AGREEMENT TO HYPOTHECATE GOODS TO SECURE FIXED LOAN
The Manager,
____________ Bank,
____________
____________
Sir,
In consideration of your Bank advancing to me/us on loan the sum of Rs. ____________, I/We hereby agree to hypothecate and hold under lien to the Bank, as security for the repayment as per the Schedule hereto of the principal amount of the loan, and payment of interest on demand at the rate of ______% per annum, subject to a maximum of ______% per annum above the Bank Rate.
The goods so to be held by me/us under lien to the Bank, I/We declare to be my/our absolute property, and to be stored in my/our godowns at ____________.
I/We hereby agree to furnish you, at the close of business on the last day of each English calendar month, so long as any money remains due in respect of the said loan, with a full and correct statement of particulars of all goods so held under lien to the Bank, with the market value thereof respectively on that day. All goods from time to time held by me/us under lien to the Bank in terms of this agreement shall be kept separate and apart from all other goods in my/our possession; and no moneys shall be borrowed by me/us from any company, firm or person on the security of such goods stored in the same godown, in a way that such other goods may be mixed with the goods held under lien to the Bank; nor shall I/We do any other act by means of which the Bank's lien on the goods so held shall be in any way impaired or affected. It is understood that I/We are at liberty, from time to time in the ordinary course of business, to sell all or any of the goods from time to time held under lien to the Bank under this agreement, provided that no such sale shall reduce the value of the goods held under lien below the amount of my/our said debt to the Bank plus the margin of ______ per cent.
In case of any sale of goods held under lien to the Bank reducing the value of the goods held under this lien to less than the amount of my/our said debt to the Bank plus such margin, the proceeds of such sale, as soon as the same are received, shall be paid into the Bank in part satisfaction of the said loan, and shall in the meantime be held as specifically appropriated to payment of the amount due by me/us on the security.
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