such contract shall be annexed to and go with the lessee's interest as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.

B. Rights and liabilities of the lessee
(d) if during the continuance of the lease any accession is made to the property, such accession (subject to the law relating to alluvion for the time being in force) shall be deemed to be comprised in the lease;

(e) if by fire, tempest or flood, or violence of any army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void :

Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself to the benefit of this provision;

(f) if the lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor;

(g) if the lessor neglects to make any payment which he is bound to make, and which if not made by him, is recoverable from the lessee or against the property, the lessee may make such payment himself, and deduct it with interest from the rent, or otherwise recover it from the lessor;

(h) the lessee may even after the determination of the lease remove, at any time whilst he is in possession of the property leased but not afterwards, all things which he has attached to the earth : provided he leaves the property in the state in which he received it ;

(i) when a lease of uncertain duration determines by any means except the fault of the lessee, he or his legal representative is entitled to all the crops planted or sown by the lessee and growing upon the property when the lease determines, and to free ingress and egress to gather and carry them;

(j) the lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not, by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease;

nothing in this clause shall be deemed to authorize a tenant having an un-transferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee;

(k) the lessee is bound to disclose to the lessor any fact as to the nature or extent of the interest which the lessee is about to take, of which the lessee is, and the lessor is not, aware, and which materially increases the value of such interest;

(l) the lessee is bound to pay or tender, at the proper time and place, the premium or rent to the lessor or his agent in this behalf;

(m) the lessee is bound to keep, and on the termination of the lease to restore, the property in as good condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible force, and to allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof and give or leave notice of any defect in such condition; and, when such defect has been caused by any act of default on the part of the lessee, his servants or agents, he is bound to make it good within three months after such notice has been given or left;

(n) if the lessee becomes aware of any proceeding to recover the property or any part thereof, or of any encroachment made upon, or any interference with, the lessor's rights concerning such property, he is bound to give, with reasonable diligence, notice thereof to the lessor;

(o) the lessee may use the property and its products (if any) as a person of ordinary prudence would use them if they were his own; but he must not use, or permit another to use, the property for a purpose other than that for which it was leased, or fell or sell timber, pull down or damage buildings belonging to the lessor or work mines or quarries not open when the lease was granted, or commit any other act which is destructive or permanently injurious thereto;

(p) he must not, without the lessor's consent, erect on the property any permanent structure, except for agricultural purposes;

(q) on the determination of the lease, the lessee is bound to put the lessor into possession of the property.