Legal Notices
Legal Notices
A legal notice is a formal communication sent by one party to another, usually to inform the recipient of the sender’s intention to undertake legal action or to demand some specific action or remedy. In the context of cheque bounce cases, a legal notice is typically sent by the payee (the person to whom the cheque was issued) to the drawer (the person who issued the cheque) when the cheque is dishonored by the bank due to insufficient funds or other reasons..
Legal notices serve several purposes, including
Demand for Payment : A legal notice usually demands payment of the amount mentioned in the bounced cheque within a specified period, typically 15 days from the receipt of the notice. It informs the drawer that failure to pay within the specified time may result in legal action.
Preservation of Rights : Sending a legal notice is often a prerequisite for initiating legal proceedings. It helps in preserving the payee’s legal rights and establishes a record of the demand for payment.
Avoidance of Legal Action : Sometimes, the mere receipt of a legal notice can prompt the drawer to settle the dues to avoid legal consequences.
Clear Communication : A legal notice clearly communicates the payee’s grievances and intentions, providing the drawer with an opportunity to respond and settle the matter amicably.
Legal Requirement : Under the Negotiable Instruments Act, 1881, specifically Section 138, sending a legal notice is a mandatory step before filing a complaint for cheque bounce. The notice must be sent within 30 days of receiving information from the bank regarding the cheque’s dishonor.
Cheque Bounce : Section 138 makes it a criminal offence for a person to issue a cheque that is subsequently dishonoured due to insufficient funds or if it exceeds the amount arranged to be paid by the drawer’s account.
Legal Notice : As mentioned earlier, before filing a complaint under Section 138, the payee must serve a legal notice to the drawer within 30 days of receiving information about the dishonour from the bank. The notice must demand payment of the cheque amount within 15 days of the receipt of the notice.
Time Limit : If the drawer fails to make the payment within 15 days of receiving the legal notice, the payee can file a complaint within 30 days from the expiry of the 15-day period. If the drawer makes the payment within this additional 30-day period, no legal action can be taken against them.
Penalty : Upon conviction, the drawer may be punished with imprisonment for a term which may extend to two years or with a fine which may extend to twice the amount of the cheque, or with both.