Hypothecation of Property

This deed of Hypothecation made entered into at ………………. this …………….. day of ………….... between M/s.  …..…………….. a Registered partnership firm consisting of (1) Mr. ……………….. (2) Mr ………….…… (3) Mr. ……………….. as partners and carrying on business at ……………………. hereinafter referred to as the Debtors of the One Part and Bank of ……………… a Banking Corporation constituted under the Banking Companies (Acquisition and Transfer of undertaking) Act, 1970 having its Branch Office at ……..…………….. hereinafter referred to as the Bank of Other Part .

WHEREAS the Debtors are carrying on business of importing ……. for the manufacture of ………………… and have placed an order with a foreign seller in Spain namely M/s………………. for the purchase and import of the machinery mentioned in the schedule hereunder written and for which the Debtors have obtained import licence number ……………… AND WHEREAS the Debtors have requested the Bank to open a letter of credit in favour of the said foreign seller through his foreign Bank for payment of the price thereof and all other incidental expenses in respect thereof. AND WHEREAS at the request of the Debtors the Bank has agreed to open a letter of credit in favour of a foreign seller through his foreign Bank to the extent of rupees……………… provided the Debtors agree to offer the said …………….. as security for repayment of the said amount. AND WHEREAS the Debtors have entered into a separate agreement on the………………….day of ……………….with the Bank for opening a letter of credit and for repayment of the loan and recording the terms and conditions of such repayment and the Debtors have agreed to execute this deed as and by way of security for the said loan in the manner following -

NOW THIS INDENTURE WITNESSETH AS FOLLOWS  

Pursuant to the said agreement and as a security for the said loan to the extent of rupees …………. and interest and other moneys becoming due and payable by the Debtors to the Bank under the said agreement the Debtors hereby hypothecate the said ……. mentioned in the schedule hereunder and same shall be deemed to be hypothecated as soon as the property in the said ……. passes to the Debtors on payment of the price or otherwise and the Debtors declare that the said ……. will remain charged with repayment of the said loan and other moneys due and payable to the Bank.

And it is agreed by and between the parties as under 

(1) The debtors will give information to the Bank immediately after receiving ……… (Goods) in India. The Debtors will furnish to the Bank a complete list or inventory of the ……… actually imported and so stored.

(2) The Debtors shall not sell or mortgage or otherwise deal with the said ……. so long as the said debt due to the Bank is not repaid in full.  However if the Debtors get a customer to purchase the said ……… or any part thereof the Debtors will communicate its offer to the Bank and if the Bank thinks the price reasonable then the Bank will allow the Debtors to sell such ……. provided the purchaser thereof agrees to pay the purchase price direct to the Bank against delivery of the …… and the ……. so sold will not be allowed to be delivered until and unless the price is credited to the said loan account. The Bank shall have the right to inspect the said ……. from time to time and the Debtors shall give all facilities in that behalf.

(3) If the Debtors fail to repay the loan amount due and payable under the said loan agreement on the due date thereof or commit breach of any term of the said loan agreement or of this agreement, then the Bank will be entitled to take possession of the ……… forthwith and to sell the same by auction for the highest price available at the cost of the Debtors and if there is any short fall in repayment of the said loan and other dues payable under the said agreement the Debtors will be personally liable to pay the same forthwith.  This is without prejudice to the right of the Bank to take legal action for the recovery of the loan amount by sale of the machinery through Court or by reserving the right of the Bank to sell the said machinery outside the Court as aforesaid.

(4) The said machinery will be kept insured for the sum of Rs………….. atleast with an Insurance Company to be approved by the Bank against any loss thereof or any part thereof or otherwise due to destruction or damage and the insurance policy will be assigned to the Bank.  In the event of such destruction, loss or damage the insurance claim sanctioned by the Insurance Company will be payable to the Bank and the Bank will have charge for the same.

In witness whereof the Debtors have put their signature this day of…………..

Schedule above 

Signed and delivered by the Debtors 
(1)………………. (2)…………… (3)………….

as partners of the firm of M/s.  ……………… and company.