SAMPLE FORMAT FOR THE REPLY TO THE NOTICE U/S 138 NI ACT
SAMPLE FORMAT FOR THE REPLY TO THE NOTICE US 138 NI ACT
SAMPLE FORMAT FOR THE REPLY TO THE NOTICE US 138 NI ACT
Dear Sir,
I respectfully submit the following:
1. The applicant had borrowed a sum of
Rs.__________/- (Rupees ____________ only), for business purposes, disbursed on
_________, and issued several blank cheques, including cheque numbers _______,
_______, _______, _______, as part of the pre-disbursement conditions specified
in the loan documents. Importantly, these cheques were undated and devoid of
any specified amounts.
2. Notably, one of these undated blank
cheques, bearing cheque number _______, was presented to the bank without any
prior intimation to the applicant. Additionally, the amount filled in the
cheque was not legally recoverable at the time of its presentation. Therefore,
the applicant cannot be held liable for the amount mentioned in the cheque.
3. Furthermore, it should be noted that the
loan's maturity date is _________. The statement of account used for
calculating the amount owed is as of ________, while the date of dishonor of
the cheque is _________. It is evident that as of the date of the cheque's
presentation, i.e., on __________, the total loan amount had not yet become
legally recoverable.
SAMPLE FORMAT FOR THE REPLY TO THE NOTICE U/S 138 NI ACT
4. The Supreme Court of India, in the case
of Sampelly Satyanarayan Rao vs. Indian Renewable Energy (19 September 2016),
clarified that Section 138 of the NI Act is applicable only if, on the date the
cheque was issued, a liability or debt existed, or the amount had become
legally recoverable.
5. The applicant has faced severe financial
hardship due to substantial business losses amounting to nearly ______ lakhs.
This crisis was promptly communicated to your client via email dated __________
(a copy of which is attached). The applicant requested support during this
crisis, but the lender declined the request. Despite these challenges, the
applicant has diligently paid 11 out of 24 EMIs, totaling Rs.__________/- out
of the _______ loan. Therefore, any allegation of cheating or fraudulent intent
is unfounded. It is essential to recognize that the applicant's financial
difficulties do not equate to dishonesty or fraudulent inducement.
SAMPLE FORMAT FOR THE REPLY TO THE NOTICE U/S 138 NI ACT
6. The undated and blank cheque, bearing
cheque number _______, was provided by the applicant solely as a security
measure before the loan disbursement. It was not issued in discharge of a
pre-existing legally enforceable liability. Consequently, the use of this
blank, undated cheque by your client to recover the outstanding amount is not
in line with the provisions of Section 138 of the NI Act. This cheque served as
a security measure, invoked only in the event of unforeseen contingencies.
7. Regrettably, it appears that your client
is leveraging legal provisions to exert pressure on the applicant to repay the
loan under the threat of criminal prosecution and penalties under Section 138 of the Negotiable Instruments Act, 1881, as well as provisions related to fraud
and cheating in the Indian Penal Code, 1860.
SAMPLE FORMAT FOR THE REPLY TO THE NOTICE U/S 138 NI ACT
8. The actions of your client are
inconsistent with established legal principles. In the case of Ramakrishna
Urban Cooperative Credit Society Ltd. v. Rajendra Bhagchand Warma, the Bombay
High Court emphasized that obtaining blank or post-dated cheques as security
before loan disbursal should not be misused to compel debtors or borrowers to
repay loans under the threat of legal action.
9. Similarly, in the case of M/s Barclays
Bank v/s Mr. Gupta, the Delhi Court highlighted that Section 138 of the NI Act
aims to instill confidence in negotiable instruments, particularly cheques. It
was not intended to transform cheques into instruments for loan recovery,
especially when obtained as blank signed cheques before or during loan
sanctioning for security purposes.
SAMPLE FORMAT FOR THE REPLY TO THE NOTICE U/S 138 NI ACT
10. In accordance with the applicant's
financial circumstances, and considering the legal aspects outlined above, the
applicant is not liable for the amount mentioned in the dishonored cheque, as
it is not legally owed. It is advised not to misuse cheque number _______, and
we kindly request its return, along with the bank's memo. Furthermore, your
client is encouraged to engage in a constructive dialogue to explore viable
solutions for loan repayment or settlement.
Regards,
[Your
Name]
