Overview of legal notice for non-payment of dues

The very step for initiation of a legal process is serving a legal notice to the opposite party. It gives an idea to the opposite party that his/her act or abstinence from the act has caused some harm to the aggrieved person. A person should contact a lawyer who is an expert and has experience in drafting such legal notice as drafting of notices require in-depth knowledge of the law. It is sent by an aggrieved person can be a real or legal person. Such a notice alerts the opposite party of a potential court case in case he/she is not willing to fulfil the demands of the aggrieved party.

The notice contains a reasonable time period in which the receiver is under an obligation to send a reply or fulfil the mentioned demand. In such case of legal notice for non-payment of dues, the receiver of the notice must pay the due amount to the sender. Such notice must contain every detail about the parties and the financial obligation of the receiver. 

A legal for recovery of dues is a formal communication between the aggrieved party and the opposite party where the latter has not paid the due money on time. It is a legal warning to the opposite party to pay the demanded money, or else the aggrieved will take legal action and file a complaint before the competent court.

There is no bar on the list of people to whom the legal notice for non-payment of dues can be served. A person can send a legal notice to his/her friend, relative or any person to whom he/she has lent the money. To recover the dues which have not been duly paid by the borrower, serving legal notice for non-payment of dues plays a very important role.

Laws under which a case can be filed

The laws under which an aggrieved person can file a complaint for non-payment of dues are as follows:

• Under order 37 of the Code of Civil Procedure
• Under section 138 of the Negotiable Instrument Act of 1881
• Under section 73 of the Indian Contract Act of 1872
• Under the Indian Penal Code of 1860
• Under the Companies Act of 2013

Need of legal notice for non-payment of dues

An aggrieved party can send a legal notice for recovery of money to an employer, friend, relative, etc to whom the party has lent the money with a promise that another party will repay the amount in the mutually agreed time period. It is preferred by people to serve a legal notice before filing a complaint as most of the cases get resolved just after the notice has been served. It also saves the time and money of the aggrieved party from approaching the court.

The sender must serve a well-structured legal notice covering all the necessary and legal aspects of the notice. This will provide the maximum opportunity for the sender for receiving the due amount.

Scope of legal notice for recovery of money

A legal notice for non-payment of dues has a broad scope and it applies to:

• All the cases where a bill of exchange or a promissory note is involved.
• Any money claim where the aggrieved party tries to recover the amount which has been paid to the opposite party.
• The claims that have been raised should be presented with supporting evidence as the written agreement or a provision mentioned in the law.

Limitation period for filing a suit for the recovery of the due amount

As per the prevailing laws in India, the limitation period for filing a civil suit for recovery of the due amount after the cause of action has aroused is three years. A civil suit which has been filed after the limitation period has ended will not be considered a valid suit. If the plaintiff provides a reasonable ground for delay in filing the suit after the expiry of the limitation period, the court can allow such a person to file the suit for recovery of the due amount.

What should a Legal Notice for Non-Payment of dues cover?

The legal notice for recovery of dues must contain:

• The advocate must draft the legal notice for non-payment of dues on his/her letterhead in a specified manner.
• The letterhead should mention the personal details such as the address and contact number of the advocate.
• The document shall mandatorily mention the name, residential address and contact number of the person to whom such notice is being issued.
• As the notice is being sent on behalf of the aggrieved party, details such as the name, address and contact details of the aggrieved party must be mentioned along with the date on which the payment was due.
• There must be a paragraph stating that there has been a clear violation of the aggrieved party’s right due to the act or omission by the receiver of the notice along with the demands as a remedy.
• The notice should contain the time period under which the opposite party must send a reply to the notice or fulfill the asked demands.
• The notice must be mandatorily signed and dated by both advocate and the aggrieved party who is sending the notice.

Format for Legal Notice for Non-Payment of Invoice

LEGAL NOTICE

To

Mr. ABC

Sub: Legal notice for non-payment of dues

Dear Sir,

As per the instructions from my client Mr. XYZ s/o Mr. AZX residing at I-11, KG Building, Delhi, I do hereby serve you with this legal notice:

1. That my client has a private company running under the name of M/s YZ Pvt. Ltd.
2. That my client is involved in the business of manufacturing and selling of keyboards used in computers.

3. That as per your confirmed order for the supply of 100 keyboards, my client started working on your order on the basis of the credit account which you have in my client’s organization from time to time in the due course of business.

4. That my client sent all the invoices to you and even you acknowledged the invoices sent by my client for every work performed in relation to the order.
5. That even after acknowledging all the invoices sent with the total calculation of the amount to be paid as Rs. 5,00,000/-, you have failed to pay the said due amount with malicious intentions. Thus, you are liable to pay the principal amount of Rs. 5,00,000 along with the prevailing interest rate of 2% from the due date of payment till the date on which the actual payment will be made.
6. That my client is entitled to recover the said amount of Rs. 5,00,000 along with the interest amount.
7. That even after constant reminders through telephone and personal messages to your offices, you have delayed making the payment due to several reasons and have not paid a single invoice out of the said outstanding amount.

Therefore, I serve you this legal notice on you to pay Rs. 5,00,000 along with the interest to my client either in cheque or cash whichever mode of payment is suitable to you within the time span of 15 days from the date on which the notice has been received to you. If you fail to comply with the same, my client will file a civil and criminal suit for recovery of the unpaid amount and compensation for the loss before the competent court. In such an event, you will be held completely responsible.

A copy of the notice has been retained in my office for record and future communication.

(____________)

ADVOCATE

Documents required for a legal notice for non-payment of dues

Whenever the draftsman is making a legal notice for recovery of unpaid dues, the below-mentioned documents must be carefully verified:

• An affidavit of evidence stating that money has been lent to another person.
• A contract of employment mentions that the employer is under an obligation to pay the defined amount to the employee in consideration for the services the employee provides and the same amount has to be recovered from the employer.
• A supporting document to be used as additional evidence to be used as proof for recovery of due amount.

Procedure for legal notice for non-payment of dues

As per the laws in India, there is no defined process for making a legal notice for non-payment of dues. Still, the legal notice must be drafted carefully keeping in mind all the necessary legal provisions. It must be duly signed by the advocate and details of the advocate and the sender must be clearly mentioned. It must be the responsibility of the advocate to provide a sample of the draft to the sender for reviewing the same. Once it has been reviewed and finalized, the advocate must send it to the receiver.

If the opposite party does not send a reply to the notice or fulfills the demand mentioned in the notice within the prescribed time limit, the sender will file a suit for recovery of the due amount before the competent court.

What should the opposite party do if he/she receives a legal notice?

After the legal notice has been received by the opposite party, he/she should:

• Read the notice carefully: The opposite party must read the contents of the notice carefully and comprehend the matter which has been mentioned by the sender of the notice. The opposite party has an option to amicably settle the matter by talking with each other.
• Hiring an advocate: It is usually suggested to people to contact an advocate in case a person has received legal notice to seek suggestions.
• Briefing the advocate: After the opposite party has appointed an advocate, the party must explain to the advocate his side of the story along with other relevant details so that the advocate can analyze the situation and draft a suitable reply.
• Sending the response: After the advocate has drafted the reply, he/she should show it to the party for reviewing the same. After the review has been finished, the advocate shall send the notice through a registered or courier. The advocate is entitled to keep a copy of the legal notice and its reply for using the same for further communications related to the case.