Legal notice under Sections 138 and 141 NI Act for dishonour of cheque
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Advocate's name Law firm name & ASSOCIATES
LEGAL CONSULTANT & ADVOCATE
SUPREME COURT OF INDIA
Office No. Office number
Mob.: +Mobile numbere-mail: Email address
REGD. POST / EMAIL / WHATSAPP
Dated: Date of notice
To,
1. First addressee (company) name
Office at:
First addressee's office address
2. Second addressee name
Director / Authorised Signatory
Office at:
Second addressee's office address
Mob. No. Second addressee's mobile number
Email: Second addressee's email address
3. Third addressee name
Director
Office at:
Third addressee's office address
Email: Third addressee's email address
4. Fourth addressee name
Director
Office at:
Fourth addressee's office address
Email: Fourth addressee's email address
5. Fifth addressee name
Director
S/o Fifth addressee's father's name
Office at:
Fifth addressee's office address
Email: Fifth addressee's email address
LEGAL NOTICE UNDER SECTIONS 138 AND 141 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881, AS AMENDED FROM TIME TO TIME
Dear Sir/Sirs,
We act for and on behalf of M/s. Client (LLP) name Foods LLP, having its office at Client's office address (hereinafter referred to as "Our Client"), through its Director, namely Client's director name, who is the authorised person to initiate all legal proceedings against the above-named noticees, and are hereby instructed to serve the present legal notice upon you, the addressees (hereinafter referred to as the "Addressees"):—
1.That Our Client, M/s. Client (LLP) name Foods LLP, a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008, is a company classified under the National Industrial Classification code 15, and is engaged in business activities pertaining to the said industry code, namely, the manufacture of foodstuffs.
2.That you, Addressee No. 1, are engaged in the business of marketing, distribution and brand building.
3.That you, the Addressees, approached Our Client in or around Month when addressees approached client, Purpose of approaching client for the sale, supply and storage of the company's products, whereupon Our Client and you, the Addressees, entered into a C&F Agreement dated Date of C&F agreement, wherein you agreed to perform the functions of stocking the company's products and selling/supplying the same to distributors from time to time, on the terms and conditions set out in the Agreement. In terms of Clause 3.1 of Article III (Operations) of the C&F Agreement, Our Client provided initial security of Rs. 1 Crore to you, the Addressees. The said Clause reads as under:—
"3.1 The C&F shall provide an initial security of Rs. Initial security amount (₹ crore) Crore. The amount of security can be altered after mutual consent of both the parties. Initially investment of Rs. Initial investment amount (₹ lakhs) Lakhs shall be in the form of bank transfer and balance security shall be made in the form of Bank Form of balance security. The company shall provide C&F with the distributor network.
*3.2The Company shall invoice the goods to the C&F against the guarantee at a discount rate as specified in Annexure 1. The C&F shall be eligible for the margin as specified in Annexure 2"*
4.That Our Client issued a Bank Guarantee to you, the Addressees, which was in turn to be furnished to M/s. Third-party company name; in order to simplify the arrangement, a Tripartite Memorandum of Understanding dated Date of tripartite MoU was executed between you, the Addressees, Our Client and M/s. Tripartite MoU party name, whereby it was agreed that the Bank Guarantee would be furnished on behalf of you, the Addressees, directly to M/s. Tripartite MoU party name.
5.That Our Client invested a sum of Rs. Total investment amount (₹ crore) Crore (comprising a Bank Guarantee of Rs. Bank guarantee amount (₹ lakhs) Lakhs and a payment of Rs. Payment to addressees (₹ lakhs) Lakhs made to you, the Addressees) as security against the goods received from you, the Addressees. You, the Addressees, held the marketing rights of various brands and were to promote the said brands and generate sales, while Our Client stored the goods and supplied the same as per your orders from time to time, with quality and standard packing for such quantity of the products. In terms of the Agreement, Our Client is eligible for margin on sales or a minimum guarantee (1% of the investment and monthly expenses), whichever is higher, and any loss arising on account of expiry of the goods is to be borne by you, the Addressees.
6.That Our Client paid a sum of Rs. Payment made to addressees (₹ lakhs) Lakhs on Date of payment made to addressees to you, the Addressees, and also issued a Bank Guarantee of Rs. Bank guarantee amount under tripartite agreement (₹ crore) Crore in favour of Beneficiary of bank guarantee in terms of the Tripartite Agreement. You, the Addressees, billed stock worth approximately Rs. Value of billed stock (₹ lakhs) Lakhs, of which some items were sold and the balance remained with Our Client. In respect of the said unsold stock, Our Client sent an email to you, the Addressees, but you failed to respond, with the result that most of the items have now expired.
7.That Our Client used to raise invoices for the minimum guarantee, payment whereof was to be made by the 7th of the following month, but you, the Addressees, consistently delayed payment and, as per the records, billed only once during the entire year. In terms of the said Agreement, in the event of termination or expiry of the Agreement, you, the Addressees, are liable to return the security and buy back the goods, which amounts to Rs. Buy-back liability amount (₹ crore) Crore.
8.That the purchase return for the entire balance stock has been raised and accepted by you, the Addressees; the said stock is still lying in the godown of Our Client, and Our Client is being forced to pay rentals in respect thereof.
9.That you, the Addressees, made payment only for the period Period for which payment was made in a single instalment, and since Month from which nothing was paid, Period for which nothing was paid, nothing has been paid to Our Client till date, resulting in loss of interest to Our Client. The total amount of Rs. Total pending amount (₹)/- remained pending up to Date up to which amount is pending, and Our Client requested you, the Addressees, to clear the dues vide email dated Date of email demanding dues. You also deducted TDS on the invoices raised by Our Client but have not deposited the same with the Income Tax Department till date. Finally, after repeated pursuation, meetings and emails, you, the Addressees, issued a cheque for the month of Month for which cheque was issued towards the outstanding amount in favour of Our Client, and agreed to pay the amount for the remaining period between Start month of remaining payment period and the date of realisation of the payment. You, the Addressees, also issued a cheque of Rs. Cheque amount for settlement (₹)/- in favour of Our Client in this regard, and a summary settlement email dated Date of settlement email was also sent by Our Client to you, the Addressees; despite receipt thereof, you failed to respond.
10.That you, the above-named Addressees, in light of the agreed terms and conditions, placed the order, and supplies against the said order were made by Our Client in accordance with your specifications and to your satisfaction. It is pertinent to mention herein that you, the above-named Addressees, accepted the products supplied by Our Client without any protest or demur. It is further pertinent to mention that Our Client raised invoices upon you, the above-named Addressees, which were duly accepted and acknowledged. That you, the above-named Addressees, made payments to Our Client on a running account basis. It is pertinent to mention herein that, as per the ledger account of Our Client, there is an outstanding principal amount due against the supplies made by Our Client, the receipt whereof was duly acknowledged by you, the above-named Addressees. In respect of the supplies made to you, the Addressees, Our Client duly furnished the invoices/bills.
11.That despite the categorical understanding that the due amount would be paid upon the raising of the invoices/bills, you, the above-named Addressees, failed to honour the payment, and after numerous attempts made by Our Client demanding payment of the due amount, you, the above-named Addressees, in discharge of part of your liability, issued account payee cheque(s) in favour of Our Client, drawn on Drawee bank name, Drawee bank branch. The details of the subject cheque(s), issued in favour of Our Client, are as follows:
| S.NO. | CHEQUE NO. | DATE | AMOUNT (INR) |
| 1. | Cheque number | Date of subject cheque | Rs.Amount of subject cheque (₹)/- |
12.That at the time of handing over the cheques to Our Client, you, the above-named Addressees, categorically represented to Our Client that the said cheques would be duly honoured as and when presented by Our Client.
13.That accordingly, Our Client presented the said cheque for encashment through its bankers, namely Name of client's bank, Client's bank branch Branch, City of client's bank. However, to the utter shock and surprise of Our Client, the above-mentioned cheque was not honoured. The cheque was returned to Our Client with the remarks “Funds Insufficient”, vide the returning banker’s memo dated Date of bank return memo, which was duly received by Our Client.
14.That you, Addressee No. 1, is a Private Limited Company; you, Addressee No. 2, is its Director-cum-Authorised Signatory in respect of the cheque in question; and you, Addressee No. 3, is a Director of Addressee No. 1 Company. All of you, the Addressees, are in charge of and responsible for the day-to-day affairs of the said Addressee No. 1 Company, and Addressees No. 4 to 9 are the shareholders/ex-directors of the said Company.
15.That after receiving back the dishonoured cheque in question, Our Client made numerous attempts to contact you, the above-named Addressees, in order to apprise you of the fact of dishonour of the cheque; however, you, the above-named Addressees, paid no heed to the requests of Our Client and, instead, put off the matter on one pretext or the other, with the result that the amount still remains due and payable.
16.That Our Client has, on numerous occasions, requested you, the Addressees, to pay the Due Amount to Our Client together with applicable interest; however, you, the Addressees, by one means or another, have ignored the request of Our Client for payment of the due amount. This conduct clearly demonstrates your dishonest intentions.
17.That as per the ledger account of Our Client, there is an outstanding amount due, together with interest calculated at the rate of 18% from the due date (hereinafter referred to as the “Due Amount”), against the supplies of goods made by Our Client to you, the Addressees, which supplies were duly accepted and acknowledged by you, the Addressees.
18.That it was to the utter shock of Our Client that, despite goods of the utmost quality having been duly supplied by Our Client on an urgent basis as and when requested by you, the Addressees, you, the Addressees, chose to resile from your obligations by not abiding by the terms and conditions agreed between the parties.
19.That Our Client has been regularly trying to contact you, the Addressees, and has sought meetings with your officials/representatives on several occasions; however, all such requests of Our Client have been in vain. It is pertinent to mention that, in view of the past business relationship with you, the Addressees, Our Client had earlier chosen not to resort to any legal remedy, trusting that you, the Addressees, would shortly pay the due amount together with interest.
20.That from the above acts and conduct of the accused persons, it is evident that the accused persons issued the said cheques in question with a dishonest and fraudulent intention, and the accused have intentionally and deliberately issued the said cheque to the Complainant despite knowing that the said cheque was liable to be dishonoured. In doing so, the accused have also committed serious criminal offences of cheating, fraud and criminal breach of trust, punishable under Sections 406, 419 and 420 of the Indian Penal Code, 1860. The Complainant therefore reserves the right to institute criminal proceedings against all the accused before the court of competent jurisdiction.
20.That the axiomatic fact emerging from the above clearly shows that you, the above-named Addressee, have cheated Our Client with dishonest and mala fide intentions, inasmuch as even prior to the issuance of the cheque, you never had any intention of paying Our Client. You have thereby caused wrongful loss to Our Client and wrongful gain to yourself, and have also committed offences under Sections 406 and 420 of the Indian Penal Code, 1860.
You are, therefore, hereby called upon, by virtue of the present notice, to make payment of the aforesaid cheque in question, for a sum of Rs.Amount of subject cheque (₹)/- in favour of Our Client, within a period of 15 (fifteen) days, failing which we have clear instructions from Our Client to initiate proceedings against you under the provisions of the Negotiable Instruments Act, 1881, together with such other appropriate legal proceedings as may be advised, at your cost and risk.
A copy of this notice is being retained in our office for future reference and action.
Yours faithfully,
Advocate's name
Advocate