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Pledge And Security Agreement Template for India

A comprehensive security document governed by Indian law that establishes a pledge or security interest over specific assets in favor of a secured party. The agreement details the creation, perfection, and enforcement of security interests in accordance with Indian security and property laws, particularly the SARFAESI Act and Transfer of Property Act. It sets out the rights and obligations of both the pledgor and pledgee, includes provisions for maintaining and protecting the security interest, and specifies enforcement mechanisms in case of default. The document incorporates necessary compliance requirements under Indian registration and stamp duty laws.

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What is a Pledge And Security Agreement?

The Pledge and Security Agreement is a crucial document in Indian secured lending transactions, used when a party (pledgor) needs to provide security over specific assets to secure their obligations to another party (pledgee). This document is commonly used in various financing arrangements including loan transactions, working capital facilities, and structured finance deals. It must comply with multiple Indian laws including the SARFAESI Act, Transfer of Property Act, and Registration Act. The agreement typically covers detailed descriptions of pledged assets, representations about ownership and authority, maintenance obligations, enforcement rights, and default remedies. It's particularly important in the Indian context where security enforcement follows specific statutory procedures and requires careful documentation to ensure enforceability.

What sections should be included in a Pledge And Security Agreement?

1. Parties: Identification of the pledgor, pledgee, and any other relevant parties to the agreement

2. Background: Context of the agreement, including reference to any underlying debt or obligation being secured

3. Definitions: Definitions of key terms used throughout the agreement

4. Grant of Security Interest: Clear description of the pledge and security interest being created

5. Secured Obligations: Detailed description of the obligations being secured by the pledge

6. Representations and Warranties: Pledgor's representations regarding ownership, authority, and status of pledged assets

7. Covenants: Ongoing obligations of the pledgor regarding maintenance and preservation of pledged assets

8. Rights and Obligations: Specific rights and obligations of both pledgor and pledgee

9. Events of Default: Circumstances constituting default under the agreement

10. Enforcement Rights: Pledgee's rights and remedies upon occurrence of an event of default

11. Protection of Security: Measures for maintaining and protecting the security interest

12. Notices: Process and requirements for serving notices under the agreement

13. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction

14. Miscellaneous: Standard boilerplate provisions including amendments, waivers, and severability

What sections are optional to include in a Pledge And Security Agreement?

1. Security Trustee Provisions: Required when security is held by a trustee on behalf of multiple beneficiaries

2. Further Assurance: Additional provisions for executing further documents or taking additional steps to perfect the security

3. Power of Attorney: Optional provision granting power of attorney to the pledgee for specific purposes

4. Insurance: Required when pledged assets need to be insured

5. Registration Requirements: Needed when security requires registration with specific authorities

6. Voting Rights: Required when pledged assets include shares or other securities with voting rights

7. Income and Distributions: Provisions dealing with income or distributions from pledged assets

What schedules should be included in a Pledge And Security Agreement?

1. Schedule of Pledged Assets: Detailed description and identification of all assets being pledged

2. Form of Notice: Standard forms of notices required under the agreement

3. Details of Existing Security Interests: List of any existing security interests or encumbrances on the pledged assets

4. List of Security Documents: Comprehensive list of all security and related documents

5. Powers of Attorney: Forms of power of attorney if required

6. Underlying Obligations: Details of the underlying obligations being secured

7. Perfection Requirements: List of all required filings, registrations, and other perfection requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

India

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use

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