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What is legal notice and what is its importance in Check Bouncing cases?

What Is A Legal Notice?

A legal notice is a formal written communication between the parties where the sender notifies the recipient about his intention of undertaking legal proceedings against the latter. It helps in making the recipient party aware of the grievances of the sender. It is considered to be a warning to the receiver to fulfil a certain condition if he does not want to take the matter to the court. It is a very time and cost-effective tool for settling the matters without any litigation procedure but rather through negotiation, mediation or arbitration.

The usage of a legal notice can be seen in a variety of situations:
  1. Consumer Forums:

    Cases relating to buying and selling of goods and services which turns out to be a faulty product or service may lead to sending of a legal notice by the consumer to the seller to rectify the deficiencies.
  2. Property Matters:

    disputes that relate to property such as partition, succession, eviction or issues relating to the possession of property may lead to sending a legal notice in case there is any breach or discrepancy between the parties concerned.
  3. Default In Repayment Of Loans:

    the debt recovery proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act) begins by sending a legal notice to the defaulter for recovery of payment.
  4. Check Bouncing Cases:

    in case of dishonour of check the aggrieved party can send a legal notice for recover of payment as under the Negotiable Instruments Act.
  5. Recovery Of Money:

    in case of recovering money from a person a legal notice can be an effective tool used.
  6. Employer And Employee Matters

    any employee deprived of his or her salary can send a legal notice to the employer for the same.

What Are The Essentials Of A Legal Notice?

A legal notice is usually filed in civil matters. There is no filing of the legal notice in criminal cases as in case of a criminal offences the action is instituted by the State against the person committing the offence. However, if one intends to initiate a civil suit against the Government a legal notice must be served to the Government beforehand and only thereafter a civil suit can be filed against the Government.

Legal provisions related to legal notice.
Section 80 of The Code of Civil Procedure, 1908 lays down the provision for sending of a legal notice to the Government or public officer if one wants to initiate an action legally against any act claimed to be done by a public officer during the course of his employment of any official duty until two months has expired. The purpose of the notice is to give the public officer a chance to offer some kind of compensation after reevaluating his legal position and resolve the issue without going to a court of law.

In Bihari Chowdhary v. State of Bihar[1], Supreme Court has stated that “The object of the section is the advancement of justice and the securing of public good by avoidance of unnecessary litigation”.

Under section 138 of the Negotiable Instruments Act, 1881, if there is dishonour of cheque in any manner, then there is a provision of sending a legal notice to the person giving such cheque by the person who dishonours the cheque. It becomes compulsory to send a legal notice to the issuer in check within a period of thirty days from the date of the refusal. In case no money is refunded after 15 days of delivery of the legal notice, the issuer can initiate legal action within 30 days from the date of completion of the 15-day period. Criminal liability is also determined under this section.

Under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act), in case of debt recovery from loan defaulters, legal proceedings are initiated once a legal notice is sent to the defaulter.

Essentials of legal notice or Format of a Legal Notice:
  • Name, description, and place of residence of the sender of the notice.
  • Statement of cause of action.
  • The relief claimed by the sender of the notice.
  • Summary of the legal basis for the relief claimed.

What Are The Requirements Of A Legal Notice?

During several occasions a person or an entity is required to send a legal notice. There may be various reasons for issuing a legal notice. Few common situations among them are Property Disputes, Consumer Complaints, Cheque Bouncing cases, Divorce, Termination of Employment on Wrongful Grounds, Eviction, etc.

The actual purpose of a legal notice is to inform the other person that the party sending the notice may take a legal action if the mentioned debt, liability or obligation is not fulfilled within the prescribed time limit. It may also act as a last chance being given to the accused before beginning with court proceedings.

Legal notice allows the aggrieved party to describe their grievance in an acceptable format through the court with the help of an experienced advocate so that the implications are clearly being understood if the receiver fails to comply with the terms and conditions as previously discussed. Serving a legal notice gives a chance to the other party and helps to resolve the issue without going for litigation which may prove expensive as well as time consuming for both the parties.

A legal notice is required for informing the defendant and making him aware of what he is being accused of, provided he (the defendant) is given a reasonable time to answer on the mentioned accusations and inform the court whether he agrees or disagrees with the facts contained therein.

Elements of a legal notice:
A legal notice is filed under Section 80 of Code of Civil Procedure, 1908 and is only filed in civil cases. A legal notice is an intimation and thus carries the following information:[2]
  • Precise statement and facts relating to the grievance for which the action is to be taken.
  • Alternatives/relief sought by the grieving party.
  • A summary of facts and the ways of how the grievance could be solved.
  • A complete brief of the problems that the aggrieved party is facing, combined with what can be done to resolve the issue need to be clearly mentioned.
  • A detailed account of how the relief can be obtained/problem solved if mutually agreed upon the grievance.
It is important that the legal notice is crafted well. Taking help of an attorney to draft notice would act as a mediator between the two parties and help to solve the issues out of the court. Proper legal language and words must be used and measures of caution must be taken if the other party denies in the court of law in admitting any fact. Therefore, a legal notice is importance for future reference and for this an expert lawyer could not keep such intricate details and prepare a well-drafted notice.

Through the case of S.Natarajan v. Sama Dharman[1], the need of a legal notice in matters relating to check bouncing can be understood.

Facts:
The appellant on 6th of May, 2006 gave a sum of Rs. 49000/- to the respondent. On 4th of July, 2006, the appellant gave a sum of Rs. 1,00,000 and on the same day he provided another sum of rupees 1,00,000. Further, in the case the Appellant on 11th of January, 2007 the accused has received 50000 and subsequently he received rupees 1,000. Thus, according to the Appellant/complainant a total sum of rupees 3,00,000 has been received by the respondent i.e., the accused.

The Appellant stated that to discharge the said debt, the accused gave a cheque dated 1st February 2011. The appellant presented the said cheque for payment through his bank on 2nd of February 2011 but the same cheque was dishonored on the ground that the accused did not have sufficient funds in their account. the appellant issued on Notice dated 2nd of March 2011 to the accused calling upon him to pay the cheque of amount Rs. 3,00,000 within 15 days.

The accused contended that the blank cheque was being stolen by the appellant as he was working with the accused and his son as partners in a business. the business of the accused was closed in the year 2008 due to it being running into loss and upon the closure of the business there was no business relation between the two of them and by misusing the stolen cheque, a false claim was being made by the appellant.

Since the accused failed to comply with the demand made in the notice, the appellant filed a complaint u/s 138 of N.I Act 1881. The accused moved the application in the Madras High Court u/s 482 of CRPC quashing the said complaint. He pleaded that no amount was borrowed from the appellant and that the dishonored cheque has not been issued legally. The High court quashed the proceeding on the complaint being time barred.

Decision:
On appeal the High Court referred to section 25 (3) of the Indian Contract act 1872, since there was no distinct promise to pay the debt either wholly or partially. Unless a specific direction in the form of novation is created with regard to payment of the debt section 25 (3) cannot be invoked. The High Court also observed that for the purpose of invoking section 138 read with section 142 of the N I Act The cheque must be issued in respect of legally enforceable debt or other liability. Therefore, on the alleged debt becoming time barred the proceeding deserved to be quashed.

Therefore, it is clear that the contention urged by the appellant can be examined only during trial if it involves examination of facts.

Opinion:
According to Sec.138 of the Negotiable Instruments Act, it is clear that in order to attract the penal provisions in the bouncing of a cheque under Chapter XVII, it is essential that the dishonoured cheque has to be issued in discharge of wholly on the part of any debt or other liability of the drawer to the payee. The explanation to Sec.138 defines the expression 'debt as liability' as a legally enforceable debt in other liability.

But a time barred debt cannot be a legally enforceable debt. It cannot be said that a time barred debt and it is dishonoured the accused cannot be convicted under Sec.138 of the Act[2]. In the instant case, the cheque was issued in view of the fact that the debtor has acknowledged his liability. Under the said circumstances, he should not be entitled to claim that the debt has become barred by limitation.

End-Notes:
  1. 2015 ALL MR (Cri) 4911 (S.C.) =2014 (9) SCALE 3
  2. Joseph v/s Devassia 2001 MLJ Crl 115
  3. AIR 1984 SC 1043
  4. Shreya Mintri, “Essential Elements of a Legal Notice” (2019), available at: https://medium.com/@shreya.mintri/essential-elements-of-a-legal-notice-e0cbe3dd27cf#:~:text=A%20legal%20notice%20is%20filed,action%20is%20to%20be%20taken., (last visited April 2, 2021)

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