The United Arab Emirates (UAE) has strict laws regarding bounced cheques, which can result in both criminal and civil cases against the issuer. A bounced cheque is a cheque that is returned unpaid by the bank due to insufficient funds in the account or other reasons.

While a bounced cheque was previously considered a criminal offense in the UAE, a new law was introduced in 2021 that decriminalized the act. However, it is still considered an act worthy of a financial penalty, and the guilty party can be liable for civil claims. The beneficiary or the holder of a bounced cheque can file a civil case against the issuer, and the court can order the issuer to pay the amount owed plus any additional fines or penalties.

It is important to note that civil cases for bounced cheques can result in both financial and legal consequences for the issuer. The jail term can be between 1-3 months – up to 3 years, or/and a fine that usually varies from AED 1,000 to AED 30,000 based on the amount of the bounced cheque. In this article, we will explore the process of filing a civil case for a bounced cheque in the UAE and what to expect from the legal proceedings.

What is a Bounced Cheque?

A bounced cheque is a cheque that has been returned by the bank due to insufficient funds in the account of the issuer. It is a serious offence in the UAE and can lead to civil and criminal proceedings against the issuer.

It is important to note that a bounced cheque is not only a financial issue but also a legal one. Dishonouring a cheque is considered a criminal offence under the UAE Criminal Code. The most common reason for cheque bounce is usually “insufficient funds” in the account of the issuer.

When a cheque bounces, it can lead to civil and/or criminal proceedings against the issuer. The aggrieved party may make a civil claim for the payment of the bounced cheque to recover the cheque amount. The court conducting the criminal trial may also impose a penalty or fine on the issuer.

It is important to be aware of the legal implications of issuing a cheque without sufficient funds. If you are unable to honour a cheque, it is advisable to inform the payee and make alternative arrangements for payment to avoid legal consequences.

Issuing a bounced cheque in UAE can lead to serious legal consequences. The consequences can be both civil and criminal, depending on the circumstances of the case. Here are some of the legal consequences of a bounced cheque in UAE:

  • Civil Liability: When a cheque bounces due to insufficient funds, the issuer becomes liable to pay the amount of the cheque to the beneficiary. The beneficiary can initiate a civil case against the issuer to recover the amount of the cheque. The issuer may also be liable to pay additional damages and legal fees.
  • Criminal Liability: In the past, a bounced cheque was considered a criminal offense in UAE. However, a new law came into effect on January 2, 2022, which decriminalized bounced cheque cases. Now, if a cheque bounces due to insufficient funds, the issuer will not face criminal charges. However, if the cheque bounces due to other reasons, such as a closed account or a forged signature, the issuer may still face criminal charges.
  • Jail Time: In the past, if a cheque bounced due to insufficient funds, the issuer could face a jail term of up to three years. However, with the new law, there is no jail time for bounced cheques due to insufficient funds.
  • Fines: In addition to civil liability, the issuer may also be liable to pay fines for issuing a bounced cheque. The amount of the fine depends on the amount of the cheque and is determined by the court.

It is important to note that even though bounced cheque cases are no longer criminal offenses in UAE, they can still have serious financial and legal consequences. It is always best to ensure that there are sufficient funds in the account before issuing a cheque to avoid any legal issues.

Filing a Civil Case for a Bounced Cheque in UAE

If you are a victim of a bounced cheque in UAE, you have the right to file a civil lawsuit against the issuer of the cheque. According to the UAE law, the beneficiary or the holder of a bounced cheque can file a criminal and a civil case against the issuer. A civil case can be filed if the amount of the bounced cheque is less than AED 50000.

The first step to file a civil case is to approach a lawyer who specializes in cheque bounce cases. The lawyer will help you file the case in the appropriate court and guide you through the legal process. The court will issue a notice to the issuer of the cheque, asking them to appear in court on a specified date.

If the issuer of the cheque fails to appear in court, the court can issue a default judgment in favor of the beneficiary. If the issuer appears in court and admits to the bounced cheque, the court can order them to pay the amount of the cheque along with any interest and legal fees. If the issuer denies the bounced cheque, the court will conduct a trial and make a decision based on the evidence presented.

It is important to note that filing a civil case for a bounced cheque can be a lengthy and expensive process. It is advisable to consult a lawyer and weigh the pros and cons before deciding to file a civil case.

Here are some key points to keep in mind when filing a civil case for a bounced cheque:

  • The amount of the bounced cheque must be less than AED 50000 to file a civil case.
  • Approach a lawyer who specializes in cheque bounce cases to file the case.
  • The court will issue a notice to the issuer of the cheque, asking them to appear in court on a specified date.
  • If the issuer fails to appear in court, the court can issue a default judgment in favor of the beneficiary.
  • If the issuer admits to the bounced cheque, the court can order them to pay the amount of the cheque along with any interest and legal fees.
  • If the issuer denies the bounced cheque, the court will conduct a trial and make a decision based on the evidence presented.
  • Filing a civil case for a bounced cheque can be a lengthy and expensive process.

Steps Involved in Filing a Civil Case for a Bounced Cheque in UAE

If you have received a bounced cheque in UAE, you can file a civil case against the issuer to claim the amount of the cheque. Here are the steps involved in filing a civil case for a bounced cheque in UAE:

  1. Inform the issuer: The first step is to inform the issuer of the bounced cheque and request them to make the payment. If the issuer fails to pay, you can proceed to the next step.
  2. Lodge a complaint: You need to formally lodge a complaint with the police of the respective emirate where the cheque was issued. The police will investigate the matter and issue a report.
  3. Approach the public prosecutor: Once you have the police report, you need to approach the public prosecutor with the report and a written complaint. The prosecutor will review the case and decide whether to proceed with the case or not.
  4. File a civil case: If the public prosecutor approves the case, you can proceed to file a civil case against the issuer in the court. You will need to hire a lawyer and provide all the necessary documents and evidence to support your case.
  5. Attend court hearings: You will need to attend all the court hearings and present your case before the judge. The judge will review the evidence and make a decision.
  6. Enforce the judgement: If the judge rules in your favor, you can enforce the judgement and recover the amount of the bounced cheque from the issuer.

It is important to note that the process of filing a civil case for a bounced cheque can be time-consuming and complex. It is recommended to seek legal advice and hire a lawyer to guide you through the process.

Conclusion

In conclusion, bounced cheques are a serious issue in the UAE and can lead to both criminal and civil cases. It is important to understand the legal implications of issuing a cheque that bounces and to take appropriate measures to prevent such incidents from occurring.

If you have issued a cheque that has bounced, it is recommended that you seek legal advice immediately. A lawyer can help you understand your legal rights and obligations and can guide you through the legal process.

It is also important to note that the UAE has implemented new laws related to bounced cheques, including the use of dishonored checks as “executive documents” that can be used in court for execution procedures. It is crucial to stay up-to-date with these laws to ensure compliance and avoid legal repercussions.

Overall, it is important to exercise caution when issuing cheques in the UAE and to ensure that you have sufficient funds in your account to cover the amount of the cheque. By taking these steps, you can avoid legal issues and protect your financial interests.