This article is written by Shikha Sinha who is pursuing a Certificate Course in Advanced Civil Litigation: Practice, Procedure and Drafting from LawSikho.

What is a Legal Notice?

A Legal Notice is a process used by a party (an individual or an entity) to inform the other party about what the other party is being accused of and about his intention of taking legal proceedings against the other party with all the facts and circumstances causing it. Through this Notice, the First Party demands an action or omission of an action from the other party warning it to comply with the same, not doing which may force the First Party to file a Suit in the Court of Law. The aggrieved party must take a lot of caution while drafting the Legal Notice as after filing of suit, the same becomes a Legal Document and nothing in it can be added or deducted. 

Purpose of Legal Notice

• The basic purpose of Legal Notice is to inform the receiver that he has whether knowingly or unknowingly caused discomfort and trouble for the First Party which has led to this Legal Notice.
• Legal Notice is a tool to resolve the matter without filing a case in the Court. It gives a chance to the Other Party to bring forward its part of the story and resolve the matter which always is a better option.
• The sending of the Legal Notice is compulsory as it gives the other party a period of 30 days to send a reply and indicate its innocence before the aggrieved party file a case in the Court of law. 
• It is of utmost importance that the Legal Notice is drafted effectively by the advocate of the aggrieved party which includes all the facts and complaints against the Other party, replying to which is not easy. If the Other party is unable to deny the claims in the Legal Notice, they may end up losing the case in the Court of Law. 

Various Scenarios in which a Legal Notice may be served

Security Refund

Security Refund refers to the security amount deposited by the tenant to the land lord while at the beginning of the rental tenure. The said amount depends upon the monthly rent which is generally twice the monthly rent. The landlords may retain a part of the Security Deposit if they believe that some damages has been caused in the rented property. However, the Landlords may foul play and try to usurp the security deposit by refusing to pay it back. In such a case, the tenant may send a Legal Notice demanding the Landlord to refund the Security Deposit.

Procedure

• The Legal Notice must be effectively drafted by the Advocate of the tenant and sent for his approval.
• The Tenant must thoroughly read it and include or exclude any detail as per his case.
• Final copy of the draft, after proofreading must be sent to the Landlord accordingly.
• True copy of the said legal notice must be retained by the Advocate of the Tenant along with post receipts.

Documents Required

• Copy of Tenant Agreement.
• Communication between the Landlord and Tenant regarding the payment of the Security Deposit.
• Payment receipt of the Security Deposit.
• Bank Account Details of the Parties.

Cheque Bounce

Cheques are negotiable instruments payable on demand. When the cheques are not processed successfully, due to reasons being insufficient balance, incorrect amount, or mismatch in the signature, such cheques are considered to be bounced. However, most of the cases in India are due to insufficient funds. The payee, after the cheque bounces, has to send a Legal Notice within a period of 30 days from the return of the memo from the bank. Thereafter, if the Drawer does not make the payment within the next 30 days, then the payee has to file a case in the Court of law. 

The said Legal Notice has to be drafted with extra caution as the same cannot be edited or changed thereafter and any mistake therein may cause grave injury to the payee. Therefore, an expert must be consulted for the drafting of the Legal notice in case of cheque bounce.

Requirements for Legal Notice in Cheque Bounce case

• The cheque should be towards a specific liability.
• Within a validity period.
• Must be returned due to insufficient fund.
• The notice must be sent within 30 days from the return of the memo from the bank.
• If the drawer fails to pay the liability within 15 days, the payee can file a case within 30 days from sending the legal notice.

Insolvency

Insolvency is a state where a person is no more in a state to repay the debt. Under Section 8 of the Insolvency and Bankruptcy Code, 2016, the Creditor sends a Demand Notice to the Operational Debtor, demanding to repay the Debt. As per the law, the Demand Notice has to be effectively delivered to whom it is intended to be delivered and issued for delivery. As per the landmark case, under section 8 of the IB Code, the demand notice once served upon the corporate debtor, either at the registered office or corporate office or both, it shall be considered as a valid proof of service. 

Demand Notice can be delivered by the person himself or by his authorized representatives. Further, a waiting period of 10 days is a must after the Demand Notice is sent to the Operational Debtor before the application is initiated in the National Company Law Tribunal.

Faulty Products

In the case where the consumer purchases a product or a good which promises a good quality, and receives a faulty or a damaged product, he has a right to complain regarding the same and get the amount paid back or compensation equivalent to it. For the redressal of the grievances of the consumers, forums are available where the aggrieved consumers can file their complaints against the retailer or the manufacturer of faulty products.

However, before filing complaints in the forums, a Legal Notice can be sent to such a Retailer or the manufacturer.  The documents required before sending a Legal Notice are as follows:

• Original copy of the bill of the faulty or damaged product.
• Proof of the damage or fault in the product or service.
• Proof of attempts made to get the refund or replacement of the faulty products.

An expert advocate is required to draft the Legal Notice as the same will be presented in the Consumer Court indicating the genuine attempts to resolve the matter outside the Court.

Arbitration

As per section 21 of the Arbitration and Conciliation Act, 1996, Notice has to be mandatorily sent to the other party before referring the matter to the Arbitrator. The non-compliance of section 21 of the Act, 1996 makes the Arbitration proceeding unsustainable in law and further makes the award passed therein as null and void. 

Section 21 of the Act reads as under:

“21. Commencement of the arbitral proceedings unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute to be referred to arbitration is received by the Respondent“

The reasons as to why sending a notice is mandatory under the Arbitration and Conciliation Act, 1996 before referring the matter to the Arbitrator are as follows:

• The parties against whom the Arbitration is considered may know the claims against him and may further accept few or more of the claims which may narrow down the dispute in the initial stage.
• The recipient gets an opportunity to analyze if the claims are time barred or barred by law or untenable factually.
•  Unless there is such a notice invoking the arbitration clause, it will not be possible to know whether the procedure for the appointment of an arbitrator, other procedures as envisaged in the arbitration clause have been followed.
• Qualification of the Arbitrator is also very important, therefore this Notice gives both the parties to choose the arbitrator efficiently.
• The purposes of Section 11(6) of the Act, without the notice under the Section 21 of the Act, a party seeking reference of disputes to the arbitration will be unable to demonstrate that there was a failure by one party to adhere to procedure and accede to the request for the appointment of an arbitrator.

Recovery of Dues

A legal notice is a legal document formally intimating a party that he owes money to the person sending the Notice. It is a sort of a warning that if the Other party doesn’t pay the money due to be paid, a Recovery Suit will be initiated in an appropriate Court of law. A proper Legal Notice may also be sent to a friend by a friend if he owes him a huge amount.

Importance of sending a Legal Notice in the matter of Recovery of Dues

• The intention of the Sender(s) becomes clear to the Other party.
• May resolve the issue between the Parties.
• Adds credibility to the Sender’s claim.

Conclusion

In all the discussed cases above, it has to be borne in mind that to add effectiveness to the subject matter, the Legal Notice should be drafted by an advocate who has good expertise in legal terminologies. The basic components of any Legal Notice are as follows:

• Name and address of the sender.
• Description of how the sender knows the defaulter.
• Cause of action.
• Monetary Relief Claim.
• Legal basis of such relief.

A well-thought-out and properly drafted legal notice in a lot of cases has the potential to settle the matter at the first instance itself without the need to move to a Court of Law. The aggrieved party hence should pay adequate attention before sending the legal notice to his/her defaulter(s).

References

• Article “Demand Notice Form 3 Of IBC- Legal Opinion”
• [http://www.legalserviceindia.com/legal/article-4243-demand-notice-form-3-of-ibc-legal-opinion.html#:~:text=To%20recover%20the%20debt%2C%20NOTICE,before%20national%20company%20law%20tribunal]
• Article “What is a Legal Notice? How to file a Legal Notice?” [http://lawtimesjournal.in/what-is-a-legal-notice-how-to-file-a-legal-notice/]

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