AGREEMENT FOR HYPOTHECATION OF GOODS
The _______________ Bank (hereinafter called the Bank.) 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:
- 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 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, accrued or accruing, with all relative interest, charges, costs (as between attorney and client) and expenses.
- 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.
- 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.
- 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.
- 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 the joint names of the Borrower and the Bank, if the Bank so desires.
- 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 is so required, as attorney for and in the name of the Borrower, to enter place anywhere 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 said 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, realize, 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 bazaar chits bills, notes, hundies and documents and agreeing to accept the Bank’s accounts of sales and realization 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 realize 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 therefore immediately on receipt thereof.
- That all the said goods property and all sales realizations 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.
- 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 authorizes 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.
- 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.
- 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.
- 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 any property hereunder shall be likewise, the unencumbered, disposable property of the Borrower.
- That if the Borrower be more than one individuals 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 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.
- 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 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. 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 or may be sent by post to 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 a certificate signed by an official of the Bank that the envelope was so posted shall be conclusive.
Dated at ____________ on __________________.