Here’s to The Amendment In Criminal Cases For Cheque Bounce!

Here’s To The Amendment In Criminal Cases For Cheque Bounce!

The commercial transaction law No 18 of 1993 was amended on 27th September through a Federal Law Decree No. 14 of 2020. The amendments of the decree were mainly focused on the commercial cheque rules. The most noteworthy amongst them was the termination or suspension of article 401, 402 and 403 of the UAE penal code. The given articles were provided for the penalization of the issuance of cheque in bad faith or ill intent as reviewed by Criminal Lawyers of Dubai.

It is prevalent that this attempt of the government to introduce such amendments will attract  more expatriates towards the country, thereby ensuring significant boost in the economy. Most of the amendments of the new decree were saved to bring in force till January 2022 as the delay will allow the individuals as well as the corporate entities to accept the changes in a friendly manner, irrespective of their consequences.

The article provides for an abutting view of the provisions modified through way of the new decree. Such key changes are as follows:

Prior the introduction of the new decree, article 401 was scrutinized by the court in a broader scope, especially the term “ issuance of cheque in bad faith”. It thereby provided that if any person would be issuing a cheque, which will get bounced, then such a drawer of the cheque will be regarded as the accused and will be charged with a criminal liability. As a result, the criminal court was vested with the power to exercise discretion in order to decide about the criminal liability as a list of acts that would amount to bad faith were absent in the old law.

Now post the issuance of the decree, new provisions have been added to the previous law, namely article 641(1), (2), and (3). These provisions provide for the list of acts that will be regarded as the act of issuance of bounced cheque in bad faith and shall be inviting criminal liability. Article 641(1), as mentioned above provides that the act amounting to bad faith will be if the court is given order by the drawer that it shall not clear the cheque presented by the beneficiary. Next, 641(2) provides two conditions for the same that if the drawer commits an act such as withdrawing of all money before the clearance of the cheque or if he closes the account before such clearance, then he will be acting in bad faith. Yet another act amounting to bad faith under the same article is that despite knowing that his bank account is dormant, the drawer still issues a cheque. Article 641(3) gives that the drawer will be criminally charged, if he will be signing the cheque in such a way that the beneficiary cannot encash the same. The decree has thus certainly revealed the intention to pass criminal charges only for the acts mentioned in the above three articles as the articles are characterized as fraudulent in nature. As a result it is regarded as justifiable to punish people undertaking such an act.

In addition to this, article 635 has been introduced and article 617 has been amended that provides for a beneficiary of the cheque to have a vested power to select an alternative method through which he can claim the amount without actually going to the court for the same.

The provisions mentioned above, enumerates that

  1. Under Article 617, the beneficiary is now vested with a power to ask the bank for partial payment of the cheque, with respect to the bank balance of the drawer.
  2. The financial institutions will have to face criminal charges, if they do not accept the request of the partial payment of the cheque which is made by the beneficiary. They have no say in the same.
  3. The dishonoured cheque can now be treated as a civil executive deed as mentioned under federal civil procedure code no, 11 of 1992, if a certificate is obtained by the beneficiary by the bank that there is no sufficient fund available in the drawer’s bank. In other words, the beneficiary can now directly file a civil execution case against the drawer, whose assets will be seized in order to obtain the value of the cheque.

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