Hire Purchase
Agreement for Securing Finance with Guarantee

This Agreement is
made at ……. this ……… day of …. between M/s. A B C & Co. Ltd., a
Company having its registered office at ……. hereinafter referred to as ‘the
Company’ of the First Part and Mr. A. carrying on business at …. hereinafter
referred to as ‘the Hirer’ of the Second Part and Mr. B residing at …..
hereinafter referred to as the ‘Guarantor’ of the Third Part;

Whereas the Hirer is
carrying on business of manufacturing… and for the purpose of his business,
he has agreed to purchase and import a machine the particulars of which are
given in the Schedule hereunder written and which is hereinafter referred to as
the said ‘Machine’.

And Whereas the Hirer
has obtained import License for importing the said machine.

And Whereas the Hirer
is in need of a sum of Rs …….. to pay the price by opening a Letter of
Credit in favour of the foreign seller through the Hirer’s Bankers.

And Whereas the Hirer
has requested the Company to advance the said amount as well as all moneys
required for payment of Import and Custom duties and other charges required to
clear the machine from the docks, to enable him to open the Letter of Credit
and paying the other duties and charges and which the Company has agreed to do
on -the following terms and conditions and agreed to by the Hirer.

Now it is agreed by
and between the parties as follows:

1.    
The
Company has agreed to advance to the Hirer a sum of Rs. … with interest
thereon at the rate of Rs. … per cent per annum. The Hirer has executed in
favour of the Company a Promissory note for the said amount and at the request
of the Hirer the Guarantor has agreed to guarantee the repayment thereof,
subject to the terms hereof.

2.    
The
Company shall pay the said amount to the Bank of ……. being the Bankers of
the Hirer, direct to enable the Bank to issue a Letter of Credit for the said
amount and to enable the Hirer to import the said Machine. The Company shall
also pay an amount not exceeding Rs …….. for payment of all Customs and
Import duties and other charges required to clear the said machine.

3.    
The
said machine shall be deemed to be sold by the Hirer to the Company on payment
of the said amount to the said Bank as well as the amount required to be paid
for Custom and Import duties and other charges for clearing the said machine.

4.    
On
the importation of the said Machine the Hirer shall clear the same from the
customs and other authorities by paying all custom and import duties and other
charges and shall hold the said machine belonging to the Company as taken on
hire from the Company with an option to purchase the same, on the following
terms.

5.    
This
agreement shall be effective since the time the said machine is imported and
taken possession of by the Hirer on behalf of the Company as aforesaid.

6.    
If
by any chance the said Machine is not imported, this agreement shall be null
and void and the Company will be entitled to claim the amount advanced by
Company from the Hirer and the Guarantor as a debt and the guarantee hereby
given,

7.    
The
Hire-purchase price of the said machine is fixed at Rs.. .being the amount
agreed to be advanced by the Company as aforesaid and inclusive of interest
payable by the Hirer for the hire period.

8.    
During
the pendency of this agreement the Hirer shall pay to the Company by thirty-six
equal monthly instalments a sum of Rs………. as hire charges, in advance, the
first of such payments to be made on the execution of this agreement, and each
subsequent monthly instalment will be made on or before the … day of each
succeeding month hereafter. The payment will be made at the registered office
of the Company by cash only or by cheque in the name of the Company.

9.    
If
the Hirer fails to pay any monthly instalment of hire charges on the due date
thereof then the Hirer shall be liable to pay interest thereon at the rate of
……. per cent per annum from the date of default till payment thereof. This
is, however, without prejudice to the right of the Company to terminate this
agreement for default in payment of the monthly instalments as hereinafter
provided.

10. 
During
the pendency of this agreement the Hirer shall keep the said machinery in good
working condition and shall maintain It properly as a man of prudence would do
and shall replace any part thereof lost or disused or out-of-use or broken.

11. 
The
Hirer agrees to indemnify and keep indemnified the Company against any loss the
Company may suffer due to any damage done to the said machine by any reason
whatsoever.

12. 
The
Company through Its authorised representative shall be en- titled to inspect
the said machine during working hours at any time and for that purpose to enter
into the premises where the said machine will be Installed or kept and the
Hirer shall allow the Company and its representative to do so.

13. 
The
Company does not give any warranty as to the quality or fitness of the
mechanism of the said machine and will not be responsible or liable for any
defect found therein.

14. 
The
Hirer proposes to install the said machine at ……. and agrees and undertakes
not to remove the same to any other place without the prior written consent of
the Company. The Hirer shall not remove the nameplates fixed to the machine for
the purpose of identification of the property of the Company during the
pendency of this Agreement.

15. 
The
Hirer shall keep the said machine insured in the name of the Company with any
recognised Insurance Company and shall pay the premium as and when due and
payable regularly. The Policy of Insurance will be handed over to the Company
and the Hirer shall produce the premium receipt or furnish copy thereof to the
Company from time to time. If the Hirer fails to insure the said machine or
fails to pay the premium at any time the Company, without prejudice to its
other rights under this agreement, will be entitled to insure the same or to
pay the premium as the case may be and the costs incurred by the Company will
be paid by the Hirer to the Company as and when demanded.

16. 
The
Hirer shall use the said machine for the manufacture of …. and not for any
other purpose without the prior consent of the Company.

17. 
The
Hirer shall not give the said machine on hire o? on any other basis to or allow
it to be used by any other person without the prior written consent of the
Company and shall not hypothecate or pledge the same with any person to secure
payment of any moneys.

18. 
The
ownership or property of the Company in the said machine will continue to remain
unaffected during the pendency of this agreement and the Hirer shall be
considered as the bailee thereof with all the duties and obligations of a
bailee in law.

19. 
If
any taxes or other dues are required to be paid in respect of the said machine
the same will be paid by the Hirer and if any permit or license to use the said
machine is required to be obtained from any Government or local authority, the
same will be obtained by the Hirer at his costs and responsibility.

20. 
If
the said machine goes out, of order and requires repairs of a .substantial
nature the work of repairs will be carried only through a mechanic appointed by
the Company and the Hirer shall pay his charges.

21. 
The
Hirer shall be liable to pay the hire charges every month not withstanding
whether the said machine is working or remains idle for want of work or for any
other reason.

22. 
This
agreement shall be deemed to have commenced from the date hereof and will
remain in force for a period of three years from the date hereof that is upto
the day of … and (unless the Hirer exercises the option to purchase as
hereinafter provided) on the expiration of the said period or earlier
termination thereof as hereinafter provided the Hirer shall hand over back the
said machine in good working condition subject to normal wear and tear at his
costs at the place of business of the Company or as may be directed by the
Company provided that, the Hirer shall continue to be liable to pay hire
charges until the said machine is actually delivered over to or taken over by
the Company.

23. 
If
the Hirer commits breach of any term of this Agreement or fails to pay any two
monthly instalments of hire charges, the Company will have the right to
terminate this agreement by giving one month’s prior notice to that effect and
unless in the meanwhile the breach is remedied and the hire charges are paid as
the case may be, this agreement shall, on the expiration of the notice period
stand terminated. If the agreement is terminated as aforesaid, the Hirer’s
option to purchase as hereinafter mentioned shall stand forfeited or cancelled.

24. 
If
the Hirer is adjudged insolvent or he allows the said machine attached In
execution of a decree or any order of a court or for recovery of any Govt. dues
or if a Receiver thereof is appointed by court or any creditor, this agreement,
on the happening of any such event shall stand terminated.

25. 
The
Hirer shall have also a right to terminate this agreement at any time by giving
one month’s prior notice to the Company to that effect but in such a case the
Hirer will be liable to pay to the Company an amount equal to the hire charges
payable for the period from the date of termination till the stipulated period
of this agreement would expire as and by way of compensation for the loss
suffered by the Company.

26. 
On
the termination of this agreement by efflux of time or earlier termination by
the Company or by the Hirer or otherwise as aforesaid without or before the
Hirer exercising his option to purchase the said machine the Company shall
become the absolute owner of the said machine and the same shall be handed over
by the Hirer to the Company forthwith.

27. 
If
the said machine is wholly destroyed or damaged beyond repairs by fire, flood
or earthquake or for any other reason, the Hirer shall make good the loss
suffered by the Company, the loss being the market price of the machine then
existing or the price mentioned in clause (7) above mentioned, whichever is
more Provided that, the amount of Insurance claim received if any will be
adjusted against such price.

28. 
The
Hirer shall have the option to purchase the said machine and the option shall
be exercised by giving one month’s prior notice to the Company. The option to
purchase can be exercised as from the date of expiration of the stipulated
period of this agreement or from any earlier date. In the former case the Hirer
shall be liable to pay to the Company a sum equal to the Hire Purchase price of
the machine mentioned in Clause (7) above, less the aggregate amount of
instalments paid upto that date or Rupee one whichever is higher.

29. 
If
the option to purchase is exercised to be effective before the expiration of
the period of this agreement, the Hirer shall be liable to pay a sum equal to
the said Hire-Purchase price or the balance thereof payable by monthly
instalments of hire charges upto the date of the stipulated period of the
agreement as reduced by a rebate which will be equal to two third of an amount
which bears to be hire charges the same proportion as the balance of the hire
purchase price not due till then bears to hire purchase price.

30. 
On
the Hirer exercising the option and paying the price of the machine and other
moneys as mentioned in clauses 28 or 29 above to the Company. the sale of the
said machinery and equipment to the Hirer shall be deemed to be complete as on
the date the option comes into operation. But until then, the Company will
continue to be the owner thereof if, however, the Hirer fails to pay the amount
due and payable to the Company as aforesaid at or before the date from which
the option is to become effective, this agreement shall stand terminated and
the Hirer will return the machine to the Company forthwith in good working
condition as aforesaid.

31. 
Notwithstanding
the completion of sale of the said machine, the Company shall have a lien or
charge on the same for all the moneys due and payable by the Hirer under this
Agreement.

32. 
The
Company declares that

a.     the Hirer shall have
and enjoy quiet possession of the said machine during the subsistence of this
agreement.

b.    That the said machine
is free from any charge or encumbrance in favour of any third person.

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33. 
The
Hirer shall not assign the benefits and rights under this Agreement to any
other person without the prior written consent of the Company which consent
shall not be unreasonably withheld or refused.

34. 
If
on the determination of this agreement by efflux of time or otherwise, the
Hirer fails to deliver the said machine to the Company without there being any
dispute the Company will be entitled to file a suit or take other proceedings
to recover possession thereof and the Hirer will be liable to pay all the
costs, charges and expenses incurred by the Company in that behalf subject to
any orders of the Court.

35. 
The
Guarantor hereby guarantees the due performance of this agreement by the Hirer
and the payment of all moneys payable by the Hirer to the Company under this
agreement and in the event of the Hirer failing to pay the amount becoming due
and payable to the Company, the Guarantor shall pay the same as per the demand
made by the Company in writing without demur or raising any objection.

36. 
The
said guarantee by the Guarantor is a continuing guarantee and will remain in
force until the Hirer exercises his option to purchase the said machine and
until the Hirer pays all moneys due and payable by him under this agreement and
no indulgence shown to the Hirer by the Company or a facility or concession or
time given to the Hirer by the Company will discharge the Guarantor from his
liability.

37. 
If
any dispute arises between the parties out of or in connection with the
agreement whether in the nature of interpretation or meaning of any term hereof
or as to any. claim by one against the other, or otherwise the same shall be
referred to arbitration of a common arbitrator if agreed upon or to arbitrators
one to be appointed by each party to the dispute and the arbitration shall be
governed by the Arbitration & Conciliation Act, 1996.

THE SCHEDULE ABOVE
REFERRED TO

(Description of the
machine)

Signed and delivered
for and on

behalf of M/s. A B C
& Co. Ltd., by Mr. … a Director of the

Company, duly
authorised by Resolution of the Board of Directors dated … in the presence of

Signed and delivered
by the withinnamed Hirer Mr.

… in the presence
of …

Signed and delivered
by the withinnamed Guarantor Mr. … in the presence of …

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