Technology is overruling every sector of the economy, yet most commercial transactions are completed with the usage of cheques to keep a record of financial transactions, especially in UAE. It is pointless to say that issuing and accepting cheques are a part and parcel of our commercial front, yet we face serious troubles when dealing with cheques.
We all talk about what is a cheque, what happens when it is dishonoured and how to seek legal redress in the event a cheque is bounced. However, we still feel the lack of importance given to dishonoured cheques issued by mistake or the details added in the cheques were mistakenly added wrong, or such cheques were never supposed to be released for payments. Criminal Lawyers of Dubai will try their best to discuss such eventualities in this particular article for our readers to be very much aware of before issuing any cheque.
Previously there was a fine or imprisonment on any individual who issued a cheque which was later dishonoured or bounced by the bank due to either insufficient balance or withdrawing the balance post issuing the cheque or wrongfully signing the cheque or if he orders the bank to not release the amount.
The United Arab Emirates issued Federal Decree Number 14 of 2020 (Issued on 27 Sep 2020) which amended and added new articles to the UAE Commercial Transaction Law No. 18 of 1993 and the UAE Penal Code. The new changes have come into force from January 2022 onwards and one of the most significant changes introduced is the limited scope of criminalization for returned cheques on account of insufficient funds.
Narrowed Criminality: The new amendments bring in narrowed criminality in matters concerning cheques. The provision related to criminal sanctions for insufficiency of funds in the UAE Penal Code has been deleted, effectively meaning that there will be no criminal liability if the cheque has bounced because of insufficiency of funds. Pursuant to the new changes, only specified actions will invite criminal action, including but not limited to the following:
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Intentionally falsifying cheques
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Instances of fraud: This covers circumstances wherein the issuer instructs the respective bank, not the pay the cheque amount
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Providing counterfeit cheques
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Withdrawing the account balance before the date of the cheque encashment to prevent the cheque from being cleared.
It is common to find the provisions concerning filing a criminal case or civil case for a cheque bounce, yet it is uncommon to find provisions governing circumstances where cheques were issued with good faith yet were bounced due to some typographical or other error. This situation gives the receiver a benefit of the doubt to register the criminal case and harass the issuer. Even though the law is unclear on such a situation, the Best Criminal Lawyers of Dubai may assist you in legally representing you before the relevant criminal court and presenting solid evidence and provisions of the law to establish the fact that the cheque was indeed issued with good faith and it was unknown to the issuer that the cheque will be bounced.
It is pertinent to understand that Lawyers of Dubai may still assist you in legal representation, it is for the court to decide the applicable law and circumstances of the matter before issuing a judgment. Therefore, it is vital to follow the said guidelines issued by the bank before issuing a cheque to avoid any legal consequences in the future.
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About the Author
Dr. Hassan Elhais publishes analysis of UAE criminal law matters, including cheque disputes, payment obligations and the distinction between civil and criminal issues. For readers researching a cheque case lawyer in Dubai, his writing offers insight into the legal questions surrounding these topics. Explore his published work and practice-area information for further context.
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