Legal Documentation Requirement

Legal Requirement At A Glance

It has been observed that there is time gap between sanction of loan by IREDA and disbursement there of 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 consult its Solicitors / Advocates, with a view to ensuring that as soon as the loan is sanctioned, execution of loan documents is expedited.

Before the Loan is Sanctioned

  1. 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 )

    1. 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.
    2. An in-built provision is contained in the Main Objects to be pursued by a Company-Clause A of the Memorandum of Association (MoA) to set-up 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 the power to be produced under the project is to be used for captive consumption, the power to take up the project is not necessarily required in Clause A of MoA. If taking up of new projects is not contained in Clause ‘A’ and Clause C - Other objects, amendment to Memorandum of Association would be required in terms of Sections 17 & 18 of the Companies Act and in terms of Section 149-(2A) of the Companies Act. However, if the object is contained in the Other objects - Clause C of MoA compliance of provisions of Section 149 (2A) would be required and in both the events, the applicant would need to furnish certificate from its statutory Auditors that the applicant has complied with provisions of Companies Act, have filed returns/duly verified declarations with Registrar of Companies (RoC) and that the RoC has permitted it to commence business and no further approval / consent is required to be obtained by such a Company.
    3. 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.
    4. To furnish to IREDA, latest certified copy of the Memorandum and Articles of Association of the Company.
    5. To furnish latest Annual Report of the Company along with Audit committee report and director’s liability report as applicable.

Government Companies

Besides requirements as 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

  1. 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.
  2. To furnish to IREDA, a copy of the Bylaws of the Society.

Societies Registered under the Societies Registration Act

  1. Societies have been registered under Societies Registration Act and Certificate of Registration obtained. Memorandum and Articles of Association / General Regulations / Bylaws have been registered / filed with the Registrar of Societies.
  2. Memorandum and Articles of Association/General Regulations/Bye-laws provide for taking up the Project and borrowing of loans.
  3. To furnish to IREDA a copy of Memorandum and Articles of Association / General Regulations / Bylaws of Society.

Miscellaneous - Common to All Categories of Borrowers

  1. In case, security, proposed to be offered, is Bank Guarantee, in principle willingness letter from Guarantor Bank who should be Scheduled Bank, should be obtained.
  2. In case, the security is mortgage of assets, the Borrower has acquired lands and is in possession of the same and title thereto is good and marketable and free from encumbrances/ litigation and all consents and approvals have been obtained for creating valid mortgage.
  3. In case security offered is exclusive charge on the project being financed by IREDA, to obtain and furnish to IREDA, No Objection Letters from existing charge-holders/Banks that IREDA will have exclusive charge on the assets/Project being financed by IREDA.
  4. 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.
  5. To furnish other securities as per condition of loan, if applicable viz. to deposit post dated cheques for instalment of loan and interest, to create second charge on other assets including un-encumbered assets, to arrange pledge of shares, to furnish Bank Guarantee for 10% of loan amounts / FDR, and to provide mortgage of land owned by promoters, to arrange pledge of FDR and charge on Special A/c / Escrow A/c / Letter of Credit opened to deposit revenue generation.

After Sanction but Before Signing of Loan Agreement

Companies / Societies etc

  1. 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, Co-operative Societies, and Societies registered under the Societies Registration Act.
  2. In the case of Companies, to satisfy IREDA that its existing borrowings together with proposed borrowings from IREDA and others are within the limits as stipulated by the Shareholders under Section 293(1)(d) of the Companies Act, by producing Auditor’s certificate to that effect.
  3. To deposit Front-End with IREDA
  4. To furnish certificate from Advocate that the Borrower has acquired the land.
  5. Any special condition as applicable to individual project.

After Signing of Loan Agreement but Before Disbursement of Loan

  1. To pass Shareholders’ Resolutions under Section 293(1)(a) of the Companies Act.
  2. Wherever corporate guarantees have been stipulated, to ensure that the Guarantor Company can issue/give guarantees in terms of its Memorandum of Association and the Guarantor Company has passed Board Resolutions authorising issue of guarantee under Common Seal as per draft resolutions prescribed by IREDA and that the provisions of Sections 295/372A of the Companies Act have been complied with by the Guarantor Company.

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 also to arrange creation of mortgage as per the conditions / requirements of IREDA.

In Case Security is Bank Guarantee -

  1. Deed of Guarantee to be signed on non - judicial stamp paper of appropriate value as applicable to guarantees by the officers authorised to sign the Deed of Guarantee 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 or conformation of powers of officials to sign the guarantee is to be produced.

In Case,where Mortgage of Assets is involved

  1. To establish title to the lands to the satisfaction of IREDA.
List of Advocates on Panel of IREDA is given as under
1. M/s Khaitan & Khaitan
C-73 & E-65, Himalaya House, 23, K. G. Marg
New Delhi - 110 001
2. M/s Pandya & Poonawala
Advocates, Solicitors & Notary
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
Solicitors & Advocates
2nd Floor, Catholic Centre, No.64,
Armenian Street, Post Box No.121,
Chennai-600 001
5. M/s Singhi & Company
Advocates & Notary
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
Chennai-600 001
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
Advocates & Law Consultants
Flat No. 303, LR Plaza
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, we engage Advocates on case-to-case basis.

  1. 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 and that the Borrower can create valid mortgage in favour of IREDA.
  2. All consents and approvals including permission to mortgage and to give 6/3 months notice to IREDA before exercising right of resumption of lands, have been obtained to take care of restrictive covenants in the Sale/Conveyance Deeds / Lease Deeds; State Government’s Sale / Conveyance Deeds / Lease Deeds generally contain restrictive covenants and, therefore, to take care of such restrictive covenants, permission/consents/notice are required.
  3. 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.
  4. In case security is by way of mortgage of immovable property, following papers/ documents are required. To submit—Schedule of lands along with Survey Nos., Area, Boundaries, etc.; Schedule of Buildings constructed/to be constructed under the Project/ Scheme; Schedule of Plant & Machinery acquired/to be acquired under the Project/Scheme; Site Plan on tracing cloth—3 copies—showing therein Survey Nos. along with, proper index, duly signed by authorised director.
  5. 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.
  6. Resolutions are required to be passed by Board of the Borrower authorising creation of mortgage.
  7. File returns in Form No: 8 and Form No: 13, both for Registration of Charges and for Modification of Charges, immediately after creation charges / further charges. (This is necessary in the case of Companies).
  8. 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 and other risks as mentioned in the Loan Agreement No Objection Letters from the existing charge holders including Banks that IREDA will have exclusive charge / pari-passu charge, post dated cheques and to furnish corporate/personal Guarantees wherever applicable and as per the pattern of security agreed and to comply with conditions precedent to the signing of Loan documents and availing of loan from IREDA.


  1. The above guidelines are indicative in nature and the Borrower is advised to consult its Advocates / Solicitors / Chartered Accountants.
  2. 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.
sl no. Title Document
1 Click Here To Download Form - Loan-Agreement (secured against mortgage) 500 KB
2 Click Here To Download Form - TRA Agreement – Reschedulement 500 KB
3 Click Here To Download Form - Trust and Retention Account Agreement - Small Hydro 500 KB
4 Click Here To Download Form - Trust and retention Account Agreement - Other sectors 500 KB
5 Click Here To Download Form - Unattested Deed of Hypothecation 500 KB
6 Click Here To Download Form - General Declarations & Undertakings 500 KB
7 Click Here To Download Form - Deed of Guarantee 500 KB
8 Click Here To Download Form - Undertaking for Meeting Shortfall 500 KB
9 Click Here To Download Form - Undertaking for Non-Disposal of Shares 500 KB
10 Click Here To Download Form - Undertaking from Wholetime Director 500 KB
11 Click Here To Download Form - Corporate Deed of Guarantee 500 KB
12 Click Here To Download Form - Undertaking for Non-Disposal (For Corporate Guarantee) 500 KB
13 Click Here To Download Form - Loan - Undertaking For Meeting Shortfall in the Project 500 KB
14 Click Here To Download Form - Undertaking for Non-Disposal of Share (for Corporate Guarantee) 500 KB
15 Click Here To Download Form - Bank Guarantee for Two Quarter 500 KB
16 Click Here To Download Form - Bank Guarantee for Two Annual Instalment 500 KB
17 Click Here To Download Form - Supplementry Deed of Hypothecation 500 KB
18 Click Here To Download Form - Escrow - Special Account Agreement 500 KB
19 Click Here To Download Form - FDR - Letter 500 KB
20 Click Here To Download Form - General Condition Forming Part of Loan Agreement 500 KB
21 Click Here To Download Form - Loan-Agreement(secured against Bank Guarantee) 500 KB
Guideline For Appointment Of Nominee Directors

Guideline For Appointment Of Nominee Directors

Last Updated on 05/09/2023