1
EXHIBIT 10.30
Place: Madras
Date:
The State Bank of Hyderabad
MADRAS - 600001
WHEREAS, the undersigned us/are Director/s of Moduler Electronics
_______Limited Co. carrying on business as manufacturers and exporters of
Electronic Components of Computer hardware hereinafter called the "THE
BORROWER".
AND WHEREAS the State Bank of Hyderabad has at my/our request agreed to
grant/has granted/renewed/renew/continue/continued loans facility/facilities to
such as amount/s from time to time under different loan account/s as the said
Bank in its discretion shall think proper in respect of each such facility, in
the aggregate not to exceed Rs. 210,00,000 besides interest and costs, charges
etc. On such conditions as to security, interest rate, charges etc. as it may
stipulate from time to time.
1. In consideration of such grant/renewal/continuation of the said
facility/ies I/we, the undersigned, in my/our individual and personal capacity
besides my/our liability as Director/s of the Borrower), hereby agree to pay and
satisfy to your Bank on demand, up to the amount herein above mentioned, all
monies and liabilities of the Borrower under the aforesaid facilities already
advanced, paid or renewed on such accounts and/or which you may at any time
advance/pay or incur by way of sanction/renewal/continuance of the said
facility/ies to the borrower together with all interest, discount, commission or
charges costs and expenses etc., which may be or may become payable in
connection therewith.
2. AND I/We further agree that my/our guarantee shall be considered
continuing/not-with-standing it may in the meantime at any time or from time to
time be brought to credit in respect of one or more or all of the said
facilities, until notice in writing that the same is closed is given by your
Bank.
3. I/We further agree that the said Bank shall be at liberty to take other
securities for the said account/s or any part thereof and to release or for-bear
to enforce all or any of its remedies upon or under such securities and my
collateral security or securities now held/come to be held by the Bank and that
no such release or forbearance as aforesaid shall have the effect of releasing
me/us from my/our liability or of prejudicing the said Bank's rights and
remedies against me/us under this guarantee and that I/We shall have no right to
the benefit of any other security that may be held by the said Bank until the
said account/s covering the different facilities against the borrower or any
other account what-so-ever shall have been fully satisfied and then in so for
only as such security shall have not been exhausted for the purpose of releasing
the amount of the said Bank's claims and noteably only with other guarantors or
other persons (if any) entitled to the benefit of such securities respectively.
1
2
4. I/We further agree that if the Borrower shall become insolvent
bankrupt, enter into liquidation (compulsory or voluntary) or make any
arrangement or composition with creditors the said Bank may (notwithstanding
payment to the said Bank by me/us or any other person/s of the whole or any part
of the amount hereby secured) Bank creditor and prove against the State of the
Borrower for the full amount of all the said Bank's claims against the Borrower
or agree to and accept any composition in respect of thereof and the said Bank
may receive retain the whole of the dividends composition or other payments
thereon to the exclusion of composition or other payments thereon to the
exclusion of all/my/our rights as guarantor/s for the Borrower in competition
with the said Bank until all the said Bank's claims are fully satisfied and I/We
will not by paying off the amount payable by me/us of any part thereof or
otherwise prove or claim against the state of the Borrower until the whole of
the said Bank may enforce and recover payment from me/us of the full amount
payable by me/us not with-standing any such proof or composition as aforesaid.
5. I/We further agree that the Borrower being a private limited company
my/our guarantee and obligations hereunder shall not be affected by any change
in the constitution of the Board of Directors of style of such company at any
time.
6. I/We further agree that if all or any of the facilities is/are intended
to be secured by the hypothecation and/or pledge of goods and/or documents of
title to goods under separate agreement to be taken from time to time and
entered into by the borrower with the said Bank which agreement contains
stipulations as to the insurance assignment and delivery of insurance policies
to the said Bank and as to the margin of value of goods under security to be
maintained and the periodical furnishing of different statements to the said
Bank and other matters We/I agree that no failure in requiring or enforcing the
observance or performance of any of the said stipulations or terms shall have
the effect of releasing us/me from our/my liability incurred in our/my
individual capacity or of prejudicing the said Bank's right or remedies against
us/me under the guarantee.
7. I/We further agree that notwithstanding anything herein before
contained I/We shall be severally liable to the Bank or the full amount of the
said facilities and that the Bank shall be at liberty to sue either or any of us
in respect of such or any one or more of them without joining the other or
others of us and not-with-standing any degree in any such suit subsequently to
sue the other or others of us to proceed to judgment and execution at the option
of the Bank until its claim is fully satisfied.
Signed sealed and delivered by the said
[ ]
2
3
H.O. 1362
FORM C.5
LETTER REGARDING THE GRANT OF
INDIVIDUAL LIMITS WITHIN THE OVERALL LIMIT
Date: 02-08-94
To, (To be stamped as an agreement)
Modular Electronics (Particulars of charge to be registered with
________________Ltd. the Register of Companies in the case of
406, Dalamai Towers borrower companies)
__________________
Nzaimar Point
Bombay - 400 027
Dear Sirs,
In pursuance of Clauses 5 and 6 of the Agreement of Loan dated the
____________ day of ___________________ 19____________________________ and
Clause 3 of the Agreement of Hypothecation dated the __________ day of
____________________ 19____ and clause 3 of the Agreement of pledge dated the
______ day of _______________ 19_____ executed for the overall limit of Rs.
210,00,000 (Rupees only) we are pleased to advise you that within the overall or
aggregate limit we have decided to grant to you the following individual limits
at the rates of interest mentioned there against:
- ---------------------------------------------------------------------------------------------
Serial No. Nature of Facility Limit Rate of Interest
Rs._____
- ---------------------------------------------------------------------------------------------
1. Foreign Bills Purchase Discount 80.00 As per RBI directives
2. Letters of ____ (_________) 130.00 As per ________
3.
4.
Etc.,
3
4
and on the terms and conditions contained in the said Agreements.
2. You shall maintain and provide the following margin(s) in respect of
the aforesaid limit(s):
- --------------------------------------------------------------------------------
Serial No. Particulars of the item Limit Margin
- --------------------------------------------------------------------------------
(i) Raw materials
(ii) Stocks-in-process
(iii) Finished goods
(iv) Any others (specify)
(v) Book debts/receivables
(vi) Land and buildings/plant
4.***This letter modifies/supercedes the individual limits granted to you
earlier in terms of Form C.5 dated the _____________________________ day of
19___
***Delete if not applicable
5. We are forwarding this letter in duplicate and shall be glad if you
will return to us the original letter dully signed by you below the
words "We Accept" appearing at the bottom of this letter and retain the
duplicate thereof for your record.
Your's faithfully,
For State Bank of HYDERABAD
/S/__________________
Asst. General Manager
Overseas Branch, Madras
We accept
Borrower
4
5
Note: In case the Borrower is a limited company, the acceptance should be
under the Common Seal of the Company affixed as per its articles of
Association.
The Common Seal of the ______ Modular _____ P. LTD was _____ unto
affixed pursuant to a Resolution passed in this behalf by the Board of
Directors at their meeting held on 4-8-1994 in the presence of Mr. [ ]
Director AND Mr. B.V. Shah _______ who have set their _____ in token
thereof.
FORM C.1 HO. 1354
(To be stamped as an agreement, as a
General Power of Attorney and also
as Declaration of Trust)
(AGREEMENT OF LOAN FOR OVERALL LIMIT)
MEMORANDUM OF AGREEMENT made the
_______________________ day of _________________
One thousand nine hundred and between
Shri/Smt/Kum*
* Please insert the name of
the Borrower
**Please insert the full
address of the place of
business.
***Please insert the name
of the firs
NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES as follows:
Statements and particulars 1. The Borrower's application dated
proposals are correct. 28-04-94 and subsequent correspondence
with the bank (hereinafter collectively
referred to as "the Borrower's proposal")
shall be deemed to constitute the basis of
this Agreement and the credit facilities
to be granted by the bank hereinafter and
the Borrower hereby warrants the
correctness of each and every statement
and particulars therein contained and
undertakes to carry out the proposal
therein set forth.
Facilities to be governed 2. The Borrower declares and confirms that
arrangement letter. the aforesaid credit facilities agreed to
be granted to the Borrower shall be
governed by the terms and conditions as
set out in the sanction/arrangement letter
No. Adv/OSM/ dated 27-07-94 also herein
contained, as well as those embodied in
the relative security documents.
- --------
* (hereinafter referred to as "the borrower" which expression shall unless
repugnant to the context or meaning thereof be deemed to include them and
survivors or survivor of the partners or partner for the time being thereof and
his/her/their respective heirs, executors, administrators, legal representatives
successors and permitted assigns) of the One Part.
5
6
Change in particulars to be 3. The borrower under takes to notify in
notified. writing to the Bank of any circumstances
affecting the correctness of any of the
particulars set forth in the Borrower's
proposal immediately on the happening or
occurrence of any such circumstance.
Covenants and declaration by 4. The Borrower declare affirms, confirms
Borrower regarding executors of and covenants that:
security documents etc.
(a) the execution on behalf of the
Borrower of this Agreement has been and
the execution on behalf of the Borrower
of the security* documents will be
validly authorised and the obligations
expressed as being assumed by the
Borrower hereunder and under the
security documents by the Borrower
constitute and will constitute valid
legal and binding obligations of the
borrower enforceable against the
Borrower in accordance with their terms;
(b) neither the execution and delivery
hereof and of the security
documents by the borrower nor the
performance or observance of any
of obligations of the Borrower
hereunder or thereunder shall:
(i) conflict with or result in
any breach of law, statute,
rule, order, trust, agreement
or other instrument,
arrangement, obligation or
duty by which the Borrower is
bound; or
(ii) cause any limitation on any
of the powers whatsoever of
the Borrower however imposed,
or on the right or ability of
the directors of the borrower
where the Borrower is a
company to exercise such
powers to be exceeded;
(c) the Borrower is not in default
under any law, rule, regulation,
order, mortgage, thrust,
instrument, agreement or other
instrument arrangement, obligation
or duty by which the Borrower
______und;
To be deleted in case non corporate (d) the copies certified by the
borrower. Borrower's Secretary, of the
certificate of Incorporation and
the Memorandum and Articles of
________tion of the Borrower are
true and effective and the
Borrower shall not during the
currency of this Agreement cause
any alteration to be made in any
of them without
6
7
prior notification to and written
consent of the Bank;
*To be deleted in case of *(e) the resolution passed by the
non-corporate borrower. Borrower in general meeting on
_______________ 19 ____ consenting
under Section 293 (i d) of the
Companies Act, 1956 to the Board
of Directors borrowing moneys in
excess of the aggregate of the
paid up capital of the Borrower
and its free reserves, a certified
copy of the minutes of which has
been delivered by the Borrower to
the Bank, is and, during the
currency of this Agreement, shall
remain adequate and effective to
enable the Bank to grant and the
Borrower to receive the credit
facilities aforesaid;
(f) the audited profit and loss
account of the Borrower for the
year ended 3-31-1993 and the
audited balance sheet of the
Borrower as of that date give a
true and fair view of the results
of the operations of the Borrower
for that period and the financial
position of the Borrower as of
that date and that there has been
no material change adverse to the
business, assets, conditions or
operations of the Borrower since
that date;
(g) no litigation or administrative or
arbitration proceedings of or
before any court governmental
authority or arbitrator is
presently taking place pending or
threatened against the Borrower or
against any of the assets of the
Borrower;
(h) all necessary resolutions,
consents, licenses, approvals and
authorisations of the Government
of India and any political
subdivision thereof and of any
government ministry, authority,
bureau or agency and of any other
person or entity required in
connection with the execution,
delivery, performance, validity
and enforceability of this
Agreement and/or the establishment
and continuance of the business
activity of the Borrower and the
transactions relating thereto have
been duly obtained and are in full
force and effect and in respect of
all payments
7
8
to be made by the Borrower to the
Bank hereunder in foreign
currencies are exempt and
exonerated from Indian withholding
tax and other taxes assessed or
imposed by any Government or
taxing authority thereof;
(i) the approval of the Reserve Bank
of India in respect of credit
facilities granted/to be granted
by the Bank in foreign currencies
has been duly obtained and a
certified copy thereof has been
delivered to the Bank;
(j) to take or cause to be taken in
respect of credit facilities and
repayments thereof in foreign
currencies all action which may be or
become necessary or appropriate in
order to ensure the immediate
availability of such foreign
currencies for all repayment and
discharge of the obligations of the
Borrower hereunder;
(k) in the event of default by the
Borrower the Bank may;
(i) apply and/or appropriate and/or
set off any credit balance standing
upon any account of the Borrower with
an branch of the Bank in India
______________ and in whatever
currency first in or towards
satisfaction of any sum (whether of
principal, interest or otherwise) due
to the Bank from the Borrower
hereunder and;
(ii) in the name of the Borrower as
the attorney of the Borrower to do all
such acts and execute all such
documents as the Bank may consider
necessary or expedient in this regard;
To be deleted if there are no prior (l) there exists no mortgage, charge,
mortgages or changes hypothecation, pledge lien,
encumbrance or other security interest
whatsoever the whole or any port of
the undertaking or assets, present or
future, including uncalled capital of
the Borrower *except the following;
Facilities to be granted at the (LIST OF EXCEPTIONS)
sole discretion of Bank.
5. The Bank may at its sole and
absolute discretion grant to the
Borrower all or some or any of the
aforesaid credit facilities either in
Indian or foreign currencies by way of
overdrafts, demand loans, loans, cash
credits (by way of pledge lock and key
type, factory type or mundy type or by
way of hypothecation or in any other
form including working capital term
loan), term loans (including funding
of interest or in any other form
granted as part of rehabilitation
packages), pre-shipment and
post-shipment credit, opening of
letters of credit, issuing of
guarantees including deferred payment
guarantees and indemnities,
negotiation and discounting of demand
and/or usance bills and cheques inland
as well as foreign and such other
facilities as may be agreed upon, from
time to time to sums not exceeding at
any one time in the aggregate the sum
of Rs. 210,00,000/ (Rupees Two _____
8
9
and ten _____ only) to be made
available at* overseas branch, Madras
or at any one or more branches
of the Bank or at any one or more
branches of any one or more associate
Banks and/or State Bank of India of
the Bank in India and/or abroad.
Facilities to be extended or 6. The Bank shall not be required to
contented at the sole discretion of extend or continue any of the
Bank. aforesaid credit facilities granted or
to be granted to the Borrower
otherwise than at the Bank's sole and
absolute discretion and in no
circumstance to an amount at any one
time exceeding in the aggregate with
the interest thereon and other costs,
if any such limit as the Bank may,
from time to time, decide in respect
of each facility or in the aggregate.
Borrower's properties to be secured. 7. As security for payment and
discharge by the Borrower to the Bank
of said sum Rs. 210,00,000/s and
interest and costs charges expenses
and other monies due and payable by
the Borrower to the bank under or in
respect of the aforesaid credit
facilities or any of them the Borrower
shall, as may be required, create in
favour of the Bank:
(a) a mortgage in a form
satisfactory to the Bank of all
the Borrower's immovable
properties both present and
future; and
(b) a first charge by way of
hypothecation and/or pledge of the
Borrower's entire goods, movables and
other assets present and future
including documents of title to the
goods and assets, such as book-debts
outstanding moneys, receivables
including receivables by way of cash
assistance and/or cash incentives
under the Cash Incentive Scheme or any
other Scheme, claims, including claims
by way of refund of customs/excise
duties under the Duty Drawback Credit
Scheme or any other Scheme, bills,
invoices, documents, contracts,
insurance policies, guarantees,
engagements, securities, investments
and rights uncalled capital and all
machinery present and future of such
form satisfactory to the Bank.
Borrower to procure personally 8. The Borrower shall if required,
guarantees. procure irrevocable and unconditional
guarantees from its Directors and/or
others for the payment and discharge
by the Borrower to the Bank of the sum
Rs. 210,00,000/s and interest all cost
charges and expenses and other monies
due and payable by the Borrower to the
Bank under in respect of the aforesaid
credit facilities the form prescribed
by the Bank.
To sell with prior approval
of Bank
9
10
12. Subject always to the Bank's
rights, powers and discretion under
this Agreement, any security documents
or otherwise the Borrower may with the
prior written approval of the Bank and
in due course of business sell from
time to time the goods movables and
other assets and receive the
book-debts which may be/have been
hypothecated, pledged mortgaged or
charged to the Bank provided the
To maintained required margin of margin(s) of security required by the
security Bank are always fully maintained and
on the terms of payment and delivery
to the bank of the proceeds thereof
and on the express understanding that
the security created thereunder and
all realisation recoveries and
insurance proceeds therefor shall
always be kept distinguishable and
held as the Bank's exclusive property
specifically appropriated to the
security created thereunder to be
dealt with only in accordance with
To keep charged machinery in good the directions of the Bank. It is
condition further agreed that the Borrower
shall-keep the machinery charged to
the Bank by way of hypothecation,
pledge or otherwise in good condition
and shall do or cause to be done all
acts and things necessary to keep the
said machinery in good condition,
provided that the Bank may in absolute
discretion, without being bound to do
so, spend such money as may be
necessary to maintain its undisturbed
possession of the said machinery and
to preserve the security and the
moneys so spent shall on demand be
paid by the Borrower to the bank and
until payment shall be debited to the
accounts opened by the Bank in respect
of the aforesaid credit facilities and
carry interest accordingly. It is,
however, understood that the Borrower
shall not without the written consent
of the bank first had and obtained
remove the plant and machinery
attached to the premises, if any,
Not to remove plant machinery mortgaged to the Bank and in case of
such removal shall replace the same by
machinery, plant and fixtures and
things of equivalent nature and value,
provided that in the event of the bank
agreeing in writing that any machinery
plant or things as aforesaid so
removed was redundant or became worn
out or absolute and need not be
replaced the same may be sold and the
sale proceeds applied towards the
satisfaction or payment of the
amount(s) due to the Bank.
To keep registers of properties 13. Registers of immovable properties
charge. and goods book-debts, movables and
other assets
hypothecated/pledged/mortgaged or
otherwise charged to the bank shall be
kept by the Borrower in respect of
each of the aforesaid credit
facilities and such registers shall
contain all particulars of such
immovable properties and goods
book-debts movables and other assets
hypothecated pledged mortgaged or
otherwise charged and/or such
immovable properties and goods
Such registers open for inspection book-debts movables and other assets
by the Bank as have been released by the bank and
withdrawn by the Borrower. Such
Registers shall at all times be open
for inspection of the bank and the
Borrowers shall if so required by the
Bank furnish to the bank daily or at
such intervals as the Bank may direct
from time to time a schedule or copy
of all the entries which shall have
been made in said Registers.
Right to charge interest at 14. Interest shall be charged on the
outstanding(s) in
10
11
such rate(s) as may be determined by the accounts opened in respect of the
the Bank aforesaid credit facilities at such
rate(s) as may be determined by the
bank from time to time at the Bank's
sole discretion on the basis of any
internal credit rating accorded to the
Borrower or otherwise provided that
the rate(s) shall be subject to
changes in the State bank Advance Rate
and/or changes in interest rates
prescribed by the Reserve Bank of
India from time to time.
Where interest is charged by the Bank
at a concessionary rate or rates
because of the credit facilities being
granted by the Bank to the Borrower
under the Interest Subsidy Scheme or
any other Scheme(s) formulated by the
Government and/or Reserve Bank of
India and/or any other authority from
time to time, the Borrower agrees,
declares, confirms and affirms that in
the event of the withdrawal,
modification and/or variation of such
Scheme(s), the concessionary rate or
rates of interest shall stand
withdrawn and the usual rate or rates
of interest of the Bank applicable at
the material time to such credit
facilities shall become effective and
the Bank shall become entitled to
charge the Borrower such rates of
interest of the Bank applicable at the
material time to such credit
facilities and such difference shall
become due and payable by the Borrower
to the Bank from the date the
withdrawal, modification and/or
variation of such Scheme(s) becomes
effective. Interest shall be
calculated respectively on the daily
balance of such account(s) and be
debited thereto on the last working
day of the month or quarter according
to the practice of the Bank. The Bank
shall also be entitled to charge at
its own discretion such enhanced rates
of interest on the account(s) either
on the entire outstanding or on a
portion thereof as it may fix for any
irregularity and for such period as
the irregularity continues of for such
time as the bank deems it necessary
regarding being had to the nature of
the irregularity and the charging of
such enhanced rate of interest shall
be without prejudice to the bank's
other rights and remedies.
To maintain sufficient security 15. In respect of security created by
way of hypothecation/pledge/mortgage
or otherwise the Borrower shall at all
times maintain a sufficient quantity
and market value of goods, book-debts,
movables and other assets and also all
immovable properties given as
security, to provide the margins of
security required by the bank from
time to time and will forthwith
whenever necessary provide further
goods book debts, moveable assets and
other security (approved b the Bank)
to restore such margins or pay to the
bank the equivalent amount in cash. In
respect of letters of credit opened or
guarantees of indemnities issued by
Bank entitled to change margin the Bank on behalf of the Borrower,
the Borrower shall deposit sufficient
cash or other security as may be
acceptable to the Bank as margin money
as stipulated by the bank. The bank
shall be entitled to and shall as its
discretion, which shall be final and
binding on the Borrower, change the
markings and the Borrower shall be
bound by it notwithstanding any
margins earlier agreed to by the Bank.
To utilise facilities for 16. The Borrower expressly agrees and
undertakes that
11
12
agreed purposes all the aforesaid credit facilities or
any of them shall be utilised for the
purposes set forth in the Borrower's
proposal and for no other purpose and
no change shall be made therein
without the written sanction of the
Bank.
To keep properties in good 17. The Borrower shall from time to
condition, to pay rates taxes etc. time and at all times during the
continuance of the aforesaid credit
facilities or any of them keep all
properties, goods, machineries and
other assets specified and mentioned
in this Agreement or any other
relative security documents in good
working condition and substantial
state of repairs and shall pay all
ground rent, rates taxes and
assessments present as well as future
payable in respect of the same
immediately they all shall become due
and also pay all electricity charges,
municipal rates and all other charges
and assessments, connected with the
business regularly and punctually and
in case the Borrower neglects to keep
the properties, goods, machineries,
and other assets secured to the Bank
or any part thereof in good and
Bank entitled to repair, pay rates substantial repair or pay the
taxes etc. electricity charges, ground rents,
rates, taxes, charges and assessments
as aforesaid, it shall be lawful for,
but not obligatory upon, the Bank to
have said securities or any part
thereof required and to such
electricity charges, ground rent,
taxes, charges and assessments. All
money, premia, costs, charges of such
repairs, the payment of the
electricity charges, ground rent, rate
taxaes, charges and assessments as
aforesaid shall be charge upon such
securities jointly with all principal
moneys and interests as if they formed
a part thereof.
To maintain sufficient interest in 18. The Borrower shall at all times
business. maintain sufficient financial interest
in the business and shall if so
considered necessary by the Bank bring
additional funds or assets by ways of
capital, deposits or otherwise. The
borrower shall not withdraw except
Not to withdraw or divert funds with the Bank's prior permission in
writing or divert or misuse the funds
and assets invested in or brought into
the business by the Borrower as
capital, deposits or otherwise.
To carry on business property. 19. The Borrower shall carry on the
business efficiently properly and
profitably and such business shall be
confined to such manufacturing and/or
trading activity as have been notified
to the Bank and for which the Bank has
sanctioned or agreed to sanction the
aforesaid credit facilities and shall
keep all the licenses, leases,
contracts, engagements, essential for
carrying on the manufacturing and/or
activity renewed from time to time and
To maintain proper books etc. shall not allow any interruptions or
disturbances to happen so as to
hamper/hinder/adversely affect the
business of the Borrower. The Borrower
shall maintain proper books of
accounts and such other registers,
books, documents, relating to the
business as may be statutorily
required or as may be statutorily
required or as may be required by the
Bank or as may be necessary and/or
generally kept in the business of the
kind carried on by the Borrower and
To audit accounts shall get the accounts books duly
audited and furnish to the Bank a copy
of the audited statements and the
auditor's report. The Borrower shall
if so required by the Bank allow the
Bank its officers, agents and nominees
and/or
12
13
qualified auditors and/or technical
experts and/or management consultants
as may be appointed by the Bank to
inspect or audit such books of
accounts, registers, books and
documents and also furnish to the Bank
at such intervals as the Bank may
Bank entitled to inspect books etc. direct from time to time a schedule or
copy of all the entries which shall
have been made in such books.
To submit periodical statements 20. The Borrower shall submit to the
Bank periodically as required by the
Bank copies of the Balance Sheet and
Profit and Loss Account duly audited
and stock statements in the formats as
may be prescribed by the Bank from
time to time indicating correctly the
quantity and value of the stocks and
also statements of receivables
indicating the names of the debtors
amounts of the debts and the periods
for which they are outstanding
together with a certificate that the
quantities and amounts stated are
correct and that all stocks are fully
covered by insurance unless such
insurance is waived by the Bank and
will also furnish and verify all
statements, reports, returns,
certificates and information and will
also execute all documents and do all
Authority to Bank to act for acts and things which the Bank may
Borrower require to give effect to any of the
terms and conditions set out herein or
in the security documents or any of
them that may be executed and the
Borrower authorises the Banks and each
of its agents and nominees as Attorney
for and in the name of the Borrower to
do whatever the Borrower may be
required to do under this Agreement.
To carry on business transactions 21. The Borrower shall carry on the
through Bank/Associate Banks etc. entire banking transactions of the
business including merchant banking
business through the Bank or any of
its Associate Banks wherever the Bank
does not have a branch established. In
particular, the Borrower's entire
foreign exchange business, inland bill
business and deposits if any shall be
placed with the Bank or any of its
Associate Banks where the Bank does
not have a branch established thereat.
The Borrower may, however with the
prior permission in writing of the
Bank in this regard and to the extent
allowed and on such other terms and
conditions as may be stipulated deal
with any other Bank(s).
Release of goods under trust 22. Where goods movables and other
assets are pledged to the Bank, the
Bank may in its own discretion and at
the Borrower's specific request and
without detriment to the pledge
release the goods movables sand other
assets to pledged to the bank from its
possession to the borrower on trust
under a factory/mundy type pledge or
other basis and/or for any purpose
connected with the Borrower's trade
business or industry and in
consideration of the bank so handing
over the Borrower from time to time
any goods movables and other assets
lying on the godown factory or other
place approved by the bank under
pledge to the bank the Borrower shall
hold the goods, movables and other
assets as trustees and agents for and
on behalf of the bank. The Borrower
undertakes that such goods movables
and other assets shall in all respects
be treated by the Borrower in the
books of the Borrower as belonging to
and held on behalf of the Bank.
13
14
Borrower to hand over to Bank 23. Where goods movables or other
documents of released goods. assets pledged to the Bank are
released to the Borrower on trust for
any purpose connected with Borrowers
trade business industry or otherwise
and are put in transit by the Borrower
for any purposed including for sale
thereof the Borrower shall hand over
to the Bank the relative railway or
other transport receipts invoices and
all documents and shall deliver back
to the bank the goods, movables and
other assets when the purpose for
which they are released on trust is
accomplished or to pay to the Bank the
sale proceeds or the proceeds of the
bills relating to the said goods,
movables or other assets. The Borrower
undertakes that the proceeds of sale
of such goods movables or other assets
shall in be treated by the Borrower in
the books of Borrower as belonging to
and held on behalf of the Bank.
Bank may fix limits for retiring 24. The Bank may at its own discretion
bills or making remittances. and at the specific request of the
Borrower grant the facility of cash
accommodation to the Borrower by
fixing limits in respect of goods,
book debts movables and other assets
hypothecated or against the security
of pledge of goods, movables and other
assets for the purpose of either (i)
retiring documentary bills drawn on
the Borrower covering purchase of
goods required for the Borrower's
manufacturing activities consigned
from various places, or (ii) making
remittances of the cost price of the
materials direct to the suppliers by
the bank subject, of course, to the
advance being limited in each case to
such percent of the said bills or the
cost price of the materials
respectively as may be decided by the
Bank from time to time and where the
bank so grants the facility the
Borrower hereby acknowledges in
consideration thereof the Bank shall
have a change by way of pledge over
the documents of title to goods
movables and other assets received
with the bills or otherwise which will
be in custody of the Bank or which may
come into the bank's custody and for
this purpose the documents of title to
goods movables and other assets shall
be deemed to have been delivered by
the Borrower to the bank for creating
pledge of goods movables and other
assets covered by the documents and in
further consideration of the delivery
by the Bank of the said documents of
title to goods movables and other
assets to the Borrower or to the
clearing agents of the Borrower under
the Borrower's instructions and on
behalf of the Borrower while the
Bank's charge thereon and the
Borrower's own indebtedness or
obligation in respect of the said
advances or other valuable
consideration are subsisting, the
Borrower undertakes to clear land
store and hold the goods movables and
other assets received under the said
documents for and on behalf of the
Bank as trustees and agents and if so
required by the bank to deliver
possession of the goods movables and
other assets to the Bank to be held by
the bank as pledgee of the said goods
movables and other assets.
Borrower's undertakings 25. For the purpose of clauses 22 and
23 the Borrower undertakes and
declares that:
(1) To handover and redeliver goods
etc. The
14
15
Borrower shall at any time hand
over or redeliver or cause to be
handed over or redelivered to
the Bank forthwith on demand all
goods movables and other assets
and documents of title thereto
and goods, movables and other
assets covered by such documents
including any policies of
insurance pertaining thereto and
authorise the bank or any person
or persons authorised by the
Bank in writing in that behalf
to enter the Borrower's godown
premises or any other place
where such goods movables and
other assets and documents of
title thereto are laying kept or
Not to deal with goods etc. stored and to take possession of
said goods, movables and other
assets and documents of title
thereto wheresoever situate at
any time without giving to the
Borrower any notice of the
Bank's intention to do so and
the Borrower hereby desires and
requires all persons in whose
custody the said goods movables
and other assures are for the
time being to yield possession
thereof according to the Bank.
(2) The Borrower shall not deal with
the goods movables and other
assets and documents of title
thereto or the goods movables
and other assets covered by the
documents except under and in
accordance with the Bank's
written instruction.
(3) The Borrower shall whether or
not in possession of the goods
movables and other assets or
documents of title thereto are
Not to deal with goods etc. delivered to the Bank repay the
outstanding in the said accounts
within such number of days of
its being utilised as may be
specified by the bank from time
to time.
(4) The Borrower shall indemnify the
bank (i) against all losses,
costs, damages expenses
whatsoever that the Bank may
incur or sustain by reason of
the Borrower's act, default or
omission of the Borrower's
servants or employees or other
persons acting on behalf of the
Borrower in respect of goods
movables and other assets
Due to discrepancies in documents pledged to the bank and released
to the Borrower on trust; (ii)
against all losses, costs,
damages expenses or consequences
whatsoever that the Bank may
incur or sustain as a result of
the Bank's complying with the
Borrower's clearing agents the
documents covering
15
16
the goods movables and other
assets (a) whether or not the
said documents are in order; (b)
notwithstanding any
discrepancies that may be
present between the price/value,
quantity and quality of the
goods movables and other assets
covered by the documents and
price, quantity and quality
specified in the contract; and
(iii) against all consequences
the suppliers losses and damages
that may arise as a result of
the Bank's complying with the
Borrower's requests to effect
advance payments from time to
time to the suppliers (a)
whether or not the suppliers
consign the goods movables and
other assets; (b) whether or not
the documents in respect thereof
are received by the Bank; and
(c) notwithstanding any
discrepancy between the quantity
or quality of the goods movables
and other assets received from
the suppliers and that of the
contracted quantity and quality.
Machineries charged to be movable 28. All the machineries of the
properties Borrower hypothecated pledged
mortgaged or otherwise charged to the
Bank shall be treated as movable
properties and not as immovable
properties and shall bear the
nameplate of the Bank indicating that
the said machineries are hypothecated
pledged mortgaged or otherwise charged
as the case may be to the bank. The
Borrower shall also exhibit
conspicuously in the main hall of the
factory a list showing the items of
machineries hypothecated, pledged,
mortgaged or otherwise charged to the
Bank.
To provide access to goods. 29. In respect of goods movables and
other assets stored and held in
godowns owned or hired by or let to
the Borrower, the Borrower shall
provide the bank and its agents and
nominees with an unimpaired access to
the godowns at all times hew are hired
by or let to the Borrower the Borrower
shall furnish to the bank a letter
Borrower the Borrower shall furnish to
the bank a letter from the land/lord
Furnish letter from landlord owner owner consenting to continue such
unimpaired access to the godown to the
Bank and its agents and nominees and
also declaring that notwithstanding
any claim of the bank on all the goods
movables and other assets stored and
held therein and hypothecated pledged
mortgaged or otherwise charged to the
Bank and that the Bank its agents and
nominees shall have the right to
remove the goods movables and other
assets so stored and held in the
godowns whenever desired by the Bank.
Bank entitled to inspect etc. goods 30. In respect of goods-book debts,
released on trust. movables and other assets
hypothecated. pledged mortgaged or
otherwise charged to the bank or which
are released to the Borrower on trust
under a factory mundy type pledge or
other basis, the Bank's agents and
nominees shall be entitled at all
times without notice to the Borrower
but at
16
17
the Borrower's risk and expenses and
if so required as Attorney for and in
the name of the Borrower's risk and
expensive place were the said goods
book-debts movable and other assets
may be and inspect value insure
superintend dispose and/or take
particulars of all or any part of the
said good-book debts movable and other
assets and check any statements
accounts reports and information and
do all such acts, deeds and things
necessary to preserve and protect the
same and the Borrower confirms,
affirms and undertakes to give all
assistance co-operations as may be
necessary in this regard.
To insure properties charged. 31. All goods book-debts movables and
other assets hypothecated, pledged,
mortgaged or otherwise charged to the
Bank as security for any of the
aforesaid credit facilities and also
all immovable properties given as
security for all such facilities or
any of them as may be required by the
Bank shall be kept at the Borrower's
risk and expense in good condition and
fully insured against loss or damages
as may be required by the bank due to
any reason whatsoever and particularly
the machine hypothecated and/or
pledged to the Bank against fire
and/or such other risk(s) as the Bank
may from time to time stipulate in the
joint names of the Borrower and the
Bank with an insurance company
approved by the bank and for such
amount as the bank may consider
necessary and that the insurance
policies shall be delivered to the
bank when required by the Bank to do
so. If the Borrowers fails to effect
such insurance the Bank may, but
without being obliged to do so, insure
the said goods movables and other
assets and immovable properties
against fire and/or such risk(s) in
joint names and debit the premium and
On default Bank may insure other charges to any account of the
Borrower opened or to be opened and in
the event of the Bank being at any
time apprehensive that the safety of
the goods movable and other assets and
machinery is likely to be endangered
owing to riot and /or strike
(including fire arising therefore)
and/or floods earthquakes., etc. and /
or also resulting in the loss of
production therefore the Borrower to
insure the same in such joint names
against any damage arising therefor
the cost of such extra insurance being
payable by the Borrower and be debited
to any such account. If the Bank
desires that the goods, movable and
other assets shall be insured against
that the Borrower shall provide the
necessary conifer therefore. The
Borrower shall provide, if the Bank so
directs, a sufficient insurance cover
against breakdown of such machinery
and against loss and damage by fire
lighting and flood to any immovable
properties of the Borrower. The
Borrower further expressly agrees that
the bank shall be entitled to adjust
settle compromise or refer to such
adjustment settle compromise or refer
to activating any dispute arising
under or in connection with any
insurance and such adjustment,
settlement compromise and any award
made on such arbitration shall be
valid and binding on the Borrower and
also receive all moneys payable under
any such insurance or under any claim
made thereunder and to give a valid
receipt therefor, and that the amount
so received shall be credited to the
Borrower's
17
18
account and the Borrower shall not
raise any question that a larger sum
might or might or ought to have
received or be entitled to dispute its
liability for the balance remaining
due on my account or accounts after
such credit. Provided that the Bank
may its sole, absolute and unqualified
discretion waive all or any of these
requirements.
Not to compound or release 32. The Borrower shall not compound or
book-debts. release any of the book-debts not do
anything whereby the recovery of the
same may be impeded, delayed or
prevented, without the consent in
writing of the Bank first had and
obtained.
Not to call uncalled capital 33. *The Borrower shall as soon as any
without notice to Bank. call in respect of its shares has been
resolved upon by the Directors or as
soon as it shall have been resolved to
issue any unissued share capital or to
create any new shares immediately give
notice of such call to the Bank or
give notice to the bank of the
intention of the Borrower to issue or
create any such share capital as
aforesaid and the proposed amount
thereof. And shall not until the
expiration of seven clear days from
the time when such notice shall have
been sent to the bank issue any notice
to the members of the Borrower in
respect of payment of any
_________________ or issue or create
any such existing or new shares
respectively as aforesaid. And if the
Bank shall so require every notice
prospectus application form or
allotment letter sent out by the
Borrower in pursuance of any such
resolution shall direct the members or
applicants for allotment of the shares
of the Borrower to pay the call so
made or the moneys payable in respect
of the said existing new shares to the
Bank or as it shall direct and if no
such requisition be made by the bank
the members applicants or allottees
shall be direct to pay any call or
other moneys into the Bank's office
(as may be informed or notified) to
the joint account of the Borrower and
the Bank or in such manner as the Bank
may direct and the Bank shall be
entitled to require all such calls or
moneys received by the Borrower to be
applied either wholly or partly in or
towards the payment or satisfaction of
the principal sum interest and other
moneys due to the Bank but in default
of the Bank requiring the said calls
or moneys received by the Borrower to
be applied either wholly or partly in
or towards the payment or satisfaction
of the principal sum interest and
other moneys due to the Bank but in
default of the Bank requiring the said
calls or moneys to be so applied as
aforesaid within one month of their
being paid, the Borrower may without
the consent of the bank apply the
whole or the balance thereof over and
above what shall be required by the
bank to be otherwise applied to the
general purposes of the Borrower as it
shall think fit proved also that all
money's hereunder to be received by
the Borrower from its members in
advance of calls upon the shares shall
be held by the Borrower from its
members in advance of calls upon the
shares shall be held by the Borrower
upon trust for the bank and so as to
form part of the security and shall be
dealt within the manner hereinbefore
mentioned in the case of calls or
other moneys received by the Borrower.
- ----------------
* To be deleted in case of non-corporate Borrower.
18
19
Not to allow receiver to be 34. *The Borrower shall not (a) allow
appointed, distress of execution to any Receiver to be appointed of the
believed and Memorandum of Articles undertaking or of the properties,
to be altered. immovable and movable, of the Borrower
mortgaged, pledged and/or charged to
the bank or any part thereof (b) allow
any distress or execution to be levied
upon or against the same or any part
thereof and (c) make or attempt to
make without the previous consent of
the Bank in writing any alterations of
its memorandum of Articles of
Association or in its capital
structure.
To alter Memorandum or Articles 35. *The Borrower shall forthwith and
when required. from time to time as may be required
by the Bank make such alterations or
additions of its Memorandum of
Articles of Association or in its
capital structure as may be necessary
to conform to this Agreement.
To make arrangements for supply of 36. The Borrower shall make long-term
raw materials. arrangements for a steady and regular
supply of raw materials as may be
required for it's business.
Not to vary shareholding of 37. During the currency of these
Directors. presents the shareholding of such or
the shareholding in the Borrower who
are it's Directors at present and the
without the previous written connect
of the Bank first obtained
Bank to appoint nominee Directors 38. During the subsistence of the
liability of the Borrower under or in
respect of any of the aforesaid credit
facilities, The Bank without prejudice
to its rights referred to in this
Agreement shall have a right to
appoint and/ or remove, from time to
time, a Director or Directors of the
Board of Directors as nominee Director
or Directors so appointed by the Bank
shall not be liable to retire by
rotation and need not possess any
share qualifications prescribed by the
Articles of Association of the
Borrower.
To continue borrowings within 39. The Borrower shall at all times
drawing power allotted. confine the Borrower to the drawing to
the drawing power allotted within the
limit of the particular facility,
namely, the value of the security less
the stipulated margin, and in no case
shall exceed such limit. The Bank may,
however, at the specific request of
the Borrower and in it's own
discretion allow drawing beyond such
drawing power for such time as may be
considered necessary and shall at any
time without any notice call upon the
Borrower to repay such excess
drawings. All rights and obligations
of the Bank and the Borrower
respectively hereunder and under any
arrangements Letter or other documents
shall extend to such exceed drawings
notwithstanding the specific limit
stipulated. All the rights and
securities created hereunder in favor
of the Bank and obligation of the
Borrower thereunder will extend to
cover the Borrower's liabilities to
the Bank , under any account
whatsoever ever of the Borrower with
the Bank notwithstanding that such
account may not relate to any
particular facility agreed to be
granted by the Bank to the Borrower.
- ----------------
* To be deleted in case of non-corporate Borrower.
* To be deleted in case of non-corporate Borrower.
19
20
Bank may release excess of security. 40. At any time or from time to time
before repayment of the amount due to
the Bank whenever the value of the
security for the time being held by
the Bank under the security documents
or otherwise shall be in excess or
amount due to the Bank, the Bank may
at the request of the Borrower and at
it's discretion release to the
Borrowers such as excess security.
Provided Always that Bank may refuse
to release such excess security as
aforesaid in its discretion if there
are other liabilities whatsoever of
Bank's general lien or right of the Borrower to the Bank absolute or
set-off not affected. contingent which in the opinion of the
Bank might not be adequately secured.
Nothing contained in this clause in
particular and in this Agreement or
any security documents between the
Bank and the Borrower in general shall
be construed as excluding the general
lien and/or the right of set-off the
Bank for may balance due to the Bank
on any account or in respect of any
liability whatsoever over any security
for the time being held by or
remaining with the Bank.
Bank not liable for verifications 41. The Bank shall not be under any
of quantity or quality of goods. liability whatsoever towards the
Borrower or any other person for
verification of the quantity and/or
quality of any goods movables or other
assets shown in the relevant invoices
statements or other documents
notwithstanding that it may have taken
possession of such goods movables or
other assets by way of hypothecation
pledge or otherwise or for any loss or
damage to the goods, movables and
other assets and other documents and
given security from whatever cause or
in whatever manner arising whether
such goods movables or other assets
shall be in the possession of the Bank
or not at the time of such loss or
damage or the happening of the cause
hereof. The Borrower doth and shall at
all times indemnify and keep
indemnified the Bank from and against
To indemnify the Bank against all actions, suits, proceedings,
losses etc. costs, charges, claims, and demands
whatsoever that may at any time arise
or be brought or made by any person
against the Bank in respects of any
acts matters and things lawfully done
or caused by the Bank in connection
with the said goods movables and other
assets or in pursuance of the rights
and powers of the Bank under this
Agreement or other security documents.
No responsibility will with the Bank
in respect of the quantity, quality or
condition or on whatever account on
final turn-out of the goods movables
and other assets in possession of the
Bank not responsible for quantity, Bank under this agreement or under
quality or condition of goods. security documents between the Bank
and the Borrower including goods
movables and other assets which may
have come into the possession of the
Bank by the Bank exercising any of its
rights under this Agreement or any
security documents or otherwise and/or
in respect of the correctness validity
sufficiency or genuineness of any of
the documents relating thereto.
Negative Covenants by the Borrower 42. The Borrower shall not during the
subsistence of the liability of the
Borrower to Bank under or in respect
of any of the aforesaid credit
facilities without the written
20
21
consent of the Bank --
Change, or alter capital (a) change or in any way alter the
capital structure of the
borrowing concern;
Effect Scheme (b) effect any scheme of
amalgamation or reconstitution;
Implement new Scheme (c) implement a new scheme of
expansion or take up an allied
line of business or manufacture;
Declare dividend (d) declare a dividend or
distributes profits after
deduction of taxes, except where
the installments of principal
and interest payable to the Bank
in respect of the aforesaid
credit facilities and being paid
regularly and there are no
irregularities whatsoever in
respect of any of the aforesaid
credit facilities.
(e) enlarge the scope of the other
manufacturing/trading
Enlarge the scope of activities activities, if any, undertaken
at the time of the application
and notified to the Bank as
such;
(f) withdraw or allow to be
withdrawn any moneys brought in
Withdraw moneys by promoters and by the promoters and direct or
directors relatives and friends of the
promoters or directors of the
Borrower;
(g) invest any funds by way of
deposits, or loans or in share
capital of any other concern
Invest funds (including subsidiaries) so long
s any money is due to the Bank;
the Borrower will, however, be
free to deposit funds by way of
security, with third parties in
the normal course of business or
if required for the business;
(h) borrow or obtain credit
facilities of any description
from any other bank or credit
Borrower obtain credit facilities agency or money-lenders or enter
into any hire purchase
arrangement during the
subsistence of the liability of
the Borrower to the Bank.
Borrower's covenants in respect of 43. In respect of advances granted by
discounting of bills etc. Bank to the Borrower by way of
purchase/negotiation/discounting of
clean/documentary/demand/usance bills
of exchange drawn by the Borrower on
his/its/their various customers and
expressed in foreign currency or
Indian rupees and whether under
letters of credit or otherwise and/or
in respect of said bills tendered for
collection the borrower agrees and
covenants with the Bank as under;
(a) that the bills shall bear, where
necessary adequate stamp duty
before purchase/negotiations/
discounting shall be drawn by
the Borrower in conformity with
the pro forma prescribed under
the Reserve Bank of India New
Bill Market Scheme, indicating
on the face thereon the
21
22
description and quantity of
goods sold and the number and
date of the carrier's receipt;
(b) that the bills shall be drawn
with a usance, ordinarily, of
not exceeding 90 days;
(c) that the bills pertaining to
supplies made to Government
departments and quasi-Government
bodies as well as statutory
Corporations and Government
Companies shall be drawn in
conformity with the pro forma
prescribed under the Reserve
Bank of India Scheme;
(d) that at the time of offering
upcountry usance bills for
discount the bills shall be
accompanied by railway receipts
or motor transport receipts of
approved Transport Companies
together with the relative
original invoices and that the
documents will be delivered to
the drawees only after the bills
are accepted;
(e) that in the case of local sales,
bills shall be accompanied by
copies of invoices bearing
acknowledgments of the
purchasers in token of their
having received the goods and
shall be offered for discount
only after acceptance of bills
by the drawees;
(f) that upcountry or local bills
will not be collected by the
borrower through other banks;
(g) that the Borrower shall ensure
at upcountry bills are accepted
by the drawees on presentation
or unpaid on due dates, the Bank
shall be entitled to recover the
amount of such bills along with
overdue interest and other
incidental charges by debit to
the accounts of Borrower.
(h) that the Bank shall be at
liberty not to accept cheques
drawn on local banks from the
drawees in payment of bills
drawn on them unless such
cheques are tendered at the Bank
before clearing hours on due
dates. In the even of cheques
being received late after
clearing hours on due dates, the
Bank may treat the relative
bills as unpaid and may debit
the amounts thereof to the
account of the Borrower on due
dates;
(i) that the Borrower shall furnish
to the Bank in advance a list of
local parties on whom the
Borrower intends to drawn usance
bill
22
23
for prior approval of the Bank;
(j) that the Borrower shall abide by
such terms and conditions as the
Bank may from time to time
stipulate;
(k) that unless otherwise specified
the rates for discounting the
bills will be the same rate
which is applicable to advances
granted to the Borrower against
stocks;
(i) service chargers on the
amount of each bill and
out-of-pocket expenses
towards registration; postal
charges etc., per instrument
as per the bank's Schedule
of standard charges in force
from time to time;
Provided always the bank at
its discretion shall be
entitled to revise the
aforesaid charges from time
to time;
(m) the Bank may send the bills
either by registered
acknowledgment due post or
registered post or ordinary post
or by any courier service, as is
decided by the Bank in its
discretion to any of its own
offices or to any of the
Scheduled Banks (reference being
to Schedule II of the Reserve
Bank of India Act, 1934) or
other Commercial Bank and/or
Co-operative Bank or directly to
the drawees at the Borrower's
risk and responsibility as to
the losses if any on the bills
or the proceeds of the bills or
of the goods represented by the
bills due to any cause
whatsoever and the Borrower
agrees to hold the Bank harmless
and indemnified from and against
all consequences that may arise
from its doing so and from and
against all losses, charges and
expenses in sending the bills
accepted under these
arrangements in the manner of
aforesaid;
(n) where the bills accepted for
collection are drawn on
Central/State Government
Departments/Agencies and/or
Public Sector Undertakings
and/or Railways and/or other
parties and/or borrower's
customers accompanied by either
railway receipts, shipping
documents or receipt notes, take
delivery notes receipted
challans or inspection rates in
cases where the railway
receipts, shipping documents or
motor receipts have been
forwarded/direct to the
concerned drawees/consignees and
offered by the Borrower to the
Bank for collection the Borrower
shall deposit with the Bank
copies or the relevant documents
along
23
24
with the bills signed by the
borrower and invoices evidencing
despatch of goods to the parties
mentioned therein;
(o) where at the request of the
Borrower the Bank has agreed to
include in the facilities
granted under this Agreement
credit sales made by the
Borrower to the customers of the
Borrower whereby finished goods
are directly sent to the
customers at their requests and
copies of the of relative
invoices with or without
receipted challans or accepted
delivery notes, receipt notes,
inspection notes, are tendered
by the Borrower to the Bank as
evidencing despatch of finished
goods and where under such
circumstances or any other
circumstances the Borrower
receives payment of the bills
the Borrower shall immediately
deposit the proceeds of the
bills and the sale proceeds of
the goods covered by invoices
directly received by the
Borrower or the agents of the
Borrower whether in cash or by
cheques or by any other mode of
payment in the said account(s)
with the Bank towards payment of
the outstandings in respect of
the advances granted on the
evidence of such invoices;
(p) the Borrower shall repay the
Bank's advances within such
number of days as may be
stipulated by the Bank of the
utilisation of the advances by
the Borrower on each occasion
whether or not the payment of
the said bills/invoices is
received by the borrower or if
the bills are returned unpaid by
any reason whatsoever the
Borrower shall reimburse the
Bank immediately on receipt of
the Bank's advice;
(q) the Borrower shall indemnify the
Bank and keep the Bank harmless
and indemnified at all times
against all losses damages
actions costs (as between
Advocate and client) charges or
expenses which may be made
against or sustained or incurred
by the Bank (and whether paid by
the Bank or not) as a result of
or in consequence of the Bank
having agreed to
purchase/negotiate/discount/
collect the said bills as also
as a result o for in consequence
of the Bank through any of its
offices of correspondents in
India and elsewhere guaranteeing
any irregularities or
discrepancies that may be
existing in the documents
relating to the said bills in
24
25
connection therewith.
(r) the Bank shall have first and
paramount lien on the bills and
the moneys received there under
and the goods in course of
transit covered by the documents
of title to goods or other
documents which purport to
represent rights of title to
goods accompanying the bills
shall remain pledged to the Bank
and irrespective of its rights
as pledgee of such goods in case
of any dispute the Bank shall
have the Banker's lien on all
bills goods securities documents
and moneys belonging or
purporting to belong to the
Borrower for all moneys claims
and demands due or to become due
from the Borrower to the Bank;
(s) in case of the bills/invoices
are passed for payment for a
reduced amount, the Borrower
authorises the Bank to accept
such reduced payment and the
Borrower shall make good the
shortage or any loss arising
therefrom and the Bank will not
be responsible;
(t) where the drawees return unpaid
the bills/invoices to the
Borrower direct, the Borrower
shall immediately on receipt
thereof return the
bills/invoices to the Bank and
the bank's acceptances thereof
shall be without prejudice to
its right of recovery of the
amounts covered by the
bills/invoices from the
Borrower.
44. In respect of advances granted by
the bank to the Borrower by way of
drawee bills acceptance limit and/or
drawee bills discounting limit wherein
usance bills drawn on the Borrower by
the suppliers of goods and accepted by
the Borrower are lodged with the Bank
for discounting; the Borrower hereby
agrees and covenants with the Bank for
discounting, the Borrower hereby
agrees and covenants with the Bank as
under:
(a) The Borrower hereby confirms
that at the request of the
Borrower the bank has agreed in
its sole and absolute discretion
to discount usance bills with
usance ordinarily not exceeding
90 days, drawn on the Borrower
for an amount at any time not
exceeding the drawee bills
discounting limit granted within
the overall limit (hereinafter
referred to as "the Bills").
(b) Whenever the Borrower requires
the bank to discount the Bills,
the Borrower shall lodge with
the bank the Bills together with
the original and/or copies of
invoices and the receipted
delivery challans evidencing the
supply to the Borrower of the
goods
25
26
drawn by the drawers of the
Bills (hereinafter called "the
Suppliers").
(c) The Borrower hereby confirms and
declares that the amounts
represented by the Bills drawn
on the Borrower by the Suppliers
will be due and owing by the
Borrower to the Suppliers and
that the goods represented by
the invoices accompanying the
Bills will have been duly
ordered and received by the
Borrower and that the amounts of
such Bills will be paid by the
Borrower to the bank at
maturity.
(d) The Borrower declares and
confirms that on the Bank
discounting the Bills the Bank
will have good title thereto and
will be entitled to have the
Bills rediscounted with Reserve
Bank of India, Discounted and
Finance House of India Limited,
any scheduled commercial bank or
any other approved financial
institution or otherwise deal
with the Bills as the holder
thereof.
(e) The Borrower further confirms
that notwithstanding anything to
the contrary contained in any
documents or letters written by
the Borrower to the Suppliers or
by the Suppliers to the
Borrower, the Borrower shall be
irrevocably, absolutely and
unconditionally liable to pay to
the Bank the amounts of the
Bills discounted with the Bank
at the maturity of such Bill.
(f) The Borrower agrees, declare and
confirms that the Borrower will
be liable to the Bank as
aforesaid on the Bills and that
the Bank shall be entitled to
enforce all its rights against
the Borrower as the holder of
such bills and that he Borrower
shall continue to be so liable
notwithstanding any claims
right, dispute or litigation
arising or which may arise
between the Borrower and the
Suppliers/drawers.
(g) The Borrower agrees and confirms
that on the acceptance of the
Bills by the Borrower and as the
same being discounted by the
Bank, the proceeds thereof shall
be paid by the Bank to the
Suppliers by means of Bankers
Cheque or by any other means as
my be deemed fit by the Bank.
(h) The Amount of
discount/commission/or exchange
at the same rate as applicable
to the discounting of drawer
bill or other rate as may be
decided by the bank, as the case
may be, will be recovered by the
bank by debit to the cash credit
account of the Borrower in the
event of non-payment
26
27
thereof by the Borrower
on the due date.
(45) Notwithstanding any of the provisions
of the Contract Act or any other law in
respect of advances against accepted
usance bills where the bills are drawn by
the Borrower and accepted b the drawees
the Borrower agrees that the subsequent
credit to the accounts(s) under these
facilities, unless specifically
apportioned by the Borrower or the Bank to
the discharge of any particular bill not
with discharge the debt represented by
such bills.
Not to draw bills on branches of 46. The Borrower hereby declares that
the Borrower or on firms in which bills shall not be drawn on any of the
the Borrower has interest. Borrower's branches nor on any firm in
which the Borrower has any proprietary
partnership or other interest and that
if on any occasion or occasions the bank
in its sole discretion accepts such bills
for collection and makes advances there
against the same shall not be deemed as
the Bank having agreed to accept
thereafter other bills of such nature.
Bills and document to represent 47. The Borrower undertakes that all bills
genuine sales. and documents tendered by the Borrower to
the bank shall represent genuine sales
transactions covering movement of goods
represented by the railway receipts or
truck receipts or shipping or other
documents accompanying such bills that the
amounts of such bills shall truly
represent the value of the goods so
transported/shipped and that every such
bills tendered by the Borrower to the Bank
shall be in respect of execution of
definite orders received by the Borrower.
48. In respect of advances granted by the
Bank to the Borrower for the purpose of
the business of the Borrower of leasing or
hire-purchase the Borrower agrees and
covenants with the Bank as under.
(a) The monies advanced by
the Bank to the Borrower
for hire of vehicles
shall be utilised for
acquisition of
machinery, equipment,
vehicles and such other
movable assets as may be
the subject matter of
leasing and hire
purchase and which shall
be hypothecated to the
Bank.
(b) Before availing of any
advance, the Borrower
shall deposit with the
Bank the original
Agreement of Lease
and/or Hire-Purchase in
respect of the
hypothecated assets. The
Borrower shall also
deposit with the Bank:
(i) Copies of
invoices; and
(ii) Letters
confirming that
the hypothecated
assets are
covered for
comprehensive
risks for the
entire period of
the Agreement.
(c) The Borrower undertakes
to provide the Bank in
respect of vehicles
hypothecated to the bank
with all particulars of
registration
27
28
entered in the
Registration Book of the
hypothecated vehicle by
the relevant Road
Transport Authority
including the entry to
the effect that the
interest of the Borrower
is duly recorded in the
Registration Book. Such
particulars, certified
by the Borrower to be
true particulars, shall
be lodged with the
bank within 60 (sixty)
days of representing the
relative Agreements of
Lease and/or Hire
Purchase to the Bank.
(d) The amount of
installments received by
the Borrower from the
Leases and/or the Hirers
will as and when
received be forthwith
paid by the Borrower to
the credit of the
relevant Account.
(e) The Borrower undertakes
not to enter into any
Lease and/or Hire
Purchase Agreements
without satisfying
themselves about the
financial status of the
Lessees and/or Hirers
and their capacity to
pay installments and
without verifying the
statements made by the
Lessees and/or Hirers in
their proposal forms.
The Borrower shall give
the hypothecated assets
on leases and/or Hires
the proposal form and/or
the lease Agreements
and/or Hire-Purchase
duly signed by them. The
Borrower shall not vary
the terms or wording of
the proposal form and/or
the Lease Agreements
and/or Hire-Purchase
agreements without the
prior consent of the
Bank and should the
Borrower contravene the
terms of this Clause,
the Bank shall have the
right to terminate this
Agreement and decline to
finance the Borrower
further. The Bank
retains the rights to
decline to accept for
making advances any
Lease and/or
Hire-Purchase Agreements
executed by any Lessees
and/or Hirers without
assigning any reasons
for such non-acceptance.
(f) The Borrower undertakes
to see that the Lessees
and/or Hirers discharge
their obligations under
the Lease and/or
Hire-Purchase Agreements
executed by them without
any prejudice to the
rights of the Bank and
any failure on the part
of the Lessees and/or
Hirers to carry out
their obligations shall
be promptly reported to
the Bank. In the event
of any failure or
default in payment of
the advance or any part
thereof, insolvency or
winding-up or
liquidation of the
Lessees and/or Hirers or
any of them, or
termination of the said
Lease and/or Hire
Purchase Agreements, the
Borrower undertakes to
repay the advance made
and outstandings in
respect
28
29
thereof at the time of
such failure, default,
insolvency, winding-up
or liquidation without
the Bank being obliged
with either to take
steps to recover the
amount from the Lessees
and/or Hirers or to
exhaust the security.
(g) The Borrower agrees,
declares, confirms and
affirms that the Bank
shall be at liberty to
fix and/or revise
drawing power in the
relevant Cash Credit
Account each month by
suitably reducing the
drawing power in respect
of installments/rentals
due during the month or
adding the amounts of
installments/rentals
relating to fresh
advances, if any
granted. Provided Always
that the drawing power
shall be allowed against
hypothecated assets
leased and/or hired
under the Lease and/or
Hire-Purchase Agreements
and the relative
receivables till such
time as suitable
security documents as
desired by the bank
_____________ executed
by the Borrower.
Provided Further that no
_______________ power
shall be allowed against
hypothecated assets
which are found be
second hand. And
Provided Further that
the drawing power shall
be restricted to such
percent of the value of
the hypothecated assets
or the value of the
relating rentals or
receivables accruing to
the Borrower within such
period as may prescribed
by the Bank from time to
time.
(h) The Borrower undertakes
and assures the Bank
that the monthly
instalments in respect
of all the Agreements of
Lease and/or
Hire-Purchase deposited
with the Bank and/or
will be duly paid as and
when due.
(i) In the event of the
Borrower or any Lesses
and/or Hirer of the
hypothecated assets
terminating the relative
Lease and/or
Hire-Purchase Agreement,
the Borrower undertakes
to notify immediately
the Bank of such
termination and the
Borrower undertakes
forthwith to pay the
Bank the total amount of
instalments then
outstanding under the
terminated Lease and/or
Hire-Purchase Agreement
to the Bank together
with interest.
(j) The Borrower shall keep
and maintain a proper
register of assets
leased and/or hired by
them showing therein
full and correct
particulars of assets
leased and/or hired by
them, the price of such
assets and sales tax
29
30
thereon, the name of the
Lessee and/or Hirer to
whom each of such assets
is given lease and/or
hire, the instalments
agreed to and amounts of
instalments received.
The said register and
all books of accounts
maintained by the
Borrower in respect of
all Lease and/or
Hire-Purchase Agreements
shall be open for
inspection at all times
by the Manager, Auditor,
Inspector or any other
Office of the bank. The
Borrower shall once a
month, in a form
approved by the bank,
submit to the Bank a
statement before the 5th
day of every month in
respect of the previous
month giving details of
the instalments due
under each Lease and/or
Hire-Purchase Agreements
which have been
deposited with the bank
and giving such other
particulars as may be
required by the Bank.
(k) The Borrower agrees,
declares, confirms and
affirms that the
outstandings in the
relevant Account shall
at all times be fully
covered by the value of
the hypothecated assets
less the stipulated
margins. If at any time,
the drawing power
yielded by the
hypothecated assets held
by the Borrower falls
below the amount
borrowed, the Borrower
shall forthwith adjust
such excess borrowings
under advice to the
Bank. The Borrower shall
submit to the bank at
monthly intervals
statements showing the
total outstandings
against Lease and/or
Hire-Purchase Agreements
(separately) entered
into by the Borrower
adding thereto the fresh
Lease and/or
Hire-Purchase Agreements
entered into by it and
reducing the instalments
and/or rentals received
from the Lessee and/or
Hirers during the
relative month. The
Borrower shall indicate
in the monthly
statements separately
the overdue
instalments/rentals, if
any , under the Lease
and/or Hire-Purchase
Agreements.
(l) The Borrower undertakes
to get in respect of the
vehicles registered in
the name of the Lessees
and/or Hirers an
endorsement in the
respective certificate
of Registration that the
vehicle is under Lease
and/or Hire-Purchase
Agreement with the
Borrower. The Borrower
shall not cancel such
endorsement in the
Certificate of
Registration of the
vehicle until the
advances made by the
Bank against the vehicle
are paid in full to the
Bank. All charges of
registration, payment of
any taxes, licence fees
or insurance premia on
the vehicle(s) or any
charges for upkeep or
repairs or maintenance
shall be that of the
Lessee and/or Hirers or
the Borrower and
30
31
the bank shall not be
called upon or be bound
to pay such charges
under any circumstances.
The Borrower hereby
agrees to indemnify the
bank and/or any of its
officers, servants or
agents against loss by
reason of damage or
destruction or loss of
the hypothecated assets
or any of them from any
cause whatsoever or by
reason of all claims
whatsoever by third
parties in respect of
the same.
(m) The Borrower shall not
avail of any advance
from any other bank or
from any other person on
the assets hypothecated
and charged to the bank
and the Borrower and/or
Lessees and/or Hirers
shall not have or be
deemed to have any
authority to create a
lien or charge upon the
hypothecated assets in
respect of any repairs,
alterations or additions
thereto.
(n) The Borrower both hereby
lastly agree that the
Borrower will at any
time on demand by the
Bank execute at the cost
in all respect of the
Borrower (a) Assignments
in favour of the bank of
all or any of the lease
and/or Hire-Purchase
Agreements deposited by
the Borrower with the
Bank in respect of the
hypothecated assets in
such forms as the Bank
may require and will
also sign and give
notices of such
assignments to the
Lessees and/or Hirers or
other persons concerned
and (b) Irrevocable
Power of Attorney
authorising the Bank to
recover the instalments,
purchase price, interest
and all other moneys
payable under the
relevant Lease and/or
Hire-Purchase Agreements
and to have and exercise
all the rights and
authorities of the
Borrower under such
Agreements and to file
suits for the purpose,
such power to be in the
form required by the
Bank.
49. The Borrower agrees declares affirms
and conforms that notwithstanding any of
the provisions of the Contract Act or any
other law, on any terms and conditions to
the contrary contained in this Agreement
and/or any security documents any payment
made by the Borrower to the _____ shall
unless otherwise agreed to by the Bank in
writing be appropriated by the bank in the
manner following:
Right of the Bank to (1) Firstly towards charges
appropriate monies received. expenses and other moneys,
due and payable or becoming
due and payable to the
Bank;
(2) Secondly towards interests
due and payable and/or
accruing due and payable to
the Bank; and
(3) lastly towards repayment of
the amount of any
31
32
instalments of the
principal sum due and
payable or becoming due and
payable to the Bank;
all the aforesaid amounts having
become due and payable by the
Borrower to the bank under this
Agreement and/or under any of the
security document executed between
the Borrower and the Bank whether
the recovery thereof has or has
not become barred by any law in
force for the time being as to the
limitation of suits.
Bank not responsible for damage to 50. The Bank shall not be responsible
goods etc. for any damage caused to goods, movables
and other assets in course of transit
covered by the bills accepted by the bank
as security or for loss of the * goods,
movables and other assets or for delayed
deliver short delivery or wrong delivery
of goods movables and other assets, or for
delayed long presentation of bills to
paying authorities or drawees for any
reason whatsoever and in case the bills
are sent for collection direct to other
banks or bankers or Government
departments/agencies/institutions or
quasi-Government bodies/public sector
undertakings/railways or other parties or
the Borrower's customers the Banks shall
not be responsible for the non-receipt by
it of the remittance representing the
proceeds of the bills and the relative
bills will be collected entirely at the
Borrower's risk and responsibility. The
Borrower shall be responsible for the
costs and charges incurred by the
collecting bank or bankers in this behalf
and shall pay the Bank these costs and
charges.
To give possession of goods etc. on 51. The Bank may at any time whether
demand. a demand for the payment of any money for
any account has been made or not call upon
the Borrower to give possession of goods,
movables and other assets hypothecated to
the Bank and the Borrower declares that on
the Borrower doing so the goods, movables
and other assets shall stand pledged to
the Bank without in any manner affecting
the rights of the Bank under the security
documents executed in favour of the Bank.
To repay Term Loan by instalments 52. (a) That in respect of the
and other facilities on demand. credit facilities by way of term loans
granted by the Bank to the Borrower, the
Borrower shall repay the amount of the
principal together with interest, costs,
charges, expenses and other monies due to
the Bank by such instalments and on such
dates as may be stipulated by the Bank
from time to time until the entire amounts
due under the term loans facilities have
been repaid. If there is any default in
payment of any one of such instalments on
due date the agreement to receive payment
by instalments shall stand determined at
the option of the Bank and the bank shall
be at liberty to demand payment of and the
Borrower shall be bound and liable to pay
forthwith on such demand the balance
amount due to the Bank.
(b) That in respect to all other
credit facilities granted by the Bank to
the Borrower, the Borrower shall pay to
the Bank forthwith on demand by the Bank
the
32
33
balance or balances then outstanding and
owing to the Bank under any of the
Borrower's account or accounts in respect
of such credit facilities together with
interest costs and expenses due in respect
thereof.
Power of Attorney to Bank. 53. (i) The Borrower irrevocably
constitutes and appoints the Bank to be
the Borrower's true and lawful attorney to
do and execute for and in the name and on
behalf of the Borrower and where the
Borrower is more than one individual
jointly and severally, all or any of the
following acts deeds and things, that is
to say:
(a) To take over on the
business of the bank
and complete engagements
and contracts;
(b) To sign register file
any application forms,
contracts, agreements,
transfers, acceptance,
receipts, acquaintances,
returns and any other
documents and go sign
and endorse al cheques,
promissory notes, bills
of exchange, bills of
lading, dividend
mandates or other orders
for payment of money or
delivery of property;
(c) To sell, transfer sign
or deal with any goods
movables and other
assets;
(d) To demand and receive
all debts sums of money
principal money
dividends interest and
dues of whatever nature;
(e) To appoint selling
agents and if necessary
to undertake new kind of
activity;
(f) To realise the assets
whether movable or
immovable including the
goodwill of the
business.
(g) If considered proper, to
wind up the Borrower's
business;
(h) To tender contract for
purchase, accept and
sign the transfer into
the name of the Borrower
of any securities, to
apply for and accept
allotment of any shares
and securities which nor
or shall hereafter be
entitled to demand
receive and collect
interest and dividend
due or to accrue due on
any such securities
shares stocks debentures
funds and other
securities and apply the
proceeds of such sale
endorsement transfer
negotiations and
assignment and recovery
of any interest and
dividend satisfaction of
any monies due by the
Borrower to the Bank and
to endorse and transfer
all or any such
securities which may
from time to time or at
any time be in the
possession of the Bank
whether for safe custody
or otherwise or held by
the bank as security for
any money payable to the
bank by the borrower in
respect of any account
33
34
or general balance of
account or otherwise.
(i) To appoint a proxy or
proxies for the purpose
of representing the
Borrower and voting in
meeting or meetings of
any Company or
corporation in which the
Borrower holds any
shares, debentures,
stocks, etc.
(k) To attend and represent
the Borrower before any
authority or tribunal
and for that purpose to
sign execute and deliver
all such documents and
make all such
declaration as may be
necessary;
(l) Generally to act in the
premises as fully and
effectually with all
intents and purposes and
to do all things as are
necessary and which the
Borrower would do if
personally present;
(m) For all and any of the
purposes aforesaid to
appoint a substitute or
substitutes;
(ii) The borrower hereby ratifies
and confirms all the acts things
deeds performed or to be performed
by the Bank or its nominees or
substitutes in pursuance of any of
the aforesaid powers and the
powers hereby conferred shall not
be determined or affected by the
fact of the Borrower acting
personally or through another in
the premises;
(iii) The powers vested in the
Bank shall be irrevocable and
subsist in favour of the Bank till
all the dues of the Borrower to
the Bank are fully satisfied;
(iv) The aforesaid powers under
this clause may be exercised by
the Bank in its sole discretion
but the exercise of the powers is
not obligatory on the Bank.
Security to be continuing security. 54. The security created and
indemnities and undertakings given herein
and/or by the security documents executed
in favour of the Bank for various credit
facilities shall operate as continuing
security and/or indemnities and/or
undertakings for all moneys indebtedness
and liabilities of the Borrower under such
credit facilities and will operate as
security and/or indemnities and/or
undertakings for the ultimate balance or
aggregate balance with interest thereon
and costs charges and expenses if any to
become payable upon the account(s) being
closed and fresh accounts being opened in
respect of fresh credit facilities being
granted within the overall limit
sanctioned to the Borrower or either or
any of them being brought to credit at any
time or from time to time or any partial
payments made thereto or any fluctuations
of such account(s) and if the whole of the
Bank's duties dues shall be repaid and the
whole of the security be withdrawn the
account(s) or either of any of
34
35
them may nevertheless at any time before
such account(s) has or have been closed,
be continued under this Agreement upon the
security as aforesaid being again
furnished.
Term loan to become payable 55. In respect of the credit facilities
forthwith on happening of certain granted to be granted by the bank by way
events. of term loans either in Indian or foreign
currencies the Borrower agrees and
declares that notwithstanding anything
contained herein or in any other security
documents the entire amounts of the term
loans or the balances then due shall, if
so decided by the bank, become forthwith
due and payable by the Borrower to the
bank, upon the happening of any of the
following events and the Bank shall be
entitled to enforce its security;
(a) any instalment of the
principal remaining
unpaid for a period
exceeding one month
after the due date for
payment thereof has
expired;
(b) any interest remaining
unpaid and in arrears
for a period of one
month after the same
have become due whether
demanded or not;
(c) the Borrower committing
any breach or default in
the performance or
observance of any of the
covenants contained in
these presents and/or
the Borrower's proposal
and/or the security
documents or any other
term or condition
relating to the term
loans;
(d) The Borrower entering
into any arrangement or
composition with the
Borrower's creditors or
committing any act of
insolvency;
(e) any execution or
distress being enforced
or levied against the
whole or any part of the
Borrower's property;
(f) on a winding up petition
being filed or the
Borrower being a limited
company going into
liquidation (except for
the purpose of
amalgamation or
reconstruction);
(g) a receiver being
appointed in respect of
the whole or any part of
the property of the
Borrower;
(h) the Borrower ceasing, or
threatening to cease, to
carry on business;
(i) the occurrence of any
circumstance which is
prejudicial to or
impairs, imperils or
depreciates or which is
likely to prejudice,
impair, imperil or
depreciate the security
given to the Bank; and
(j) the occurrence of any
event or circumstance
which prejudicially or
adversely affect in
35
36
the manner the capacity
of the Borrower to repay
the amount due under the
term loans.
On the question whether any of the above
events has happened, the decision of the
Bank shall be conclusive and binding on
the Borrower.
Provided always that the bank may in its
discretion refrain from forthwith
enforcing its right under this Agreement
inspite of the happening of any of the
contingencies aforesaid and provided
further that the failure or deal by the
Bank in exercising any right, power or
privilege hereunder or under any of the
security documents shall not
impair/extinguish the same or operate as
waiver of the same nor shall any single or
partial exercise of any right, power or
privilege preclude any further exercise of
the same or the exercise of any outer
right, power or privilege. The rights and
remedies provided herein are in the
security documents and cumulative and not
exclusive of any rights and remedies
provided by law.
56. In respect of the credit facilities
granted or to be granted by way of term
loans or such facilities/lines of credit
as may be granted in foreign currencies
(hereinafter referred to as foreign
currency loans), the borrower hereby
agrees and covenants with Bank as under:
(i) The Bank may, without
prejudice to any of the
rights as may be
available to the Bank
under any other
agreement, remit the
instalments under the
foreign currency loans
by debiting the rupee
equivalents of such
instalments, as and when
falling due, converted
at such rate of exchange
as may be ruling at the
material time as between
the concerned foreign
currency and Indian
Rupee and the Borrower
hereby indemnifies the
bank against any claims
or claims, loss or
losses or damages,
actions, costs and
expanses whatsoever
which may be brought or
made against or
sustained or incurred by
the Bank (and whether
paid by the Bank or not)
or which the Bank may
become liable in making
such remittances;
(ii) In the event of the
borrower defaulting in
effecting the remittance
of any of the
instalments falling due
under the foreign
currency loans, the bank
may, without prejudice
to any other remedy or
without being obliged to
do so, shall be entitled
to debit the Rupee
equivalent of the said
instalment (converted at
such rate of exchange as
may be ruling at that
material time as between
the concerned foreign
currency and Indian
Rupee) to any cash
credit/overdraft account
of the borrower opened
or to be opened with the
Bank and all such
amounts so debited shall
be charged with interest
as applicable to the
36
37
said account as provided
in clause No 14 above;
(iii) Such remittances made by
the bank shall not
absolve the borrower
protanto from his
liability under the
foreign currency loans
nor shall they be
deemed, in so far as the
borrower's liability to
the bank and the
relative security
charged therefor in
favour of the Bank are
concerned, to reduce the
outstandings under the
foreign currency loans
to the extent of the
defaulted amounts of
instalments so remitted
by the Bank
notwithstanding the
remittances so made, the
Bank reserves the right
to set off or other
legal remedies as
against the borrower
according to the law of
the country where such
foreign currency loans
have been made
available.
57. In respect of the facilities granted
by the Bank of Issue of letters of credit,
guarantees including deferred payment
guarantees and indemnities whether in
Indian or foreign currencies, the Borrower
hereby agrees and covenants with the Bank
as under:
(i) To indemnify the Bank
against any claim or
claims, loss or damage
actions costs (as
between Advocate and
client), charges and
expenses whatsoever
which may be brought or
made against or
sustained or incurred by
the Bank (and whether
paid by the Bank or not)
or which the Bank may
become liable under or
in respect of such
letters of credit
guarantees and
indemnities;
(ii) The Bank may in its sole
absolute and unqualified
discretion and without
reference to the
Borrower and without the
Bank being required to
ascertain whether or not
there was any breach or
the part of the Borrower
of the Agreement
executed between the
Borrower and the
beneficiaries in whose
favour the guarantees
and/or indemnities are
or were executed by the
bank and without the
Bank being required to
go into the validity or
otherwise of the demand
for payment made against
the Bank and
notwithstanding any
directions to the
contrary given by the
Borrower or any other
person on the ground of
a dispute as to the
liability of the
Borrower or otherwise
admit or compromise and
pay or submit to
arbitration or dispute
or resist any claim or
demand made against the
Bank under or in respect
of such guarantees and
indemnifies, this
counter-indemnity/
guarantee contained
herein of the Borrower
being available to the
Bank in respect of any
action or payment which
the Bank may take or
make; and
37
38
(iii) In the event of any
payment being made by
the bank pursuant to an
letter of credit,
guarantee/indemnity
issued by the Bank on
behalf of the borrower,
the Bank without
prejudice to any other
remedy it may have shall
be entitled to debit the
said payment to any
account of the borrower
opened/to be opened with
the Bank and all such
amounts unless adjusted
against any cash margin
available and properly
applicable to the said
letter of credit,
guarantee/indemnity
shall also be charged
with interest as
applicable to the
account in which they
are debited as provided
in clause No. 14 above.
58. If the Borrower be more than one
individual all shall be bound hereunder
jointly and severally or if a firm or
members of a firm, such firm and all such
members and all the members thereof, from
time to time, shall be bound hereunder
jointly and severally notwithstanding any
changes in the ____________________
thereof and whether such firm consents of
or be reduced _________ individual any
time and that if the Borrower be more than
one individual at any time, any notice
served on any such one individual shall be
deemed to be service of such notice on all
such individuals.
59. Any notice of communication or demand
by the Bank in writing the Borrower under
this Agreement or any security documents
shall be deemed to have Borrower at the
address notified by the Borrower and such
notice or communication or demand shall be
deemed to have been received by the
Borrower four days after the date of
posting thereof and shall be sufficient if
signed by any officer of the Bank and in
proving such service it shall be
sufficient if it is established that the
envelope containing such notice,
communication or demand was properly
addressed and put into the post office.
60. The Borrower shall bear and pay all
costs charges and expenses (between
Advocate and Client) including stamp duty
registration and other charges payable in
respect of this Agreement and also in
respect of other security documents to be
executed between the parties hereto as
stipulated in this Agreement and if any
penalty or charges are paid or become
payable by the Bank, the Borrower shall
pay to the Bank the amount thereof with
interest thereon at the rate aforesaid
forthwith on demand by the Bank.
IN WITNESS WHEREOF the parties here to
have executed these presents the day and
year first hereinabove written.
SIGNED by Name
38
39
of the Designation
Department
of the bank and as such one of
the authorised officers of the
said Bank for on behalf of the For and on behalf of State Bank of
Bank Hyderabad
(Designation)
(Authorised Officer)
_____________________________
* The common Seal of the Company or the society must be affixed in
accordance with the Articles of Association of the Company or the
By-laws of the Society.
39
40
H.O. 1355
FORM C-2
STATE BANK OF HYDERBAD
(AGREEMENT OF HYPOTHECATION
OF GOODS AND ASSETS)
(NOT TO BE ATTESTED)
(Particulars of charge to be registered
with Registrar of Companies in the case of
borrower companies) (To be stamped as an
Agreement and General Power of Attorney)
MEMORANDUM OF AGREEMENT made the _________
day of ______________________ one thousand
nine hundred and ___________________ between
* Please insert the name of the Borrower
Please insert the name of the Borrower
***Please insert the name of the firm
OR
MODULAR ELECTRONICS (India) Limited, a company within the meaning
of the Companies Act, 1956, and having registered office at
present carrying on the business of Manufacture of Electronic
Components of computer hardware (hereinafter referred to as "the
Borrower" which expression shall unless repugnant to the context
of meaning thereof be deemed to include its successors and
permitted assigns) of the One Part
and STATE BANK OF HYDERABAD, A Corporation constituted under
State Bank of India (Subsidiary Banks) Act No. 38 of 1959 and
having its Head Office at Gunfoundry, Hyerabad
and amongst other places a branch at 56, Cathedral Road Madras-86
(hereinafter referred to as "the Bank") which expression shall
unless repugnant to the context or meaning thereof be
40
41
deemed to include its successors and assigns) of the Other part.
WHEREAS in terms of the Agreement of Loan executed by the
Borrower on the ___________________ day of __________ 19
(hereinafter referred to as "said Agreement of Loan") the Bank
has agreed to finance the business of the Borrower by granting
all or some or any of the credit facilities by way of overdrafts,
demand loans, loans, cash creditors (by way of pledge lock and
key type, factory type or mundy type or by hypothecation or in
any other form including working capital term loan, term loans
(including funding of interest or in any other form granted as
part of rehabilitation packages), pre-shipment and post-shipment
credits, opening of letters of credit, issuing of guarantees
including deferred payment guarantees and indemnities,
negotiation and discounting of bills and cheques, inland as well
as foreign, and such other facilities as may be agreed upon from
time to time between the Bank and the borrower for sums not
exceeding at any one time in the aggregate the sum Rs.
210,00,000/00 (Rupees Two _______________________ only)
(hereinafter referred to as "the aforesaid credit facilities") on
the terms and conditions specified and contained therein.
AND WHEREAS one of the conditions specified and contained in
this said Agreement of Loan is that the borrower shall as
security for due payment of the said sum of Rs. 210,00,000/00 and
interest discount commission charges and costs (between Advocate
and client) and expenses payable to or incurred by the Bank in
relation thereto hypothecate by way of first charge all the
Borrower's goods book-debts and all other movable assets.
AND WHEREAS the Bank has requested the Borrower to execute
these presents which the Borrower has agreed to do in the manner
hereinafter expressed.
Hypothecation of goods etc. (1) This in pursuance of the said Agreement of
Loan and in consideration of the Bank having
granted and/or agreed to grant to the Borrower all
or some or any of the aforesaid credit facilities
for the purposes and subject to the terms and
conditions specified and contained in the said
Agreement of Loan and in consideration of the
Premises aforesaid it is hereby agreed and
declared that all present and future goods
book-debts and all other movable assets of the
Borrower including documents of title to the
goods, outstanding moneys, receivables including
receivables by way of cash assistance and/or cash
incentives under the Cash Incentive Scheme or any
other Scheme claims including claims by way of
refund of customs/excise duties under the Duty
Drawback Credit Scheme or any other Scheme, bills,
invoices documents, contracts, insurance policies,
guarantees, engagements, securities, investments
and rights and the present machinery listed in the
schedule hereinto and all future machinery
belonging to or in the possession or under the
41
42
control of the Borrower wherever _______ stored
and kept and whether in possession of the Borrower
or of the Bank or of any third party whether in
India or elsewhere throughout the world (including
all such goods, other movable assets as may be in
course of shipment transit or delivery)
(hereinafter referred to as "the said goods and
assets") shall stand hypothecated to the Bank by
way of first charge (subject, however, to any
charge in favour of any third party which may have
been modified by the Borrower and accepted by the
Bank or of any third party whether in India or
elsewhere throughout the world (including all such
goods, other movable assets as may be in course of
shipment transit or delivery) (hereinafter
referred to as "the said goods and assets") shall
stand hypothecated to the Bank by way of first
charge (subject, however, to any charge in favour
of any third party which may have been notified by
the Borrower to the bank under or in respect of
all or some or any of the aforesaid credit
facilities granted or to be granted to the
Borrower and also as security for the payment and
discharged of all indebtedness whatsoever or
liability of the Borrower to the Bank in respect
of any liability undertaken by the Bank under any
letter of credit opened or otherwise in respect of
any account at any office of the Bank (whether in
India or elsewhere and whether accrued, accruing
or contingent and whether solely or jointly with
others) any bills of exchange promissory notes or
instruments at any time drawn made accepted or
endorsed by the Borrower solely or jointly with
others which the Bank may discount or become
interested in together with all interest discount
commission charges costs (between Advocate and
Client) and expenses payable to or incurred by the
Bank in relation thereto, Provided however, that
where the Bank has at the specific request of the
Borrower and in sole discretion communicated in
writing to the Borrower that in respect of any
specific items of goods, book-debts and other
movable assets this charge by way of hypothecation
will not operate, such goods book-debts and other
movable assets shall be deemed as not having been
hypothecated to the Bank as stated therein before.
Rights to charge interest at (2) Interest shall be charged on the
such rate(s) as may be outstanding(s) in the accounts opened in respect
determined by the Bank of the aforesaid credit facilities at such
rate(s) as may be determined by the Bank from time
to time at the Bank's sole discretion on the basis
of the any internal credit rating accorded to the
Borrower or otherwise provided that the rate(s)
shall be subject to changes in the State Bank
Advance Rate and/or changes in the interest rates
prescribed by the Reserve Bank of India from time
to time. Where interest is charged by the Bank at
a concessionary rate or rates because of the
credit facilities being granted by the Bank to the
Borrower under the Interest Subsidy Scheme or any
other Scheme(s) formulated by the Government
and/or Reserve Bank of India and/or or any other
authority from time to time, the Borrower agrees
declares confirms and affirms that in the event of
the withdrawal, modification and/or variation of
such Scheme(s), the concessionary rate or rates of
interest of the Bank applicable at the material
time to such credit facilities shall become
effective and the
42
43
Bank shall become entitled to charge the Borrower
such rate or rates of interest and the Borrower
shall pay to the Bank on demand the difference
between such concessionary rate or rates and the
usual rate or rates of interest of the bank
applicable at the material time to such credit
facilities and such difference shall become due
and payable by the Borrower to the Bank from the
date the withdrawal, modification and/or variation
of such Scheme(s) becomes effective, interest
shall be calculated respectively on the daily
balance of such account(s) and be debited thereto
on the last working day of the month or quarter
according to the practice of the Bank. The Bank
shall also be entitled to charge at its own
Rights to enhance the rate of discretion such enhanced rates of interest on the
interest. account(s) either of the entire outstandings or on
a portion thereof as it may fix for an
irregularity and for such period as the
irregularity continues or for such time as the
Bank deems it necessary regard being had to the
nature of their regularity and the charging of
such enhanced rate of interest shall be without
prejudice to the Bank's other rights and remedies.
(3) That the bank shall not be required to grant
or continue all or some or any of the aforesaid
credit facilities otherwise than at the Bank
discretion and in no circumstances for sums
exceeding at any one time in the aggregate the sum
of Rs. 210,00,000/00 (Rupees Two __________only)
or a sum equal to a stated percentage of the value
of the said goods and assets which the Bank may
specify from time to time whichever sum may be the
less, valuation being done in the manner and at
the rate approved by the Bank.
(4) That the Borrower will at all times maintain a
sufficient quantity a market value of the said
goods and assets to provide margins security
required by the Bank from time to time and will
forthwith whenever necessary provide further goods
and assets (approved by the Bank) to restore such
margins or pay the Bank the equivalent cash. In
respect of the letters of credit opened or
guarantees or indemnities issued by the Bank on
behalf of the Borrower, the Borrower's deposit
sufficient cash or others security as may be
acceptable to Bank as margin money as stipulated
by the Bank. The Bank shall be entitled to and
shall at its sole discretion charge margins and
the Borrower shall be bound by it not withstanding
margins earlier agreed to by the Bank.
(5) That the Bank shall be at liberty to leave any
of the said goods and assets that may be
hypothecated as aforesaid valued by an appraiser
appointed by the Bank and the Borrower shall
render/give all assistance/co-operation to such
appraiser and the fees and expenses of such
appraisement shall be debited to the said
accounts opened by the Bank and shall be in charge
on the security created hereunder.
To insure property charged (6) That all the said goods book debts and other
movable assets hypothecated, or otherwise charged
to the Bank as security for the aforesaid credit
facilities or any of them as may be required by
the Bank shall be kept at the Borrower's risk and
expense in good condition and fully insured by the
Borrower against loss or damages as may be
required by the Bank due to any reason whatsoever
and particularly the machineries hypothecated to
the Bank, against the fire and or such risk(s) as
the Bank may from time to time stipulate in the
joint names of the Borrower and the Bank with an
insurance company approved by the Bank and for
such amount as the Bank may consider necessary and
that the insurance policies shall be delivered to
the Bank when required by the Bank to do so, if
the Borrower fails to effect such insurance the
Bank may, but without being obliged to do so,
insure the said goods and other assets against the
fire and/or such risk(s) in such joint names and
debit the premium and other charges to any account
of the Borrower opened or to be opened and in the
On default the Bank may event of the Bank being at any time apprehensive
insure that the safety of the goods and other assets and
machinery is likely to be endangered owing to riot
and/or strike (including fire arising therefrom)
and/or floods earthquakes etc. and/or also
resulting in the loss of production therefrom the
Bank may of its discretion but without being bound
to do so insure or require the Borrower to
insure the same in such joint names against any
damage arising therefrom the cost of such extra
insurance being payable by the Borrower and be
debited to any such account. If the Bank desires
that the said goods, and other movable assets
shall be insured against theft the Borrower shall
provide the necessary cover therefor. The Borrower
shall provide if the bank so directs sufficient
insurance cover against breakdown of such
machineries and against loss and damage by fire
lighting and flood to such properties of the
Borrower. The Borrower further expressly agrees
that the Bank shall be entitled to adjust settle
compromise or relet to arbitration any dispute
arising under or in connection with any insurance
and such adjustment, settlement compromise and any
award made on such arbitration shall be valid and
binding on the Borrower and also to receive all
moneys payable under any such insurance or under
any claim made thereunder and to give a valid
receipt therefor, and that the amount so received
shall be credited to the Borrower's account and
the Borrower shall not raise any question that a
large sum might or ought to have been received or
be entitled to dispute his liability for the
balance remaining due to any account or accounts
after such credit, provided that the bank may at
its own absolute and unqualified discretion waive
all or any of these requirement.
(7) That the Bank its Agents and Nominees shall be
entitled, at all times without notice to the
Borrower but at the Borrower's risk and expense
and if so required as Attorney for and in the name
of the Borrower to enter any place where the said
goods and assets may be and inspect, value insure,
superintend disposal and/or take particulars of
all or any or part of the said goods and assets
and check any statements accounts reports
information and for the purpose of such entry to
do all acts, deeds and things deemed necessary by
the Bank including breaking open of anyplace where
the hypothecated goods and the banks agreement or
other documents relating to the hypothecated goods
and the books of account or other documents
relating to the hypothecated debts or assets may
be lying or stored or kept and also on any default
of the Borrower in payment of any money hereby
secured or the performance of any obligation of
the Borrower to the Bank or breach of any terms of
the said Agreement of Loan or the occurrence of
any circumstances in the opinion of the Bank
endangering this security to take charge of,
seize, recover, receive, take possession of,
inter- alia, by putting its locks on the godowns
and other places where the hypothecated goods or
account books and other documents relating to the
hypothecated book-debts are lying or kept and to
appoint receiver or remove all or any part of the
said goods and assets and also all books of
accounts, papers documents, and vouchers and other
records relating thereto, and also to give notices
and demands to debtors and third parties liable
therefor sue for recovery receive and give
receipts for the same and/or sell, realise,
dispose at and deal with in any manner including
by tender or public auction or private contract
and whether with or without the intervention of
Court all or any part of the said goods and assets
and to enforce realise settle compromise submit to
arbitration and deal in any manner with any rights
and debts or claims relating therefor and to
complete any engagements and carrying on the
business of the Borrower through Agents, Managers
or otherwise 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 or otherwise
and notwithstanding there may be any pending suit
or other proceedings the Borrower undertaking to
give immediate possession to the Bank on demand of
the aid goods and assets and to give notices to
debtors as and when required by the Bank to
transfer and deliver to the Bank all relative
bills contracts securities papers and documents
and agreeing to accept the Bank's account of sales
receipts and realisations as sufficient proof of
amounts, realised and relative and expenses to pay
any shortfall or deficiency thereby shown provided
that the Bank shall be entitled at all times to
apply any other money or monies in its hands
standing to the credit of or belonging to the
Borrower in or towards payment of any amount for
the time being payable to the bank in respect of
all or some or any of the aforesaid credit
facilities granted and/or agreed to be granted by
the Bank or otherwise as aforesaid and to recover
at any time from the Borrower by suit or otherwise
the balance remaining payable to the Bank in
respect of the aforesaid credit facilities or
otherwise notwithstanding that all or any of the
securities may not have been realised provided
also that subject to these powers of the Bank the
Borrower may with the approval of the Bank deal
with the said goods and assets from time to time
in due course of business provided the margin of
security required by the Bank is fully maintained
and on the terms of payment or delivery to the
Bank of the proceeds thereof or documents therefor
immediately thereof.
8. That the Borrower will submit to the Bank monthly
or oftener as may be required statements of the
said goods and assets hypothecated to the Bank in
the form prescribed by the Bank from time to time
with list of current insurance policies and
amounts verified by certificate of the Borrower
that the quantities and amounts stated are correct
and that all the said goods and assets are fully
covered by insurance and will also furnish and
verify all statements reports returns,
certificates and information and will also execute
all documents and do all acts and things which the
bank may require to give effect here to and all
the Borrower authorises the bank and each of its
Agents and Nominees as attorney for and in the
name of
43
44
the Borrower to do whatever the Borrower may be
required to do hereunder.
9. That this Agreement shall operate as a
continuing security for all moneys indebtedness
and liabilities aforesaid notwithstanding the
existence of a credit balance in the account or
accounts at any time or any partial payments or
fluctuations of accounts.
10. That nothing herein contained shall prejudice
and ___________ remedies of the bank in respect of
any present guarantee obligation or decree for any
indebtedness or liability of the Borrower to the
Bank.
11. That the Borrower declares that all the said
goods and assets hypothecated hereunder and are at
present in existence and all the said goods and
assets over which security may be created
hereafter for all or some or any of the aforesaid
credit facilities and are in existence at the time
of such creation of security are and shall be the
absolute property of the Borrower at his/its sole
disposal and free from any prior charge lien or
encumbrance as have been notified to the bank and
accepted by it as having priority over its charge
and all the future goods and assets to be given as
security to the bank shall likewise be the
unencumbered absolute and disposable property of
the Borrower and the Borrower shall not without
the Bank's prior permission create any mortgage,
charge, lien or encumbrance of any kind upon or
over the same or the undertaking property (whether
movable or immovable) and assets (including
uncalled share capital or any part thereof in the
case of Borrower company) except to the Bank nor
suffer any such mortgage, charged lien or
encumbrance to effect the same or any part thereof
nor do or allow anything that may prejudice the
security while Borrower remains indebted or liable
to the Bank in any manner without Bank's written
consent. The Borrower shall also not report to
outside borrowings without the bank's prior
written consent.
12. Subject always to the Bank's right powers and
privileges under this Agreement or otherwise the
Borrower may with the approval of the bank and in
due course of business sell from time to time the
said goods and assets which have been hypothecated
to the Bank provided the margins of security
required by the Bank are always fully maintained
and on the terms of payment and deliver to the
Bank of the proceeds thereof the documents
relating thereto immediately on receipt and on the
express understanding the security created
hereunder and all realisations recoveries and
insurance proceeds thereof and all rights and
interests in respect and all documents therefor
shall always be kept distinguishable and held as
the Bank's exclusive property specifically
appropriated to the security created hereunder to
be dealt with only under the directions of the
Bank.
13. That the Bank shall not be under any liability
whatsoever towards the Borrower or any other
person for any loss or damage to the said goods
and assets the subject
44
45
of this Agreement from or in whatever cause or
manner arising whether such goods and assets shall
be in the possession of the bank or not at the
time of such loss or damage or the happening of
the cause thereof. The Borrower shall at all times
indemnify and keep indemnified the Bank from and
against all suits proceedings costs charges claims
and demands whatsoever that may at any time arise
or be brought or made by the any person against
the bank in respect of any acts matter and things
lawfully done or caused to be done by the Bank in
connection with the said goods and assets or in
pursuance of the rights and power of the Bank
under this Agreement.
14. That the Borrower shall display the Bank's
name on the godown factory and other places
approved by the Bank where such goods and assets
as are hypothecated to the Bank and against which
limits for purposes of drawings have been fixed
under all or some any of the aforesaid credit
facilities have been stored indicating that such
goods and assets are hypothecated to the Bank.
15. All the machineries of the Borrower
hypothecated and charged to the Bank shall be
treated as movable property and not as an
immovable property and shall bear the name of the
Bank indicating that the said machineries are
hypothecated and charged to the Bank. The Borrower
shall also exhibit conspicuously in the main-hall
of the factory a list showing the items of
machineries hypothecated and charged to the Bank.
THE SCHEDULE REFERRED TO HEREINABOVE
(Give description of the machinery hypothecated)
IN WITNESS WHEREOF the parties hereto have
executed these presents the day and year first
hereinabove written.
THE COMMON SEAL* OF MODULAR ELECTRONICS (India)
______________.
was hereunto fixed pursuant to the resolution of
the Board of Directors passed in that behalf
on _________________ day of _______________ 1996
in the presence of ____________________________
______________________________________
__________________
* The Common Seal of the Company or Society must be affixed in accordance with
the Articles of Association of the Company or the Bye-laws of the Society.
45
46
SIGNED by ______________________ For and on behalf
of the ____________________ State Bank of Hyerabad
(Department)
signed Sealed and Delivered by For and on behalf of Messrs
Shri/Smi./Kum.
for and on behalf of
Messrs
as Proprietor/Proprietress Proprietor/Proprietress
OR
Signed Sealed and Delivered by For and on behalf of Messrs
Shri/Smi./Kum. 1.
Shri/Smi./Kum. 2.
Shri/Smi./Kum. 3.
Shri/Smi./Kum. 4.
for and on behalf of Partners
Messrs
as partners
OR
Signed Sealed and Delivered by For and on behalf of Messrs
Shri
for and on behalf of
Messrs
as karta of his joint family Karta
THE COMMON SEAL - OF THE ABOVE
NAMED
was hereunto
affixed in pursuance of a __ OF THE _______________
Committee of __ of the said Society
__ on the day of
and these presents have been signed
by(1)
and _________
(2)
MEMBERS OF THE
Members of the said Committee and MANAGING COMMITTEE
the Secretary thereof SECRETARY
______________________ of the Bank and as such one
of the authorised (Designation)
_______________________ Officers of the said bank
for and behalf of the Bank
___________________________________ (Authorised
Officers)
46