Are you criminal if your cheque is bounced in UAE?
Posted: Oct 18, 2020
A bounced cheque is among the most common financial offenses which can land the issuer of the cheque in legal trouble and can seriously impact his credit ratio in the financial market or with the Central Bank. In the UAE, the quantity of cheque bounce cases is colossal. A check is dishonored if the guarantor composes a disrupted cheque, which may happen due to multiple reasons such as false signature, insufficient balance, overwriting, or other similar reasons. Nevertheless, Criminal Lawyers of Dubai herein desire to discuss the dire consequences of issuing a cheque in the country which is thereafter dishonored by the bank.
Criminal Liability in UAE
Federal Law number 18 of 1993 (Commercial Transactions Law) defines a cheque as an order issued by a person to his bank on a presented date to release payment of a specific amount to another person (or whose name is written on the cheque). The law of UAE further defines the consequences in case the order (or a promise to pay via cheque) is not fulfilled by the bank as the issuer of the cheque fails to fulfill the criteria established by the bank. In such circumstances, the failure of the issuer will then be considered as a criminal offense under the Federal Criminal Law of UAE.
There can be multiple reasons for a cheque being dishonored by the bank, however, the main concern of the present article is to critically understand the criminal liabilities one may incur in Dubai if they issue a cheque which is later dishonored.
In the occasion, where the drawee holds a bounced cheque, the inability to pay because of any reasons will be upheld by the bank through a bank letter; the drawee can wait for three days for the issuer of the cheque to pay the amount. However, if the issuer of the cheque fails to pay the requisite amount, the next recourse is to approach the best Criminal Lawyers in Dubai for seeking legal recourse through criminal or civil courts.
Right when the issuer of the cheque defaults, the bank will have the opportunity of recording the criminal by issuing a letter confirming that the cheque was dishonored allowing the drawee of the cheque to record a criminal case against the drawer. Irrespective of the fact that a criminal case will not let the drawee of the cheque receive his pending amount, yet it will help the government to take any action against a defaulter and will work as a deterrent for other cheque issuers.
Recent developments in the Federal Criminal Law has established one-day courts for addressing small matters. Such courts possess the authority to issue punishments for small criminal matters and to issue a judgment within 24 hours. In addition, the following amendments in the law enable the Public prosecutor to issue criminal punishments for simple violations by issuing fines. The defaulter will be allowed to raise an appeal on such judgment within seven days from the date of issuing the order. Even though the procedure for dealing with cheque bounce cases has been simplified by the court, yet the drawee would require the assistance of a Criminal Lawyer in Dubai to register the complaint against the defaulter and take relevant action against him.
Dr. Hassan Elhais is a legal consultant in Dubai, specializing in the drafting of all statements of claim, memos and consultation on litigation of all manner.