Agreement of pledge
THIS AGREEMENT OF PLEDGE is made and entered into at .............................. this .............. day of ................ between .................................. a company registered under the Companies Act, 1956 and having its registered office at .............. hereinafter referred to as 'the Borrower' of the One part and Bank of ................. a Bank constituted by the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970, and having its Head Office at .................................... and a branch office at ..................... hereinafter called' The Bank' of the Other Part.
WHEREAS the Borrower has requested the Bank to grant to the Borrower a cash credit facility of Rs............. (Rupees................ only) for the purpose which the Bank has agreed to do on the Borrower agreeing to repay the said moneys becoming due with interest and other charges in the manner mentioned in the First Schedule and on the Borrower agreeing to comply with the terms and conditions stipulated by the Bank in the letter of sanction or otherwise, and upon the Borrower securing repayment of the moneys becoming due under the said cash credit account with interest to the Bank by pledge of the Borrower's goods described in the general terms in the Second Schedule hereunder written on the terms and conditions herein after recorded.
NOW IT IS AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS:
1. In pursuance of the said agreement and in consideration of the cash Credit facility of Rs ............. (Rupees.............. only) granted/agreed to be granted by the Bank to the Borrower to be made available in one or more instalments according to the needs of the Borrower and as the Bank deems fit, the Borrower hereby covenants with the Bank to repay the said monies becoming due under the cash credit account, of Rs............... (Rupees............. only) in such instalments/manner as set out in the First Schedule hereunder written. In the event of failure of the Borrower to repay the said loan/monies or any portion thereof on its due date the entire amount then outstanding shall at the option of the Bank become due and payable immediately.
2. It is agreed by the Borrower to pay interest on the amount due under the said daily debit balances of the said cash credit account at rate of Rs.......... by the Borrower to the Bank from time to time at the rate of ...............% per annum with quarterly rests and such interest to be paid on the 31st March, 30th June, 30th September and 31st December of each year till the entire loan of Rs................ and interest thereon/ all money due under the said cash credit facility is repaid by the Borrower.
3. For the consideration aforesaid the Borrower has pledged and delivered to the Bank the goods described in general terms in the Second Schedule hereto and the goods that may be hereafter delivered to the Bank pursuant to this Agreement whether for the purpose of forming additional security for any sum already drawn or as security for any sum or sums to be drawn against the said Cash Credit/Loan Account or by way of substitution for and in lieu of any goods which may from time to time have been delivered or may be delivered to the Bank under this agreement or otherwise howsoever (hereinafter called the "goods") shall to be deemed to have been so pledged as security to the Bank for the payment by the Borrower to the Bank of the moneys due to the Bank from time to time under or in respect of the Cash Credit/Loan Account. The expression "the money due to the Bank" in this and the subsequent clauses of this Agreement shall be taken to include the principal moneys from time to time due on the said Cash Credit/Loan Account and also all interest thereon calculated from day to day at the rate hereinbefore mentioned and the amount of all charges and expenses which the Bank may have paid or incurred in any way in connection with the goods or the sale or disposal thereof.
4. That the Borrower shall not during the continuance of this Agreement create in favour of third parties a pledge or otherwise charge or encumber any of the goods for the time being the subject or intended to be the subject of this security nor do or permit any act whereby the security hereinbefore expressed to be given to the Bank shall be in any way prejudicially affected.
5. The Borrower shall with the previous consent of the Bank be at liberty from time to time to withdraw from the Bank any goods, for the time being pledged to the Bank and forming part of the securities herein, provided the value of the said goods is paid into the said account or goods of a similar nature to those mentioned in the Second Schedule hereto, or any of the same, and of atleast equal value are substituted for the goods so withdrawn, provided always that, with the previous consent of the Bank the Borrower shall be at liberty to withdraw from the Bank any of the goods for the time being pledged to the Bank without paying into the said account such advance value as aforesaid or substituting any goods as aforesaid provided the necessary margin required herein is fully maintained.
6. That all goods already and hereafter delivered as aforesaid shall be insured against fire, theft, riots, civil commotions, floods and such other risks as the Bank may require the Borrower to do in an insurance office of repute approved by the Bank and in the name of the Bank for the full market value or such value as the Bank may think proper, of such goods and that all policies for and receipts for premia paid on such insurance shall be delivered to the Bank. Should the Borrower fail to so insure or fail to deliver the policies or receipts for premia as aforesaid the Bank shall be at liberty to effect such insurance at the expense of the Borrower and to debit the expenses so incurred to the Cash Credit/Loan Account of the Borrower and the sums so debited shall be deemed to be an advance by the Bank carrying like interest and secured by the pledge of the said goods created in favour of the Bank. The Borrower also agrees to insure the goods for any other risks if called upon by the Bank to do so.
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 herein.
7. The Borrower shall pay all rents, taxes, payments and outgoings in respect of any immoveable property in or on which the pledged goods are for the time being and may from time to time be lying. In default of payment of rent by the Borrower the Bank will be entitled but not bound to pay the same on behalf of the Borrower and to debit the same to the Borrower's Loan/cash Credit Account carrying like interest. The Borrower agrees to give free access to the Bank to the places where the goods are stored and in case of any obstruction the Bank will be entitled to remove the obstructions at the cost and consequences of the Borrower.
8. That the Borrower shall make and furnish to the Bank such statements and returns of the cost and market value of the goods and a 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 ................ per cent between the market value from time to time of the goods and the moneys due to the Bank for the time being. Such margin shall be calculated on the open market value of the goods as fixed by the Bank from time to time and shall be maintained by the Borrower either by the delivery of further security to be approved by the Bank or by cash payment by the Borrower immediately on the market value for the time being of the securities becoming less than the aggregate of the balance due to the Bank plus the amount of the margin as calculated above.
9. That the Borrower shall be responsible for the quality and quantity of goods pledged with the Bank and also for the correctness of the statements and returns required to be furnished as in the above mentioned clause; and that during the continuance of this agreement the Borrower shall be responsible for all loss, shortage, damage or deterioration of the securities caused by fire, theft, rain, water, heat or any other cause whatsoever and the Bank shall not be responsible for any such loss, damage, shortfall or deterioration of the securities notwithstanding the fact that Bank has been in possession thereof.
10. That if the Borrower fails to maintain such margin as aforesaid or if the Borrower fails or neglects to repay to the Bank on demand the moneys then due to the Bank or in the event of the Borrower becoming or being adjudicated bankrupt or insolvent or executing any deed of arrangement, or composition or in the event of any distress or execution being levied or enforced upon or against any property of the Borrower whether the said property shall or shall not be the subject of this security or in the event of any person, firm or company taking any steps towards applying for or obtaining an order for the appointment of a Receiver of the Borrower's property or any part thereof or if any person, firm or company shall apply for or obtain an order for the winding up of the Borrower or if any such order is made or any step be taken by any person, firm or company towards passing any resolution to wind up the Borrower or if any such resolution be passed, whichever event may first happen, it shall be lawful for the Bank forthwith or at any time thereafter (without prejudice to Bank's right of suit against the Borrower) either by public auction or private contract absolutely to sell or otherwise to dispose of all or any of the goods either in lots or separately and to apply the net proceeds of such sale in or towards the liquidation of the balance then due to the Bank. The Bank shall not be liable for any involuntary loss incurred by such sale and the Borrower shall not be entitled to dispute or question the reasonableness of the price or procedure relating to realization of goods pledged.
11. 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 or towards payment of the moneys 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 monies being still insufficient for the discharge in full of such balance the Borrower promises and agrees forthwith on production to them of an account to be prepared and signed as hereinafter provided to pay further balance which may appear to be due by the Borrower thereon; PROVIDED ALWAYS that, nothing herein contained shall be deemed to negative, qualify or otherwise prejudicially affect the right of the Bank to recover (which it is hereby expressly reserved) and the Bank shall have to recover from the Borrower the balance for the time being remaining due from the Borrower to the Bank upon the said Cash Credit/Loan Account notwithstanding that all or any of the said securities may not have been realised by the Bank.
12. That in the event of there being a surplus available of the net proceeds of such sale after payment 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 Borrower for the time being in the hands of the Bank in or under whatever account the same shall extend, in or towards payment or liquidation of any and all other moneys which shall be or may become due from the Borrower whether solely or jointly with any other person or persons, firm or company to the Bank by way of loans, discounted bills, letters of credit, guarantee charges or of any other debts or liabilities including bills, notes, credits, and other obligations current though not then due or payable or other demands legal or equitable which the bank may have against the Borrower or which the law of set-off or mutual credit would in any case admit and whether the Borrower shall become or be adjudicated bankrupt or insolvent or be in liquidation or otherwise and interest thereon from the date on which any and all advances in respect thereof shall have been made at the rate or respective rates at which the same shall have been so advanced.
13. In case the said Cash Credit/Loan account is eligible or covered by Deposit Insurance & Credit Guarantee Corporation for small scale industries or small borrowers, etc. then it is agreed by the Borrower and the Bank that the Borrower shall bear the guarantee fee paid/to be paid in connection with the said Cash Credit/loan Account. In case of failure of the Borrower to do so, it is agreed that the Bank shall be entitled to debit the account of the Borrower with the amount of the said fees and it shall be treated as part of the cash credit/loan advanced and shall carry like interest in the same manner as the said Cash Credit/loan Account. The Bank may at its discretion agree to obtain guarantee cover up to such limits as it deems fit.
14. It is further agreed that if the said Cash Credit/loan Account is eligible for refinance from any Financial Institution in accordance with the norms laid down for the same, then the Bank shall be entitled to seek refinance from such Institution for the said Cash Credit/loan Account and if due to delay in disbursement or availment of the said cash credit/loan or on account of default on the part of the Borrower and consequent delay in availing the refinance from such Institution, and commitment charges are levied by it, in such event the Borrower agrees to bear the same and pay the amount of such charges to the Bank and on the failure of the Borrower to pay the same, the Bank will be entitled to debit the amount to the said Cash Credit/loan Account of the Borrower and it shall be treated as part of the Cash Credit/loan hereby agreed to be advanced and shall carry like interest in the same manner. It is further agreed that in case such refinance is availed of then the additional terms and conditions that may be stipulated by such Institution shall be binding on the Borrower in connection with the said cash credit/loan as if they are provided for herein.
15. The Borrower agrees to utilise the Cash Credit/loan Account for the purpose for which it has been sanctioned.
16. That this Agreement is to operate as security for the moneys from time to time due to the Bank as also for the ultimate balance to become due on the said Cash Credit/Loan Account and the said account is not to be considered exhausted by reason of the said cash credit being brought to credit at any time or from time to time as long as the facility is not terminated.
17. No change whatsoever in the constitution of the Borrower during the continuance of this Agreement shall impair or discharge the liability of the Borrower hereunder.
18. Any demand or notice to be made or given to the Borrower may be made or given by leaving the same at or posting the same by post under Certificate of Posting addressed to the Borrower at its place of business, residence or office and every such demand or notice shall be deemed to be received as the case may be at the time at which it is left or at the time at which it should have been delivered in the ordinary course of post.
THE FIRST SCHEDULE ABOVE REFERRED TO
Repayment Schedule
THE SECOND SCHEDULE ABOVE REFERRED TO
Description of the Goods Pledged
IN WITNESS WHEREOF the Borrower has executed these presents on the day and year first hereinabove mentioned.
The common seal of ......... & Co. Ltd.
is hereto affixed pursuant to the resolution
of the Board of Directors dated...............
in the presence of the............. Managing Director
duly authorised and who in token thereof has put his hand.