HYPOTHECATION OF GOODS TO SECURE DEMAND CASH CREDIT
THIS AGREEMENT made this day the ................................................ 20… between
............................................ aged about ...................... years, son of ...................... residing in ......... hereinafter termed “The Borrowers” which expression shall be deemed to include all their assigns and successors-in-title and attorneys of one part and.......... Bank, a body corporate constituted under the Banking ...................... Companies (Acquisition and Transfer of Undertakings) Act 1980 having its Head Office at ........... and among others a branch office at ................ hereinafter termed “The Bank’ which expression shall be deemed to include all their assigns and successors-in-title and Attorney of other part witnesseth.
WHEREAS the Borrowers are ................................................. dealing in.................
AND WHEREAS the Bank having at the request of the Borrowers agreed to open in the books of the Bank at its ..................... office a Cash Credit account to the extent of Rs............................... (..............................) with the Borrowers to remain in force till this agreement is cancelled either by (including live/non-live stocks) to secure demand cash credit account the Bank or by mutual consent of the parties and hereinafter mentioned in specific terms and to be secured by goods to be hypothecated with the Bank it is hereby agreed between the Bank and the Borrowers as follows:
1. The Borrowers hereby hypothecate in favour of the Bank the goods described in general terms in the Schedule ‘A’ hereunder (hereinafter referred to as “The Hypothecated Goods”), which expression shall include all product goods and movables of any kind belonging to the Borrowers and also such products, goods and movables which the Borrowers are under various powers and authorities entitled to pledge or hypothecate and in the possession and control of the Borrowers and which now or hereinafter from time to time during the security shall be brought in, stored or be in or about the premises and/or rooms in the sole occupation of the Borrowers within the ...................... Municipality and mentioned in Schedule ‘B’ hereunder as security for the payment by the Borrowers to the Bank of the balance due to the Bank at any time or ultimately on the closing of the said Cash Credit account and for payment of all debts and liabilities mentioned in the clauses thereof. The expression “the balance due to the bank” in this and subsequent clauses of the Agreement shall mean the principal moneys from time to time due on the said Cash Credit Account and also interest thereon calculated from day to day at the rate hereinafter mentioned and the amount of all charges and expenses including guarantee fee or any other guarantee fee which the Bank may have paid or incurred in any way in connection with the facility/hypothecated goods or the sale or disposal thereof.
2. The security afforded by this deed shall be deemed to be and shall be continuing security for all amounts due by the Borrowers in respect of the account and this security shall not in any manner be affected even if the Account be overdrawn by drawings or debits against the same beyond the limits stated above or even if it shows a nil balance for the time being or from time to time or even a credit balance in favour of the Borrowers. The security shall also be available as for all such other debts, liabilities and obligations as are stated in clause 1 hereof above and shall not affect or be affected by any other security, lien or charge held by the Bank or to which the Bank may be entitled and the liability of any other person or persons for all or any of the moneys hereby receivables secured, shall not be prejudiced.
3. So long as the account remains in force or uncleared, the Bank shall have the right to demand that the promissory note executed as cover therefor shall be renewed for a like amount as the Bank may deem fit; the execution of such renewed promissory note shall not be deemed to (including live/non-live stocks) to secure demand cash credit account create a new or a distinct debt but the account shall be deemed to be the same and continuous one until it is declared closed by the bank and shall carry with it the benefit of the security afforded by the deed as well as every other security appertaining thereto available therefor.
4. Nothing herein contained shall affect, limit, negative or take away the right of the bank to recover personally from the Borrowers or from their other properties the balance for the time being due in the said Cash Credit account notwithstanding that all or any of the hypothecated goods may not have been sold or realised. And nothing herein contained shall prejudice or affect the rights and remedies of the Bank apart from and irrespective of this deed in respect of any other debts, liabilities due by the Borrowers to the Bank.
5. The Borrowers hereby declare that the hypothecated goods are their property over which they have full rights of disposal, that the goods are free from any encumbrance whatever, the future goods and property hereunder shall be likewise unencumbered property of the Borrowers disposable by them, that the Borrowers have not done or knowingly suffered or been party or privy to anything which prevents them from hypothecating the goods.
6. That the hypothecated goods and all sales, relations and insurance proceeds thereof shall be held as the Bank’s exclusive property specially appropriated to this security and the Borrowers will not create any mortgage, charge, lien or encumbrance affecting the same or any part thereof nor anything which would prejudice this security and the Borrowers shall not part with the hypothecated goods save by way of sale in the ordinary course of the Borrower’s business and hereinafter provided nor shall any sale be made after prohibition in writing from the Bank against selling unless the Cash Credit Account dues are fully paid up by the Borrowers to the Bank.
7. That the Borrowers shall not be at liberty to sell or dispose off in any manner the hypothecated goods or any party thereof unless the advance value of such goods is paid into the said Cash Credit Account or goods of a similar nature to those mentioned in the schedule “A” hereto, or any of the same, and of at least equal value are substituted in the place of the goods so to be sold or disposed off.
8. The Borrowers shall permit the Bank, their agents and servants from time to time and at all times to enter upon any premises or rooms mentioned in Schedule “B” hereunder and wherein the hypothecated goods or any part thereof may, for the time being be and to view, inspect and value the same and take inventories thereof or to take possession thereof and render to the Bank and their servants all facilities as may be required for any of the purpose aforesaid.(including live/non-live stocks) to secure demand cash credit account
9. The Borrowers shall punctually pay all rents, rates, taxes and other outgoing of the premises and rooms wherein the hypothecated goods shall be and kept the same free from distress.
10. The Borrowers shall themselves insure and are hereby bound to keep insured from time to time at their expense, the hypothecated goods described in Schedule A below and stored in the go downs or premises described in Schedule B below with any insurance company as agreed to by the Bank to Rs ...................... (Rupees ..........................) for one year from this date or from such other date, not later than ............ in their names jointly with the name of the Bank in such other names as agreed to by the Bank and shall deliver such policy or policies to the Bank. If the Borrowers fail to so insure the goods and to keep them insured from time to time as required of them by the Bank, it shall be open to the Bank and the Bank is hereby at liberty to offer such insurance in joint names as aforesaid or in its own name in a company of its choice at the expense of the Borrowers and charge such expenses and the premia on such policy or policies to such account or accounts of the Borrowers from time to time standing in the Books of the Bank at any of its branches. The Borrowers shall be bound to assign the benefits of the insurance policies standing in their names, in favour of the Bank and the Bank is hereby entitled to the benefits of all such policies.
11. That all sums received under any such insurance as aforesaid shall be applied in or towards the liquidation of the balance due to the Bank for the time being and in the event of there being a surplus, the same shall be applied as provided by the clauses thereof.
12. That the Borrowers shall make and furnish to the Bank all statements and returns of the cost and market value of the hypothecated goods and full description thereof and produce such evidence in support thereof as the Bank may from time to time require and shall maintain in favour of the Bank a margin of ...................... percent between the market value from time to time receivables of the hypothecated goods and the balance due to the Bank for the time being. Such margin shall be calculated on the open market value of the hypothecated goods as filed with the Bank from time to time and shall be maintained by the Borrowers either by the hypothecation of further goods approved by the Bank in writing or by cash payment by the Borrowers to the Bank immediately on the market value for the time being of the hypothecated goods becoming less than the aggregate of (including live/non-live stocks) to secure demand cash credit account the balance due to the Bank plus the amount of the margin as calculated above.
13. That, interest at the rate of ..................% p.a., over and above the Reserve Bank of India Rate subject to a minimum of .................% p.a. or at such lending rate that the Bank may determine to charge from time to time on account of the directives of the Reserve Bank of India or otherwise compounded quarterly shall be calculated and charged on daily balance in bank's favour due upon the said Cash Credit account until the same is fully liquidated and shall be paid by the Borrower/s as and when demanded by the Bank.
In case the Borrower/Borrowers fail to comply with any of the terms of Cash Credit account or this agreement of the Cash Credit account is overdrawn by any reason whatsoever the Bank shall be entitled to charge overdue and/or penal interest at the rate of ......................% p.a., over and above the normal rate of interest stipulated above.
14. That on demand by the Bank the Borrowers shall pay to the Bank the balance then due to the Bank on the said Cash Credit Account together with all further interest at the rate mentioned and the amount of all further charges and expenses, if any till the date of payment provided that, nothing contained shall be deemed to prevent the Bank from demanding payment of the interest for the time being due to the above mentioned rate without at the same time demanding payment of receivables the balance due to the Bank exclusive of such interest.
15. The Bank and their Officers and Managers shall be entitled at any time as of absolute owners and without notice to the Borrowers but at the Borrowers’ risk and expenses and if so required as attorneys for and in the name of the Borrowers to enter and remain at any place where (including live/non-live stocks) to secure demand cash credit account the hypothecated goods shall be and to take possession of, recover and receive the same and/or appoint any officer or officers of the Bank as receivers of the hypothecated goods and/or sell by public auction or private contract or otherwise dispose off or deal with all or any part of the hypothecated goods, and to enforce, realise, settle, compromise and deal with any of the rights aforesaid without being bound to exercise any of these powers or being liable for any loss in the exercise thereof and without prejudice to the Bank’s rights and remedies of suit against the Borrowers and to apply the net proceeds of such sale in or towards the liquidation of the balance due to the Bank and the Borrowers hereby agree to accept the Bank’s account regarding sales and/or realisation and to pay any short-fall or deficiency therein shown.
16. That if the net sum realised by such sales be insufficient to cover the balance then due to the Bank, the Bank shall be at liberty to apply any other money or moneys in the hands of the Bank standing to the credit of or belonging to the borrower, in or towards payment of the balance for the time being due to the Bank and in the event of there not being any such money or moneys as aforesaid in the hands of the Bank or in the event of such money or moneys being insufficient for discharge in full of such balance the Borrowers promise and agree forthwith on production to them of an account to be prepared and signed as in the clauses hereinafter provided, to pay any further balance which may appear to be due by the Borrowers thereon, provided always that nothing herein receivables contained shall be deemed to negate, qualify or otherwise prejudicially affect the right of the Bank (which it is hereby expressly agreed the Bank shall have) to recover from the Borrowers the balance for the time being remaining due from Borrowers to the Bank upon the said Cash Credit Accounts notwithstanding that all or any of the said hypothecated goods may not have been realised.
17. That in the event of there being a surplus available the net proceeds of such sale after (including live/non-live stocks) to secure demand cash credit account payments in full of the balance due to the Bank it shall be lawful for the Bank to retain and apply the said surplus together with any other money or moneys belonging to the Borrowers for the time being in the hands of the Bank in or under whatever account as far as the same shall extend against in or towards payment of liquidation of any and all other moneys which shall be or may become due from the Borrowers whether solely or jointly with any other person or persons, firms or company to the Bank by way of loans, discounted bills, letters of credit, guarantees, charges or of any other debt or liability, including bills, letters of credit, guarantees, charges or of any other debt or liability, and other obligations current though not then due or payable or other demands legal or equitable which the Bank may have against the Borrowers or, which the law of set-off or mutual credit would in any case admit and whether the Borrowers shall be in liquidation or otherwise and interest thereon from the date on which any and all advances and interest in respect thereon shall have been made at the rate or respective rates at which the same shall have been so advanced.
18. The Borrowers agree to accept as conclusive proof of the correctness of any sum claimed to be due from time to time to the Bank under this agreement a statement of account made out from the books of the Bank and signed by the Accountant or other duly authorised officer of the Bank without the production of any other voucher, document or paper.
19. That this Agreement is to operate as security for the balance from time to time due to the Bank and also for the ultimate balance to become due on the said cash credit account and the said account is not to be considered to be closed for the purpose of this security and the security of hypothecated goods is not to be considered exhausted by reason of the said cash credit account being brought to credit at any time or from time to time or of the cash credit account showing a nil balance from time to time in the course of operation or of its being drawn upon to the full extent of the said sum of Rs....................... (........................................) if afterwards reopened by a payment to credit.
20. The Borrowers hereby declare that all the hypothecated goods are at the sole and absolute disposal of the Borrowers as mentioned above and free from any prior charge or encumbrance and that all future goods and property hereunder shall be likewise their unencumbered undisposeds property and that the Borrowers have not done or knowingly suffered or been party or privy to anything whereby they are in anywise prevented from hypothecating the hypothecated goods in any (including live/non-live stocks) to secure demand cash credit account manner aforesaid and that the Borrowers will do and execute at their costs all such acts and things for further and more particularly assuring the hypothecated goods or any part thereof to the Bank as shall be required by the Bank and for giving better effect to these presents, the Borrowers authorise and irrevocably appoint the Bank and/or their officers as attorney for and in the name of the Borrowers to act on behalf of the Borrowers and to execute and do any acts, assurances and things which the Borrowers ought to execute and do under these presents and generally to use the name of the Borrowers in the exercise of the powers hereby conferred.
21. Provided always that this Agreement is not to prejudice the rights or remedies of the Bank against the Borrowers irrespective and independent of this Agreement in respect of any other advances made or to be made by the Bank to the Borrowers.
In witness whereof the Borrowers and the Bank have hereunto set their hands this ...................... day of ...................... 20..................... the Christian Year One Thousand Nine Hundred