Adam Frankel
General Counsel · Technology & AI
15+ years as General Counsel to technology, cloud & AI companies
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.
This is a preview. The full template is free on GitLaw.
About this template
What is this template?
This document is a formal deed that pledges movable machinery as collateral for a loan while leaving the equipment in the borrower's hands. It is not a mortgage of real property or a simple unsecured promissory note. It contains specific schedules for asset description and repayment installments.
When should you use it?
Use this when a creditor is paying a manufacturer directly for equipment that the borrower will use and eventually own. Use a Chattel Mortgage if the jurisdiction does not recognize hypothecation of movable assets.
What's inside
| Clause | Name | What it does |
|---|---|---|
| Payment by the CREDITOR | Payment by the CREDITOR | The CREDITOR pays the balance price directly to the manufacturer and retains the original invoice until the debt is discharged. |
| Hypothecation | Hypothecation | The BORROWER creates a charge on the asset described in Schedule A as security for loan repayment plus interest. |
| Obligations of the BORROWER | Obligations of the BORROWER | The BORROWER must repay the loan within a stated number of months and pay monthly interest at a specified percentage. |
| Rights of the CREDITOR | Rights of the CREDITOR | The CREDITOR may claim the entire principal if the BORROWER fails to pay a specific number of installments. |
| Insurance | Insurance | The BORROWER must insure the asset against all hazards and provide receipts to the CREDITOR upon request. |
| Arbitration | Arbitration | All disputes are settled by arbitration under the Arbitration and Conciliation Act, 1996 at a designated venue. |
Who it's for
- an individual in India borrowing funds to purchase specific industrial machinery from a manufacturer
- a creditor financing the balance price of equipment in exchange for a charge over the asset
- parties requiring a fixed monthly repayment schedule for a machinery loan
- a borrower who needs to retain possession of a financed asset for business operations
How long it runs and how it's signed
How long
Runs until the work is done
Stated duration
[number of months] months
Signed by
CREDITOR, BORROWER
Witness
Required
Notarisation
Not required
Also needed
affix signatures to Schedule A and Schedule B
Law it's drafted under
Governed by
Arbitration and Conciliation Act, 1996
Jurisdiction
India
Document info
GitLaw document. Document created on Fri Jun 26th, 2026. Last updated on Fri Jul 10th, 2026.
This document is public
Licensed under CC BY 4.0 (Attribution).
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