Loan Agreement - Template Form to Create Word & PDF Pro · IN-law

LOAN AGREEMENT

This Loan Agreement (the "Agreement") is made and executed on this ________ ("Effective Date") at ________, ________.

BY AND BETWEEN

________, son/daughter/wife of ________, aged ________ years, with permanent address at: ________, PAN: ________, Aadhaar No.: ________ (hereinafter referred to as the "Borrower", which expression shall, unless excluded by or repugnant to the subject or context, be deemed to include its legal heirs, executors, administrators, successors and permitted assigns) of the ONE PART;

AND

________, son/daughter/wife of ________, aged ________ years, with permanent address at: ________, PAN: ________, Aadhaar No.: ________ (hereinafter referred to as the "Lender", which expression shall, unless excluded by or repugnant to the subject or context, be deemed to include its legal heirs, executors, administrators, successors and permitted assigns) of the SECOND PART;

AND

________, son/daughter/wife of ________, aged ________ years, with permanent address at: ________, PAN: ________ (hereinafter referred to as the "Guarantor", which expression shall, unless excluded by or repugnant to the subject or context, be deemed to include its legal heirs, executors, administrators, successors and permitted assigns) of the THIRD PART.

(The Borrower, the Lender and the Guarantor shall hereinafter be individually referred to as a "Party" and collectively as the "Parties".)

WHEREAS:

A. The Borrower is engaged in the business of:

________

B. The Borrower requires funds for the following purpose:

________

and has requested the Lender to provide financial assistance for an amount of Rs. ________ (Rupees ________ only) (the "Loan"), and the Lender has agreed to do the same.

C. Pursuant to the above, the Parties seek to enter into this Agreement to confirm and record the terms and conditions on which the Lender shall provide the Loan to the Borrower, and other agreements in connection therewith.

D. This Agreement is made and constituted in accordance with the provisions of the Indian Contract Act, 1872, and the Lender confirms that the lending hereunder does not constitute carrying on the business of a non-banking financial institution within the meaning of the Reserve Bank of India Act, 1934.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the Parties hereby agree as follows:

1. DEFINITIONS AND INTERPRETATION

1.1. "Applicable Law" shall include all applicable (i) statutes, enactments, acts of legislature or parliament, laws, ordinances, rules, bye-laws, regulations, notifications, guidelines or policies of any jurisdiction; and (ii) judicial, quasi-judicial and/or administrative decisions, interpretations, directions, directives, licenses, permits, judgments, writs, injunctions, arbitral awards, decrees, orders, terms and conditions of governmental or regulatory approvals or agreements with any Government Body.

1.2. "Approvals" shall mean sanctions, permissions, consents, validations, confirmations, licenses, and other authorisations obtained and/or required to be obtained from any Government Body.

1.3. "Business Day" means a day that is not a Saturday, Sunday, public holiday or bank holiday in ________.

1.4. "Confidential Information" means all information disclosed by one Party to the other in connection with this Agreement, whether oral, written or in any other form, including financial, commercial and personal information.

1.5. "Default Interest Rate" means ________% (________ per cent) per annum over and above the Interest Rate.

1.6. "Government Body" means any government authority, statutory authority, government department, agency, commission, board, tribunal or court or other law, rule or regulation-making entity having or purporting to have jurisdiction on behalf of India or any state or other subdivision thereof or any municipality, district or other subdivision thereof.

1.7. "Interest Rate" means ________% (________ per cent) per annum.

1.8. "Loan Amount" means the principal amount of the Loan provided by the Lender to the Borrower, being an amount equivalent to Rs. ________ (Rupees ________ only).

1.9. "Material Adverse Change" means any change in the circumstances of the Borrower that the Borrower knows, or should know, will materially affect its capacity to perform its obligations under this Agreement.

1.10. "Outstanding Amounts" means at any time the aggregate of the Loan Amount, all accrued interest, default interest, costs, charges, fees and all other monies whatsoever due and payable by the Borrower to the Lender under this Agreement.

1.11. "Repayment Date" means ________ or such other date as the Lender and Borrower may agree to in writing.

1.12. "Security" means any security interest, pledge, mortgage, hypothecation, encumbrance or charge provided by the Borrower, including the guarantee provided by the Guarantor as specified in Clause 4 of this Agreement.

1.13. Interpretation

1.13.1. The headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement.

1.13.2. Unless the context otherwise requires, in this Agreement:

1.13.2.1. words using the singular or plural number also include the plural or singular number, respectively;

1.13.2.2. words denoting any gender shall include all genders;

1.13.2.3. the words "written" and "in writing" include any means of visible reproduction;

1.13.2.4. the terms "hereof", "herein", "hereto" and similar words refer to this entire Agreement and not to any particular Clause or other subdivision of this Agreement;

1.13.2.5. the words "include" or "including" shall be deemed to be followed by "without limitation" or "but not limited to";

1.13.2.6. references to any "person" include any natural person, corporation, judicial entity, association, statutory body, partnership, limited liability company, joint venture, trust, estate, unincorporated organisation or government, state or any political subdivision, instrumentality, agency or authority; and

1.13.2.7. references to a "Clause" or any other agreement or document in this Agreement shall be construed as references to the Clauses of this Agreement, or such other agreement or document, as may be amended, modified or supplemented from time to time.

2. THE LOAN

2.1. Subject to the terms of this Agreement, the Lender hereby agrees to grant to the Borrower, and the Borrower hereby agrees to avail from the Lender, the Loan in accordance with the provisions contained herein.

2.2. The Loan shall be disbursed by the Lender to the Borrower in the following manner: ________, on or before ________.

2.3. The Borrower acknowledges and confirms receipt of the Loan Amount, the acknowledgement whereof shall be evidenced by a duly stamped receipt and/or the records of the disbursing bank.

3. INTEREST

3.1. Interest shall be payable by the Borrower on the Loan at the Interest Rate of ________% (________ per cent) per annum, payable ________.

3.2. The Borrower acknowledges that the Loan provided under this Agreement is for a commercial transaction and hereby explicitly waives any defence that may be available to it under any usury or other laws relating to the charging of interest, subject to compliance with Applicable Law.

3.3. If the Borrower defaults in making any payment of the Loan, any interest or any other amount under this Agreement on its due date, interest shall accrue on the unpaid sum from the due date up to the date of actual payment at the Default Interest Rate. Any interest accruing under this Clause shall be immediately payable by the Borrower on demand by the Lender.

4. SECURITY

4.1. Until the discharge of all the obligations under this Agreement, including without limitation repayment of the Loan, payment of interest and all other Outstanding Amounts due to the Lender, the Borrower shall maintain the following security in favour of the Lender:

________

4.2. The Loan shall further be secured by the personal guarantee provided by ________ in terms of Clause 10 of this Agreement.

4.3. Where the Security comprises immovable property, the Borrower shall execute and register such mortgage deed or other documents of charge as required under the Transfer of Property Act, 1882, and the Registration Act, 1908, and bear all stamp duty and registration charges in connection therewith.

5. REPAYMENT

5.1. The Borrower shall repay the Loan on the Repayment Date together with interest and all other charges, fees, costs, expenses or other Outstanding Amounts due and payable under this Agreement.

5.2. The Loan shall be repaid in accordance with the following repayment schedule: ________.

5.3. All payments by the Borrower shall be made free and clear of any deduction or withholding, save as required by Applicable Law, and shall be made to the bank account of the Lender notified in writing.

6. PREPAYMENT

6.1. The Borrower shall be permitted to prepay the principal amount of the Loan.

6.2. Any prepayment made by the Borrower shall be applied by the Lender in the following order:

6.2.1. firstly, towards payment of accrued interest;

6.2.2. secondly, towards any costs, expenses or fees accrued in relation to this Agreement;

6.2.3. thirdly, towards the principal amount of the Loan; and

6.2.4. fourthly, as a prepayment towards future payments due in accordance with this Agreement.

7. UTILISATION OF THE LOAN

7.1. The Borrower shall utilise the Loan strictly for the following purpose:

________

7.2. The Lender may in its discretion, but without being bound to, monitor or verify the application of any amount borrowed pursuant to this Agreement. The Borrower undertakes to make available to the Lender such books and records as may be required by the Lender for such monitoring.

8. OBLIGATIONS OF THE BORROWER

8.1. The Borrower shall ensure that the Security provided to the Lender towards the Loan is kept insured at all times and that the name of the Lender is recorded with the insurer as a person holding a charge over the Security.

8.2. The Borrower shall provide information and give access to records as may be reasonably requested by the Lender.

8.3. The Borrower shall, on request by the Lender, provide a valuation of the Security by a valuer of sufficient skill and experience in valuing assets such as that forming the Security.

8.4. The Borrower shall execute such documents and do such acts as are reasonably requested by the Lender from time to time to ensure that the Lender may take full benefit of the Security granted in its favour.

8.5. The Borrower shall ensure that there is no substantial change in the nature of the business carried out by it without the written consent of the Lender.

8.6. The Borrower shall ensure that no charge is created over the Security other than as specified in this Agreement, and that none of the properties forming part of the Security is sold, transferred or otherwise disposed of until all Outstanding Amounts have been paid in full to the Lender.

8.7. The Borrower shall comply with all Applicable Laws and keep all Approvals required for its business in force.

8.8. The Borrower shall make no counterclaim or set-off against any payment due under this Agreement and shall make such payments on or before the date they fall due without any deductions whatsoever, save as required by Applicable Law.

8.9. The Borrower shall provide notice to the Lender of any Event of Default or Material Adverse Change forthwith upon becoming aware thereof.

9. REPRESENTATIONS AND WARRANTIES OF THE BORROWER

9.1. The Borrower hereby represents and warrants to the Lender that:

9.1.1. all necessary corporate and other authorisations required in connection with its entry into, performance of, and the validity and enforceability of its obligations under and delivery of this Agreement have been obtained and are in full force and effect;

9.1.2. the obligations expressed to be assumed by it in this Agreement are legal, valid, binding and enforceable obligations in accordance with their terms;

9.1.3. the execution and performance by it of this Agreement does not conflict with or constitute a default of any Applicable Law or any contract entered into by it with any party;

9.1.4. all documents provided by the Borrower to the Lender are true and correct, and any financial statements provided to the Lender give a true and fair view of, and represent, the Borrower's financial condition;

9.1.5. all information supplied by the Borrower for the purpose of the Loan is true, complete and accurate in all material respects as of the date on which it was given and is not misleading in any respect;

9.1.6. there are no insolvency or bankruptcy proceedings ongoing or initiated against the Borrower under the Insolvency and Bankruptcy Code, 2016, or otherwise;

9.1.7. there are no lawsuits, arbitration actions or proceedings pending or, to the knowledge of the Borrower, threatened against the Borrower; and

9.1.8. the Borrower is in compliance with Applicable Laws and possesses all Approvals required under Applicable Law to conduct its business.

9.2. The Borrower acknowledges that the Lender has agreed to provide the Loan on the basis of and in full reliance upon the representations and warranties set out in this Clause 9. The Borrower further agrees that each of the representations and warranties shall be deemed to be repeated on each day during the subsistence of this Agreement until all Outstanding Amounts have been paid in full to the Lender.

10. GUARANTEE

10.1. In consideration of the Lender providing the Loan to the Borrower, the Guarantor hereby unconditionally and irrevocably guarantees to the Lender the due performance by the Borrower of all its obligations under this Agreement, including without limitation repayment of the Loan Amount and payment of all Outstanding Amounts.

10.2. Upon the occurrence of an Event of Default, the Guarantor shall:

10.2.1. pay on demand all Outstanding Amounts as directed by the Lender; and

10.2.2. indemnify the Lender against all losses, liabilities or expenses (including legal costs and expenses on a full indemnity basis) that the Lender incurs or suffers (directly or indirectly) as a result of the Event of Default.

10.3. The obligations of the Guarantor shall be enforceable against the Guarantor without any obligation on the Lender to (i) enforce any security it may hold in relation to the Borrower's obligations hereunder; or (ii) pursue any alternative remedy it may have against the Borrower.

10.4. The liability of the Guarantor is co-extensive with that of the Borrower as principal debtor in terms of Section 128 of the Indian Contract Act, 1872, and the obligations of the Guarantor are continuing in nature and shall survive the termination of this Agreement.

11. EVENTS OF DEFAULT

11.1. Each of the following events shall constitute an Event of Default:

11.1.1. failure by the Borrower to comply with any of the obligations or covenants under this Agreement;

11.1.2. failure by the Borrower to make payment of any amounts due under this Agreement, including without limitation the principal and interest amounts, on the date on which such amount is due;

11.1.3. filing of insolvency or bankruptcy proceedings against the Borrower under the Insolvency and Bankruptcy Code, 2016, or otherwise;

11.1.4. the Borrower is unable to pay its debts, or the value of the assets of the Borrower is less than its liabilities, or a moratorium is declared in respect of any indebtedness of the Borrower;

11.1.5. appointment of a receiver, resolution professional or liquidator in respect of the Borrower;

11.1.6. sale or acquisition of a material portion of the business of the Borrower, or if the Borrower ceases or threatens to cease to carry on all or a substantial part of its business;

11.1.7. where the Lender reasonably is of the opinion that the Loan proceeds have been applied for a purpose other than the following purpose:

________

11.1.8. if the Borrower creates an encumbrance over the Security provided to the Lender, or if the Security or any part of it is transferred, disposed of or sold without the written consent of the Lender;

11.1.9. where the Borrower breaches any law, order, judgment, decree or regulation which, in the opinion of the Lender, could have a material adverse effect on the business of the Borrower;

11.1.10. change in control of the Borrower; and

11.1.11. any financial indebtedness of the Borrower is not paid when due, or there is an event of default in respect of any financial indebtedness of the Borrower.

12. CONSEQUENCES OF AN EVENT OF DEFAULT

12.1. On the occurrence of an Event of Default, the Lender may, in addition to the rights available under Applicable Law, exercise the following rights:

12.1.1. declare that all or part of the Loan, together with accrued interest and all other amounts accrued or outstanding under this Agreement, be immediately due and payable, whereupon they shall become immediately due and payable;

12.1.2. accelerate the repayment of the Loan;

12.1.3. exercise any other right that the Lender may have under this Agreement or under Applicable Law;

12.1.4. enforce any of the Security created in pursuance of this Agreement in any order it may deem fit, and all monies in excess after payment of all Outstanding Amounts shall be returned to the Borrower without delay or demur;

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12.1.6. on receipt of notice by the Borrower from the Lender of the Lender having enforced the Security as herein provided, the Borrower shall, without raising any dispute, forthwith quit, vacate and hand over vacant and peaceful possession of the secured properties to the Lender;

12.1.7. so long as an Event of Default continues, the Borrower shall pay default interest at the Default Interest Rate on the defaulted amount, from the date of occurrence of the Event of Default until such Event of Default is rectified and the final payment in respect thereof is made to the Lender, without prejudice to the other remedies available to the Lender; and

12.1.8. all expenses incurred by the Lender after an Event of Default has occurred in connection with (a) preservation of the Borrower's assets; and (b) collection of amounts due in respect of the Loan or under these presents, shall be payable by the Borrower.

13. CONFIDENTIALITY AND DATA PROTECTION

13.1. Each Party shall keep confidential and shall not, without the prior written consent of the other Party, disclose to any third party any Confidential Information disclosed to it by or on behalf of the other Party in connection with this Agreement, except as may be required for the performance of its obligations under this Agreement or as required by Applicable Law or any Government Body.

13.2. The obligations of confidentiality under this Clause shall not apply to any information which: (i) is or becomes publicly available other than through a breach of this Agreement; (ii) was lawfully in the possession of the receiving Party prior to its disclosure; or (iii) is required to be disclosed pursuant to any Applicable Law, court order or direction of any Government Body.

13.3. Each Party shall process any personal data of the other Party in accordance with the Digital Personal Data Protection Act, 2023, and shall use such data solely for the purposes of this Agreement.

13.4. The obligations under this Clause shall survive the termination or expiry of this Agreement.

14. WAIVER

14.1. No failure or delay by either Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

14.2. Any waiver of any provision of this Agreement shall be effective only if made in writing and signed by the Party against whom such waiver is sought to be enforced, and shall apply only to the specific instance for which it is given.

15. NO OTHER RIGHTS GRANTED

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16. AMENDMENTS

Any change, alteration, amendment or modification to this Agreement must be in writing and signed by the Parties or their authorised representatives.

17. DISPUTE RESOLUTION

17.1. Any dispute(s) arising out of or in connection with this Agreement shall, as far as possible, be settled amicably between the Parties, failing which the following shall apply:

17.1.1. any dispute under this Agreement shall be referred to arbitration by a sole arbitrator to be appointed jointly by the Parties;

17.1.2. the arbitration proceedings shall be held at ________, ________, in the English language, in accordance with the provisions of the Arbitration and Conciliation Act, 1996, or any statutory re-enactment or modification thereof for the time being in force;

17.1.3. the Parties agree that the arbitral award shall be final and binding and may be enforced as a decree of court;

17.1.4. subject to the above, only the competent courts at ________, ________ shall have exclusive jurisdiction in all matters arising hereunder;

17.1.5. the Parties further agree to keep the arbitration proceedings and the arbitral award confidential; and

17.1.6. if either Party employs advocates to enforce any rights arising out of or relating to this Agreement, the prevailing Party shall be entitled to recover reasonable costs and advocates' fees.

18. INDEPENDENT PARTIES

Nothing contained or implied in this Agreement creates a joint venture or partnership between the Parties or makes one Party the agent or legal representative of the other for any purpose.

19. ASSIGNMENT

The Borrower shall not assign, subcontract or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the Lender. Any assignment or transfer in violation of this provision shall be deemed to be invalid. The Lender may assign or transfer its rights under this Agreement to any person upon written notice to the Borrower.

20. ANNOUNCEMENTS

A Party shall not make any news releases, public announcements, give interviews, issue or publish advertisements or publicise in any other manner whatsoever in connection with this Agreement, its contents or provisions, the Confidential Information or any other matter of this Agreement, without the prior written approval of the other Party.

21. NOTICES

21.1. Except as otherwise specified in this Agreement, all notices, requests, consents, approvals, agreements, authorisations, acknowledgements, waivers and other communications required or permitted under this Agreement shall be in writing and shall be deemed given when delivered by hand, sent by registered post or reputed courier, or transmitted by email, to the address specified below.

21.2. In the case of the Borrower:

Attention: ________

Address: ________

Email: ________

21.3. In the case of the Lender:

Attention: ________

Address: ________

Email: ________

21.4. In the case of the Guarantor:

Attention: ________

Address: ________

Email: ________

21.5. Either Party may change its address for notification purposes by giving the other Party 10 (ten) days' notice of the new address and the date upon which it will become effective.

22. STAMP DUTY

This Agreement shall be stamped in accordance with the applicable stamp duty payable under the Indian Stamp Act, 1899, and/or the relevant State Stamp Act as in force in ________, and the stamp duty and all costs of execution shall be borne by ________.

23. SEVERABILITY

If any provision of this Agreement is held to be invalid, illegal or unenforceable under Applicable Law, such provision shall be severed and the remaining provisions shall continue in full force and effect.

24. ENTIRE AGREEMENT

This Agreement, together with its schedules and annexures, constitutes the entire agreement between the Parties in relation to the subject matter hereof and supersedes all prior negotiations, understandings and agreements, whether oral or written.

25. GOVERNING LAW

This Agreement and all issues arising out of the same shall be governed by and construed in accordance with the laws of India.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day, month and year first hereinabove written.

_____________________

For and on behalf of the BORROWER

Name: ________

_____________________

For and on behalf of the LENDER

Name: ________

_____________________

For and on behalf of the GUARANTOR

Name: ________

WITNESSES:

1. Name: ________, Address: ________, Signature: _____________________

2. Name: ________, Address: ________, Signature: _____________________