How to Send a Notice for Recovery of Money?

In various circumstances, individuals or businesses may find themselves in a position where they need to recover money owed to them. Sending a legal notice serves as a formal communication, indicating the intention to initiate legal action if the matter is not resolved. This guide provides an in-depth understanding of the legal framework, the drafting process, and essential considerations for sending a legal notice for money recovery in India.

Legal Framework

1. Relevant Legal Sections:

Negotiable Instruments Act, 1881:

Section 138: Deals with the dishonour of a cheque, making it a criminal offence.

Code of Civil Procedure, 1908 (CPC):

Section 80: Mandates a notice to be served to the government or public officer before filing a suit.

2. Choosing the Appropriate Section:

Cheque Bounce Cases: Section 138 of the Negotiable Instruments Act is applicable when the dispute involves the dishonour of a cheque. 

Government or Public Officer Claims: Section 80 of the CPC is crucial when dealing with claims against the government or public officers.

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Legal Notice under Section 138 of The Negotiable Instrument Act, 1881

Unpacking Cheque Bounce Cases

In instances of a bounced cheque, Indian law mandates the dispatch of a legal notice within 30 days of the dishonour. Failure to repay within 15 days post notice allows the initiation of legal proceedings. The notice, jointly signed by the lawyer and payee, is sent through registered post.

Drafting an Effective Legal Notice

1. Incorporating Essential Details:

Sender’s Information: Mention your name, description, and address.

Cause of Action: Provide a detailed account of the circumstances leading to the claim.

Relief Claimed: Specify the amount to be recovered, including principal and any accrued interest.

Legal Basis: Summarize the legal grounds for the relief claimed, citing relevant legal provisions.

2. Setting Timeframe and Language:

Timeframe: Clearly state a reasonable period for compliance, usually between 15 to 30 days.

Language: Use unambiguous language to avoid misinterpretation.

3. Mode of Delivery:

Preferably send the notice through registered post with acknowledgement to ensure proof of delivery.

Electronic means like email can also be used if it aligns with legal requirements.

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Filing a Legal Notice – Step-by-Step

Step 1: Consulting with a Lawyer:

Seek advice from a legal professional with expertise in the relevant field.

Step 2: Providing Information to the Lawyer:

Share all necessary details, including names, addresses, transaction dates, and any previous communication.

Step 3: Drafting the Legal Notice:

The lawyer drafts the notice, ensuring it complies with legal standards and clearly states the demand.

Step 4: Signing and Sending the Notice:

The notice is signed by both the lawyer and the client.

It is sent through registered post with acknowledgement due or other legally acceptable means.

Step 5: Followup:

The recipient is expected to respond within the stipulated timeframe.

Legal Notice Format For Cheque Bounce Cases

[Your Name]  

[Your Address]  

[City, Pin Code]  

[Email Address]  

[Contact Number]  

[Date]

[Recipient’s Name]  

[Recipient’s Address]  

[City, Pin Code]

Subject: Legal Notice under Section 138 of The Negotiable Instrument Act, 1881 for Cheque Dishonoured

Dear [Recipient’s Name],

I, [Your Name], am writing to you under the instructions and authority of my client, [Your Client’s Name], regarding the dishonour of a cheque issued by you. This notice is issued in compliance with Section 138 of The Negotiable Instrument Act, of 1881.

Factual Background:

1. On [Date], you issued a cheque bearing number [Cheque Number] drawn on [Bank Name] for an amount of [Amount].

2. The said cheque was presented by my client for realization on [Date] at [Bank Name].

3. Unfortunately, the cheque was dishonoured by your bank with the remarks/reasons “Insufficient Funds.”

Communication Attempts:

1. My client promptly brought the dishonour of the cheque to your attention through a letter dated [Date].

2. In response, you requested my client to represent the cheque, assuring that it would be honoured this time.

Subsequent Dishonour:

1. Despite your assurances, the cheque was again presented by my client but was dishonoured once more due to insufficient funds.

Legal Implications:

1. The dishonour of the cheque is a violation of Section 138 of The Negotiable Instrument Act, of 1881.

2. As per the said section, the drawer of the dishonoured cheque may be liable to face criminal proceedings, including imprisonment or a fine, or both.

Demand for Payment:

1. I hereby demand the payment of [Amount] as the principal amount of the dishonoured cheque.

2. Additionally, my client demands interest at the rate of [Interest Rate]% per annum till the date of actual payment.

Settlement Period:

1. You are given 15 (fifteen) days from the receipt of this notice to settle the outstanding amount.

2. Failure to make the payment within the stipulated time will compel my client to initiate legal proceedings against you.

This notice is issued without prejudice to any other legal rights and remedies available to my client. Your prompt attention to this matter is advised.

Sincerely,

[Your Full Name]  

[Your Designation, if applicable]  

[Your Advocate’s License Number, if applicable]  

[Your Law Firm’s Name, if applicable]  

[Enclosures: Copy of Dishonoured Cheque, Previous Correspondence]  

Note: This is a general template. It is recommended to seek legal advice for customization based on the specific facts and circumstances of the case.

Navigating the Legal Notice Drafting Process

1. Engage a Legal Professional: While not obligatory, involving a legal professional enhances the efficacy of the legal notice.

2. Official Letterhead Usage: Draft the notice on the advocate’s official letterhead for a professional touch.

3. Elaborate Content: Delineate details of the grievance, required actions, and potential consequences.

4. Client’s Signature: Obtain the client’s signature on the notice for added authenticity.

Conclusion

Sending a legal notice for money recovery is a strategic and legally significant step. It is essential to navigate the legal framework accurately and ensure the notice is meticulously drafted. While legal notices can often lead to resolution without court intervention, consulting with a legal professional is crucial to navigating the complexities of Indian law effectively. Always seek tailored advice based on the specific circumstances of your case.

Frequently Asked Questions on Legal Notice for Cheque Bounce Cases

Q1. What is Section 138 of The Negotiable Instrument Act, 1881?  

Ans1. Section 138 of The Negotiable Instrument Act, 1881 deals with the offence of dishonour of a cheque for insufficiency of funds or if it exceeds the amount arranged to be paid by the drawer’s account.

Q2. What are the legal consequences of dishonouring a cheque under Section 138?  

Ans2. The drawer of the dishonoured cheque may face criminal proceedings, including imprisonment for a term that may extend to two years or with a fine that may extend to twice the amount of the cheque or with both.

Q3. Is sending a legal notice mandatory before initiating legal proceedings under Section 138?  

Ans3. While Section 138 does not explicitly mandate sending a legal notice, it is a common practice to issue a legal notice to the drawer, providing an opportunity to settle the matter before resorting to legal action.

Q4. What information should be included in a legal notice under Section 138?  

Ans4. A legal notice should include details of the cheque, reasons for dishonour, communication attempts made by the payee, the demand for the principal amount, interest, and a reasonable settlement period.

Q5. Can the drawer settle the matter after receiving a legal notice?  

Ans5. Yes, the drawer has the option to settle the matter by making the payment within the specified period mentioned in the legal notice, thus avoiding further legal proceedings.

Q6. What should be done if the drawer fails to respond or make the payment after receiving the legal notice?  

Ans6. If the drawer fails to respond or make the payment within the stipulated time, the payee can proceed to initiate legal action by filing a complaint before the appropriate court.

Q7. Is legal representation necessary for sending a legal notice under Section 138?  

Ans7. While it is not mandatory, seeking legal representation is advisable to ensure that the legal notice is drafted accurately and complies with legal requirements.

Q8. Can the drawer challenge the legal notice in court?  

Ans8. Yes, the drawer has the right to contest the legal notice in court and present its defence against the allegations made in the notice.

Q9. What documents should be enclosed with the legal notice?  

Ans9. It is advisable to enclose copies of the dishonoured cheque, previous correspondence between the parties, and any other relevant documents supporting the claim.

Q10. What happens if the drawer ignores the legal notice? 

Ans10. If the drawer ignores the legal notice and fails to settle the matter, the payee can proceed to file a criminal complaint under Section 138 before the appropriate court