It has been observed that there is time gap between sanction of loan by IREDA and disbursement thereof to the Borrowers. This results in delays in the implementation of the project and also in the overrun in the cost of project. Sometimes, delays are attributed to the time taken in compliance of legal formalities.
While the detailed legal formalities will be advised to the Borrowers at the time of sanction of loan, an attempt has been made to indicate the broad legal requirements / formalities that are required to be complied with by a Borrower — before the loan assistance is sanctioned and thereafter before the loan is disbursed — so that the Borrower is aware of the same and consults its Solicitors / Advocates, with a view to ensuring that as soon as the loan is sanctioned, execution of loan documents is expedited.
1
Before the Loan is Sanctioned
Applicants are to ensure that they are competent to enter into contract and borrow loans. Individual Proprietary concerns and partnership firms are also eligible for loan on the condition that loan is secured against the security of Bank Guarantee of Scheduled Bank.
Companies (Both Public and Private)
- The Company has been duly registered and Certificate of Incorporation obtained. In the case of Public Limited Companies, Certificate of Commencement of Business is also necessary.
- An in-built provision is contained in the Main Objects — Clause A of the MoA — to set up the project for which loan has been applied for, and in Clause B of MoA, Objects incidental to the attainment of main objects, to borrow loan. If taking up of new projects is not contained in Clause 'A' or Clause C, amendment to Memorandum of Association would be required.
- To ensure that borrowings are within limits as stipulated by Shareholders under Section 293(1)(d) of the Companies Act — required in case of Public Limited Companies.
- To furnish to IREDA the latest certified copy of the Memorandum and Articles of Association of the Company.
- To furnish latest Annual Report of the Company along with Audit committee report and director's liability report as applicable.
Government Companies
- Besides requirements applicable to Companies, permission of Government — if required — for taking up the project and for borrowing of loan is to be obtained.
Co-operative Societies
- Certificate of Registration has been issued by Registrar of Co-operative Societies and Bylaws containing in-built provisions to take up projects and to borrow loans have been approved by Registrar.
- To furnish to IREDA a copy of the Bylaws of the Society.
Societies Registered under the Societies Registration Act
- Societies have been registered under Societies Registration Act and Certificate of Registration obtained.
- Memorandum and Articles of Association / General Regulations / Bylaws provide for taking up the Project and borrowing of loans.
- To furnish to IREDA a copy of Memorandum and Articles of Association / General Regulations / Bylaws of Society.
Miscellaneous — Common to All Categories of Borrowers
- In case security proposed is Bank Guarantee, in-principle willingness letter from Guarantor Bank (must be a Scheduled Bank) should be obtained.
- In case the security is mortgage of assets, the Borrower has acquired lands and is in possession thereof and title is good, marketable and free from encumbrances / litigation and all consents and approvals have been obtained for creating valid mortgage.
- In case security offered is exclusive charge on the project being financed by IREDA, to obtain and furnish No Objection Letters from existing charge-holders / Banks that IREDA will have exclusive charge on the assets / Project.
- In case security offered is on pari passu basis, to obtain No Objection / consent of existing charge-holders ceding pari passu charges as per pattern of security agreed.
- To furnish other securities as per condition of loan — viz. post dated cheques, second charge on other assets, pledge of shares, Bank Guarantee for 10% of loan amounts / FDR, mortgage of land owned by promoters, pledge of FDR and charge on Special A/c / Escrow A/c / Letter of Credit.
2
After Sanction but Before Signing of Loan Agreement
Companies / Societies etc.
- To pass Board / Governing Council Resolutions at a regularly convened meeting authorising the borrowing of loans and execution of loan documents therefor.
- In the case of Companies, to satisfy IREDA that existing borrowings together with proposed borrowings from IREDA and others are within the limits as stipulated by Shareholders under Section 293(1)(d) of the Companies Act, by producing Auditor's certificate to that effect.
- To deposit Front-End Fee with IREDA.
- To furnish certificate from Advocate that the Borrower has acquired the land.
- Any special condition as applicable to individual project.
3
After Signing of Loan Agreement but Before Disbursement
- To pass Shareholders' Resolutions under Section 293(1)(a) of the Companies Act.
- Wherever corporate guarantees have been stipulated, to ensure that the Guarantor Company can issue / give guarantees in terms of its MoA and has passed Board Resolutions authorising issue of guarantee under Common Seal, and that provisions of Sections 295 / 372A of the Companies Act have been complied with.
Common to All
- To arrange for the execution of Loan Agreement, Deed of Hypothecation, Deeds of Guarantee, and other documents / undertakings by the Borrower / Promoters and to arrange creation of mortgage as per the conditions / requirements of IREDA.
In Case Security is Bank Guarantee
- Deed of Guarantee to be signed on non-judicial stamp paper of appropriate value by the officers authorised to sign on behalf of the Guarantor Bank after Loan Agreement has been executed by both Borrower and IREDA. Photocopy of the Power of Attorney by the Guarantor Bank in favour of its officials is to be produced.
In Case Mortgage of Assets is Involved
- To establish title to the lands to the satisfaction of IREDA.
- The Borrower has good and marketable title to the lands and all consents and approvals as per local State laws and Central laws have been obtained for creating valid mortgage in favour of IREDA.
- All consents and approvals including permission to mortgage have been obtained to take care of restrictive covenants in the Sale / Conveyance Deeds / Lease Deeds.
- In case of Leasehold properties, the lease should be for a minimum period of 30 years with an option for renewal for another term of 30 years.
- In case security is by way of mortgage of immovable property, required documents include: Schedule of lands with Survey Nos., Area, Boundaries; Schedule of Buildings; Schedule of Plant & Machinery; and Site Plan on tracing cloth — 3 copies — showing Survey Nos. with proper index, duly signed by authorised director.
- In case the mortgage security is by way of deposit of title deeds plus hypothecation of movable assets, permission under Section 281 of the Income Tax Act will need to be produced.
- Resolutions are required to be passed by Board of the Borrower authorising creation of mortgage.
- File returns in Form No. 8 and Form No. 13 for Registration of Charges and Modification of Charges immediately after creation of charges / further charges. (This is necessary in the case of Companies.)
- Letter of 'No set-off' / 'No Lien', Insurance Policies showing the name of IREDA as 'mortgagee' with usual bank clause covering all risks including theft.
List of Advocates on Panel of IREDA
1
M/s Khaitan & Khaitan
C-73 & E-65, Himalaya House, 23, K.G. Marg, New Delhi – 110 001
2
M/s Pandya & Poonawala
102-104, Bhagyoday, 1st Floor, 79, Nagindas Master Road, Fort, Mumbai – 400 023
3
Shri H.K. Ramaiah
No. 438, "Tulasi", 2nd Cross, 6th Main, Second Block, Banashankari III Stage, III Phase, Bangalore – 560 085
4
M/s King & Partridge
2nd Floor, Catholic Centre, No. 64, Armenian Street, Post Box No. 121, Chennai – 600 001
5
M/s Singhi & Company
7, Premchand House Annexe, Ashram Road, High Road Way, Ahmedabad – 380 009
7
M/s Rangarajan & Prabhakharan
152, Thambu Chetty Street, Chennai – 600 001
8
M/s Kesar Dass B & Associates
D-228-229, Gurudwara Road, Lajpat Nagar – I, New Delhi – 110 024
9
Fox Mandal & Co., Advocates
FM House, D-1109, New Friends Colony, New Delhi – 110 065
10
M/s Arun K. Sharma & Co. Advocates
107, Lawyers Chambers, Supreme Court of India, New Delhi
11
M/s Aditya Associates
Flat No. 303, LR Plaza, Hyderguda, Hyderabad – 500 029
12
Shri Varadaraj R Havaldar
No. 433/C, 1st Floor, 2A Cross, 9th Main Road, Ideal Homes Township, Rajarajeshwari Nagar, Bangalore – 560 002
Since the number of projects in other States is not many, Advocates are engaged on a case-to-case basis.
Downloadable Legal Forms
| S.No. | Document Title | Download |
|---|---|---|
| 1 | Loan Agreement (secured against mortgage) | Download |
| 2 | TRA Agreement – Reschedulement | Download |
| 3 | Trust and Retention Account Agreement – Small Hydro | Download |
| 4 | Trust and Retention Account Agreement – Other Sectors | Download |
| 5 | Unattested Deed of Hypothecation | Download |
| 6 | General Declarations & Undertakings | Download |
| 7 | Deed of Guarantee | Download |
| 8 | Undertaking for Meeting Shortfall | Download |
| 9 | Undertaking for Non-Disposal of Shares | Download |
| 10 | Undertaking from Wholetime Director | Download |
| 11 | Corporate Deed of Guarantee | Download |
| 12 | Undertaking for Non-Disposal (For Corporate Guarantee) | Download |
| 13 | Loan – Undertaking For Meeting Shortfall in the Project | Download |
| 14 | Undertaking for Non-Disposal of Share (for Corporate Guarantee) | Download |
| 15 | Bank Guarantee for Two Quarter | Download |
| 16 | Bank Guarantee for Two Annual Instalment | Download |
| 17 | Supplementary Deed of Hypothecation | Download |
| 18 | Escrow – Special Account Agreement | Download |
| 19 | FDR – Letter | Download |
| 20 | General Condition Forming Part of Loan Agreement | Download |
| 21 | Loan Agreement (secured against Bank Guarantee) | Download |
Guideline For Appointment of Nominee Directors
The above guidelines are indicative in nature and the Borrower is advised to consult its Advocates / Solicitors / Chartered Accountants.
The Borrower is welcome to meet the Executives of IREDA for seeking any clarification / elucidation on any point with a view to ensuring that the time gap between the sanction of loan and disbursement thereof is reduced to the minimum.