The deed of Hypothecation executed at......................... this......................... day of......................... One Thousand Nine Hundred and......................... by ......................... a company within the meaning of the Companies Act, 1956 (1 of 1956) and having its Registered Office at.................................................. (hereinafter referred to as "the Borrower" which expression shall, unless it be repugnant to the subject of context thereof, include its successors and assigns) in favour of ......................... a public company incorporated under the Indian Companies Act, 1956......................... (hereinafter referred to as "the Lender")
Whereas
1. By an agreement dated
the......................... day of......................... 19
......................... entered into between the Borrower and the Lender
(hereinafter referred to as "the loan agreement") the Lender has
agreed to lend and advance to the Borrower and the Borrower has agreed to borrow
from the Lender on the terms and conditions contained in the Loan Agreement a
sum to the maximum extent of Rs..........................
(Rupees.................................................. ) (hereinafter
referred to as the Loan").
2. One of the conditions of the Loan
Agreement is that the Loan together with all interest, liquidated damages,
commitment charges, premia on prepayment or on redemption, costs, expenses and
other monies whatsoever stipulated in the Loan Agreement shall be secured, inter
alia, by a first charge by way of Hypothecation of all the Borrower’s
movables (Save and except book debts) including movable machinery, machinery
spares, tools and accessories, present and future subject to prior charges
created and/or to be created:
(i) In favour of the
Borrower’s Bankers on the Borrower’s stocks of raw materials, semi-finished and
finished goods, consumable stores and such other movables as may be agreed to
by the Lender (hereinafter referred to as "the Bankers Goods") for
securing the borrowings for working capital requirement in the ordinary course
of business.
3. The Lender has called upon the Borrower to
execute these presents which the Borrower has agreed to do in the manner
hereinafter expressed.
NOW THEREFORE THESE PRESENTS WITNESSETH THAT:
1. In pursuance of the Loan Agreement and in
consideration of the Lender having lent and advanced and/or agreed to lend and
advance the loan to the Borrower for the purpose and subject to the terms and
conditions set out in the Loan Agreement and in consideration of the premises,
the Borrower doth hereby covenant with the Lender that it shall repay the loan
to the Lender and shall pay interest, commitment charges, liquidated damages,
premia on prepayment or on redemption, costs, charges and expenses and all other
monies as stipulated and in the manner set out in the Loan Agreement and shall
duly observe and perform all the terms and conditions of the Loan Agreement.
2. In pursuance of the Loan Agreement and for
the consideration aforesaid, the whole of the movable properties of the
Borrower including its movable plant and machinery, machinery spares, tools and
accessories and other movables, both present and future (save and except book
debts) whether installed or not and whether now lying loose or in cases or which
are now lying) or stored in or about or shall hereafter from time to time
during the continuance of these presents be brought into or upon or be stored
or be in or about all the Borrower’s factories, premises and godowns situated
at or wherever else the same may be or be held by any party to the order or
disposition of the Borrower or in the course of transit or on high seas or on
order or delivery (hereinafter collectively referred to as "the said
goods"; short particulars whereof arc given in schedule hereto, are hereby
hypothecated as and by way of first charge to the Lender as security for and be
charged with the repayment of loan and repayment or payment of other monies
including all interest, commitment charges, in liquidated damages, premia on prepayment
or on redemption, costs, charges and expenses and all other monies due to the
Lender under the loan agreement and these presents, provided that the charges
created and/or to be created by the Borrower in favour of its Bankers on the
Banker’s Goods, to secure borrowings’ in the ordinary course of business of the
Borrower for its working capital requirements.
3. In further pursuance of the Loan Agreement
and for the consideration aforesaid, the Borrower doth hereby further agree,
declare and covenant with the Lender as follow:
(i) the Borrower
shall at its expense keep the said goods in marketable and good condition and
insure the same in the joint names of the Borrower, the Lenders
and......................... as provided in the Loan Agreement against any loss
or damage by theft, fire, lightning, eathquake, explosion, riot, strike, civil
commotion, storm, tempest, flood, marine risk, erection risk, war risk and such
other risks as the Lender shall, from time to time, require with as insurance
company or companies. The Borrower shall deliver to the Lender the relevant
policies of insurance duly assigned to the Lender and maintain such insurance
throughout the continuance of the security of these presents and deliver to the
Lender the renewal receipts therefor and shall duly and punctually pay all
premia and shall not do or suffer to be done or omit to do or be done any act
which may invalidate or avoid such insurance. In default the Lender may (but
shall not be bound to) keep in good condition and render marketable the said
goods and take out/renew such insurance. Any premium paid by the Lender and any
costs, charges and expenses incurred by the Lender shall, forthwith on receipt
of a notice of demand from the Lender, be reimbursed to the Lender together with
interest thereon at the applicable rate for the loan on the date of the Loan
Agreement from
the date of payment and until such reimbursement by the Borrower
the same shall be
debited to the Borrower’s Loan Account and be a charge on the said goods.
(ii) The nominees of
the Lender shall, without any notice and at the risk and expense of the
Borrower, be entitled at all times to enter any place where the said goods may
be and inspect, value, insure, superintend the disposal of and take particulars
of all or any part of the said goods and check any statement, accounts, reports
and information.
(iii) In the event of
any breach or default by the Borrower in the performance of its bligations
hereunder or any of terms, covenants, obligations and conditions stipulated in
the Loan Agreement or the related security documents or the deeds executed or
that may hereafter be executed by the Borrower in favour of the Lender or in
the event of the Borrower failing to pay either the interest or any instalment
of the Principal of the Loan, or in the event of the charge or the security
created in favour of the Lender having become enforceable for any reason
whatsoever, the Lender or its nominees shall, in case such breach or default is
not remedied by the Borrower to the satisfaction of the Lender within a period
of fifteen days from the date of intimation by the Lender of such breach or
default or such extended time as may be granted by the Lender in writing,
without any notice and without assigning any reason and at the risk and expense
of the Borrower and if necessary as Attorney for and in the name of the
Borrower seize, recover, receive and remove them and/ or sell by public auction
or by private contract, despatch or consign for realisation or otherwise
dispose of or deal
with all or any part of the said goods and to enforce, realise, settle,
compromise and deal with any rights or claims relating thereto without being
bound to exercise any of these powers or be liable for any losses in the
exercise or non-exercise thereof and without prejudice to the Lender’s rights
and remedies of suit or otherwise. Notwithstanding any pending suit or other
proceeding, the Borrower undertakes to
give immediate possession to the nominees of the Lender on demand of the said
goods and to transfer and to delivery to the Lender all relative bills,
contracts, securities and documents and the Borrower hereby agreed to accept
the Lender’s account of sales and realisations as sufficient proof of amounts
realised and relative expenses and to pay on demand by the Lender any short
fall or deficiency thereby shown. Provided, however, that the Lender shall not
be in any way liable or responsible for any loss, damage or depreciation that
the said goods may suffer or sustain on any account whatsoever whilst the same
are in possession of the Lender or by reason of exercise or non-exercise of
rights and remedies available to the Lender as aforesaid and that all such
loss, damage or depreciation shall be wholly debited to the account of the
Borrower howsoever the same may have been caused.
(iv) The Lender, at
any time after the security, hereby created has become enforceable and whether
or not the Lender shall then have entered into or taken possession of and in
addition to the powers hereinbefore conferred upon the Lender after such entry
into or taking possession of, may have a receiver or receivers appointed of the
said goods or any part thereof. The following provisions shall apply to such
Receiver:
(a) Unless otherwise
directed by the Lender, such Receiver shall have and exercise all powers and
authorities vested in the Lender;
(b) Such Receiver
shall, in the exercise of his powers, authorities and discretions, conform to
the regulations and directions from time to time made and given by the Lender;
(c) The Lender may,
from time to time, fix the remuneration of such Receiver and shall direct
payment thereof out of the said goods, but the Borrower alone shall be liable
for the payment of such remuneration;
(d) The Lender may,
from time to time and at any time, require such receiver to give security for
the due performance of his duties as such Receiver and may fix the nature and
amount of the security to be given to the Lender but the Lender shall not be
bound to require such security in any case;
(e) The Lender may
pay over to such receiver any monies constituting part of the securities to the
intent that the same may be applied for the purpose hereof by such Receiver and
the Lender may, from time to time, determine what funds the Receiver shall be
at liberty to keep in hand with a view to the performance of his duties as such
Receiver;
(f) Every such
Receiver shall be the agent of the Borrower for all purposes and the Borrower
alone shall be responsible for his acts and defaults, loss or misconduct and
liable on any contract or engagement made of entered into by him and for his
remuneration and the Lender shall not incur any liability or responsibility
therefor by reason of its making of consenting to his appointment as such
Receiver.
(V) All the said goods and all sale
realisations and insurance proceeds thereof and all documents under this
security shall always be kept distinguishable and held
as the exclusive property of the Lender
specifically appropriated to this security and he dealt with only under the
directions of the Lender and the Borrower shall not create any charge,
mortgage, lien or other encumbrance upon or over the same or any part thereof
except in favour of the Lender nor suffer any such charge, mortgage, lien or
other encumbrance or any attachment or distress to affect the same or any part
thereof nor do or allow anything that may prejudice this security and the
Lender shall be at liberty to incur all costs and expenses as may be necessary
to preserve this security and to maintain the same undiminished and claim
reimbursement thereof as mentioned in sub-clause (i) hereof provided that
except to the extent specifically permitted by the Lender, the Borrower shall
not sell all or any of the said goods. The Borrower shall on any and every such
sale pay to the Lender, if so required by it, the net proceeds of the sale or
disposal in satisfaction so far as the same shall extend, of the monies, due
and payable by the Borrower to the Lender provided that the Borrower may
without payment to the Lender, if the Lender so agrees, replace the outmoded
equipment by equipment of equivalent or greater value.
(vi)The Borrower shall, whenever required by
the Lender give full particulars to the Lender of all the assets of the
Borrower and of the said goods and shall furnish and verify all statements,
reports, returns, certificates and information from time to time and as
required by the Lender and may furnish and execute all necessary documents to
give effect to this security.
(vii) This security shall be a continuing
security for repayment of the Loan together with all interest, commitment
charges, liquidated damages, premia on redemption and repayment or payment of
all other monies due to the Lender under the loan agreement and these presents
and shall not affect, impair or discharge the liability of the Borrower by
winding up (voluntary or otherwise) or by any merger or amalgamation,
reconstruction or otherwise of the Borrower with any other company or take over
of the management or nationalisation of the undertaking of the Borrower.
(viii) The Borrower hereby declares that the
said goods are and will at all time be the absolute property of the Borrower at
the sole disposal of the Borrower and subject to the charges created and/or to
be created with the specific permission of the Lender be free from any charges,
trust, pledge, lien, claim or encumbrance and as to future goods the same shall
likewise be unencumbered, absolute and disposable property of the Borrower with
full power of disposition over the same provided that the Borrower shall be
entitled at all times to sell or dispose of the Banker’s goods in the ordinary
course of business and also to hypothecate the Banker’s goods by way of first
charge in favour of its Bankers, such charge(s) in favour of the Bankers to
rank in priority over the charge hereby created.
(ix)The Borrower hereby appoints the Lender
as its attorney and authorise the lendor to act for and in the name of the
Borrower to do whatever the Borrower may be required to do under these presents
and generally to use the name of the
Borrower in the exercise of all or any of the
powers by these presents conferred on the Lender and the Borrower shall bear
the expense that may be incurred in this regard.
(x) Nothing herein shall prejudice the rights
or remedies of the Lender in respect of any present or future security,
guarantees, obligation or decree for any indebtedness or liability of the
Borrower to the Lender.
(xi)The provisions contained herein shall be
read in conjunction with the provisions of the loan agreement as amended from
time to time and to the extent of any inconsistency or repugnancy the latter
shall prevail to all intents and purposes.
SCHEDULE
(Short Particulars of movable
properties)
In witness whereof the Borrower has caused
its common seal to be affixed hereto on the day, month and year first above
written.
Witnesses Borrower
1.........................
2.......................... Lendor
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