Remedies under criminal law -Remedies under criminal law

Remedies under criminal law

• Section 406 covers criminal breach of trust under the Indian Penal Code: Under Section 406 of the Indian Penal Code. Seller can file a suit for breach of trust. Seller have to prove that the customer has breached his trust by not paying the money against the product or services provided. “Punishment for criminal breach of trust.—Whoever commits criminal breach of trust shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both”. Punishment is given to the person who breaches the trust.
• Section 417 of Indian Penal Code: This section deals with the cheating. Cheating can be in any sense between seller and buyer or between any two people.”Punishment for cheating.—Whoever cheats shall be punished with imprisonment of either description for a term which may extend to one year, or with fine, or with both”.
• Section 420 of Indian Penal Code: This section gives relief to the person who is being cheated by someone. This section also includes cheating same as section 417. This section can be one provision on which seller can take action for non payment from the customer.

How To Take Legal Action for Non-Payment of Invoices

he Business.com community wanted to know how to prevent and approach non-paying customers. We answered.

When you do business with a client, you expect to be paid for your labor, product or services. But what happens when those payments are late – or don't come at all? It’s a question that comes up often in the Business.com community. So we went looking for a definitive answer. Fortunately, there are steps to help you handle and even prevent the problem.

Preventing non-payments

Chasing a non-paying customer is often a messy process, so it's best to avoid the issue altogether by taking the following precautions.

1. Research your client.

If you've never worked with a client before, take the time to do research and find out who you're dealing with. Google their name, ask your contacts if they know anything about your new prospect, and see if there are any complaints against them on sites like the Better Business Bureau.

"Most non-payments can be prevented or severely minimized by screening the customers in advance," said Jocelyn R. Nager, president of Frank, Frank, Goldstein & Nager, a professional legal corporation. "Thanks to all information available on the internet, especially the court records, notice of liens and more, most often you can run a risk assessment on your own … and the possibility of non-payment should be reflective of your tolerance for risk." [Looking for a collections agency? Read our recommendations and reviews on our Best Picks page.]

2. Have a contract.

No matter if it's your best friend or one of the most respected business leaders in your industry, always have a written contract in place. The contract should address these legal concerns:

• Payment schedule: e.g., 40 percent deposit, 40 percent milestone payment and 20 percent on completion
• Terms: e.g., payment either 30, 60 or 90 days after the invoice is sent
• Preferred payment method: e.g., checks, credit card or PayPal
• Scope: the exact work you are expected to complete
• Deadline: expected completion date
• Late payment policy: amount charged if invoice is not paid on time

It's essential to get all details in writing so you don't face issues down the road. For instance, if your client is aware they owe fees for overdue expenses, they'll be less likely to flake – and if they do, they'll be forced to pay interest. But if you fail to set up a contract, nothing is guaranteed.

"Often when assisting clients who are being charged interest, late fees or legal fees, I will ask the company for anything in writing and signed by my client that permits them to do so," said Thomas J. Simeone, trial attorney and managing partner at Simeone & Miller LLP. "When they cannot do so, I explain that interest and fees are not part of the contract and therefore are not allowed."

Don't set yourself up for problems that can be easily avoided. You can find service contracts for free and online. Here's one from LawDepot.

3. Ask for a deposit.

If you ask for a portion of the payment upfront, you'll absorb some of the hit. Asking for a deposit or retainer is common for freelancers when negotiating with clients and will help cover the expenses or time that you already put into a project.

According to Tina Willis, owner of Tina Willis Law, the amount you should ask for depends largely on the industry. If workers in your position do not typically charge retainers, consider installment fees, which are paid as you complete certain parts of the job.

"That way, you are less likely to do way too much work before getting paid, or realizing that you are never going to be paid," Willis said.

Approaching non-paying clients

Sometimes, no matter what you do to prevent the issue, you're still left empty-handed. If you've taken all of the precautions and a client still hasn't paid the invoice, you'll need to act fast. Here's how to approach the situation.

1. Weigh your options.                                                                                                            

Ask yourself if chasing down the client is really worth it. If the payment was only a small percentage of your yearly income, it may be better to let it go and write off the client for future business. You could end up spending more money and energy than what the invoice is worth.

"Best-case scenario, if you have a winnable case, and the defendant has the money to pay and doesn't declare bankruptcy, you usually will still have to pay your own attorney's fees to collect," said Willis. "And those can run in the tens or even hundreds of thousands, depending on the complexity of the case."

2. Follow up.

Don't hesitate to send out an email if the invoice has not been paid by the agreed-upon date. There's always a possibility that the invoice was lost or misplaced. Maybe the client was on vacation or had a family emergency. You shouldn't instantly assume that the client is a deadbeat because they didn't pay on time.

Send them a friendly yet firm email reminding them that the invoice is past due and you'd like to resolve the issue as soon as possible. Also ask if they have any concerns with the product or service that you provided, or if they need assistance with the payment process.

3. Talk to a lawyer.

When your client is either resisting or ignoring your requests, and you still think the unpaid invoice is worth the trouble, you should involve a third party. But don't ask a friend or look online for help; meet with an actual attorney who will suggest which legal courses of action you can take against the customer.

According to Willis, once you've tried all else, it's best to hire a lawyer to write a demand letter.

"Many businesses and individuals do not understand the legal obstacles involved in collections," she said. "So, if they are a debtor, and your lawyer contacts them, many will just pay without analyzing further."

You also want to be careful not to overstep the Fair Debt Collection Practices Act, added Roumen Todorov, co-founder and COO of 411 Locals. Involving a legal assistant will help you avoid getting yourself in further trouble.

4. Hire a collection agency.

You could also hire an agency to collect the debt for you. You can find a reputable collection agency like you would with other professionals, such as accountants or lawyers. Ask your network if they know of any collection agencies, or read online reviews to select one for yourself. If that doesn't work, then check out member listings for the Commercial Collection Agency Association or BBB-certified collection agencies.

"A licensed collection agency is experienced, trained and skilled to pursue recovery while trying to maintain a good business relation with your debtor, should you want to keep doing business with them," said Federico Nuccio, FCIB Certified International Credit Professional (CICP) and founder and CEO of Recoupera. "Most agencies will offer you to collect on a contingent fee and on a 'no win, no fee' basis. This way, you can rely on their assistance while not incurring further costs and keep focusing on your business."

How to Handle Non-Paying Clients

he Business.com community wanted to know how to prevent and approach non-paying customers. We answered.

When you do business with a client, you expect to be paid for your labor, product or services. But what happens when those payments are late – or don't come at all? It’s a question that comes up often in the Business.com community. So we went looking for a definitive answer. Fortunately, there are steps to help you handle and even prevent the problem.

Preventing non-payments

Chasing a non-paying customer is often a messy process, so it's best to avoid the issue altogether by taking the following precautions.

1. Research your client.

If you've never worked with a client before, take the time to do research and find out who you're dealing with. Google their name, ask your contacts if they know anything about your new prospect, and see if there are any complaints against them on sites like the Better Business Bureau.

"Most non-payments can be prevented or severely minimized by screening the customers in advance," said Jocelyn R. Nager, president of Frank, Frank, Goldstein & Nager, a professional legal corporation. "Thanks to all information available on the internet, especially the court records, notice of liens and more, most often you can run a risk assessment on your own … and the possibility of non-payment should be reflective of your tolerance for risk." [Looking for a collections agency? Read our recommendations and reviews on our Best Picks page.]

2. Have a contract.

No matter if it's your best friend or one of the most respected business leaders in your industry, always have a written contract in place. The contract should address these legal concerns:

• Payment schedule: e.g., 40 percent deposit, 40 percent milestone payment and 20 percent on completion
• Terms: e.g., payment either 30, 60 or 90 days after the invoice is sent
• Preferred payment method: e.g., checks, credit card or PayPal
• Scope: the exact work you are expected to complete
• Deadline: expected completion date
• Late payment policy: amount charged if invoice is not paid on time

It's essential to get all details in writing so you don't face issues down the road. For instance, if your client is aware they owe fees for overdue expenses, they'll be less likely to flake – and if they do, they'll be forced to pay interest. But if you fail to set up a contract, nothing is guaranteed.

"Often when assisting clients who are being charged interest, late fees or legal fees, I will ask the company for anything in writing and signed by my client that permits them to do so," said Thomas J. Simeone, trial attorney and managing partner at Simeone & Miller LLP. "When they cannot do so, I explain that interest and fees are not part of the contract and therefore are not allowed."

Don't set yourself up for problems that can be easily avoided. You can find service contracts for free and online. Here's one from LawDepot.

3. Ask for a deposit.

If you ask for a portion of the payment upfront, you'll absorb some of the hit. Asking for a deposit or retainer is common for freelancers when negotiating with clients and will help cover the expenses or time that you already put into a project.

According to Tina Willis, owner of Tina Willis Law, the amount you should ask for depends largely on the industry. If workers in your position do not typically charge retainers, consider installment fees, which are paid as you complete certain parts of the job.

"That way, you are less likely to do way too much work before getting paid, or realizing that you are never going to be paid," Willis said.

Approaching non-paying clients

Sometimes, no matter what you do to prevent the issue, you're still left empty-handed. If you've taken all of the precautions and a client still hasn't paid the invoice, you'll need to act fast. Here's how to approach the situation.

1. Weigh your options.                                                                                                            

Ask yourself if chasing down the client is really worth it. If the payment was only a small percentage of your yearly income, it may be better to let it go and write off the client for future business. You could end up spending more money and energy than what the invoice is worth.

"Best-case scenario, if you have a winnable case, and the defendant has the money to pay and doesn't declare bankruptcy, you usually will still have to pay your own attorney's fees to collect," said Willis. "And those can run in the tens or even hundreds of thousands, depending on the complexity of the case."

2. Follow up.

Don't hesitate to send out an email if the invoice has not been paid by the agreed-upon date. There's always a possibility that the invoice was lost or misplaced. Maybe the client was on vacation or had a family emergency. You shouldn't instantly assume that the client is a deadbeat because they didn't pay on time.

Send them a friendly yet firm email reminding them that the invoice is past due and you'd like to resolve the issue as soon as possible. Also ask if they have any concerns with the product or service that you provided, or if they need assistance with the payment process.

3. Talk to a lawyer.

When your client is either resisting or ignoring your requests, and you still think the unpaid invoice is worth the trouble, you should involve a third party. But don't ask a friend or look online for help; meet with an actual attorney who will suggest which legal courses of action you can take against the customer.

According to Willis, once you've tried all else, it's best to hire a lawyer to write a demand letter.

"Many businesses and individuals do not understand the legal obstacles involved in collections," she said. "So, if they are a debtor, and your lawyer contacts them, many will just pay without analyzing further."

You also want to be careful not to overstep the Fair Debt Collection Practices Act, added Roumen Todorov, co-founder and COO of 411 Locals. Involving a legal assistant will help you avoid getting yourself in further trouble.

4. Hire a collection agency.

You could also hire an agency to collect the debt for you. You can find a reputable collection agency like you would with other professionals, such as accountants or lawyers. Ask your network if they know of any collection agencies, or read online reviews to select one for yourself. If that doesn't work, then check out member listings for the Commercial Collection Agency Association or BBB-certified collection agencies.

"A licensed collection agency is experienced, trained and skilled to pursue recovery while trying to maintain a good business relation with your debtor, should you want to keep doing business with them," said Federico Nuccio, FCIB Certified International Credit Professional (CICP) and founder and CEO of Recoupera. "Most agencies will offer you to collect on a contingent fee and on a 'no win, no fee' basis. This way, you can rely on their assistance while not incurring further costs and keep focusing on your business."

latest judgment of the Apex Court, PDCs and Security Cheques are not covered under N.I.Act.

If you decide to file case u/s138 of N.I. Act, do not mention that those cheques were post dated chaques since as per latest judgment of the Apex Court, PDCs and Security Cheques are not covered under N.I.Act.

Post dated cheques are those cheques which are issued by the payer to the payee but are to be drawn only on a future date. In business world, post dated cheques are commonly and conveniently cheque issued for security purposes like loans, lease, advances etc. Let’s take a detailed glimpse on its legality and validity. Meaning of post dated cheque is a cheque which has been dated a later date from the date it has been issued to another person. Post dated cheque validity is arises only from the date it has become payable.

Enforceability of Post Dated Cheques

A post dated cheque is enforceable as a negotiable instrument only when it becomes payable on demand. It is covered under the purview of Negotiable Instrument Act, 1881.  In accordance to the Supreme Court judgement on post dated cheque in 1998, a post dated cheque will be considered as a bill of exchange and not a cheque before the date mentioned on the said instrument/document. It becomes payable only from the mentioned date on the face of the document. By bill of exchange, it means that the document will stay negotiable and will turn into cheque only on the date it will be payable on demand.

Important components of PDC

PDC can become cheque only on the date that is mentioned on the document. Prior to the said, it is just a bill of exchange.
Its validity is only for 3 months from the date that appears on the document.
PDCs are issued either as security cheques for loans or as advance to ensure the trustworthiness of the payer to its supplier.






Applicability of Section 138 of Negotiable Instrument Act

A dishonor of a cheque is a punishable offence under Negotiable Instrument Act. How the Act is applicable on Post Dated Cheques?

It is applicable on PDC once it becomes a cheque i.e. from the date it is payable on demand and the said cheque is issued to meet a legitimate liability, but gets dishonored due to insufficient funds or the reasons specified in the Act.

In accordance to Section 138 of the said Act, the dishonoring of the issued cheque by the bank due to insufficient funds in the issuer’s account or if the specified amount on the cheque is over and above the amount arranged to be discharged by the issuer after making an agreement with the its bank, then such act is a criminal offence and is punishable provided:-

The cheque is presented within 6 months before the bank from the date mentioned on the face of the instrument or its date of validity, whichever is earlier.
The beneficiary demands the drawer to make the payment as so specified in the cheque within the due period of time and such a demand should be made in writing within 15 days from the date the bank informs about the return/dishonor of the given cheque by the drawer.
The drawer of the dishonored cheque couldn’t make the payment of the said amount to the drawee within the due period of the cheque or within 15 days of acknowledging the notice, as the case may be.



Legal Punishment on dishonor of PDC/Cheque

According to the provisions of the said Act, the legal punishment for dishonor of PDC is:-

Imprisonment maximum upto 1 year or
Fine equivalent to two times the amount mentioned on the dishonored cheque or
Both, as decided by the authority


Latest ruling on dishonor of PDC by the Apex Court…..a glimpse

According to the latest judgment of Supreme Court in a cheque bounce case, if the PDC is issued for any advance payment for any purchase/supply of goods/services is not any discharge of security of a legitimate debt, then it will not attract Section 138 of the Negotiable Instrument Act. It clearly indicated that any dishonor of PDC for repayment of EMI of a loan is considered as security and hence it will be covered under the purview of the Act.

How to file a suit for recovery of money

How to file Recovery Suit under Order 37? What are the rules for filing Summary Suit under order 37 of Criminal Procedure Code 1908? How to file Order 37 Suit for recovery of money?




What is Order 37 Suit?
Civil Procedure Code Order 37 provides for the summary procedure. The provision has been made keeping in view certain suits, in order to prevent the unreasonable obstruction laid down by the defendant, who has no defence. Unlike other civil suits, the trial in summary suits begins after the court grants leave to the defendant to contest the suit. The court dealing with summary suits can pass the judgment in the favour of the plaintiff if (1) the defendant has not applied for leave to defend or if such application has been made but refused, or (2) the defendant who is permitted to defend fails to comply with the conditions on which the leave to defend was granted.

HIGH COURT AMENDMENTS RELATED TO SUMMARY SUITS

Bombay, Goa, Daman and Diu.- In Order XXXVII, substitute the following sub-rule (1) for the existing sub-rule (1) of Rule 1 :-

“1. (i) This order shall apply to the following Courts, namely:-

(a) The High Courts, City Civil Courts and Courts of Small Causes; and

(b) Such other Courts as may be specifically empowered in this behalf by the High Court from time to time by a Notification in the Official Gazette:

Provided that in respect of the Courts referred to the clause (b), the High Court may, by notification in the Official Gazette, restrict the operation of this Order only to such categories or suits as it deems proper and may also from time to time, as the circumstance of the case may require, by subsequent notification in the Official Gazette further restrict, enlarge or vary the categories of suits to be brought under the operation of this Order as it deems proper. (1.10.1983) and (1.10.1987).

Kerala, Laccadive, Minicoy and Aminidivi Islands.- Order XXXVII shall be omitted (9.6.1959).

What are the Rules for filing Order 37 Suit?
Rules related to summary suit under Civil Procedure Cord are:

1. Courts and classes of suits to which the Order is to apply.

1(1) This Order shall apply to the following courts, namely:-

(a) High Courts, City Civil Courts and Courts of Small Causes; and

(b) other courts;

Provided that in respect of the courts referred to in clause (b), the High Court may, by notification in the Official Gazette, restrict the operation of this order only to such categories of suits as it deems proper, and may also, from time to time, as the circumstances of the case may require, by subsequent notification in the Official Gazette, further restrict, enlarge or vary, the categories of suits to be brought under the operation of this order as it deems proper.

(2) Subject to the provisions of sub-rule

(1), the order applies to the following classes of Suits, namely:

(a) suit upon bills of exchange, hundies and promissory notes;

(b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest arising-

(i) on a written contract; or

(ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt(other than a penalty; or

(iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.

2. Institution of summary Suits.

(1) A suit, to which this Order applies, may, it the plaintiff desires to proceed hereunder, be instituted by presenting a plaint which shall contain,-

(a) a specific averment to the effect that the suit is filed under this Order;

(b) that no relief, which does not fall within the ambit of this rule, has been claimed in the plaint; and

(c) the following inscription, immediately below the number of the suit in the title of the suit, namely:-

(Under Order XXXVII of the Code of Civil Procedure, 1908)”.

(2) The summons of the suit shall be in form No. 4 in Appendix B or in such other Form as may , from time to time, be prescribed.

(3) The defendant shall not defend the suit referred to in sub-rule (1) unless he enters an appearance and in default of his entering an appearance the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree for any sum, not exceeding the sum mentioned in the summons, together with interest at the rate specified, if any, up to the date of the decree and such sum for costs as may be determined by the High Court from time to time by rules made in that behalf and such decree may be executed forthwith.

3. Procedure for the appearance of defendant.

(1) In a suit to which this Order applies, the plaintiff shall, together with the summons under rule 2, serve on the defendant a copy of the plaint and annexure thereto and the defendant may, at any time within ten days of such service, enter an appearance either in person or by pleader and, in either case, he shall file in court an address for service of notice on him.

(2) Unless otherwise ordered, all summonses, notices and other judicial processes, required to be served on the defendant, shall be deemed to have been duly served on him if they are left at the address given by him for such service.

(3) On the day of entering the appearance, notice of such appearance shall be given by the defendant to the plaintiff’s pleader, or, if the plaintiff sues in person, to the plaintiff himself, either by notice delivered at or sent by a prepaid letter directed to the address of the plaintiff’s pleader or of the plaintiff, as the case may be.

(4) If the defendant enters an appearance, the plaintiff shall thereafter serve on the defendant a summons for judgment in Form No. 4A in Appendix B or such other Form as may be prescribed fr6m time to time, returnable not less than ten days from the date of service supported by an affidavit verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the suit.

(5) The defendant may at any time within ten days from the service of such summons for It's affidavit or otherwise d such facts as may be deemed sufficient to entitle him to defend , apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the court or judge to be just:

Provided that leave to defend shall not be refused unless the court-is-satisfied.*hat the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious:

Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in court.

(6) At the hearing of such summons for judgment,-

(a) if the defendant has not applied for leave to defend, or if such application has been made and is refused, the plaintiff shall be entitled to judgment forthwith; or

(b) if the defendant is permitted to defend as to the whole or any part of the claim, the court or judge may direct him to give such security and within such time as may be fixed by the court of judge and that, on failure to give such security within the time specified by the court or judge or to carry out such other directions as may have been given by the court or judge, the plaintiff shall be entitled to judgment forthwith.

(7) The court or judge may, for sufficient cause shown by the defendant, excuse the delay the defendant in entering an appearance or in applying for leave to defend the suit.

4. Power to set aside decree

Under special circumstances, set aside the decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the court so to do, and on such terms as the court thinks fit.

5. Power to Order bill, etc., to be deposited with officer of court.

In any proceeding under this Order the court may Order the bill, hundi or note on which the suit is founded to be forthwith deposited with an officer of the court, and may further Order that all proceedings shall be stayed until the plaintiff gives security for the costs thereof.

6. Recovery of cost of noting non-acceptance of dishonoured bill or note.

The holder of every dishonoured bill of exchange or promissory note shall have the same remedies for the recovery of the expenses incurred in noting the same for non-acceptance or non-payment, or otherwise, by reason of such dishonour, as he has under this Order for the recovery of the amount of such bill or note.

7. Procedure in Suits.

Save as provided by this order, the procedure in suits hereunder shall be the same as the procedure in suits instituted in the ordinary manner.




HIGH COURT AMENDMENT

Order XXXVII-A

“Karnataka. - After Order XXXVII and before Order XXXVII insert the following Order:

Order XXXVII-A

Interlocutory Applications:

(1) An interlocutory application means an application to the Court in any suit, appeal or proceeding already instituted in such Court other than an application for execution of decree or order or for review of judgment or for leave to appeal.

(2) Except where otherwise prescribed by rules or otherwise provided by any law for the time being in force, an interlocutory application shall state only the order prayed for and shall not contain any statement of facts or argumentative matter. Every application in contravention of this rule shall be returned for amendment or rejected.

(3) Every interlocutory application shall be supported by an affidavit. Where, however, the facts on which the application is based appear from the records in Court or relate to any act or conduct of the applicant’s pleader himself, the Court may permit a memorandum of facts signed by the applicant’s pleader to be filed instead of an affidavit.

(4) Any fact required to be proved upon an interlocutory proceeding shall, unless otherwise prescribed by rule, or ordered by Court be proved by affidavit, but the Judge may in any case direct evidence to be given orally, and thereupon the evidence shall be recorded and exhibits m ed in the same manner as in a suit.”(30.3.1967).