Plant and Machinery Lease Agreement Format in India

Lease Agreement for Plant and Machinery

This Lease Agreement is made on this ___ day of __________, 20___ at __________.

BETWEEN

____________________________ Limited/Private Limited/LLP/Proprietorship, incorporated/registered under the applicable law and having its registered/principal office at ____________________________, acting through its duly authorised representative ____________________________ (hereinafter referred to as the "Lessor", which expression shall, unless repugnant to the context, include its successors and permitted assigns), of the First Part;

AND

____________________________ Limited/Private Limited/LLP/Proprietorship, incorporated/registered under the applicable law and having its registered/principal office at ____________________________, carrying on the business of ____________________________, acting through its duly authorised representative ____________________________ (hereinafter referred to as the "Lessee", which expression shall, unless repugnant to the context, include its successors and permitted assigns), of the Second Part.

The Lessor and the Lessee are individually a "Party" and collectively the "Parties".

Recitals

A. The Lessor is the owner of, or is otherwise lawfully entitled to lease, the plant and machinery described in Schedule I.

B. The Lessee requires the plant and machinery for its lawful business operations and has requested the Lessor to provide the same on lease.

C. The Parties have agreed to record the terms governing the lease in this Agreement.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

1. Lease of Equipment. The Lessor agrees to lease to the Lessee, and the Lessee agrees to take on lease, the plant, machinery, equipment and accessories described in Schedule I ("Equipment"), subject to the terms of this Agreement.

2. Ownership and Title. Unless this Agreement expressly provides otherwise, legal title to and ownership of the Equipment shall remain with the Lessor throughout the lease term. Nothing in this Agreement shall by itself transfer ownership of the Equipment to the Lessee.

3. Delivery, Installation and Acceptance. The Equipment shall be delivered and, where applicable, installed at ____________________________. The Lessee shall inspect the Equipment and, upon satisfactory inspection, acknowledge receipt and acceptance. Any visible shortage, defect or damage shall be notified in writing to the Lessor within ___ days of delivery.

4. Lease Term. The lease shall commence on __________ and continue for a period of ___ years/months, unless terminated earlier in accordance with this Agreement. Any renewal shall be by written agreement of the Parties.

5. Lease Rentals. The Lessee shall pay lease rentals in the amounts and on the due dates stated in Schedule II, together with applicable taxes. Payments shall be made to the bank account or other payment destination notified by the Lessor.

6. Delay in Payment. If an undisputed amount remains unpaid after its due date, the Lessee shall be liable to pay reasonable interest/late charges at the rate of ___% per annum, subject to applicable law, from the due date until payment. Any stipulated sum, acceleration or damages provision shall operate only to the extent enforceable under applicable law.

7. Selection of Equipment. Where the Equipment has been selected by the Lessee from a manufacturer or supplier, the Lessee confirms that the selection is based on its own technical and commercial assessment, except to the extent the Lessor has expressly given a written representation or warranty.

8. Use and Operation. The Lessee shall use the Equipment only for lawful business purposes, in accordance with manufacturer instructions, safety requirements, licences, permits and applicable laws. The Equipment shall be operated only by appropriately trained and competent personnel.

9. Repairs and Maintenance. During the lease term, the Lessee shall, at its cost unless otherwise agreed, keep the Equipment in good working order, carry out routine and preventive maintenance and promptly attend to repairs. Normal wear and tear shall be treated in accordance with the commercial arrangement stated in Schedule II.

10. Manufacturer Warranty. To the extent legally transferable and available, the Lessor shall permit the Lessee to use the benefit of any manufacturer or supplier warranty relating to the Equipment. This clause does not create a warranty by the Lessor beyond any express warranty stated in this Agreement.

11. No Sale, Sub-Lease or Encumbrance. Without the Lessor's prior written consent, the Lessee shall not sell, assign, sub-lease, pledge, hypothecate, create a lien over, part with possession of, or otherwise encumber the Equipment or its rights under this Agreement, except as expressly permitted herein.

12. Location and Inspection. The Equipment shall ordinarily remain at ____________________________. It shall not be permanently removed to another location without prior written consent of the Lessor, except where temporary removal is reasonably required for authorised repair or maintenance. On reasonable prior notice, the Lessor may inspect the Equipment during normal business hours without materially disrupting the Lessee's operations.

13. Taxes, Duties and Charges. GST and any other applicable tax, duty, cess, levy, fee or statutory charge shall be borne and discharged by the Party on whom the law places the liability, subject to any lawful contractual reimbursement agreed in Schedule II. Tax invoices and supporting documents shall be issued as required by applicable law.

14. Insurance. The Lessee shall keep the Equipment adequately insured throughout the lease term against customary commercial risks, including fire, theft and accidental damage, for an agreed insured value of Rs. __________ or such other value stated in Schedule II. The policy shall note the Lessor's interest where legally and commercially appropriate.

15. Loss or Total Damage. In the event of theft, destruction or damage beyond economical repair, the Lessee shall immediately notify the Lessor and insurer. Insurance proceeds and any unrecovered contractual amount shall be dealt with as specified in Schedule II and in accordance with applicable law. No automatic transfer of title shall occur unless expressly agreed in writing.

16. Compliance and Indemnity. The Lessee shall comply with laws governing possession, installation, operation, transport and use of the Equipment. Subject to applicable law, the Lessee shall indemnify the Lessor against third-party claims, losses, costs or liabilities arising from the Lessee's unlawful, negligent or unauthorised possession or operation of the Equipment, except to the extent caused by the Lessor's own breach, negligence or wilful misconduct.

17. Records and Information. Where reasonably required for the lease or financing arrangement, the Lessee shall maintain appropriate records relating to the Equipment and provide the Lessor with information reasonably necessary to verify possession, condition, insurance and payment status, subject to confidentiality obligations.

18. Events of Default. Each of the following shall constitute an event of default if not cured within the applicable cure period stated below: (a) failure to pay an undisputed lease rental within ___ days after written notice; (b) material breach of this Agreement not remedied within ___ days after written notice; (c) unauthorised sale, disposal or encumbrance of the Equipment; (d) material unlawful use of the Equipment; or (e) insolvency-related circumstances to the extent that contractual consequences are permitted under applicable insolvency law.

19. Remedies and Termination. Upon an uncured event of default, the non-defaulting Party may exercise the remedies available under this Agreement and applicable law, including termination, recovery of amounts lawfully due and, where legally permissible, recovery of possession of the Equipment through lawful process. Nothing in this Agreement authorises forcible or otherwise unlawful repossession.

20. Return of Equipment. Upon expiry or lawful termination, the Lessee shall return the Equipment to the Lessor at ____________________________ in substantially the condition required by this Agreement, allowing for reasonable wear and tear, unless the Parties have agreed to a purchase, renewal or other disposal arrangement.

21. Notices. Notices under this Agreement shall be in writing and delivered by hand, recognised courier, registered/speed post or email to the addresses stated below, or to any replacement address notified in writing. A notice shall be treated as received in accordance with the delivery method and applicable law.

22. Force Majeure. Neither Party shall be liable for delay or failure in performance caused by an event beyond its reasonable control, excluding payment obligations already accrued, provided the affected Party promptly notifies the other and takes reasonable steps to mitigate the effect. If the event continues for more than ___ days, the Parties shall discuss an appropriate commercial solution.

23. Confidentiality. Each Party shall protect confidential commercial, technical and financial information received from the other Party and shall use it only for purposes connected with this Agreement, except where disclosure is required by law, a regulator, court, auditor, insurer or professional adviser subject to appropriate confidentiality obligations.

24. Assignment. Neither Party shall assign this Agreement without the prior written consent of the other Party, except that the Lessor may, if expressly agreed in Schedule II and permitted by law, assign receivables or financing interests while preserving the Lessee's contractual rights.

25. Entire Agreement and Amendments. This Agreement together with its Schedules constitutes the entire agreement relating to the Equipment and supersedes prior discussions on the same subject. Any amendment must be in writing and signed by duly authorised representatives of both Parties.

26. Severability and Waiver. If any provision is held invalid or unenforceable, the remaining provisions shall continue to operate to the fullest extent permitted by law. A waiver of one breach shall not constitute a waiver of any other or subsequent breach.

27. Governing Law. This Agreement shall be governed by the laws of India.

28. Dispute Resolution and Arbitration. The Parties shall first attempt in good faith to resolve any dispute through negotiation within 30 days after written notice of the dispute. If unresolved, the dispute shall be referred to arbitration by a sole arbitrator mutually appointed by the Parties. If the Parties do not agree on the arbitrator, appointment shall be made in accordance with the Arbitration and Conciliation Act, 1996, as amended and in force. The seat and legal place of arbitration shall be __________, India. The language of arbitration shall be English. Subject to the arbitration clause and applicable law, courts having jurisdiction at the seat of arbitration shall have jurisdiction over proceedings arising from the arbitration.

Execution

IN WITNESS WHEREOF, the Parties, acting through their duly authorised representatives, have executed this Agreement on the date and place first written above.