Deed of Hypothecation
Updated 10 July 2026
DEED OF HYPOTHECATION — MACHINERY
THIS DEED OF HYPOTHECATION executed at ____________ on this the ______ day of ____________,
Between Mr. ____________________, son of ____________, aged about ______ years, residing at ____________________ (hereinafter called the "CREDITOR", which expression shall, unless it is repugnant to the context, mean and include his legal representatives, executors, administrators and assigns);
And Mr. ____________________, son of ____________, aged about ______ years, residing at ____________________ (hereinafter called the "BORROWER", which expression shall, unless it is repugnant to the context, mean and include his legal representatives, executors, administrators and assigns).
WHEREAS:
The BORROWER has placed an order for the purchase of a ____________, namely ____________ (valued at Rs. ____________ (Rupees ____________); details of the same are set out in Schedule 'A' hereunder) (hereinafter referred to as the "asset"), with the ____________, namely ____________, having its office at ____________; and has remitted an amount of Rs. ____________ (Rupees ____________ only) with the said ____________ as advance towards the sale consideration.
The BORROWER has approached the CREDITOR for a loan of Rs. ____________ (Rupees ____________ only), for the payment of the balance price of the Schedule 'A' mentioned asset. The CREDITOR and BORROWER have agreed that the CREDITOR shall finance the purchase of the Schedule 'A' mentioned asset, on the condition that the BORROWER hypothecates the schedule mentioned asset with the CREDITOR as security for the due repayment of the said loan. The parties have agreed to reduce their agreement to writing.
NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL OBLIGATIONS AND UNDERTAKINGS CONTAINED HEREIN, THIS AGREEMENT WITNESSETH AS FOLLOWS:
Payment by the CREDITOR
The CREDITOR shall pay to the said manufacturer, on behalf of the BORROWER, a sum of Rs. ____________/- (Rupees ____________) towards the balance price of the said asset, and shall retain possession of the original invoice of the said asset till the debt is fully discharged by the BORROWER.
Hypothecation
The BORROWER hereby hypothecates and creates a charge on the asset more fully described in Schedule 'A' hereunder, to and in favour of the CREDITOR, as security for the repayment of the loan with interest.
Obligations of the BORROWER
The BORROWER hereby undertakes to repay the loan amount within a period of ______ months commencing from ____________, along with interest. The BORROWER shall pay interest at the rate of ______% per month on the principal, amounting to Rs. ____________/- (Rupees ____________ only) per month. The interest and principal are payable in monthly instalments as per Schedule 'B' hereto.
Rights of the CREDITOR
If the BORROWER defaults in payment of the amount as per Schedule 'B' hereto, then such defaulted instalment will carry interest as if the defaulted instalment is the principal, until it is paid. If the BORROWER fails to pay any ______ instalments, then the CREDITOR shall be entitled to claim the principal and interest amount due, and the same shall become payable forthwith, on the CREDITOR calling upon the BORROWER to make payment of such defaulted amount.
The BORROWER shall not remove or take the said asset outside the State without prior intimation to the CREDITOR.
The BORROWER agrees and undertakes to insure the asset against all hazards, and shall produce the relevant receipts and other documents whenever called upon by the CREDITOR to do so.
Any dispute arising under this Deed, or any matter incidental thereto, shall be submitted to arbitration as per the provisions of the Arbitration and Conciliation Act, 1996, and the venue of the arbitration shall be at ____________.
IN WITNESS WHEREOF the parties hereto have affixed their signatures on the day, month and year mentioned hereinabove.
SCHEDULE 'A'
(Describe the asset)
SCHEDULE 'B'
(Describe the payment schedule)
CREDITOR: ________________________
BORROWER: ________________________
WITNESSES:
1. ________________________
2. ________________________
About this template
What is this template?
Deed of Hypothecation is a free, ready-to-use Arbitration template you can open, customize, and download on GitLaw. It gives you a professionally structured starting point, so you never have to draft from a blank page. The wording is plain and modern, organized into clear sections that are easy to read, edit, and adapt to your own situation before you share or sign it.
When should you use it?
Reach for this Arbitration template whenever you need a reliable agreement quickly and want to be sure the essentials are covered. It suits individuals, freelancers, startups, and established businesses alike. Instead of paying for a document drafted from scratch, you can start here, tailor the details to your arrangement, and have a polished draft ready in minutes. This version is drafted with India in mind, though you should always review the final wording against the laws that apply to you.
What's typically included?
A well-drafted Arbitration usually sets out the parties involved, the scope of the agreement, and each side's rights and responsibilities. Expect sections covering key terms and definitions, how long the agreement lasts, how it can be ended, and what happens if something goes wrong. This template brings those building blocks together in a sensible order, so you can focus on the specifics rather than worrying about what to include. Open it to read the full document, then sign up to edit, negotiate, and e-sign it directly in GitLaw.