Deed of Covenant to Accompany Statutory Mortgage of Ship
THIS
DEED OF COVENANT is made the ....... day of ......... between M/s. AB & Co.
Ltd., a company registered under the companies Act, 1956, having its registered
office at ................. (hereinafter called the "Mortgagor") of
the one part and Bank of ........... a banking corporation constituted under
the Banking Companies (Acquisition and Transfer of Undertaking) Act 1970 and
having its Head Office at ......... (here in after called the ''Mortgagee'') of
the other part.
WHEREAS:
1. The mortgagor is the
absolute and unencumbered owner of all the shares of and in the ship by name
....... and which is more particularly described in the schedule hereunder
written and is hereinafter referred to as ''the said ship''.
2. The mortgagees have
lent to the mortgagor the sum of Rs. ........ upon having the same secured by a
statutory mortgage of the said ship and upon the terms hereinafter set out and
the mortgagor has executed a statutory mortgage of the said ship bearing even
date with this deed and intended to be forthwith registered for securing the
said sum of Rs. .... with interest and any other sums which may be owing in
accordance with the terms of this deed.
3. This deed is
supplemental to the said mortgage and to the security thereby created.
NOW
THIS DEED WITNESSETH AS FOLLOWS:
1. The mortgagor doth
hereby acknowledge that the mortgagor owes to the mortgagees the principal sum
of Rs. ...... (hereinafter called the principal sum) and hereby covenants with the
Mortgagees as follows:
a. To pay interest at
the rate of ..... per cent per annum on the principal sum or other the sum for
the time being owing on the security of the said recited mortgage (hereinafter
called the statutory mortgage) in half-yearly payments on the day ...... and on
the ....... day of in every year and such interest to be paid on those dated
respectively;
b. To repay the said
principal amount by four installments that is to say, to pay a sum of Rs.
........ at the end of the first year from the date hereof, an equal sum of Rs.
...... at the expiration of three years from the date hereof, another sum of
Rs...... at the expiration of three years from the date hereof and the balance
of the principal sum on the expiration of four years from the date hereof, each
time to be deemed of the essence of the contract.
c. In the event of
default in payment of any installment of interest or the due date thereof as
hereinabove provided the Mortgagor will be liable to pay and shall pay interest
on such defaulted installment of interest at the rate as aforesaid from the
date of default until payment as and way of compound interest.
2. The statutory
mortgage and the policies of insurance herein mentioned shall be held by the
Mortgages as security for the payment of all monies for principal, interest or
otherwise however (hereinafter referred to as ''the mortgagee debt'') which may
become due and payable under or in respect of any of the provisions hereof.
3. The mortgagor further
covenants with the mortgagees that through out the currency of this security
and until all monies secured hereby and by the statutory mortgage have been
paid, the mortgage shall-
a. Insure and keep the
said ship at all times insured to the extent of her full market value (in the
joint names of the mortgagor and the mortgagees) by policies to be approved by
the mortgagees against all such risks as are from time to time required by the
mortgagees to be covered by insurance with such insurance companies
underwriters war risks or other mutual insurance associations and through such
brokers in India as the mortgagees shall from time to time approve in writing.
b. Enter and keep the
said ship at all times entered in respect of her full value and tonnage in such
protection and Indemnity association in India as the mortgagees shall approve
for all risks and liabilities for the time being usually covered therein and to
arrange for guarantees (if required) to be given to the satisfaction of such
association.
c. Punctually pay all
such premia, calls, contributions or other sums as may be payable by the
Mortgagor in order so to insure and keep the ship insured and entered and to
produce all relevant receipts when so required by the mortgagees.
d. Procure that the
interest of the mortgagees shall be duly endorsed or noted upon all slips,
cover notes, policies. Certificates of entry or other instrument of insurance
issued in connection with such insurances or entry and that each and every
policy covered by these provisions shall contain or have attached thereto a
Loss payable Clause whereby any monies due in respect of claims under the
policy shall be payable to the Mortgagees or in accordance with their
directions;
e. Procure that all such
instrument of insurance shall be deposited with the approved brokers and shall
(if required) be delivered up by them to the Mortgagees or their nominees and
that the brokers shall give appropriate letters of undertaking stipulating that
the brokers will hold all such instruments for the benefit of the Mortgagees.
f. At the outset at any
time of the Mortgagees, assign, endorse and deliver to the mortgagees the
originals of all policies covered by these provisions and all monies insured by
or to become payable under such policies or any of them and the full benefit
thereof and to do all such things and execute all such documents as shall
create legal title in such policies in the mortgagees.
g. Not do anything nor
suffer anything to be done whereby any policy or policies on the ship or any
cover afforded by the rules of any Association in which the ship is entered may
be or become void and in particular shall not employ the ship or suffer the
ship to be employed otherwise than in accordance with the terms of such
policies and cover (including any warranties or trading limits therein) without
first giving written notice to the mortgagees and obtaining the consent of the
insurers concerned and complying with such requirements as to payment of extra
premium or otherwise as the insurers may impose;
4. And the Mortgagor
doth hereby further covenant with the mortgagees as follows:
a. To keep the said ship
registered as an Indian ship at any port of registry in India and not to do or
suffer to be done anything whereby such registration may be forfeited or
imperiled.
b. Not to employ or
permit the said ship to be employed in any illicit trade or in carrying any
illicit or prohibited goods;
c. Not to enter into any
demise or other character whereby the mortgagor surrenders possession of the
ship nor into any time or consecutive voyage charter on the said ship lasting
or reasonably calculated to last for longer than ...... months;
d. Not, without the
previous written consent of the Mortgagees, to sell, assign, mortgage, charge,
or otherwise in cumber the ship or any share therein or to agree so to do;
e. To pay and discharge
all debts and liabilities which may give rise to maritime or possessory liens
on the said ship or to claims enforceable by actions in rem against the said
ship or similar process so as to keep her free from arrest or detention and in
the event of arrest or detention of the ship being threatened or effected,
forthwith to notify the mortgagees thereof and to take all steps and make all
payments necessary to obtain the release of the said ship from such arrest or
detention within the week days from receiving notice thereof;
f. To maintain the said
ship in her present class and to keep her and her machinery, auxiliaries and
all equipment at all times in thoroughly good and seaworthy condition and
repair and in such condition as to make her comply with the provisions of the
Merchant Shipping Act, 1958 and of all other Indian regulations and
requirements of the law of the Government of any country where the ship may
trade and to renew and replace all parts and equipment as and when they may
become worn out, damaged or lost by other of a similar nature and of at least
equal value;
g. To permit the
mortgagees to inspect the condition of the ship at all reasonable times and to
give the mortgagees sufficient notice whenever practicable of dry dockings,
surveys and major repairs so as to enable the mortgagees'' surveyors to attend
thereat and if so required to supply to the mortgagees copies of survey reports
on the said ship;
5. And the mortgagor
doth further agree and undertake-
a. Not, without the
prior consent in writing of the mortgagees, to make any major alteration to the
structure or equipment of the said ship;
b. To supply to the
mortgagees on request full information regarding the said ship, her employment
position and engagements, particulars of all towages and salvages and copies of
all charters and other contracts concerning the ship;
c. To notify to the
mortgagees forthwith by letter or in case of urgency by telegram (a) of any
accident to the ship involving repairs, the cost whereof is likely to exceed
Rs. ...... (b) of any occurrence whereby the ship has or is likely to become a
total loss, (c) of any actual or threatened arrest, detention, seizure,
confiscation or requisition of the ship (d) of any requirement of insurers''
classification society or any competent authority which is not immediately
carried out and (e) of any petition or notice of meeting to consider any
resolution to wind up the mortgagor company;
d. To manage the ship in
a business like and efficient manner and keep proper books of account in
respect of the ship which shall be available for inspection by the mortgagees
at all reasonable times;
e. Punctually to pay all
dues, charges, fees, rates, taxes, fines, penalties and other outgoings payable
in respect of the ship and to produce all relevant receipts when so required by
the mortgagees;
f. In the event of any
requisition or seizure of the ship, by any authority, forthwith to assign, to
the mortgagees all rights (if any) which the mortgagor may have, to receive any
payment or compensation in respect of such requisitioning or seizure.
g. To keep a certified
copy of these presents and of the statutory mortgage on board the ship and to
bring the contents thereof to the notice of the master for the time being of
the ship.
h. to permit the
mortgagees to exercise all their rights and remedies under this deed and under
the statutory mortgage and otherwise howsoever and to pay to the mortgagees on
demand all monies whatsoever which the mortgagees may pay or become liable to
pay (including legal costs on a full indemnity and between attorney and client
basis) in connection with the protection, maintenance and enforcement of the
security created by this deed and the statutory mortgage or the exercise of any
of the aforesaid rights and remedies and all such monies shall be added to and
form part of the principal sum and shall bear interest accordingly;
6. The mortgagees shall,
without prejudice to their other rights and powers, be entitled (but not bound)
at all times to take any such action as they may think fit for the purpose of
protecting the security created by this deed and by the statutory mortgage and
in particular (but without prejudice to the generality of the foregoing).
a. In the event of any
failure by the mortgagor to comply with any of the provisions of this deed
relating to insurance, to effect and maintain such insurance of and relating to
the said ship as the mortgages shall think fit;
b. In the event of the
mortgagor failing to carry out any repairs to the said ship within .........
weeks of being instructed in writing by the mortgagees to effect such repairs,
to cause such repairs as they consider necessary to be carried out;
c. In the event of the
mortgagor failing to obtain the release of the ship within ..... days in
accordance with sub-clause (e) of clause 4 hereof, to take all such steps and
make all such payments as may be necessary to obtain such release.
7. The mortgagor shall
indemnify the mortgagees on demand against all and any expenditure and
liability incurred by the mortgagees in and about the protection of the
security as aforesaid.
8. All monies secured by
this deed and/or by the statutory mortgage shall become immediately due and
payable, without any demand, and the security shall become enforceable if the
mortgagor has made default in any of the following respects or if any of the
following events should happen;
a. If the mortgagor does
not pay any installment of the principal amount on the day stipulated herein in
clause (1) sub clause (b) for the payment of the same;
b. If the mortgagor
fails to pay any installment of interest on the due date thereof as provided in
clause (1) (a) hereof.
c. If the mortgagor does
not observe or perform any of the covenants or obligations contained herein or
in the statutory mortgage;
d. If the said ship be
lost, or substantially damaged in collision at sea or otherwise or captured,
seized, confiscated or requisitioned for title;
e. If a petition be
filed or an order be made or an effective resolution be passed for the
compulsory or voluntary winding up otherwise than for the purpose of
reconstruction or amalgamation, of the mortgagor or if a receiver shall be
appointed of the undertaking or property of the mortgagor or if the mortgagor
suspends payment or cease to carry on business or make any special arrangement
or composition with its creditors.
9. When the security created
by this deed and/or by the statutory mortgage shall become enforceable as
herein provided, the mortgagees without prejudice to any statutory or common
law remedies or powers which they may possess, shall forthwith be entitled as
and when they shall think fit with or without notice to do all or any of the
following: -
a. To take possession of
the ship;
b. Either with or
without taking possession of the ship, to take appropriate legal proceedings in
a court of law including interim proceedings for arrest of the ship and for
appointment of a Receiver thereof and to invite judgment for sale of the ship
or any part thereof by public auction or private contract upon such terms as
the court may think fit and without being answerable for any loss occasioned by
such sale or by any postponement thereof;
c. Upon any such sale as
aforesaid to give a receipt for the purchase money which shall effectually
discharge the purchaser or persons paying the same and the purchaser shall not
be bound to see or inquire whether the mortgagees'' power of sale has arisen
and shall not be concerned with the manner of application of the proceeds of
sale or be in any way answerable therefore;
d. After taking
possession of the ship as aforesaid, to manage, insure, maintain and repair the
ship and to employ or lay up the ship for so long and in such manner as they
may think fit and to do all acts and things incidental thereto and to enter
into such arrangements respecting the ship or the working thereof in all
respects as if the Mortgages were the owners of the ship and without being
answerable for any loss thereby incurred.
10. All expenses,
payments and disbursements incurred or paid by the Mortgagees in and about the
exercise of any of their powers herein contained shall be payable by the
Mortgagor to the Mortgagees on demand, failing which the same shall form part
of the Mortgage debt and the Mortgagor shall indemnify the Mortgagees against
all losses and liabilities which the Mortgagees may incur in the exercise of
such powers.
11. The Mortgagees shall hold
the monies received by them on the total loss of the ship or on the sale of the
ship or any part thereof or by way of payment or compensation for any
requisitioning or seizure of the ship upon trust, in the first place, to pay or
retain all costs and expenses incurred in connection with such loss or sale or
the obtaining of such payment or compensation or in or about the execution of
the powers conferred upon them by this deed and shall apply the balance first
in or towards payment of all unsatisfied interest owing to the Mortgagees
hereunder, secondly in or towards payment of the principal sum, thirdly, in or
towards payment of all other monies then owing or which will thereafter become
owing hereunder and fourthly, shall pay the surplus if any to the Mortgagor.
12. Any monies received
by the Mortgagees upon any insurance effected by the Mortgagor pursuant to this
deed other than for a total loss as aforesaid shall so long as the security has
not become enforceable under clause 8 hereof be paid over by the Mortgagees to
the Mortgagor and shall be applied by the Mortgagees in making good any loss or
damage in respect of which such insurance monies were received.
13. The Mortgagees
covenant with the Mortgagor as follows: -
a. Not to exercise their
powers of enforcement of the security created by this deed and by the statutory
mortgage until or unless the Mortgagor has made default in observance of any of
the covenants or agreements or any of the events shall happen which are
specified in clause 8 hereof;
b. That upon payment of
all monies secured by the said Mortgage and payable hereunder shall become
enforceable and upon payment of all costs, charges and expenses and the
discharge of all liabilities of the Mortgagees in relation of the said ship
they will discharge the statutory mortgage and re-transfer or reassign to the
Mortgagor all such policies, certificates of entry and other documents relating
to the ship as may remain in their possession.
14. No delay in
exercising or omission by the Mortgagees to exercise any right or power vested
in them under this deed or the said statutory mortgage, shall impair such right
or power and shall not be construed as a waiver of or as an acquiescence in any
default by the Mortgagor and in the event of the Mortgagees on any occasion agreeing
to waive any such right or power such waiver shall not in any way prejudice pr
affect the right of the Mortgagees afterwards to act strictly in accordance
with the powers conferred upon them under this deed or the statutory mortgage.
15. The statutory mortgage
and this deed shall be additional to any other security which may now or
hereafter be given to the Mortgagees by the Mortgagor and section 61 of the
Transfer of Property Act, 1882 shall have no application hereto.
16. The statutory
mortgage and this deed shall be construed in accordance with and be governed by
the Indian Law.
IN
WITNESS WHEREOF the parties hereto have put their respective hands the day and
year first hereinabove written.
THE
SCHEDULE ABOVE REFERRED TO:
The
common seal of the withinnamed)
Mortgagor
Company M/s. AB & Co.)
Ltd.,
is hereto affixed pursuant to the)
resolution
of the Board of Directors)
dated
....... In the presence of Mr. .......)
the
Managing Director and countersigned )
by
Mr. ....... Director/Secretary duly)
authorised
in that behalf and who is token)
thereof
have put their signatures opposite)
in
the presence of .............)
1.
2.
Signed
for & on behalf of the)
withinnamed
Mortgagees Bank of)
.......
By the general Manager Mr. ......)
duly
authorized in that behalf in the)
presence
of ...........)
