DEED OF HYPOTHECATION OF BUSINESS ASSETS WITH BANK AGAINST CREDIT FACILITIES
THIS AGREEMENT made on this ........ day of ..................................
BETWEEN
M/s.................................................., a company incorporated under the Companies Act, and having its registered office at ................................ hereinafter called "the Company" of the one part
AND
..........................................................Bank Ltd. a company incorporated under the Companies Act, and having its registered office at ................................................ hereinafter called "the Bank" of the one part
WHEREAS the Company wishes to have credit facilities from the Bank to the extent of Rs....................... (Rupees ..................................) to carry out its business operations more smoothly and the Bank has agreed to grant the credit facilities to the extent of Rs....................... (Rupees ..................................) and on terms and conditions hereinafter appearing.
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:
1. Consideration
That in consideration of the credit facilities to the extent of Rs..................... (Rupees....................................) granted by the Bank to the Company, the Company hereby agrees, declares and covenants that all business assets of the Company, held at present as well as in future, which are movable including but not limited to sundry debtors, stocks, loans and advances of whatsoever nature, investment, furniture's and fixtures, vehicles, .............................................., etc., wherever kept and stored shall stand hypothecated to the Bank by way of a first charge as security for the payment of all amounts due to the Bank under the credit facilities granted by the Bank until the time such credit facilities are enjoyed by the Company. Provided that the value of the business assets as mentioned hereinabove shall, at all times hereafter, be at least ......per cent of the amount due to the Bank under the said credit facilities and if, at any time, the value of the business assets happen to be less than the aforesaid percentage, the Company shall take immediate steps to increase its business assets so as to make the value of the business assets in accordance with the aforesaid percentage.
2. Interest
The Bank shall charge an interest @ ......% per annum on the amounts due under the said credit facilities which rate may, however, vary depending on the Directive issued by the Reserve Bank of India, from time to time. The interest due as aforesaid shall be calculated on a monthly basis and debited by the Bank to the account of the Company on the last working day of each month.
3. Company’s Covenants
The Company hereby covenants that:
(i) All business assets hereinabove mentioned presently held by the Company are in existence and the absolute property of the Company and that the same have not been pledged, mortgaged or charged, in any manner whatsoever by, the Company.
(ii) The Company shall, at all times hereafter and at its own costs and charges, keep all the business assets, whether presently held or purchased in future, in good conditions and properly insured against loss or damage of whatever nature and the insurance policies in respect thereof be shown or, if so desired by the Bank, be delivered to the Bank. During the continuance of the security the Company shall pay all insurance premium and sums of money necessary for keeping such insurance in force. In the event of any damage or loss happening to the said business assets or any part thereof the Company shall forthwith have the same repaired or replaced as the case may be or arrange for the payment of the entire amount recovered or to be recovered from the insurance Company to the Bank towards the payment of the amount due under the said credit facilities.
(iii). As long as the business assets hereinabove mentioned, whether presently held or purchased in future, remain hypothecated to the Bank, the Company shall not pledge, mortgage, hypothecate, transfer or part with or in any manner deal with them without taking prior permission of the Bank in this regard.
(iv) The Company shall, at all times hereafter, allow the Bank, its agents and representatives to enter any premises of the Company where the hypothecated business assets are being kept, to inspect those assets physically as well as the accounts & other records in respect thereof and take particulars of the same.
(v) The Company shall furnish to the Bank, on a monthly basis (or as desired by the Bank from time to time) such statements and other documents in respect of the business assets hypothecated to the Bank as desired by the Bank.
4. Liability in case of loss or damage
The Bank shall not be liable to the Company for any loss or damage, of whatsoever nature, to the said business assets which may happen whether or not the said business assets are in the custody and possession of the Bank and the Company shall keep indemnified the Bank including its agents and representatives from and against any claims, demands and other costs that may, at any time hereafter, arise in respect of anything done lawfully by the Bank including its agents and representatives in connection with the said business assets.
5. Default by Company
If the Company makes a default in the repayment of the said credit facilities, due to any reason whatsoever or makes a default in complying with any of the terms of this deed, the Bank may seize and take possession of the said business assets and sell all the said business assets or any of them either by public auction or private contract and may, out of the sale proceeds, retain the balance of the amount due under the said credit facilities and all costs, charges and expenses and payments incurred or made in connection with the sale of the said business assets or otherwise and shall pay over the surplus, if any, to the Company.
IN WITNESS WHEREOF, the parties hereunto have executed these presents on the day and year first above written.
For and on Behalf of M/s ......................................
(Company)
For and on Behalf of ..........................................
(Bank)
Witness:
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