GOVERNMENT GUARANTEE

This agreement is made this 5th day of June 2005 between the Governor of Maharashtra hereinafter called the government (which expression shall unless excluded by or repugnant to the subject or context include his successors in Office) of the first part, Arvind Paper Mills Limited, a company incorporated under the Companies Act 1956 and having its registered office at Park Plaza, Mumbai 400 016 hereinafter called the company (which expression shall unless excluded by or repugnant to the subject or context include its successors and assigns) of the second part and ELH Bank, a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 and having its Head Office at 3 Old Court House Street, Mumbai 400 069 hereinafter called the bank (which expression shall unless excluded by or repugnant to the subject or context include its successors and assigns) of the third part.
Whereas the company is a borrower of the bank and is indebted to the bank for more than Rs. 2 crores.
And whereas for expansion of the business the company needs further advances of about Rs. 3 crores but is not in a position to give adequate security to the bank.
And whereas the bank has agreed to grant such advances if the government guarantees repayment of said advances with applicable interest.
And whereas in the interest of the development of the State the Government has agreed to guarantee to the bank payment of the company's present and future indebtedness to the bank and has requested the bank to grant such advances to the company.
Now therefore these presents witnesseth and the parties agree as follows:
1. In consideration of the bank agreeing at the request of the government to grant advances to the company upto Rs. 3 crores the government hereby guarantees to the bank the payment of all present and future indebtedness and liabilities of the company to the bank. The Government shall hereafter indemnify and keep the bank fully indemnified from and against all losses of principal and/or interest, charges and expenses which the bank may incur or be put to on account of default of the company and in demanding, enforcing or obtaining payment of all or any such moneys either from the Company or the Government or howsoever otherwise.
2. The bank shall have the fullest liberty without affecting this guarantee to postpone for any time or from time to time the exercise of any of the rights powers or remedies available to the bank against the company or any other person or persons and/or any other security and the government shall not be released from the liability under this guarantee by any exercise by the bank of its liberty with reference to the matters aforesaid or any of them or by reason of time being given to the company or any other person as aforesaid or any forbearance, act or omission on the part of the bank or any other indulgence given to or composition by the bank with the company or any other person or by any other matters or things whatsoever which under the law relating to the sureties would but for this provision have the effect of releasing the Government from such liability.
3. The guarantee herein shall be in addition to and without prejudice to all other securities if any that the bank may now or hereafter at any time have from the company or any other person for all or any moneys covered by this guarantee and this guarantee shall be enforceable against the government notwithstanding that all or any such securities held by the bank shall at any time when demand is made from or proceedings taken against the government hereunder be outstanding or unreleased.
4. This guarantee shall be a continuing guarantee for all principals and interests from time to time and at any time remaining due or unpaid by the company to the bank in respect of the sum of Rs. 3 crores and interest thereon payable by it to the bank and that all compositions and payments received by the bank from the company or from any other person or persons for or on its account should be regarded for all purposes as payment in gross and the bank shall be entitled to prove against the company before the Liquidator should it go into liquidation in respect of the whole of its indebtedness to the bank without any right on the part of the government to stand in bank's place in respect of or to claim the benefit until the bank has received the full amount of the bank's claim against the company and that this guarantee shall apply to and secure all moneys now or at any time hereafter or ultimately remaining due from or unpaid by the company.
5. This guarantee shall not be affected by the bank's taking or varying or giving up any securities or rights if any held by or available to it from or against the company or any other person in respect of all or any moneys covered by this guarantee and this guarantee shall not be determined or in any way affected by the winding up of the Company or the amalgamation thereof with any other company or howsoever otherwise.
6. All entries in the bank's Books kept by it and made in the ordinary course of its banking business as may be adduced by it shall be conclusive against the government of the amounts from time to time thereby appearing due from the company to the bank and the same shall not be disputed or questioned by the government.
7. Any money or moneys covered by this Guarantee shall be due and payable to the bank on demand after requiring payment of the same shall have been delivered or sent through the post by registered letters addressed to the Secretary, Ministry of Industries, Maharashtra Government.
8. This guarantee shall be a continuing guarantee irrespective of any sum or sums which may be paid into any of the account or accounts of the company with the bank at any time during the continuance of the guarantee and this guarantee shall remain in force until all principal and interest payable by the company to the BANK are fully paid and satisfied.
9. The government hereby expressly declare that this guarantee and the powers and provisions herein contained are in addition to and not by way of limitation of or substitution of any former or other guarantee or guarantees if any heretofore given to the bank by the government and now existing uncancelled and this guarantee is not intended to and shall not revoke or limit such other guarantee or guarantees and that this guarantee shall be in addition and without prejudice to any other securities, if any, negotiable or otherwise which the bank may now or hereafter possess from the company or any other person or persons in respect of all or any moneys secured or intended so to be and the bank shall  be under no obligation whatsoever to marshall in favour of the government any such securities or any of the funds or assets that the bank may be entitled to receive or have a claim upon and the bank may at its own absolute discretion vary exchange renew release modify or discharge or assign all or any of such securities or instruments negotiable or otherwise and whether satisfied by payment in full or in part or not.
10. This guarantee shall bind the government and its successors and shall be available to and enforceable by the bank and its successors and assigns including any other body corporate or Company or concern by or with which the bank may become amalgamated or absorbed and that nothing done or omitted by the bank in pursuance of any of the powers provisions authorities or permissions contained in this guarantee shall in any way affect or discharge the government's liability under it.
11. Notwithstanding anything hereinbefore contained the government's liability under this guarantee shall not at any time exceed the sum of Rs. 3 crores and interest thereon payable by the company to the bank and all costs and other moneys, for which the government shall or may become liable to the bank and this Guarantee shall be irrevocable and the government undertakes not to revoke the same or purport to do so at any time before the bank has received payment of all moneys hereby guaranteed as aforesaid.
In witness whereof this guarantee has been executed for and on behalf of the Governor of Maharashtra State by Mr. V. Venkateswaran, Secretary, Industries Department this 5th day of September 2005.
For and on behalf of and under Order of Governor of Maharashtra
Sd/- 5.9.2005
Secretary, Department of Industries, Maharashtra