1

BANK OF INDIA

HYPOTHECATION OF MOVEABLE MACHINERY

BANK OF INDIA ( hereinafter called “the Bank” which includes its assigns) having at the request
of _____________________________________________________ (hereinafter called “the
Borrower”) ageed to grant to the Borrower a loan of Rs. __________________________________
repayable with interest in the manner mentioned in the Agreement dated __________ 200__ made
between the Borrower on ONE PART and the Bank on the OTHER PART ( hereinafter referred to
as “the Principal Agreement”).

IT IS HEREBY AGREED by the Borrower jointly and severally with the Bank namely –

1. The expression “the Borrower” shall when the Borrower is

a) an individual, include his or her heirs, executors, administrators and assigns

b) a firm, include the partners for the time being of the firm

c) a Company, include its successors and assigns

d) a joint and Undivided Hindu Family or a joint family firm, include all its co-
parceners

e) an Association corporate or incorporate, include its successors and assigns and

all members and their respective heirs, executors, administrators and
assigns.

2. The Borrower hereby hypothecates in favour of the Bank ALL those the folowing
goods of the Borrower ( described in general terms ), namely :-

All tangible movable machinery and plant ( both present and future,
whether installed or not and whether lying loose or in cases at site or in
transit, or which may at any time hereinafter during the continuance of this
security be installed or lying loose or in cases or being in or upon or about
the Borrower’s premises and godowns at ___________________________
_______________________________ or wherever as the same may be or
be held by any party anywhere to the order and disposition of the Borrower
or in course of transit to the Borrower (all of which are hereinafter called
“the hypothecated goods”). The hypothecated goods are hypothecated as
security by way of first charge for due repayment by the Borrower to the
Bank at ___________________ of the said term of Rs._______________
or the balance thereof for the time being outstanding with the terms of
Principal Agreement with interest at the rate therein provided, and for
payment of all sums of money payable by the Borrower to the Bank either
under the Principal Agreement or hereunder AND all costs ( between
attorney and client), charges and expenses incurred by the Bank for the
preservation, protection, defence and perfection of this security or for
attempted or actual realisation thereof. And Also for due repayment and

1/5
 2

discharge of all present and future indebtedness and liabilities of the

Borrower to the Bank of any kind in any manner whether solely or jointly,
primary or collateral, accrued and accuing with all relative interest,
charges, costs ( between attorney and client), charges and expenses.

3. The Borrower shall so long as the advance remains unpaid pay interest thereon or
on the balances thereof due from time to time at the rate of _________% p.a. over
Prime Lending Rate minimum ____% p.a. with monthly/ quarterly ( March, June,
September and December) / half-yearly ( September and March ) each year.

4. Subject to the proviso following and the Bank’s powers conferred by this security,
the Borrower may in the ordinary course of business shall and dispose any of the
hypothecated goods But the Borrower shall on any and every such sale on receipt
of the documents or sale proceeds deliver the documents or pay the net proceeds of
sale in satisfaction so far as the same will extend of the balance then due and owing
on the account kept by the Bank in respect of such loan Provided that the
Borrower shall not make any sale of the hypothecated goods upon being prohibited
by the Bank in writing from doing so.

5. The Borrower shall, whenever required by the Bank, give full particulars to the
Bank, of all the assets of the Borrower and of the hypothecated goods and shall at
all times allow the Bank or the authorised agent of the Bank inspection of the
hypothecated goods and all records of the Borrower in reference thereto and shall
allow the Bank or its agent to value the same. All costs, charges and expenses
incurred by the Bank of an incidental to such inspection and valuation shall be paid
to the Bank forthwith on demand ( the Bank’s statement being conclusive), and
until payment, shall with interest at the rate aforesaid be a charge upon the
hypothecated goods. Any such valuation shall be conclusive and binding on the
borrower.

6. The Borrower shall at all times during the continuance of this security keep and
maintain such margin of security in favour of the Bank as the Bank may require
from time to time. If and so often as the said margin shall failed to be maintained,
then the Borrower shall forthwith ( according as the Bank may require) either
hypothecate to the Bank further goods or tangible movable property approved by
the Bank and of sufficient value to make up the deficiency or shall reduce the
amount for the time being due to the Bank by cash payment so as to maintain the
said margin.

7. The Borrower shall pay all rent, taxes and other outgoings in respect of the
immovable property in or on which the hypothecated goods may for the time being
lying and shall keep such property insured against loss or damage by fire And also
against such other risks as the Bank shall require and shall produce the policies of
insurance to the Bank whenever required. In default, the Bank may without
prejudice to and affecting its right under the Principal Agreement or hereunder or at
law ( but shall not be bound to ) pay such rent, rates, taxes and other outgoings.

8. The Borrower shall at the Borrower’s expense keep the hypothecated goods in
marketable and good condition And shall insure the same against fire and such
other risks and the Bank shall from time to time require for the full market value in

2/5
 3

one or more insurance officer approved by the Bank And shall deliver to the Bank
the policies of insurance duly assigned to the Bank and shall keep on foot and
maintain such insurances throughout the continuance of the security and deliver to
the Bank the renewal receipts. In default, the Bank may (but shall not be bound)
condition and render marketable the goods or effect or renew such insurance. Any
amount paid by the Bank either under the preceeding clause or this clause and any
cost, charges and expenses incurred by the Bank shall be repaid on demand
forthwith And shall until repayment with interest at the rate aforesaid to be a
charge on the hypothecated goods. All such sums received under such insurance
shall be applied in all towards the liquidation of the amount for the time being due
to the Bank.

9. If the Borrower makes any default in payment of instalment of yhe Principal

monies on the respective due dates for payment thereof as mentioned in the
Principal Agreement or in payment of interest amount at least for a period of one
month after the same shall have become due whether demanded or not or if any
other event or circumstance mentioned in clause 6 of the Principal Agreement
occurs whereby the whole of the Advance or the entire balance thereof outstanding
shall become forthwith due and payable or if the advance or the entire default in the
performance or discharge of any obligation or liability to the Bank hereunder or
under the Principal Agreement, then the Bank, if it is think fit, shall be entitled at
the risk and expense of the Borrower without any notice at any time or time after
such default or event or circumstances occur to enter (and for that purpose to do
any necessary act, deed or things) any place where the said goods may be and to
inspect, value, insure and /or take charge and / or possession of all or any part of
the hypothecated goods And to seize, recover, receive, appoint receiver of or
remove and / or sale by public auction or private contract or otherwise dispose of or
deal with all or any part of the hypothecated goods And to enforce, realise, settle,
compromise and deal with any rights aforesaid without being bound to exercise any
of these powers or being liable for any losses in the exercise thereof and without
prejudice to the rights and remedies of suits or otherwise and notwithstanding there
may be any pending suit or other proceedings, the Borrower hereby undertaking to
transfer and deliver to the Bank all relative contract, securities, bazar chits, bill
notes, hundies and documents and agreeing to accept the Bank’s account, of sales
and realisation and to pay any shortfall or deficiency thereby shown; and if the net
sum realised by such sale shall be insufficient to pay the amount secured the Bank
shall be at libery to apply any other money or moneys in the hands of the Bank
standing to the credit of or belonging to the Borrower in or towards the payment of
balance And in the event of there being still deficiency, the Borrower shall
forthwith pay such deficinecy Provided that nothing herein contained shall in any
manner prejudice or affect the Bank’s remedy against the Borrower personally.

10. The Borrower hereby declares and guarantees that the hypothecated goods as to
those now in existence are the absolute and unencumbered property of the
Borrower with full power of disposition thereover and as to future goods shall be
the absolute and unencumbered property of the Borrower with full power of
disposition.

11. Pending seizure by the Bank the hypothecated goods and any documents and any
sale proceeds received by the Borrower on sale in ordinary course and any
insurance money received shall be held as the Bank’s exclusive property

3/5
 4

specifically apropriated to this security and the Borrower will not make or suffer
any mortgage or charge, lien or encumbrance affecting the same or any part thereof
nor do or allow anything which may prejudice the security.

12. The Borrower shall furnish and verify all statements, reports, returns, certificate
and information from time to time and as required by the Bank and give and
execute any necessary document required to give effect to this security.

13. This security shall be a CONTINUING SECURITY for the balance of the said
loan from time to time due to the Bank.

14. Nothing herein shall operate to prejudice the Bank’s rights or remedies in respect
of any present or future security, guarantee obligation or decree for any
indebtedness or liability of the Borrower to the Bank.

15. If the Borrower be more than one individual all shall be bound hereby jointly and
severally and if the Borrower shall be a firm such firm and all members from time
to time thereof shall be bound hereby notwithstanding any changes in the
consitution or style thereof and whether the firm shall consist of or be reduced to
one individual.

16. If and whenever the security shall be held by the Bank for the Borrower’s liability
to the Bank or for any third party’s obligations to the Bank, then the Bank shall be
free without reference to the Borrower to deal, and the Borrower hereby consents
the Bank, dealing with the principal debtor and with any securities; obligations or
decrees and generally to act as if the Borrower were primarily liable and to give
time or other indulgence or make any variation without thereby in any manner
impairing or prejudicing the Bank’s rights against the Borrower, who declares that
the liability of the Borrower shall be deemed that of co-promiser with such third
party.

17. Any notice by way of request or otherwise hereunder may be given by the Bank to
the Borrower or any of the individual constituting the Borrower personally or may
be left at the then or last known place of business or residence of the Borrower in
the Republic of India or in acceeding State or in the Dominion of Pakistan or an
acceeding state as the case may be or any of such individuals addressed to the
Borrower or any of such individuals which may be sent by post to the Borrower or
any of such individuals addressed as aforesaid and if sent by post such notice shall
be deemed to have been given at the time when it would be delivered in due course
of post, and in proving such notice when given by post, it shall be sufficient to
prove that the envelope containing the notice was posted and a certificate signed by
the Bank’s Local Manager or Agent that the envelope was so posted shall be
conclusive. If, by reason of absence from India or Pakistan, as the case may be or
otherwise, any such notice to the Borrower or any of such individual can not be
given, the same, if inserted once as an advertisement in a newspaper circulating in
the district of Bank’s Office shall be deemed to have been effectually given and
received on the day on which the advertisement appears.

Dated at ___________________ this _______________ day of _________________ 200__

executed by Borrower in the manner hereunder :

4/5
 5

IN WITNESS WHEREOF the Borrower has executed these presents the day and year
hereinabove written.
The Common Seal of the within named ______________________________________________
was pursuant to the Resolution of its Board of Directors passed in that behalf on the _______ day of
the _________________ 200__ hereunto affixed in the presence of Mr. ___________________ and
Mr. ______________________.

5/5