Security for repayment of loans

Finance194917 sections

Statutory text

(1) As soon as may be after an application for loan has been sanctioned, the applicant, and, if the applicant is a firm or company, a duly authorized representative thereof shall execute a bond in the prescribed form under taking to apply the [loan]1 for the purpose or purposes for which, and to fulfill the conditions on which, the application has been sanctioned.
(2) The assets created from the loan shall, notwithstanding any law or usage to the contrary, be deemed to bemortgaged or hypothecated, as the case may be to the Chief Administrator for the repayment of the loan together with the interest thereon if any, and the amount of the loan and the interest thereon shall be first charge on such assets. [(3) Subject to the provision of subsection (2), the borrower shall not without the prior approval of the controlling authority, mortgage, convey or otherwise transfer any of his interests in the whole or any part of assets acquired with the loan, and any mortgage, conveyance or other transfer without such approval shall be void as against the State Government: Provided that nothing in this sub- section shall affect the borrower's right to sell such articles of his stock-in-trade as are meant for sale to customers in the normal course of business.]2

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