How to Draft a Legal Notice for Recovery of Money? (With Video Inside)

When it becomes a hard task for you to get your own money back from someone, the legal course of action comes to rescue. By sending a legal notice for recovery of money, you give a formal warning to the person who owes you money to repay, or else a legal process will take place. To know how this can be done easily, scroll down to the video.

Legal Notice for Recovery of Money

By Abhishek Thakkar in Default or Fraud

Dec. 6, 2018, 5:16 p.m.

  • 570 Views

Legal notice for recovery of money is a formal intimation between two people warning the other before a formal legal action is taken to get their due payment.

Believe it or not, but yes you can send a legal notice for recovery of money from a friend as well, in case he/she owes you a lot.

To recover money from people who owe it to you the role & importance of a legal notice for recovery of dues becomes important. Legal notice for refund of money can be filed for anyone, from legal notice for recovery of money from a dealer to an employee, tenant, friend, company, bank, etc.

It is not only upsetting when your money is blocked with someone, but it is also very stressful to keep reminding someone to pay you back your own money. In such cases, one needs to take the legal route and act accordingly.

Table of Content:

India on Recovery of Money

This is the era of entrepreneurship and start-up businesses which is clearly boosting the developing economy of the country towards the path of financial freedom. 

It is very unfortunate that according to IBM Institute for business value and Oxford Economics, more than 90% funded startups are shutting down within primary five years of their business and the conditions of the bootstrapped start-ups are worse than that. 

What was found as one of the most common reasons amongst almost all failed business was, negative cash flow i.e. issues with the recovery of money. 

In most cases, due to the lack of strong legal support and prudent legal advisors, businessmen failed to recover a huge amount of money from the debtors which lead to the closure of the business. 

It was one of the most recent instances with the problem of money recovery. Apart from that, there are several other situations in relation to the recovery of money which ordinary people or a company faces. 

 

Consult: Top Cheque Bounce Lawyers in India

When & Why the Situation of Recovery of Money Arises?

There are several situations when it becomes necessary to opt for legal solutions. Among the most common are as follows:

  • Tenant: 

  1. Sometimes tenants don’t pay the rent to the landowner and as a result, a huge amount accrued which the landowner is entitled to receive. 
  2. If the tenancy has been started by signing an agreement of leave and licence or lease and licence in that case the landowner is entitled to send a legal notice for recovery of outstanding dues
  3. Or you can recover the rent by filing a suit for specific performance of contact which is governed by the Specific Relief Act 1963 and The Indian Contract Act, 1872.
  • Employee: 

  1. In case, an employee absconds with money, then a domestic enquiry will be initiated, sending a show cause notice to the employee to his/her residential address. 
  2. Even after giving two or three of such letters to the employee, if he/she does not respond. 
  3. This is to give him a chance to defend the charge that he/she is absconding. 
  4. Once it is proved that he/she has left your company, you can proceed with sending a legal notice to an employee for recovery of money. 
  • Employer/Company

  1. If any employer deprives his employees of their legitimate salary then several procedures are available like sending a legal notice for recovery of money for salary
  2. If that employee is governed by the Labour laws, then he/she can approach labour Commissioner or can sue the employer under the Payment of Wages Act, 1936 and Industrial Dispute Act, 1947.
  3. If the employee is of the rank of executives, managers and doesn’t come under the Labour laws, then he/she can seek remedy for recovery of money under order 37 of The Code of Civil Procedure, 1908 which is commonly known as a summary suit. 
  4. In case the employer had taken any fraudulent means to deprive the employees of their salary they can get remedy under different sections of Indian Penal Code 1860 and section 447 of the Companies Act, 2013. 
  5. Any person who is seeking recovery of money should send a legal notice to an employer for recovery of money drafted by a prudent and tacit lawyer before taking any of the above mentioned legal steps. 
  6. Sometimes a strong and effective Legal Notice can become fruitful in recovery the money and saves a lot of hassle and expenditure. 
  7. Here anyone can start the procedure by sending a legal notice for recovery of money from a company it can either be accepted or be rejected with a reply.
  • Legal notice for recovery of money under Loan: 

  1. In India defaulters of a loan are creating a huge mess in the economy and as such in recent years the government had taken strong measures to recover the money circulated through debt.  
  2. The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the SARFAESI Act) were introduced with the sole intentions to recover the debt amount and a separate judicial body. 
  3. The Debt Recovery Tribunal is formed in every State to resolve the debt related issues only where the first step begins by sending a legal notice for debt recovery from banks or Financial Institution.
  • Dealer: 

  1. In business, most of the times producers sell their product through the distributors and keeps security deposit from the Dealers and Distributors in the form of Post dated cheques. 
  2. If those cheques get bounced due to non-availability of the fund then the drawee can straight away send a legal notice for recovery of money from a dealer to the drawer for recovery of the due amount within 30 days from the date of receipt of return memo from bank. 
  3. if sending a legal notice for recovery of Payment becomes futile then the drawee can file a case against the drawer within 15 days under section 138 of The Negotiable Instruments Act, 1881.
  • Recovery of Money from a Friend: 

  1. To avoid any unpleasant issue in future one should give a loan to friends or family members through either of these two instruments i.e. Promissory Notes and Loan Agreement. 
  2. If you have put that loan under written contract through either of these two instruments you are entitled to get legal relief. 
  3. You can send a legal notice for recovery of money to your friend if even that doesn’t work you can file summary suit under The Code of Civil Procedure, 1908.

Henceforth, in order to summarize all the above mentioned legal remedies for recovery of money, it can be said that for recovery of money civil remedies are available under Order 37 of The Code of Civil Procedure, 1908. 

Which is the Summary suit And Criminal remedies are available under Section 406 (criminal breach of trust), Section 420 (cheating), Section 426 (mischief ) of the Indian Penal Code 1860. 
Above all the most effective and primary step which can be taken is sending a legal notice for recovery of money in order to get your money safely & securely back.

Drafting a Legal Notice

As we discussed earlier one of the crucial step to recovery of money is sending a legal notice for recovery of money in India. The legal notice is generally issued by an advocate on behalf of his/her client for the purpose of soliciting a settlement. 

A legal notice must contain the following points:

  • Name, description, and place of residence of the sender of the notice.

  • Details of the cause of action.

  • The monetary relief claimed by the sender of the notice.

  • The gist of the legal basis for the relief claimed.

Suggested Read: How to Send Legal Notice for Cheque Bounce? (With Video Inside)

Steps to Draft a Legal Notice

  • The legal notice must be drafted in the letterhead of an Advocate which is to be specific and proper.

  • It should contain addresses and contact details of the advocate. 

  • The date on which the legal notice is issued and the name, address and contact details of the person to whom the legal notice is issued is to be stated.

  • Since the legal notice for recovery of money from a client is going, therefore, the name and details of the client should be clearly mentioned in the Notice.

  • It should be clearly mentioned in the notice how your right has been infringed due to the act or omission of the opposite party and for that what you want from him. The specific direction must be given to the opposite party and time limit must be given.

  • The notice must be signed with date by the Advocate and the sender.

You can also get a sample legal notice for recovery of money here. We at MyAdvo help you save your time and efforts by availing the pdf format of legal notice for recovery of money right here!

How to Find the Right Advocate?

MyAdvo can help you in drafting and sending a legal notice for recovery of money from security deposits, from a dealer, friend, etc. with just one click!
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