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April 14, 2021

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Bouncing of Cheques is witnessed as the incessant complication confronted by the people of UAE. The criminal act is defined under the provisions of criminal law and it can result into penalties and punishments which can prove to be really stringent and intimidating as confirmed by Criminal Lawyers of Dubai. Entities and foreign exchanges, loan from banks, lease deeds, sales and purchases or transactions by the individuals are not the only areas where one could face such type of issue.

The paramount reason for bouncing of Cheques is the sheer inability on the part of the debtor to repay the amount lent to him by the creditor on the due date. This type of offense not only invites the criminal proceedings but also the civil proceedings. It is regulated under UAE federal law (3) of 1987. As a result, it is not only important for the citizens of UAE to take necessary precautions but anyone undergoing commercial affairs in the UAE should make sure that all the requisites of dealing with a cheque are thoroughly followed. The article thus, explains the effects one can face in a situation of Bouncing of Cheques.

Sufficiency of Funds

Bona Fide intentions are one of the characteristic which the court looks upon firstly, on getting a case. Thereby, it is imperative for the drawer of the cheque to maintain adequate amount of funds for avoiding the situation. The article 599 of the law provides that the drawer shall putt a sufficient amount of funds in his bank account with respect to the clearance of the full amount as indicated in the cheque. If the drawer fails to pay the debt due on him, a right is entitled upon the payee to ask the drawee, i.e the bank to provide him with the bank statement of the drawer, based on which he/she can take further action.

Offense of Bounced Cheque : Explained A cheque is said to be bounced when, the drawee bank spurns to present the cheque on the date of issue, due to the following reasons:

  1. The bank refuses the cheque and mark it when the drawer’s bank account does not constitute sufficient fund for the payment of the amount mentioned on the cheque, either partially or fully.
  2. When the issuer prohibit the bank from clearing the cheque
  3. In a case where either the signature on the cheque does not match with the original ones, or where the cheque is not made properly. In either case, the bank doesn’t clear the cheque for safety purposes.
  4. The bank account linked with the drawer was shut before the payment.


Liability of the offense

Cheque is a commercial payment instrument that is based on the unforseen availability of funds in the drawer’s account as well as on the acceptance of the instrument by the drawee. The UAE Commercial transaction Law provides the payee or the presenter of the cheque with a remedy under Article 632 stating that the payee or the presenter of the cheque can take action against the drawer or the party liable for non payment of the amount due to him on the condition that the cheque is presented to the drawee by the payee within the time frame and despite his protest and efforts, no payment has been initiated.

The bank statement of the drawer can be called upon as the evidence of non payment of the amount regardless of all the protest by the payee.

Time Duration of Presentation of Cheque

The due date of the presentation of the cheque is stated on the cheque by the drawer on the date of issue of cheque. Article 617 and 618 explains the time frame of presenting the cheque. According to the former article, the cheque cannot be presented before the due date and the latter article enumerates that a period of six months from the due date is the time frame that the payee enjoys for the presentation of cheque.

Consideration

A drawer is obligated to provide the drawee with some consideration as against the issuance of the cheque for the successful payment of the same and the consideration shall not cease to exist before the expiry of the time frame. In a case where the drawer fails to provide the consideration to the drawee, the payee can take a recourse against the drawee under Article 634, even when he or she has not presented the cheque.

The procedure of Legal Recourse

The inability to pay the cheque shall be evident from the bank statement of the drawer upon the bouncing of the cheque. This bank statement shall be made available to the payee on his/her request by the drawee bank and he cannot refuse the same. The only option present by the drawee is that to ask for a three days grace period for the purpose of contacting the drawer, after which he is bound to produce the same to the payee.

Criminal Charge

A Dubai Police Mobile Application is a platform available to the payee in case he wants to lodge a complaint with a police for a bounced cheque. The next step involved in the proceeding is that the police will summon the drawer to the police station, where he is required to give the reason for the same. Another step that the drawer can take to prevent the legal proceedings against him is that he can settle the amount at the police station only. He can also ask for a specified time to repay his debt which shall be secured by the confiscation of his passport at the police station. On the filing of the complaint, another consequence that the drawer will have to face during a criminal proceeding is that a travel ban or an arrest warrant might get issued in his name.

The case is then transferred from the police station to the office of the public prosecutor, who is responsible to carry out investigation of the same. On the basis of the investigation, the Public Prosecutor will either provide for bail upon the payment of the debt by the drawer or will order for the detention of the drawer for the non payment until the court hears the case. After this, the case is then transferred to the court, where the court undergoes a detailed examination of the case in order to find out whether the elements of the offense were present or not.

The actus reus in the following type of offense will be the absence of sufficient amount of fund in the drawer’s account or the withdrawal of money by the issuer post the date of issuance of the cheque or issue of an improper cheque. But a person will not be charged for the same, until and unless the mens rea is present i.e. the intention of the party to bring damages of financial nature on the payee. As soon as the dual elements are achieved, the court on its discretion can charge the accused under Article 401 of the UAE penal code.

Civil Case proceedings

The criminal court only provides for the sanction of acting in bad faith and thereby passes the case to the Civil court in order to determine the civil claim against the accused. The civil court will pass the decree for either payment of the debt in full or for payment of the amount left for the payment. In case the accused fails to pay the same, he will be charged for yet another offense, i.e. for not following the court’s order. If at the end of the jail term, there is no pending case against the issuer of the bounced cheque, the matter gets terminated.

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