(1) A security for an advance of money upon chattels may be in Form B in the Schedule.
(2) Form B may be used for a mortgage of—
(a) specific chattels; or
(b) the chattels constituting the stock-in-trade for the time being of a business.
Obligations under a mortgage of specific chattels.
Unless it is otherwise specifically provided in the mortgage, a mortgage in Form B of specific chattels imposes upon the mortgagor—
(a) an obligation to repay the full amount lent and each instalment thereof and to pay all interest thereon at the times and at the place and in the manner fixed by the mortgage;
(b) an obligation not to sell, dispose of, mortgage, or part with the possession of any of the mortgaged chattels or remove any of them from the premises where they are situated as stated in the mortgage;
(c) an obligation to keep the mortgaged chattels in good and substantial repair and to preserve them from damage or destruction and to substitute other chattels of a similar kind and of not less value for any of the mortgaged chattels which cease to exist or are destroyed, damaged or deteriorated (which substituted chattels shall for all purposes of the mortgage and these Regulations be included in the term “mortgaged chattels”);
(d) an obligation duly and promptly to pay and discharge and keep paid and discharged all rents, rates, taxes, and outgoings of whatsoever kind payable or chargeable upon or in respect of the mortgaged chattels or any of them and the premises where the mortgaged chattels are situated, and to produce and hand over receipts evidencing such payment whenever required so to do by the Commission;
(e) an obligation to insure and keep insured the mortgaged chattels against fire in the joint names of the Commission and of the Mortgagor in an office approved by the Commission for that purpose for the full amount secured by the mortgage;
(f) an obligation to pay, and, whenever required by the Commission so to do, to produce and hand over to the Commission receipts evidencing payment of all premiums necessary to keep such insurance in full force and virtue; and
(g) an obligation to permit any officer of the Department to enter the premises where the mortgaged chattels or any of them are situated at all reasonable times and inspect the chattels.
Mortgaged chattels charged for the benefit of the Commission
A mortgage in Form B of specific chattels charges for the benefit of the Commission—
(a) the mortgaged chattels and each and every of them;
(b) any chattels substituted by the mortgagor for the mortgaged chattels or any of them; and
(c) where the mortgaged chattels are live stock—the progeny of the mortgaged chattels and of any chattels substituted for the mortgaged chattels—
with the full amount lent and all interest payable under the mortgage.
Charge on mortgaged chattels not to be lessened.
145. The charge of the Commission under a mortgage in Form B of specific chattels—
(a) shall not be lessened, weakened, postponed, defeated, avoided or discharged by any subsequent sale, disposition or mortgage of the mortgaged chattels; and
(b) shall be subject to any prior existing legal charge upon the mortgaged chattels.
Obligations of mortgagor.
146. Unless it is otherwise specifically provided in the mortgage, a mortgage in Form B of the chattels constituting the stock-in-trade of a business imposes upon the mortgagor—
(a) an obligation to repay the full amount lent and each instalment thereof and to pay all interest thereon at the times and place and in the manner fixed by the mortgage;
(b) an obligation not to sell, dispose of, mortgage or part with the possession of any of the mortgaged chattels or remove any of them from the premises where they are situated as stated in the mortgage otherwise than in the ordinary and usual course of trade in that business;
(c) an obligation to replace from time to time with other chattels of a similar kind and of not less value all mortgaged chattels which are destroyed, damaged or deteriorated, or sold or disposed of in the course of trade so that the value of the stock-in-trade of the business shall not at any time fall below its value at the date of the mortgage (which other chattels shall for all purposes of the mortgage and these Regulations be included in the term “mortgaged chattels”);
(d) an obligation to pay and discharge and keep paid and discharged all rents, rates, taxes, and outgoings whatsoever payable on or in respect of the mortgaged chattels and the premises where the mortgaged chattels or any of them are situated and to produce receipts evidencing such payment whenever required so to do by the Commission;
(e) an obligation to insure and keep insured the mortgaged chattels against fire in the joint names of the Commission and of the Mortgagor in an office approved by the Commission for that purpose for the full amount secured by the mortgage;
(f) an obligation to pay and, whenever required so to do by the Commission to produce and hand over to the Commission receipts evidencing payment of all premiums necessary to keep such insurance in full force and virtue; and
(g) an obligation to permit any officer of the Department to enter the premises where the mortgaged chattels or any of them are situated at all reasonable times and inspect the chattels and all business books and documents of the mortgagor.
Charge on stock-in-trade for benefit of Commission.
A mortgage in Form B of the chattels constituting the stock-in-trade of a business charges for the benefit of the Commission the stock-in-trade of the business for the time being on the premises specified in the mortgage with the full amount lent and all interest payable under the mortgage.
Charge on stock-in-trade not to be lessened.
The charge of the Commission under a mortgage in Form B of the chattels constituting the stock-in-trade of a business—
(a) shall not be lessened, weakened, postponed, defeated, avoided or discharged by any subsequent sale, disposition or mortgage of the mortgaged chattels other than a sale or disposition in the ordinary and usual course of trade in that business; and
(b) shall be subject to any prior existing legal charge upon the mortgaged chattels.
Sale of stock-in-trade.
For the purposes of regulations 146 and 148 a sale or disposition of the whole or a substantial part of the stock-in-trade of the business is not a sale or disposition in the ordinary and usual course of trade in that business.
Effect of non-compliance with obligation under mortgage.
If any obligation imposed upon a mortgagor by a mortgage in Form B or by these Regulations is not complied with, or if the mortgagor becomes bankrupt or insolvent or makes any composition with or assignment of his estate to or for the benefit of his creditors—
(1) the Commission may—
(a) by its officers or agents enter, if necessary by force, any premises where the mortgaged chattels or any of them are or are reasonably suspected to be and take possession of and remove the mortgaged chattels;
(b) sell the mortgaged chattels or any of them either by auction or private contract, and may apply the proceeds of the sale—
Firstly—in reimbursing the expenses of the sale;
Secondly—in payment of any interest payable under the mortgage;
Thirdly—in repayment of the amount lent and due under the mortgage; and
Fourthly—in payment to the mortgagor of any balance then remaining; or
retain the mortgaged chattels or any of them without sale;
(c) recover from the mortgagor the full amount lent and all interest payable under the mortgage after giving the mortgagor credit for—
(i) any amounts repaid by the mortgagor;
(ii) the net proceeds of the sale of any of the mortgaged chattels which have been sold by the Commission; and
(iii) the value ascertained by agreement with the mortgagor or by the valuation of an independent valuer of any of the mortgaged chattels retained by the Commission without sale; or
(2) the Commission may, without having recourse to the mortgaged chattels, recover from the mortgagor the full amount lent and all interest payable under the mortgage after giving credit for any amount repaid by the mortgagor; or
(3) if the obligation not complied with is the obligation to insure and keep insured the mortgaged chattels, the Commission may insure and keep insured the chattels and the cost of such insurance shall be added to the amount due under the mortgage and for all purposes of the mortgage and these Regulations be deemed to be included in the term “amount lent.”
Mortgage of chattels to have effect of bill of sale.
A mortgage of chattels in Form B shall without filing or registration in accordance with the laws relating to bills of sale in the State in which the mortgaged chattels are situated have the full force and effect of a bill of sale duly and validly filed, registered and renewed and in force under those laws.
Penalty for sale of chattels.
(1) If any chattels the subject of a mortgage in Form B are without the consent in writing of the Commission sold, disposed of, or removed or dealt with in breach of or non-compliance with any obligation imposed upon the mortgagor by the mortgage or by these Regulations, the mortgagor shall be guilty of an offence.
Penalty: Twenty-five pounds or three months’ imprisonment.
(2) On the conviction of a mortgagor for an offence under this regulation, the Court may, in addition to imposing a penalty—
(a) order the defendant to pay to the Commission the full amount of principal and interest due under the mortgage; or
(b) order the defendant or any other person in possession of the mortgaged chattels or any of them to forthwith deliver the chattels to the Commission.