By Imran Khan

Cheque bounce is one of the UAE’s most common offence. FEDERAL LAW NO (3) OF 1987 ON ISSUANCE OF THE PENAL CODE describes that “Detention or a fine shall be imposed upon anyone who, in bad faith, gives a cheque without a sufficient and drawable balance or who, after giving a cheque, withdraws all or part of the balance, making the balance insufficient for settlement of the cheque, or if he orders a drawee not to cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed.”

The aggrieved party can report for a criminal complaint and register a civil case for recovery of the amount against the signatory of the cheque.
When a cheque is dishonoured, the drawee bank issues a Cheque Return Memo to the payee mentioning the reason for non-payment and reason can be insufficient funds, the incorrect date, instructed by the account holder, the signature does not match, editing in cheque etc. Bearer of the cheque can resubmit the cheque in the bank within six months of the date on it.
However, if the drawer fails to make a payment, then the beneficiary has the right to register a criminal complaint against the signatory of cheque in the jurisdiction of the police station where the cheque is dishonoured. A complaint can be registered by a person himself or his Power of attorney holder and lawyer.
After the report police shall communicate with the drawee bank to verify the signature of the drawer of the cheque after that Police will register a criminal complaint against the signatory. After the registration, the criminal complaint, a travel ban on the charged person will be issued. It’s a cognizable offence and punishable with imprisonment or a fine.
The police will refer the complaint to the public prosecution, Public prosecutor has the right to grant bail either by paying the value of the bounced cheque or demand the passport of the defaulter or another guarantor. If bail is denied, the public prosecutor may order the detention of the defaulter until the court hears and decides on the case. After submission of both parties’ contentions and investigation, if the public prosecution finds the sufficient support for a criminal case, he shall transfer the case to the criminal court and court based on the evidence submitted by the parties and examination of witnesses if required will pronounce the verdict.

Punishment:
Fines 1000 to 3,000
Imprisonment 1 month to 3 years

However, in the Emirate of Dubai, the Dubai Public Prosecution, without case transferred to the Criminal Courts, to issue a criminal judgment which will be in the manner of fines only that Judgment can’t be appealed. This covers dishonoured cheques for a value not exceeding AED 200,000.  

The dishonour of cheques shall be punishable with the following fines:
Bounced cheques value up to AED 50,000 = fines Dh2,000
AED 50,000 to 100,000 = fines Dh5,000
AED 100,000 to 200,000 = Fines Dh10,000

Fines imposed by the public prosecution or court are payable to the UAE government and not as compensation to the complainant.
Article (20) of the UAE Criminal Procedures Law allows the limitation of the five years in misdemeanors matters and bounce cheque cases come under misdemeanor

Civil Legal Action

Criminal case order Fines is not a remedy to the victim, the claimant must submit his case to the civil court to claim or recover the amount. Based on the evidence and facts presented by the parties, the civil court shall issue a judgment obliging the defaulter of the bounced cheque to pay an amount equivalent to the value of the cheque with interest and legal charges.
The UAE Commercial Transactions Law provides for two years from expiry of the presentment period to file a civil case.

Civil case will be filed against the company if cheque is issued by managerial capacity. But manger will have criminal liability.
Court may order to stop all criminal and civil proceedings against an individual defender under new Insolvency Law (The UAE Insolvency Law No. 9 of 2019) and against a corporate entity under Federal Law by Decree No. (9) of 2016 on Bankruptcy.

Imran Khan is a Legal Consultant at Bin Eid Advocates & Legal Consultants. He can be reached at Email: imran_advocate@live.com.
Views expressed are his own and do not reflect The UAE News policy.