Deed of Hypothecation

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.

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