Agreement between Government and Company for Loan given for setting up Factory by Shiva.

No. 35

Agreement between Government and Company for
Loan given for setting up Factory

THIS AGREEMENT made this . . . . . . . . . . . . . day of . . . . . . . . . one thousand nine hundred and . . . . . . . . . . . . . BETWEEN the . . . . . . . . . . a Company registered under the Indian Companies Act and having its  registered office at . . . . . . . . . . . . . (hereinafter called ‘the Company’) of the one part AND THE GOVERNOR OF . . . . . . . . . . . (hereinafter called ‘the Governor’) of the other part;

WHEREAS the Government of . . . . . . . . . . . . . (hereinafter called ‘the State Government’) has on the request of the Company agreed to grant to the Company an advance of Rupees . . . . . . . . . . . . (in words) for the purpose of setting up a . . . . . . . factory in the State of . . . . . . . . .

AND WHEREAS it is agreed that the said advance of Rs . . . . . . . . . shall be secured by a mortgage of the tangible assets including lands, buildings, plant and machinery of the Company/Director . . . . . . . . . . . . but the completion of mortgage documents cannot be immediately effected and the parties have agreed that till such time as the said security is furnished the Company shall furnish a Bank Guarantee from the . . . . . . . . . . . . . Bank through which the advance shall be made, for the repayment of the said advance;

AND WHEREAS the Memoranda of Association of the Company do not expressly include in the objects of the Company the power to carry on the business of manufacture of . . . . . . . . . . . . . but the Company has at an Extraordinary General Meeting of the shareholders held on the . . . . . . . . . . . . . day of . . . . . . . . . . . . ., 20 . . . . unanimously passed a special resolution to alter the said Memoranda by incorporating the said power in the objects of the Company;

AND WHEREAS a copy of the said special resolution has been filed in the office of the Registrar, Joint Stock Companies at . . . . . . . . . , and an application has also been made before the High Court at . . . . . . . . . . . for approving the same but the said application has not been disposed of as yet by the said High Court;

AND WHEREAS the Company has agreed that the said loan of . . . . . . . . . .  to be advanced by the State Government shall not be withdrawn by the Company from the Bank except after and upon the High Court approving the amendment as aforesaid of the Memorandum of Association;  and after the Government of India have granted a licence to the Company to set up a . . . . . . . factory in . . . . . . . . . . . . . State;

NOW THIS DEED WITNESSES as follows:

1. In consideration of the Governor agreeing to advance to the Company the amount of Rupees . . . . . . . . . . . . . . (in words), the Company hereby covenants with the Governor as follows:

(i) That the Company shall utilise the said advance for setting up a . . . . . . . industry in the State of . . . . . . . . . . . . . and for no other purpose.

(ii) That the Company shall repay the said principal amount of Rs . . . . . . . . with interest, which will start accruing from the date the money is paid by the State Government to the. . . . . . . . . Bank (hereinafter called ‘‘the Bank’’) in accordance with sub-para (iv) herein, at. . . . . . . . . . . . . . . . per cent per annum by . . . . . . . in . . . . . . . . . . . . . . . .  . . . . . . monthly equated instalments of principal and interest, the first of such repayment instalments shall be due on the first day of . . . . . . . . . . . . . at such place or places as the State Government may appoint in this behalf: PROVIDED THAT the interest accruing on the said advance till the end of . . . . . . . . . . . . . . . . . . . will be payable by the Company on . . . . . . . . . and in the event of the interest not being paid on the due date, the interest so accrued will be added to the amount of the loan, and the equated instalments will be calculated on that basis.

(iii) That if any instalment of principal or interest or both as aforesaid are not paid on the due dates, interest on the sum or sums that are in arrears shall be paid at the rate of . . . . . . . . . . per annum for so long as the arrears are not paid provided that this provision for the payment of enhanced interest shall in no way prejudice or affect the exercise by the Governor of any of the rights or remedies vested in him by law or by this deed.

(iv) That notwithstanding the stipulation regarding payment of . . . . . . . . . . .  monthly instalments as aforesaid, the Company may repay the whole amount of the loan or any portion thereof and the interest that has accrued thereon at any time before the date on which the loan or any portion thereof and the interest that has accrued thereon at any time before the date on which the loan or any instalment thereof falls due for payment.

(v) That the Company shall obtain a licence from the Government of India for establishing the proposed . . . . . . . . . industries in the State . . . . . . . . . . . . . and if the Company shall not be able to obtain such a licence, the loan together with such interest as may be due shall become repayable forthwith.

(vi) That as long as the Memorandum of Association of the Company has not been finally amended as aforesaid and until such instructions as hereinafter have been issued by the State Government, the amount to be advanced shall remain in deposit and be held by the Bank and the Company shall as soon as the said Memorandum has been altered as aforesaid furnish to the State Government a certified copy of the order of the High Court and the State Government shall instruct the Bank in writing to make payment to the Company.

(vii) That the Company shall as soon as possible, and in any case within . . . calendar months from the date of these presents, and upon terms and conditions as are herein provided or may hereafter be required by the State Government, create a mortgage on the tangible assets including lands, buildings, machinery and plant of the Company . . . . . . . . . . as may to the satisfaction of the State Government be of the value of . . . . . . . . . . and till such time as such security is furnished the Company shall furnish a bank guarantee from the Bank for the repayment of the aforesaid loan with interest thereon and for keeping the Governor harmless against any and all losses which may result from the failure of the Company to furnish adequate security.

(viii) That the tangible assets including lands, buildings, plant and machinery of the proposed . . . . . . . . . . . . . factory, as and when created, shall also be duly hypothecated to the State Government:

PROVIDED ALWAYS that upon the creation of a mortgage on the assets aforesaid of the said factory, the security mentioned in sub-para (vii) shall be reduced pro tanto.

(ix) That the Company shall at its own cost insure the buildings and machinery offered as security in clauses (vii) and (viii) above with a Company or Companies approved by the State Government for the full amount for which such buildings and machinery are hypothecated and the Company shall keep the insurance alive until the whole amount of principal and interest is fully repaid.

(x) That the assets hypothecated with the State Government will be kept free from all encumbrances and shall not be rehypothecated in favour of any other person or as security for any other loan or amount till the dues of the State Government have been paid off in full.

(xi) That if for any reason the scheme is abandoned or the proposed factory is closed after its establishment or in case of default on the part of the Company in the payment of any equated instalment on due date or in case of breach of any condition and covenant of this agreement, the entire amount of the loan outstanding on that date together with accrued interest shall become recoverable forthwith and it shall be open to the State Government to effect the recovery, in any manner it thinks fit, from the Company or by disposal of the mortgaged assets of the Company Director either by sale or by public auction PROVIDED THAT if previous to the creation of the mortgage as aforesaid the scheme for the setting up of the . . . . . . . . . . factory, for which purpose the loan is agreed to be advanced, is given up or abandoned, the entire amount of the loan outstanding on that date together with accrued interest shall become recoverable forthwith and it shall be open to the State Government to effect the recovery in any manner it thinks fit, from the Guarantors as well.

2. IT IS HEREBY FURTHER AGREED between the parties hereto:

(i) That the sum herein advanced shall remain in deposit and be held by the Bank and the Bank will release the same to the Company only on receipt of specific written instructions from the State Government which will be issued by the State Government when:

(a)   the company has been granted by the Government of India the requisite licence for establishing . . . . . . . . . industry in . . . . . .  State, and

(b)   the alteration in the Memorandum of Association of the Company is confirmed by the High Court.

(ii) That if the Company is unable to secure the licence within two months of the issue of the orders, the amount of the loan will be refunded together with the interest due thereon.

(iii) That the Company shall, over and above the amount to be advanced as aforesaid by the State Government, provide or arrange an amount at least equal to the amount of the advance for the purpose of the erection, establishment and working of the proposed factory.

(iv) That the proposed . . . . . . . . . . . . . factory with all its processes shall be located in the State of . . . . . . . . . at a place to be approved by the State Government.

(v) That the Company shall, as early as may be, amend their Articles of Association with a view to secure the appointment of two Directors to be nominated by the State Government on the Board of Directors who shall be Directors till such time as the loan including interest has been paid off in full.

(vi) That the Company shall make suitable arrangements for apprenticeship training at the proposed factory in accordance with an agreed plan.

(vii) That if at any time any dispute, doubt or question shall arise between the Company and the State Government or any person claiming under them, touching or arising out of or in respect of this deed or the subject-matter thereof, the same shall be referred to two arbitrators one to be appointed by each party to the agreement, and in case of difference of opinion between them to the Secretary to Government. . . . . . . ./Judicial Department, and the decision of the arbitrators/Secretary to Government/Judicial Department . . . . . . . . . .,  as the case may be, shall be final and binding on the parties:

PROVIDED ALWAYS and it is hereby agreed that the expressions ‘‘the Company’’ and ‘‘the Governor’’ herein used shall, wherever such an interpretation would be requisite to give the fullest possible scope and effect to any contract or covenant herein contained, include their respective successors and assigns.

3. The Company hereby assure unto the Governor as follows:

(i) That they have been duly authorized by their Board of Directors, through a resolution dated . . . . . . . . . ., to raise loan for the purpose of setting up a . . . . . factory and to mortgage the assets of the Company as security therefor.

(ii) That apart from the temporary loan obtained from the Company’s Bankers in the ordinary course of business there are no loans contracted or due from the Company.

(iii) That the issued and paid-up Share Capital of the Company is rupees . . . . . . . .

(iv) That the Free Reserves of the Company are not less than . . . . . . . . .

(v) That, subject to the confirmation of the alteration of the Memorandum of Association of the Company by the High Court at . . . . . . . . . . . . ., the Company has power to establish a . . . . . . . . . . . . factory.

(vi) That the Company shall execute all such assurances and documents as may be required by the State Government or be necessary under the Articles of Association of the Company for creating the mortgage as aforesaid.

Signed, sealed and delivered by

Shri . . . . . . . . . . . . . . . . . . . . . . .

Secretary to the Government of

. . . . . . . . . . . . . . . . . . . . . . . . . .

for and on behalf of the Governor

at. . . . . . . . . . . . . . . . . . . . . . . . .

(Sd.) . . . . . . . . . . . . .

Secy. to the Govt.

IN THE PRESENCE OF

Witness?1.                                                                   (Sd.) . . . . . . . . . . . . .

Witness?2.                                                                   (Sd.) . . . . . . . . . . . .  .

Signed, sealed and delivered by

. . . . . . . . . . . . . . . . . . . . . . . . . .

Managing?Director, . . . . . . . .

in pursuance of the Company’s

Board of Directors resolution

Dated. . . . . . . . . . . . . . . . . . . . .

at. . . . . . . . . . . . . . . . . . . . . . . .                                  For & on behalf of the

Co. . . . . . . . . . . . . . .

(Sd.) . . . . . . . . . . . . .

Director

Identified

(Sd.) . . . . . . . . . . . . .

IN THE PRESENCE OF

Witness?1.                                                                   (Sd.) . . . . . . . . . . . . .

Address                                                                       ?? . . . . . . . . . . . . .

. . . . . . . . . . . . .

Witness?2.                                                                   (Sd.) . . . . . . . . . . . . .

Address                                                                       ?   . . . . . . . . . . . . . .

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