958 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
Attested instrument being an agreement relating to hypothecation of
movable property made by way of security for repayment of money
advanced or to be advanced by way of loan or of an existing or future debt,
is chargeable at the reduced rate of Stamp Duty as on a bill of exchange
under Art. 13(b), in most of the States?See, ibid.
Unattested instrument evidencing an agreement relating to the hypoth-
ecation of movable property has been exempted from Stamp Duty in most
of the States, while in others the same is chargeable at concessional rates,
for which the relevant State Amendments may be referred to?See, South
Indian Bank Ltd. v N. Venkataraman Chettiar 1972 Ker LJ 193.
FORMS
1
Letter of Hypothecation of Tangible Property to secure Loan
In consideration of the Industrial Promotion and Investment Corporation
Limited, a Government Company within the meaning of Companies Act,
1956 having its Registered Office at?????. hereinafter called ?the
Corporation? at the request of M/s????????? a Private/Public
Limited Company incorporated and registered under the Companies Act,
1956 bearing Certificate of Incorporation No????? having its Regis-
tered Office at?????.. hereinafter called ?the Borrower? having agreed
to lend and advance a sum of Rs???? on the execution of these
presents in such instalments as the Corporation may think fit on the security
of (a) an Equitable Mortgage of the Borrower?s property with all buildings
and structures thereon and plant and fixed machinery situate at????.
and (b) this Hypothecation of all tangible moveable property, furniture,
fixtures, assets and other moveable assets described in general terms in
the Schedule hereunder (hereinafter referred to the hypothecate assets?)
as the Borrowers do hereby admit and acknowledge and to be secured by
this Hypothecation of the hypothecated assets with the Corporation and in
the manner and on the terms hereinafter contained.
IT IS HEREBY AGREED BY THE BORROWERS WITH THE CORPORATION AS
UNDER:
1. The Borrowers covenant and agree to pay the sum of Rs………. to be
hereafter advanced to the Corporation at its Regd. Office at??????
in the manner mentioned in the Letters of Sanction dated?????? and
dated…….. addressed by the Corporation to the Borrowers setting out the
terms of the said loan (hereinafter called ?the Letters of Sanction?) together
with interest as therein mentioned.Ch. 62] HYPOTHECATION?FORMS 959
2. The Borrowers hereby pledge and hypothecate with the Corporation
by way of First Charge all the plant, fixed and unfixed machinery, fixtures,
implements, fittings and other installation, furniture, vehicles, type-writers
and all other articles and thing fixed or lying on the said premises or any
godowns of the Borrower or in the hands of any person as Mercantile Agent
of the Borrowers or in the course of transit described in the general terms
in the Schedule hereto (hereinafter called ?the hypothecated assets?) which
now or hereinafter from time to time during this security shall be brought
in or be in or used about the premises utilised by the said Borrowers as
security.
(3) Balance due to the Corporation at any time or as
recorded in
the
books of account of the Corporation of all moneys advanced by the
Corporation to the Borrowers and for payment of all debts and liabilities due
by the Borrowers to the Corporation thereunder. The expression ?the
Balance due to the Corporation? in this and the subsequent clause of this
Agreement shall be taken to include the balance of the moneys from time
to time due under the account of the Borrowers with the Corporation and
also all interest thereon at the rate mentioned in the letters of sanction and
the amount of all charges and expenses which the Corporation may have
paid or incurred in any way in connection with the Hypothecated asset or
the sale or disposal thereof.
3. That the Hypothecated assets shall be held as the Corporation?s
exclusive property specially appropriated to this Security and the Borrowers
will not, except with the consent in writing of the Corporation, create any
mortgage, charge lien or encumbrance thereon affecting the same or any
part thereof nor do anything which would prejudice this security.
4. The Borrowers shall permit the Corporation, its agents, servants and
technical experts from time to time and at all times to enter upon any building
or any premises where the Hypothecated assets or any spares or
equipment thereof may be lying and to view, inspect and value the same
and take inventories thereof to ensure the efficient working of the Hypoth-
ecated assets and to render to the Corporation and to their servants all
facilities as may be required for any of the purposes aforesaid. The
Borrowers shall carry out all the suggestions and directions that may be
given by the Corporation in the behalf and shall bear and pay all fees
expenses that may be incurred by the Corporation in connection with such
inspection valuation and technical consultation and the carrying out of all
such suggestions and directions and all such fees and expenses together
with interest thereon at the rate of interest hereinafter specified shall be a
charge on the Hypothecated assets for due payment of all the dues of the
Corporation.
5. The Borrowers will purchase machinery as per the scheme approved
by the Corporation and from suppliers to be approved by the Corporation
in writing.960 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
6. The Borrowers shall pay the rates, taxes, outgoings and other charges
payable to any authority for the maintenance and upkeep of the Hypoth-
ecated assets or the place where it is stored and shall keep the same free
from any distress.
7. (i) The Borrowers shall at all times during the continuance of this
security and froth time to time insure the Hypothecated assets and keep
in insured against loss or damage by fire, riot, civil commotions, strikes
comprehensive or any other risks as may at any time or from time to time
be required by the Corporation or by law in the joint names of the
Corporation and the Borrower with insurance Company/Companies pre-
viously determined in writing by the Corporation to the extent of the full
market value thereof and punctually pay the premium due for such
insurance and that the cover note(s) or the insurance Policy/Policies
Certificate(s) shall be deposited by the Borrowers with the Corporation may
be deemed necessary by the Corporation in its absolute discretion and
debit the premium and other charges to the account maintained by the
Corporation.
(ii) In the event of loss, destruction by fire or otherwise or damage to the
Hypothecated assets or any of them or any part thereof the Corporation
shall be entitled to recover and receive all moneys payable in respect of
the insurance. In the event of the Corporation not receiving the amount
payable in respect of the insurance either wholly or partly for any reason
whatsoever the Borrowers shall be bound to pay forthwith the balance due
to the Corporation on demand.
(iii) All sums of money recovered or received under the last preceding
sub-clause may at the option of the Corporation be applied towards the
liquidation and satisfaction of the balance due to the Corporation and if any
surplus shall remain in the hands of the Corporation after such application
thereof as aforesaid such surplus shall remain at the disposal of the
Borrowers but if the sum or sums of money realised from the insurance be
sufficient to cover the balance due to the Corporation as aforesaid, the
Borrowers agree forthwith to repay to the Corporation to deficiency on
demand.
(iv) The Corporation shall be entitled to adjust, settle, compromise or
refer to arbitration any dispute between the Insurance Company/Compa-
nies and the Borrowers arising under or in connection with the Insurance
Policy/Policies and such adjustment, settlement, compromise and any
award made on such arbitration shall be valid and binding on the Borrowers.
(v) The Borrowers shall not at any time raise any question that a larger
sum might or ought to have been received under such settlement,
compromise or award as the case may be entitled to dispute its liability for
the balance remaining due to the Corporation as the same shall be valid
and binding on the Borrowers.Ch. 62] HYPOTHECATION?FORMS 961
8. That Borrowers shall make and furnish to the Corporation all
statements and returns of the cost and market value of the Hypothecated
assets and produce such evidence in support thereof as the Corporation
may from time to time require and shall maintain in favour of the Corporation
a margin of at least???.. (Per cent) of the written down value. The said
margin shall be calculated on the cost price or open market value of the
Hypothecated asset as fixed by the Corporation from time to time and shall
be maintained by the Borrowers by such payment by the Borrowers
immediately on the market value for the time being of the Hypothecated
assets becoming less than the aggregate of the balance due to the
Corporation plus amount of the margin as calculated above. In the event
of default in repayment of principal on the amount of default for the defaulted
period. The interest will be calculated with half yearly, rest on the last days
of June and December and shall become payable within six days in the next
succeeding month.
In the event of default in payment of interest on the due dates compound
interest at the rate of 2% over and above the normal rate shall be payable
on the amount of interest due and not paid for the period of default. Further
the Company undertake to pay the revised rate of interest as and when the
rate of interest shall be revised upward by the corporation from time to time
during the subsistence of the loan.
9. You/Company shall pay interest@???? p. a., subject to such
variation in the rate of interest as may be decided upon by the Corporation
and communicated from time to time during the subsistence of the loan.
You shall also pay penal interest @ 2% p.a.
10. That on demand by the Corporation the Borrowers shall pay to
Corporation the Balance due to the Corporation at the foot of the account
together with all further charges and expenses (if any) to the date of
payment provided that nothing herein contained shall be deemed to prevent
the Corporation from demanding payment of the interest for the time being
due at the above mentioned rate without at the same time demanding
payment of the balance due to the Corporation exclusive of such interest.
Provided further that all interest which shall for the time being accrue due
on the said principal sum or any part thereof and which shall for the time
being remain unpaid and all other moneys which become payable here-
under shall in case the same be not paid on the days on which become
due carry interest at the same rate aforesaid computed from the respective
time of such due dates upon the taking of compound interest with rests,
taken or made monthly on the days herein above provided for payment of
interest and all such compound interest shall be charged on the Hypoth-
ecated assets provided that this provision shall not be deemed to authorise
the Borrowers to allow any interest or other moneys as hereunder written
to fall in arrears unless permitted so to do by the Corporation and this
provision shall also not be deemed to authorise the Borrowers not to pay
G : CDD (Vol. 7) ? 61962 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
interest every 6 months and not to pay such other moneys as aforesaid or
the right of the Corporation to take any legal proceedings or other action
under these present provided that the Borrowers shall have the option to
repay in whole or in part any of the instalments of principal amount
hereunder written before their respective due dates.
11. The Corporation and their officers and agents shall be entitled in
default of payment of the moneys and/or instalments due to the Corporation
or in case of any contingency or emergency arising which in the opinion
of the Corporation would make it necessary for the Corporation to take
possession of the Hypothecated assets to enter upon premises where the
Hypothecated assets shall be living and to break upon outer doors and to
take possession or recover and receive the same and the Corporation shall
be entitled to appoint any officer or officers of the Corporation as receivers
of the Hypothecated assets with power to do all things as fully and
effectually as the Borrowers could do and/or sell together or in loss either
by public auction or private contract or otherwise dispose of or deal with
all or any part of the Hypothecated assets with liberty to buy in at any sale
by auction and to remind any contract for sale without being answerable
for any loss or diminution in price and without being bound to exercise any
of such power of being liable for any loss in exercise of such power to give
effectual receipts and discharges for the purchase money and to do all other
acts and things for completing the sale as the Corporation shall think proper
and to apply the net sale proceeds of such sales in or towards liquidation
of the balance due to the Corporation and the Borrowers hereby agree to
accept the Corporation?s statement of realisation and to pay any shortfall
or deficiency therein show PROVIDED HOWEVER the Corporation shall be
entitled to charge and retain as part of the costs, charges and expenses
incurred in connection herein such commission at the Corporation shall at
its sole discretion fix and shall not be liable to account for the same to the
Borrowers. Such commission shall be in addition to any brokerage or
outgoing payable in respect of such sale. If the sale proceeds are not
sufficient to pay the amount of such commission the Borrowers shall pay
the same forthwith to the Corporation on demand.
12. That if the sum realised by such sale be insufficient to cover the
balance then due to the Corporation, the Corporation shall be at liberty to
sue the Borrowers for the balance thereof and nothing herein contained
shall be deemed to negative quality or otherwise prejudice the right of the
Corporation to recover from the Borrowers notwithstanding that all or any
of the said Hypothecated assets or any part thereof not being realised.
13. That if the Corporation shall take possession of the Hypothecated
assets whether under clause 10 thereof or otherwise howsoever or shall
appoint a Receiver thereof neither the Corporation nor the Receiver shall
be responsible, notwithstanding anything to the contrary in Section 152 of
the Indian Contract Act, for any loss or deterioration or damage to theCh. 62] HYPOTHECATION?FORMS 963
Hypothecated assets whether by theft, fire, rain, flood, earthquake, lighting
or any other case whatsoever.
14. Nothing herein contained shall prejudice or affect any general or
special lien to which the Corporation shall by law or otherwise be entitled
to operate to prejudice its and remedies in respect of any present or future
security, guarantee obligation for any indebtedness or liability of the
Borrowers to the Corporation.
15. The Borrowers agree accept as conclusive proof of the correctness
of any sum claimed to be due, from them to the Corporation under the
agreement, a statement of account made out from the books of the
Corporation and signed by the Account/and/or other duly authorised
officers of the Corporation without the production of any other voucher,
document or paper.
16. The Borrowers hereby declare that all hypothecation assets are the
absolute property of the Borrowers at sole disposal of the Borrowers and
free from any prior charge or encumbrance and that the Borrowers have
not done or knowingly suffered or been party or privy to anything whereby
are in anywise prevented from hypothecating the said assets in manner
aforesaid and that the Borrowers will do and execute at their costs all such
acts things for further and more particularly assuring the Hypothecated
asset to the Corporation as shall be required by Corporation.
17. That the Borrowers shall keep proper books of accounts of their
business and shall have them at all time duly posted and shall permit the
Corporation or any person appointed for that purpose by it to examine such
books all responsible times and make such copies of or extracts therefrom
as the Corporation may think fit. The Borrowers shall also have their
accounts audited at least once a year by a duly qualified auditor and shall
submit a copy of the audited accounts to the Corporation within six months
from the closing of each yearly account.
18. In case the Borrowers shall not utilise the Hypothecated asset for
the purpose for which the loan is granted in terms of the Letters of Sanction
such a default shall be treated as a breach of terms and conditions hereof.
19. The Borrowers shall furnish and verify all statements, reports,
returns, certificates and information from time to time as required by the
Corporation and give and execute any necessary documents required to
give effect to this security. The Borrowers shall also give all information and
assistance and furnish all such reports as may be required by the
Corporation or any person appointed by it in relation to the business of the
Borrowers or their accounting and other arrangement or regarding the loan
advanced to Borrowers and the use made of such loan and the Corporation
shall without any question or objection by the Borrowers be entitled to
furnish to the Industrial Development Bank of India all such information and
reports as may have been obtained by the Corporation either from the964 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
Borrowers or otherwise howsoever. It is however hereby provided, agreed
and declared that the Borrowers shall if necessary execute a fresh and
proper Letter of Hypothecation the said Hypothecated asset in favour of the
Industrial Development Bank of India on the analogous terms and condi-
tions in these presents contained, at the costs of the Borrowers all such
acts, deeds and things as the Corporation may require for in connection
therewith.
20. Nothing herein contained shall operate or be deemed to prejudice
the rights or remedies of the Corporation in respect of any present or future
securities guarantees, obligations or decree for any outer indebtedness or
liability of the Borrowers to the Corporation.
21. The agreement shall operate as continuing security for the balance
due to the Corporation from tine to time and all other monies due by the
Borrowers to the Corporation as aforesaid.
22. Pending seizure by the Corporation the hypothecated assets and any
documents any money received by the Borrowers from any insurance
company shall be held as the Corporation?s exclusive property specifically
appropriated to this security.
23. The Borrowers hereby covenant with the Corporation as follows:
(a) That the Borrowers have good right to hypothecate and charge the
hypothecated asset by way of first charge as aforesaid and declare
that the same is and shall be free from. any other claim either by
way of mortgage, lien, pledge, charge, hypothecation or otherwise
and as to future machinery the same shall be the absolute and
unencumbered property of the Borrowers with full power of
disposition.
(b) That during the subsistence of these presents of Borrowers will not
create without the Corporation?s prior written consent any other
term debt nor any mortgage, pledge, hypothecation, charge, lien
or encumbrance in respect of hypothecated assets or any of them
or any part thereof in and manner whatsoever (whether by way of
specific mortgage or charge or floating charge or otherwise) in
favour of any person, firm or company other than the Corporation
or otherwise deal with the hypothecated asset or any part thereof
except in the regular course of business and only until notice is
received from the Corporation of their intention to enforce. This
agreement by realization of the security herein and will not permit
or suffer to be done any act, deed matter, thing, which may
adversely affect of in any way prejudice the security and/or the
rights of the Corporation herein.
(c) That all the agreements, terms and conditions contained in the
Corporation?s Letters of Sanction, dated???.. and dated???..
addressed to the Borrowers and not specially set out herein shallCh. 62] HYPOTHECATION?FORMS 965
deemed to be a part of these presents as if they were incorporated
and formed part of these presents and shall be duly paid, observed
and performed by the Borrowers.
(d) To utilise the said sum of Rs????? for the purpose set out in
the Letters of Sanction and for no other purposes.
(e) To bring in the balance amount as may be required to complete
the scheme as envisaged.
(f) Not to give or let on hire and/or utilise the hypothecated assets
during the currency of these presents for illegal purposes.
(g) To maintain the hypothecated assets in good working condition.
(h) To execute on demand by the Corporation such further documents
as may be required by the Corporation to vest the hypothecated
assets in the Corporation to render the same readily realisable by
the Corporation at any time.
(i) The Borrowers shall not make any alteration in or the hypothecated
assets in the ordinary course of repairs without permission of the
Corporation and shall not remove or change or allow to be
removed.
(j) The Borrowers shall keep the Corporation notified of the address
where the hypothecated assets are from time to time kept and
every change of the said address shall be intimated to the
Corporation within 24 hours (exclusive of Sundays and holidays)
before the same is made.
(k) The Borrowers shall notify the Corporation of any accident, loss
or damage to the hypothecated assets or any accident, loss or
damage involving a third party as soon as it shall occur.
(l) The Borrowers shall alone be responsible for any breaches of law
committed by them as their employees and for all claims made by
third parties in respect of loss or damage caused by the hypoth-
ecated assets and shall keep the Corporation indemnified against
all claims and demands made against it in respect of any such
breach of loss or damage.
24. The Borrowers shall indemnify absolutely unconditionally and fully
and at all times indemnified saved defended and harmless the Corporation
against all claims demands rights actions proceedings of whatsoever kind
or nature made taken filed by any person or party and against all and any
losses damages costs charges expenses and liability of any kind or nature
whatsoever which the Corporation may suffer sustain incur or be exposed
to in respect of or relating to the hypothecated assets.
25. The Borrowers hereby agree to pay on demand all costs, charges
and expenses (the legal costs between attorney and client) that may be
incurred or suffered by the Corporation in the negotiations executions of966 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
carrying into effect or in enforcing of this Agreement in relation to the
exercise of any power or sale or any other power herein contained or in
relation to any deed act matter or thing arising out of this Agreement or of
and incidental thereto together with interest thereon at the rate of per
annum.
26. Any notice to be given by the Corporation to Borrowers shall be
deemed to have been duly given if despatched by post or manual delivery
addressed to the Borrowers as his / their office address even though
returned undelivered on account of refusal by Borrowers and every such
notice shall be deemed to have been received by the Borrowers on the
expiration of the normal period occupied in transit by post from the time at
which it was put into the post.
27. Notwithstanding anything contained herein the Borrowers hereby
covenant that in accordance with the provisions of Section 29 of the State
Financial Corporations Act (hereinafter called ?the Act?) the Corporation
may by notice require the Borrowers forthwith to discharge in full their
liability to the Corporation in the following events merely:
1. (a) If it appears to the Board of Directors of the Corporation that false
or misleading information in any material particular was given in
the application made by the Borrowers to the Corporation for the
loan hereby secured, or
(b) If the Borrowers shall make any default in any of the terms and
conditions set out hereinabove.
(c) If there is any responsible apprehension that the Borrowers are
unable to pay debts or proceedings are taken for his/ their or any
of his/their adjudication as insolvent, or
(d) If for any reason it is necessary in the opinion of the Board of
Directors of the Corporation to protect the interest of
the??????
2. Over and above the other rights and power of the Corporation
conferred on it by the said Section 30 of the Act and without prejudice to
such rights and powers, the Corporation shall have the right by notice in
writing to require the Borrowers forthwith to discharge in full his/their
liabilities to the Corporation hereunder in the following cases and in any
such case the whole of the amount then remaining payable to the
Corporation shall at the opinion of the Corporation become payable to the
Corporation as if the time for payment thereof had expired and the
Corporation shall be entitled to exercise all its rights and remedies
hereunder namely:
(a) If default shall be committed by the Borrowers or any of them in
the observance or performance of and of the covenants conditions
or provisions of These presents, or of the Letters of Sanction, orCh. 62] HYPOTHECATION?FORMS 967
(b) if execution or distress is levied against the whole or any part of
the hypothecated assets, or
(c) if a Receiver is appointed or the hypothecated assets or any part
thereof, or
(d) if the Borrowers shall enter into any arrangement or composition
with their creditors commit any act or default which shall render
them liable to be adjudicated insolvent, or
(e) if the Borrowers cease or threaten to cease to carry on their
business, or
(f) if any circumstances shall occur which shall prejudice or imperil
or depreciate or if likely to prejudice or impair or imperil or
depreciate the security of the Corporation, or
(g) if any circumstances or event shall occur which would or is in the
opinion of the Corporation likely to be prejudicial or adversely affect
in any manner the capacity of the Borrowers to repay the loan to
the Corporation:
PROVIDED FURTHER that the decision of the Corporation as to whether
any of the aforesaid events or circumstances has occurred shall be final,
conclusive and binding on the Borrowers and thus entitling the Corporation
to file a petition in the appropriate Court for adequate relief under Section
31 of the Act or to take action under Section 29 of the Act.
IN WITNESS WHEREOF the said Borrowers has/have set his/their hands
and seals at the…………………… day of………………… 200….The common seal
of the Borrowers has been hereto affixed in the manner hereinafter
mentioned the day of?????.. 200?
THE SCHEDULE ABOVE OFFERED TO:
All, tangible movable property, plant fixed or otherwise machinery
fixtures, fittings, electric and other installation, and all other articles fixed
lying on the premises at or in the godowns of the Borrowers or in the custody
of any person who are Mercantile Agents of the Borrowers or in the course
of transit including all movable assets which may hereinafter be brought
stored or be laying or upon the said premises of the Borrowers which
includes the following machineries.
BORROWER
2
Agreement for hypothecation of stocks, goods and
movables to secure present and future debts
The . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank (hereinafter called ?the Bank?)968 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
having at the request of . . . . . . . . . . . . . . . . . . . . . . . . . . (hereinafter called
?the Borrower?) agreed to grant accommodation to the Borrower by way of
Overdraft Cash Credit Account or otherwise under a drawing limit of Rs.
. . . . . . . . . . . on the security hereof it is agreed as follows :
1. That the whole of the Borrower?s stocks of goods, produce and
merchandise mentioned in the Schedule hereto, whether raw or in process
of manufacture and all products, goods and movable property of any kind
which now or hereafter, from time to time, during this security shall be
brought into, stored or be in or about the Borrower?s premises or godowns
at No. . . . . . . . . . . . . . or wherever else the same may be (including any
goods in course of transit or delivery) with the benefit of all rights relating
thereto, on sale thereof or otherwise shall be hypothecated to the bank, and
its assigns by way of first charge as security for the payment and discharge
of all present and future indebtedness and liabilities of the Borrower to the
Bank of any kind, in any manner, whether solely or jointly, primary or
collateral, secured or accruing, with all relative interest, charges, costs (as
between attorney and client) and expenses.
2. That interest at the rate of . . . . . . . . . per cent per annum above the
Reserve Bank of India . . . .. . . . . . . . Rate . . . . . . . from time to time with
a minimum rate of . . . . . . per cent per annum shall be calculated on the
daily balance of accounts and charged in accordance with the practice of
the Bank with . . . . . . rests.
3. The Borrower also agrees that notwithstanding anything hereinbefore
contained the Bank shall not be bound to allow or to continue the Borrower?s
overdraft in current or loan or cash credit account or to grant to the Borrower
any financial or other facilities or accommodation to any extent or for any
time further than the Bank shall in its absolute discretion see fit to do.
4. That the Borrower will at all times maintain a sufficient quantity and
market value of goods and property aforesaid to provide the margin of
security required by the Bank and will forthwith, whenever necessary,
provided further goods (approved by the Bank) to restore such margin or
pay the Bank the equivalent in cash.
5. That the said goods and property shall be kept at the Borrower?s risk
and expense in good condition and fully insured against loss or damage
as may be required by the Bank and the Insurance Policies shall be
transferred and delivered to the Bank or be made out in joint names of the
Borrower and the Bank, if the Bank so desires.
6. That the Bank, its Agents and Nominees shall be entitled at all times,
as if absolute owners and without notice to the Borrower but at the
Borrower?s risk and expense and if so required, as attorney for and in the
name of the Borrower, to enter place any where the said goods may be and
inspect, value, insure, superintend disposal of and/or take charge and/or
possession of (so that they become pledged) all or any part of the saidCh. 62] HYPOTHECATION?FORMS 969
goods and property and on any default of the Borrower in payment of any
money hereby secured or the performance of the obligation to the Bank
hereunder or the occurrence of any circumstances in the opinion of the
Bank endangering this security, to recover, receive, appoint receivers or
remove and/or sell by public auction or private contract or otherwise dispose
of or deal with all or any part of the said goods and property and to enforce,
realise, settle, compromise and deal with any rights, aforesaid without being
bound to exercise any of these powers or liable for any losses in the exercise
thereof, and without prejudice to the Bank?s rights and remedies or suit or
otherwise and notwithstanding there may be any pending suit or other
proceeding, the Borrower undertaking to transfer and deliver to the Bank
all relative contracts, securities, bazar chits bills, notes, hundis and
documents and agreeing to accept the Bank?s accounts of sales and
realisation and to pay any short fall or deficiency thereby shown PROVIDED
that subject to these powers of the Bank, the Borrower may, in the ordinary
course of business, sell and realise any such goods or property provided
that the margin or security required by the Bank is fully maintained and on
the express terms of payment or delivery to the Bank of the proceeds or
documents therefor immediately on receipt thereof.
7. That all the goods property and all sales realisations and insurance
proceeds thereof and all documents under this security shall be kept
distinguishable and held as the Bank?s exclusive property specifically
appropriated to this security and the Borrower will not create or suffer any
mortgage, charge, lien or encumbrance affecting the same or any part
thereof nor do allow anything that may prejudice this security.
8. That the Borrower will furnish and verify all statements, reports,
returns, certificates and information, execute all documents and do all
things which the Bank may require to give effect hereto and the Borrower
authorises the Bank, its agents and nominees as attorney for and in the
name of the Borrower to do whatever the Borrower may be required to do
hereunder.
9. That this security is to continue notwithstanding the existence of a
credit balance on any account at any time or any partial payment or any
fluctuation of accounts.
10. That nothing herein shall operate to prejudice the Bank?s rights or
remedies in respect of any present or future security, guarantee, obligation
or decree for any indebtedness or liability of the Borrower to the Bank.
11. That it is declared that all present goods and property aforesaid are the
absolute property of the Borrower at the sole disposal of the Borrower and free
from any prior charge or encumbrance and that all future goods and property
hereunder shall be likewise, the unencumbered, disposable property of the
Borrower.
12. That if the Borrower be more than one individuals all shall be bound970 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
hereby jointly and severally and if the Borrower shall be a Firm, such Firm
and all members, from time to time, thereof shall be bound hereby jointly
and severally notwithstanding any changes in the constitution or style
thereof and whether the Firm shall consist of or be reduced to one
individual.
13. That as and whenever this security shall be held by the Bank for the
Borrower?s liability for any third party?s obligations to the Bank, the Bank
shall be free without reference to the Borrower to deal with the principal
debtor and any securities, obligations or decrees and generally to act as
if the Borrower were primarily liable and the Borrower hereby waives all
suretyship rights in relation thereto.
14. Any notice by way of request, demand or otherwise hereunder may
be given by the Bank to the Borrower or any of the individuals constituting
the Borrower personally or may be left at the last known place of business
or residence in India of the Borrower or any of such individuals and if sent
by post it shall be deemed to have been given at the time when it would
be delivered in due course of post and in proving such notice when given
by post it shall be sufficient to prove that the envelope containing the notice
was posted and certificate signed by an official of the Bank that the envelope
was so posted shall be conclusive.
SCHEDULE
Dated at . . . . . . the . . . . 20. . . .
[Signature]
3
Deed of hypothecation of book debts and assets of
business to secure advance
The . . . . . . . . . . . Bank . . . . . . . . . (hereinafter called ?The Bank?) having
at the request of . . . . . . . . . . . . . . . (hereinafter called ?The Borrower?) agreed
to grant accommodation and facilities to the Borrower by the way of
overdraft loan Cash Credit Account or otherwise under a drawing limit of
Rupees . . . . . . . on the Security hereof it is agreed as follows :
1. That the Borrower?s book debts outstandings moneys receivable
claims and bills and other assets as are set out in the Schedule hereunder
are hereby, and all present and future book debts outstanding moneys
receivable claims and bills, and other assets the documents relating to
which shall be handed to or come into the possession of the Bank, shall
be hypothecated and charged to the Bank and its assigns by the way of
first charge Security for?Ch. 62] HYPOTHECATION?FORMS 971
(a) The payment to the Bank on demand of all moneys which now are,
or which at any time or times hereafter may become due and owing
from the Borrower to the Bank, whether alone or in partnership with
any person, firm or company by way of overdraft in current account
or by way of loan or by way of cash credit with the Bank (including
moneys owing upon any cheques, promissory notes or bills of
exchange drawn, accepted or endorsed by the borrower or which
shall have been paid for credit or the borrower either solely or jointly
with another or others).
(b) Interest on the money aforesaid from the respective dates from
which the same shall be chargeable.
(c) All costs (as between Attorney and Client) charges and expenses,
if any, which the Bank may be entitled to add to its security.
(d) And for the payment and discharge of all the Borrower?s present
and future indebtedness and liabilities to the Bank of any kind in
any manner whether solely or jointly primary or collateral accrued
or accruing with all relative interest, charges, costs (as between
attorney and client) and expenses payable to or incurred by the
Bank in relation thereto.
2. That interest at the rate of . . . . . . . . . per cent annum . . . . . . . the
Reserve Bank of India . . . . . . . . rate from time to time . . . . . . . shall be calculated
on the daily balance of accounts and charged in accordance with the
practice of the Bank with monthly rests.
3. That on any default of the Borrower in payment of any money hereby
secured or the performance of any obligation to the Bank under this or any
other security or the occurrence of any circumstances in the opinion of the
Bank endangering this or any other security the Bank shall be entitled at
the Borrower?s risk and expense as Attorney for and in the name of the
Borrowers or otherwise to take possession and/or appoint receiver of any
debts or assets under this security give notices and demands to the
Borrower and third parties liable therefor sue for recovery receipts and give
receipts for the same and sell or realise by public auction or private contract
or otherwise dispose of all or any part or such debts or assets and enforce
settle compromise submit to arbitration or deal in any manner with any debts
or claims under this security without being bound to exercise any of these
powers or liable for any loss in the exercise thereof the Borrower under-
taking to transfer and deliver to the Bank all relative documents and papers
and agreeing to accept the Bank?s accounts of receipt from realisations
under this security and to pay shortfall or deficiency thereby shown.
Provided also that subject to these powers of the Bank, the Borrowers may
with approval of the Bank deal with the said debts and assets in due course
of business on the express understanding that the same and all proceeds
thereof and documents therefor are always kept distinguishable and held972 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
as the Bank?s exclusive property specifically appropriated to this security
to be dealt with only under the direction of the Bank.
4. That nothing herein shall prejudice the Bank?s rights or remedies in
respect of any present or future security guarantee obligation or decree for
any indebtedness or liability of the Borrower to the Bank.
5. All account sales rendered to the Borrower by the Bank shall
conclusive evidence both in and out of court of matters therein stated.
6. The Borrower agrees to execute on demand by the Bank such further
documents as may be required by the Bank to vest the said securities or
any of them in the Bank and to render the same readily realisable or
transferable by the Bank at any time.
7. The Borrower also agrees that notwithstanding anything hereinbefore
contained the Bank shall not be bound to allow or to continue the Borrower?s
overdraft or current or loan or cash credit account or to grant to the Borrower
any financial or other facilities or accommodation to any extent or for any
time further than the Bank shall in its absolute discretion see fit to do but
in no circumstances to an amount at any time exceeding with interest
thereon the sum of Rupees . . . . . . . .
8. The Borrower hereby declares that the securities shall always be the
Borrower?s absolute property at the Borrower?s sole disposal and free from
any prior charge or encumbrance and that all future debts and assets
hereunder shall be likewise the unencumbered absolute and disposable
property of the Borrower and declares that nothing herein shall operate to
prejudice the Bank?s rights or remedies in respect of any present or future
security guarantee obligation or decree for any indebtedness or liability of
the Borrower to the Bank.
9. The Security hereby constituted is to operate as a continuing security
for all sums due or owing to the Bank at any time and in the event of the
Borrower?s current account loan or cash credit or any other account with
the Bank running to a credit balance at any time the Bank?s security
hereunder shall still continue and the Borrower shall still be liable for all
sums due or contingently due on any account whatsoever.
10. That if the Borrower be more than one individual all shall be bound
hereby jointly and severally and if the Borrower shall be a Firm such Firm
and all members from time to time thereof shall be bound thereby
notwithstanding any changes in the constitution or style thereof and
whether the Firm shall consist of or be reduced to one individual.
11. That if and whenever this security shall be held by the Bank for the
Borrower?s liability for any third party?s obligations to the Bank, the bank
shall be free without reference to the Borrower to deal with the principal
debtor and any securities obligations or decrees and generally to act as
if the Borrower were primarily liable and the Borrower hereby waives all
suretyship rights in relation thereto.Ch. 62] HYPOTHECATION?FORMS 973
12. Any notice by way of request demand or otherwise hereunder may
be given by the Bank to the Borrower or any of the individuals constituting
the Borrower personally or may be left at the last known place of business
residence in India of the Borrower or any of such individuals or may be sent
by post to the Borrower or any of such individuals addressed as aforesaid
and if sent by post it shall be deemed to have been given at the time when
it would be delivered in due course of post and in proving such notice when
given by post it shall be sufficient to prove that the envelope containing the
notice was posted and a certificate signed by an official of the Bank that
the envelope was so posted shall conclusive.
SCHEDULE
Dated . . . . .
Signature
4
Deed of hypothecation of tea crop and
charge on immovable property
THIS INDENTURE made etc. BETWEEN A. etc. (Borrower) of the ONE PART
AND B. etc. (Lender) of the OTHER PART.
WHEREAS the Borrower is the sole and absolute owner of the messuages
and hereditaments known as . . . . . . . Tea Estate mentioned and described
in the schedule hereunder written and is growing and manufacturing tea
therein AND WHERAS the Lender has agreed to lend and advance to the
Borrower the sum of Rs. . . . . . on and subject to the stipulations and
conditions hereinafter contained and secured in manner hereinafter ap-
pearing.
NOW THIS INDENTURE WITNESSETH that in pursuance of the said
agreement and in consideration of the sum of Rs. . . . . . . by the Lender paid
to the Borrower on or before the execution of these presents (receipt clause)
he the Borrower hereby charges and hypothecates the entire tea crop
already grown and manufactured or in course of manufacture or to be grown
and manufactured at the said . . . . . . . Tea Estate during the year . . . . . .
as security for the due payment of the said sum of Rs. . . . . . . . . . . . . and
the commission, interests, costs, charges and expenses hereinafter men-
tioned subject to the condition that such charge and hypothecation shall
be void and of no effect if the said sum of Rs. . . . . . and the said commission
and all interests, costs, charges and expenses hereinafter mentioned are
paid and/or satisfied pursuant to the covenants and conditions hereinafter
contained.974 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
AND IT IS HEREBY AGREED AND DECLARED
1. That the Borrower shall and will pay to the Lender at . . . . . . the said
sum of Rs. . . . . . . and also the commission hereinafter mentioned with
interest thereon at the rate of . . . . . . . . per cent per annum payable half
yearly on the 30th day of June and 31st day of December with half yearly
rests in the account;
2. AND that the Borrower shall henceforth hold all tea already grown
and manufactured or in course of manufacture or to be grown and
manufactured at the said . . . . . . . Tea Estate during the year . . . . . . . as
trustee for the sole use and benefit of the Lender.
3. AND that the Borrower shall and will consign the said tea to the Lender
at . . . . . directly the same is manufacture and at the same time send to the
lender the Railway Receipts in respect thereof and also send to the Lender
every week a report of all tea manufactured at the said messuages and
hereditaments and of all tea so consigned to the Lender as aforesaid;
4. AND that the Lender shall be entitled to sell the tea so consigned as
aforesaid through brokers nominated by the Borrower with the prior
approval of the Lender on such brokers agreeing to carry out the orders
and directions of the Lender and undertaking to pay to the Lender the sale
proceeds of the tea sold through them and if such brokers shall fail or
neglect to carry out the orders and directions of the Lender then in such
manner as the Lender shall in his absolute discretion think fit and proper
in which case the Lender shall be entitled to realise the sale proceeds from
the purchaser or any other broker or brokers and the same when realised
shall be placed to the credit of the Borrower PROVIDED HOWEVER that the
Lender shall not be held responsible for any loss or damage that may be
sustained by reason of the failure, neglect or default of any brokers,
purchasers or other persons connected with or employed for the sale of the
tea so consigned as aforesaid;
5. AND that should the Borrower fail or neglect to grow and manufacture
tea at the said Tea Estate or to consign to the Lender the tea directly it is
manufactured there and becomes fit for sale, or should the brokers to be
nominated by the Borrower as aforesaid shall make default in performing
and observing any order or direction of the Lender or any of the conditions
of their employment, or should the Lender for any reason consider it
necessary to take actual possession of the said tea crop in order to protect
the Lender?s interest in the same, then the Lender and any person or
persons authorised by him in that behalf may enter upon the said . . . . . .
Tea Estate and take possession of the tea produced and manufactured or
in course of manufacture therein and also the tea crop hereby hypothecated
and may also stop the tea in transit or otherwise recover the same from any
person or persons in possession thereof and may sell the same either by
public auction or by private treaty;Ch. 62] HYPOTHECATION?FORMS 975
6. AND that the Borrower shall and will pay to the Lender a commission
of . . . . . . . per cent on the gross sale proceeds of all tea sold and also all
costs, charges and expenses as between attorney and client that may be
incurred by the Lender in procuring or enforcing the due fulfilment of the
stipulations and conditions herein.
7. AND that after deducting the commission and costs aforesaid from the
said sale proceeds the balance thereof shall be credited towards reduction
of the said sum of Rs. . . . . . and shall carry interest at the rate of . . . . . .
up to the date of payment;
8. AND that the account shall be adjusted and closed on the 31st day
of December . . . . . . . and all sums which may be found due thereon from
the Borrower to the Lender shall be payable with interest thereon as
hereinbefore provided and shall form a charge on the said . . . . . . Tea Estate;
9. AND lastly that the Lender shall be at liberty during the subsistence
of these presents to inspect the said . . . . . . . Tea Estate and the growing
and manufacturing of tea therein at the cost and expense of the Borrower
on not more than two occasions.
THE SCHEDULE ABOVE REFERRED TO
(Describe the property)
IN WITNESS etc.
5
Supplemental deed of hypothecation of stocks and movables
of borrower to secure further advance without
additional security
THIS AGREEMENT made this . . . . . . . . . . . day of . . . . ., 20 . . . . BETWEEN
. . . . . . . . . . . (hereinafter called ?the Borrower?) which expression shall unless
excluded by or repugnant to the context be deemed to include its legal heirs/
successors, executors, administrators, representatives and assigns of the
ONE PART AND . . . . . . . . . . BANK, a body corporate constituted under the
. . . . . . Act, and having its Head Office at . . . . . and a Branch Office inter
alia, at . . . . . . (hereinafter called ?the Bank?) which expression shall unless
excluded by or repugnant to the context be deemed to include its
successors and assigns of the OTHER PART:
WHEREAS by a deed of hypothecation made on . . . . . . . . . . day of . . .
. . . 20 .. . . . . . by the borrower in favour of the bank (hereinafter called ?the
Principal Deed of Hypothecation?) the borrower in consideration of the bank
having granted and/or agreed to grant to the borrower accommodation by
way of cash credit facilities to the extent of Rs. . . . . . . . . . . . hypothecated
to and in favour of the bank all the present and future stocks and movable976 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
of the borrower as mentioned in the Principal Deed of Hypothecation
(hereinafter called ?Hypothecated Goods?) as security for the due repay-
ment by the borrower to the bank of the balance for the time being due to
the bank in the said cash credit account of the borrower with the bank
inclusive of principal, interests, costs, charges and expenses.
AND WHEREAS the borrower has requested the bank to grant to the
borrower further accommodation by way of cash credit facilities by enhanc-
ing existing limit thereof from Rs. . . . . . . . . . . . . . . . to Rs. . . . . . . . . . . . .
which the borrower has agreed to do on the terms and conditions
hereinafter provided and the borrower agreeing that the hypothecated
goods shall constitute security not only for the existing limit of Rs. . . . . ..
. . . . . . . . . . but also for the enhanced limit of Rs. . . . . . . . . . . . agreed to
be granted as aforesaid with all interests, costs, charges and expenses and
other money as hereinafter mentioned.
NOW THIS DEED WITNESSES that in pursuance of the said agreement and
in consideration of the bank having granted and/or agreed to grant further
accommodation to the borrower by way of cash credit facilities by enhancing
the maximum limit thereof from Rs. . . . . . . . . . to Rs. . . . . . . . . . . the borrower
hereby agrees that this agreement shall be supplemental to the Principal
Deed of Hypothecation as recited above and the hypothecated goods
charged under the Principal Deed of Hypothecation shall constitute security
in favour of the bank by way of first charges for the said enhanced facilities
with the aggregate limit of Rs. . . . . . . . . . . . . . and for payment by the borrower
to the bank of all principal money together with interests at the rate specified
in the Principal Deed of Hypothecation or at such rate or rates as the bank
may notify to the borrower from time to time and also all costs, charges
and expenses incurred by the bank till the date of payment, for the
preservation, protection, defence or perfection of the security created by
the said Principal Deed of Hypothecation and the Principal Deed of
Hypothecation should be read and construed as if the maximum limit
mentioned therein is Rs. . . . . . . . . . . . . . in place and stead of Rs. . . . . .
. . . . . . AND THAT the words and figures ?Rupees . . . . . . . . ? wherever appearing
in the Principal Deed of Hypothecation shall be substituted by the words
and figures ?Rupees . . . . . . . . ? as if the same were originally written therein
AND THAT save as expressly modified herein all the terms and conditions
set out and provided in the Principal Deed of Hypothecation shall remain
in full force and effect.
THE SCHEDULE ABOVE REFERRED TO :
IN WITNESS WHEREOF , etc.Ch. 62] HYPOTHECATION?FORMS 977
6
Supplemental deed of hypothecation with additional secu-
rity to secure further accommodation of advance
THIS AGREEMENT made . . . . . . . this . . . . . . . day of . . . . . . ., 20. . . . .
BETWEEN . . . . . . . . . . (hereinafter called ?the Borrower?) which expression
shall unless excluded by or repugnant to the context be deemed to include
its legal heirs, successors, executors, administrators, representatives and
assigns) of the ONE PART AND . . . . . BANK, a body corporate constitute under
the . . . . . . . . Act, and having its Head Office at and a Branch Officer inter
alia, at . . . . . . . (hereinafter called ?the Bank?) which expression shall unless
excluded by or repugnant to the context be deemed to include its
successors and assigns) of the OTHER PART :
WHEREAS by a deed of hypothecation made on . . . . . . . . day of . . . . .
20. . . . by the borrower in favour of the bank (hereinafter called ?the Principal
Deed of Hypothecation?) the borrower in consideration of the bank having
granted and/or agreed to grant to the borrower accommodation by way of
cash credit facilities to the extent of Rs. . . . . . . hypothecated to and in favour
of the bank all the present and future stocks and movables of the borrower
as mentioned in the Principal Deed of Hypothecation (hereinafter called
?Hypothecated Goods?) as security for the due repayment by the borrower
to the bank of the balance for the time being due to the bank in the said
cash credit account of the borrower with the bank inclusive of principal,
interests, costs, charges and expenses.
AND WHEREAS the borrower has requested the bank to grant to the
borrower further accommodation by way of cash credit facilities by enhanc-
ing existing limit thereof from Rs. . . . . . to Rs. . . . . . . . which the bank has
agreed to do on the borrower agreeing to furnish additional security, as
hereinafter provided and further on the borrower agreeing that the hypoth-
ecated goods shall constitute security not only for existing limit of Rs. . . .
but also for the enhancing limit of Rs. . . . . . . agreed to be granted as aforesaid
with all interests, costs, charges and expenses and other money as
hereafter provided.
NOW THIS DEED WITNESSES that in pursuance of the said agreement and
in consideration of the bank having granted and/or agreed to grant further
accommodation to the borrower by way of cash credit facilities by enhancing
the maximum limit thereof from Rs. . . . . . . . . . . . . to Rs. . . . . . . . . . . . . .
. the borrower hereby agrees that this agreement shall be supplemental to
the Principal Deed of Hypothecation AND THAT the borrower hypothecates
by way of first charge in favour of the bank the goods described in the
schedule hereto which shall include all goods and movable property of any
kind belonging to the borrower which now or hereinafter from time to time
during the currency of this guarantee shall be brought or wherever else the
G : CDD (Vol. 7) ? 62978 CONVEYANCING, DRAFTING & DEEDS [Ch. 62
same may be as security for the payment by the borrower to the bank, of
the balance due to the bank at any time ultimately on the closing said cash
credit account and that the expression ?the balance due to the bank? here
shall have the same meaning as in the Principal Deed of Hypothecation
and the hypothecated goods charged under the Principal Deed of Hypoth-
ecation shall constitute security in favour of the bank by way of first charge
for such enhanced facilities with the aggregate limit of Rs. . . . . . . . . . . and
for payment by the borrower to the bank of all principal money together with
interests, at the rate specified in the Principal Deed of Hypothecation or at
such other rate or rates as the bank may notify from time to time and all
costs, charges and expenses incurred by the bank to the date of repayment
for the preservation, protection defence or perfection of the security created
by the Principal Deed of Hypothecation shall be read and construed as if
the maximum limit mentioned therein is Rs. . . . . . . in place and stead of
Rs. . . . . . AND THAT the words and figures ?Rupees . . . . . . ? Wherever appearing
in the Principal Deed of Hypothecation shall be substituted by the words
and figures ?Rupees . . . . . . ? as if the same were originally written therein
AND THAT save as expressly modified as aforesaid all the terms and
conditions set out and contained in the Principal Deed of Hypothecation
shall remain in full force and effect.
THE SCHEDULE ABOVE REFERRED TO :
IN WITHESS WHEREOF, etc.