LEGAL NOTICE – RECOVERY OF MONEY
Sometimes disputes end up in court, but you can inform the other party well in advance with a LEGAL NOTICE that legal action will be taken against them in case the issue is not resolved on the ground. On many occasions, one may consider taking legal action against someone or something as a result of some disagreement.
It is necessary to give LEGAL NOTICE FOR RECOVERY OF MONEY before taking any legal action against the other party. By giving the such notification, The party wronged ensures that the demand notice was given to the party who provided the justification, but the money was not given to the aggrieved party. Additionally, the wrongful party has a specific cause of action for legal remedy due to unpaid recovery of such money in court. The legal notice should include all the details that led to such a dispute.
What is the legal notice?
Sending a legal notice is an initial step in the legal process, And it may also be said that the foundation of practically all legal proceedings in India is a legal notice. Legal notices are professionally written documents sent by an aggrieved party, which may be an individual or entity. It is delivered to warn the recipient about anything that could harm the sender as a result of the recipient’s actions or inactions. A legal notice sets forth the facts and alerts the receiver to a possible court case that will be filed if the sender’s complaint is not met.
A person or an entity may receive a legal notice informing them of possible legal action against them. Notice is issued with sufficient time for the party to respond. This serves as a final warning to the recipient and if ignored, May result in formal legal procedures.
When is a legal notice required to be sent for the recovery of money?
When the misconduct of a person prevents the recovery of dues, giving legal notice to the delinquent party is the first step in the recovery of money.
The importance of a legal notice can also be gauged from the possibility that it will act as a warning to the recipient of the notice that either intentionally or accidentally it may cause problems for the sender.
The importance of a legal notice can also be gauged from the possibility that it will act as a warning to the recipient of the notice that either intentionally or accidentally may cause problems for the sender. Also, most of the cases are settled at the initial stage of giving legal notice for recovery of money. However, if no decision is taken, the court may be approached to take legal measures to recover the unpaid money.
Legal notice must demonstrate that you have made a sincere effort to settle the conflict on your behalf before filing a complaint in the appropriate court.
Scope of legal notice for recovery of money
This applies to:
- In each case, promissory notes and bills of exchange are involved.
- claims in which the plaintiff seeks to recover money paid to the defendant
- Such claims must be supported by evidence of a written agreement or legal provision.
- Supreme Court, Civil Court, or such other court as the Supreme Court may notify.
Documents required for legal notice for recovery of money
While preparing a legal notice for recovery of money, these relevant documents should always be carefully examined:
- Affidavit of proof of money owed or lent to a friend, relative, etc.
- An employment contract that specifies the amount your company has to pay you in return for your service if the money is to be recovered from the employer.
- Additional supporting documents that you can use to support your case in a money recovery dispute.
The time period for filing suit for recovery of money
In India, there is only a three-year window in which a citizen can file a recovery claim after the cause of action has arisen. Lawsuits filed after the statute of limitations have passed will not be entertained. If the case is filed after the lapse of the limitation period, the grounds for seeking exemption should be indicated.
Where should the suit for recovery of money be filed?
The ‘Jurisdiction’ for filing a suit can be determined by considering the place or area from where the defaulter resides, as well as the pecuniary limits over which the Hon’ble Court can exercise its jurisdiction.
The most important factor to consider while bringing a case against the defaulter is whether the defaulter is located within the jurisdiction of the court. The geographic parameters of the court’s power under this type of jurisdiction are clearly stated and listed. Consequently, the Court is not permitted to assume or exercise any right outside its jurisdiction.
The following are the territorial courts where a suit can be brought as per the ‘Code of Civil Procedure (CPC), 1908’:
- Where the defendant (money defaulter) resides,
- Where the defendant carries on a business or earns money,
- Where the cause of the action is found (in whole or in part).
The word ‘economic‘ has a financial meaning. The purpose of such jurisdiction is to determine whether the court can hear cases involving such money or amounts. For example, the pecuniary jurisdiction of the civil courts of Delhi is up to Rs 20 lakh, and above that, it would come under the jurisdiction of the High Court. Before initiating the process of bringing a case, territorial jurisdiction should be considered first, followed by pecuniary jurisdiction.
Law under which case can be filed against the defaulter
Code of Civil Procedure, 1908
As per Order 37 of CPC, the most common method of collecting money is by filing a summary suit. An important type of law in the hands of a potential litigant who wants to fight a civil suit is Order 37 of the CPC. As per Order 37, the suit can be decreed in two stages. One is in the rule 2(3) step and the other is in rule 2(6).
The procedure for the appearance of the respondent is mentioned in Rule 2(3) and should be completed within 10 days from the date of summons to the respondent. After appearing, the plaintiff summons the defendant for judgment within ten days from the date of service with an affidavit which, in the opinion of the plaintiff, affirms the nature of the claim, the amount sought, and the absence of any defense. ,
As per Rule 2(6), if the defendant does not request leave to defend, either (a) judgment shall be given forthwith to the plaintiff, or (b) the court may order the defendant to be given such security as it thinks fit. As per sub-section 7, if sufficient justification is shown, delay in appearance or request leave to defend the case may also be delayed.
Therefore, we can conclude that all the plaintiffs need to establish is that their case fits within the purview of Order 37. Once the summons is issued, It is up to the defendant to establish his right to defend himself. If it succeeds, the Order 37 case is converted into a regular civil suit, and the defendant is directed to submit its written statement within 30 days.
Negotiable Instruments Act, 1881
Section 138 of the Negotiable Instruments Act, of 1881, when a check is drawn to meet a debt or other obligation in full or in part, and the bank delivers the cheque, 138 of the Negotiable Instruments Act, 1881, describes the criminal and civil penalties associated with the dishonor of cheques. In case of non-payment of the cheque, the drawee’s bank will send a ‘Cheque Return Memo’ to the drawee’s bank stating the reason for non-payment.
The memo and dishonored check are subsequently delivered to the payee by the payee’s bank. If the payee believes that the check will be honored on the second presentation, he has to deposit it once again within 3 months from the date of the cheque. Although, If the check bounces, the drawee has the option of suing the drawer.
Section 138 of the Act aims at punishing a person who knowingly draws a check with the intention of not encashing it and bouncing it. In case of the dishonorable payee of a cheque, section 138 of the Act imposes a criminal penalty in addition to civil liability.
Indian Contract Act, 1872
Section 73 and Section 74 of the Indian Contract Act of 1872 can be used to seek compensation for loss or damage caused by a breach of contract if a person commits fraud under section 17, misrepresentation under section 18 is, or is unable to perform its function. or its obligations due to severe liquidity crises and possible bankruptcy.
The basic idea behind Section 73 of the Indian Contract Act is to evaluate the contractual actions and/or inactions of one party so as to determine the amount of compensation owed to the non-defaulting party as a result of the non-performance of the other party. Could The non-defaulting party be in the same position financially as it would have been had the promise of the contract been kept? As a result, compensation is generally commensurate with that expected from the performance of a contractual promise.
The Indian Contract Act of 1872, however, qualifies the general principle by stating that to be eligible for damages, the loss or damage must have resulted from a breach in the ordinary course of events, or that the parties must have known that such damage would have occurred. Or the damage may happen later when they enter into the contract.
Indian Penal Code, 1860
The Indian Penal Code (IPC), 1860, provides a variety of provisions that provide remedies for those whose money has become overdue for one reason or the other.
The IPC has the following provisions which can be used in certain circumstances:
- Cheating (Section 415): A person is liable for cheating if they compel another person to give any property by fraud or deceit. The maximum punishment for cheating is one year in prison, a fine, or both.
- Criminal Misappropriation (Section 403): When a person dishonestly uses the property of another person for his own use, it is considered criminal misappropriation. The punishment is imprisonment of up to two years, a fine, or both.
- Criminal Breach of Trust: (Section 405): When someone dishonestly appropriates or diverts for his own benefit the property of another person, it is considered to be a criminal breach of trust. Criminal misappropriation and criminal breach of trust are similar, but in this case, the person is entrusted with the property.
Companies Act, 2013
Being a defaulter company, a case can be registered under the Companies Act, 2013. Cases under this may take the form of a class action, In which a certain group of people sue on behalf of a particular class and file a case for recovery of debts owed to them, or they may include businesses where payments are due as per a contract.
When a firm fails to distribute dividends to investors against earnings, the investor can seek compensation by bringing a Section 127 contract enforcement case.
Section 212 is invoked when a third party having a relationship with the company files a complaint with the Serious Fraud Investigation Office.
When a creditor to a business is unable to collect their debts and there is a breach owing to the firm’s non-payment, the creditor may file a petition for winding up under Section 272, In addition, a lawsuit may be initiated under Sections 447, and 451 to hold any office of the company accountable for fraud or unjustified property withholding.
Legal Notice Format for Money Recovery
Legal Notice for the Recovery of Money Include:
- Name, Contact Info of the Sender of Legal Notice.
- Name, Contact Info of the Receiver of Legal Notice
- Clear and Detailed description of the debt, including the Recovery Amount, etc.
- Demand for payment and deadline for payment to be made
- A statement that legal action will be taken if the debt is not paid by the deadline
- The signature of the creditor or their authorized representative
Consult with your lawyer before sending the legal notice for Money Recovery.
Format for Legal Notice for Recovery of Money
Legal Notice For Money Recovery
Ref. No……………. Dated, __
Pursuant to the instructions from and on behalf of my client _______, through its _, I do hereby serve you with the following Legal Notice: –
1- That my client is a firm/individual under the name and style of M/s ___________.
2- That my client is engaged in the business of _ of the etc.
3- That against your valid and confirmed order my client did your job work from time to time on a credit basis as you have a running credit account in the account books of my client operated in due course of business.
4- That my client-raised bills of each and every work performed for payment, although you have acknowledged the receipt of such bills raised by my client.
5- That in spite of acknowledging the liability of payment of the principal balance of Rs. _________/- you have miserably failed to make payment of the said amount due to my client from you deliberately with malafide intent, hence you are liable to pay the said principal balance amount of Rs. __________/- along with interest @ __% p.a. from the date of due till actual realization of the said sum as is generally and customarily prevailing in the trade usages, which comes to Rs. __________/-
6- Thus you are liable to pay the total amount of Rs. __/- to my above-named client and my above-named client is entitled to recover the same from you.
7- That my client requested you several times through telephonic messages and by sending a personal messenger to your office for the release of the said outstanding payment, but you have always been dilly delaying the same on one pretext or the other and so far have not paid even a single paisa out of the said outstanding undisputed amount.
I, therefore, through this Notice finally call upon you to pay my client Rs. _/-. along with future interest @ % p.a. from the date of notice till the actual realization of the said amount, together with a notice fee of Rs. ___/- to my client either in cash or by demand draft or Cheque whichever mode suits you better, within clear 30 days from the date of receipt of this notice, failing which my client has given me clear instructions to file civil as well as a criminal lawsuit for recovery and other Miscellaneous proceedings against you in the competent court of law and in that event you shall be fully responsible for the same.
A copy of this Notice has been preserved in my office for record and future course of action.
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