How to Draft a Legal Notice for Recovery of Money?

Legal notice for recovery of money is a formal intimation between two people warning the other before legal action is initiated to get their due payment. Believe it or not, you can also send a legal notice for recovery of money from a friend, in case he/she owes you a lot. To recover money from people who owe it to you, the role and importance of a legal notice for recovery of due becomes important. Legal notice for refund of money can be filed for anyone from a dealer to an employee, tenant, friend, company, bank, etc.

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 because of negative cash inflow i.e. issues with the recovery of money. In most cases, due to the lack of strong legal support and prudent legal advisors, people failed to recover a huge amount of money from debtors which led to the closure of businesses or other financial instabilities.

As we discussed earlier, one of the crucial steps for recovery of money in India is to send a legal notice. 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

Steps to Drafting 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 including 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 is going from the client’s end, the name and details of the client should be mentioned.
• It should be made clear in the notice as to how your right has been infringed due to the act or omission by the opposite party and for that what you want from him. A specific direction must be given to the opposite party along with a time limit.
• The notice must be signed (with date) by the advocate and the sender.

When & Why the Situation of Recovery of Money Arises?

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

• Tenant:
  • Sometimes tenants don’t pay the rent to the landowner and as a result, a huge amount is accrued which the landowner is entitled to receive.
  • If initiation of tenancy involved signing an agreement of lease and licence, the landowner is entitled to send a legal notice for recovery of outstanding dues.
  • The landowner can also recover the rent by filing a suit for specific non-performance of the contract which is governed by the Specific Relief Act 1963 and The Indian Contract Act, 1872.

• Employee:

  • In case an employee absconds with the money, then a domestic enquiry will be initiated, sending a show-cause notice to the employee's residential address.

  • Even after giving two or three such letters to the employee, if he/she does not respond, it would result in disciplinary action against him/her as per the Standing Orders or Service Regulations of the organization.
  • This is to give the employee a chance to defend the charge that he/she is absconding.
  • 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

  • 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.

  • If that employee is governed by the Labour laws, then he/she can approach the Labour Commissioner or can sue the employer under the Payment of Wages Act, 1936 and Industrial Disputes Act, 1947.
  • 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.
  • In case the employer had taken any fraudulent means to deprive the employees of their salary, they can get remedy under different sections of the Indian Penal Code, 1860 and Section 447 of the Companies Act, 2013.
  • 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.
  • Sometimes a strong and effective legal notice can become fruitful in the recovery of the money which saves a lot of hassle and expenditure.
  • Here anyone can start the procedure by sending a legal notice for recovery of money from a company, where it can either be accepted or rejected with a reply.

• Legal notice for recovery of money under Loan:

  • In India, defaulters of a loan are creating a huge mess in the economy and as such in recent years the government has taken strong measures to recover the money circulated through debt.

  • 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 intention to recover the debt amount under a separate judicial body.
  • The Debt Recovery Tribunal is formed in every State to resolve debt-related issues, where the first step begins by sending a legal notice for debt recovery from banks or financial institutions.

• Dealer:

  • In business, most of the time producers sell their product through distributors and keeps security deposit from the Dealers and Distributors in the form of post-dated cheques.
  • 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 within 30 days from the date of receipt of return memo from the bank.
  • 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:

  • To avoid any unpleasant issue in the future, one should give loan to friends or family members through either of the two instruments i.e. Promissory Notes or Loan Agreements.

  • If you have put the loan underwritten contract through either of the two instruments, you are entitled to get legal relief.
  • You can send a legal notice for recovery of money to your friend and if that doesn’t work, you can file a summary suit under The Code of Civil Procedure, 1908.

Henceforth, in order to summarize all of 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.

The Summary Suit and Criminal Remedies are available under Section 406 (criminal breach of trust), Section 420 (cheating), and 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.

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, a dealer, friend, etc. with just one click!

MyAdvo is a legal-tech service aggregator offering you with great services of lawyer discovery, price discovery, and case updates. You can look up a lawyer near you by visiting MyAdvo and hire the one that matches your case requirements. In this process, the case managers at MyAdvo help you throughout by offering end to end solutions for all your legal issues.

If you are finding a lawyer near you who can send a legal notice for recovery of money from a provident fund or looking for a lawyer to draft a reply to a legal notice for recovery of money, then you can stay assured with MyAdvo!

This platform provides you with a list of lawyers in your proximity with up to date information on expertise, experience, contact details, and more. Just express your concerns via mail at consult@myadvo.in or through a call at +91-9811782573, and we’ll connect with you soon with a list of legal experts. You can consult a lawyer online and ask any legal question from expert lawyers.

External Links:

[1] Specific Relief Act, 1963 - An Act to define and amend the law relating to certain kinds of specific relief.

[2] The Indian Contract Act, 1872 - The Indian Contract Act, 1872 prescribes the law relating to contracts in India and is the key act regulating Indian contract law. 

[3] Payment of Wages Act, 1936 - The Act applies to employed persons drawing average wages not exceeding Rs. 10,000/- Per Month.

[4] Industrial Disputes Act, 1947 - An Act to make provision for the investigation and settlement of industrial disputes, and for certain other purposes.

[5] The Code of Civil Procedure, 1908 - An Act to consolidate and amend the laws relating to the procedure of the Courts of Civil Judicature.

[6] Indian Penal Code 1860 - The Indian Penal Code (IPC) is the official criminal code of India. It is a comprehensive code intended to cover all substantive aspects of criminal law. 

[7] Section 447 - Companies Act, 2013 - Punishment for fraud provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.

[8] The Negotiable Instruments Act, 1881 - This law defines these instruments and also deals with each type of them individually. It governs the use of cheques, promissory notes, and bills of exchange.