Learn More about Cheque Bounce Cases and Solutions in UAE

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About New Law on Bounced Cheque UAE

People should be aware of the new Law on bounced cheque uae (cheque bounce). Banks are required to make an initial payment on the amount of the check and let the remainder bounce The law's amendments have brought in a variety of penalties that limit the consequences of writing bad checks. The most recent amendments of the U.A.'s Commercial Transactions Law will enhance the power of cheques as a form of payment and reduce the time required to process the beneficiary's claim. The UAE Cabinet amended certain provisions of Federal Law No 18 of 1993, also known as the Commercial Transactions Law, including those relating to cheque bounce. The new law is expected to create an instrument to ensure the collection of payments made through cheques, requiring banks to pay a portion of the amount after deducting the total amount of the beneficiary. The new rules represent a huge leap into the future and will have significant and rapid results when they take effect on January 2, 2022. The new rules will reduce the time and effort of the beneficiary of a check as the decree is an executive document that must be executed by a judge who is suited to the court. These changes will assist in overcoming issues with commercial transactions and when it comes to securing payment. Following the new law provides that banks must provide partial payment for a check to the beneficiary when the cheque is made payable at the bank. Hence, the balance of the account is sufficient to meet the claim of the beneficiary. The remaining amount is then refunded. The banks are obliged to pay a portion of the check amount and then bounce the remainder of the sum. The person who is the beneficiary will be able to take the bounced check and take it to court to recover the remainder of the amount." This change in law will make it easier for the person who received the cheque to assert his rights since the bounced cheque will be seen as an official document enforceable and executed by a judge in a UAE court. A Civil Court can demand the person who issued the bounced cheque to pay an amount equivalent to the amount of the check or its outstanding balance if the person is unable to pay. Could confiscate his assets to settle the balance, and the person convicted of the offense is sentenced to jail in the event of not complying with the civil court's decision.

Modified penalties applicable to cheques

Anyone who endorses or issues an unpaid cheque to another person, knowing that there is not enough balance or that the cheque is not easily withdrawable, is liable to be fined the minimum amount of 10 percent of the check amount at least Dh1,000. The fine will be increased in the event of repeating the same action.' The sentence is between six months and two years. A fine of the minimum of 10 percent of the check amount, but at least Dh5,000, If the person makes an order to the bank, who is the drawee before the date of encashment not to encash the check or to withdraw the entire amount before the cheque is given to the bank, or intentionally create a cheque in such a manner that blocks it from being accepted for encashment.

Alternative currency

The cheques will be a strong instrument like an alternative currency as it will enhance the trust between parties in commercial transactions because both parties will believe that they can realize the amount of the cheque. The punishment for forgery of cheques is the imprisonment of a minimum of one year and the possibility of a fine that ranges from Dh20,000 to Dh100,000.

Name-and-shame

The law's article 642 gives a strong and new penalty, as the court will be given the authority to release the decision of the guilty person in two local daily newspapers (an English as well as an Arabic newspaper] or on the internet with his name, the guilty person, their residence, and job. Furthermore, the person who is convicted is required to pay the costs of publication.

Supreme Legislation Committee in Dubai

To improve the culture of law and improve the understanding of lawyers within to improve the legal culture and knowledge of lawyers in the Government of Dubai. Enhancing economic competitiveness and attractiveness, through the amendments, the UAE's economic attractiveness and competitiveness will improve.

Cheque Bounce Offence

Cheque bounce is one of the most frequently committed offenses in the UAE. Federal Law No. (3) of 1987 on The issuance of the Penal Code stipulates the following ". shall impose detention or a fine 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 file for an indictment and file a civil action to recover the funds against the person who signed the cheque.

If a check is rejected and the bank issues the cheque by an official Check Return Memo to the payer, stating the reason for non-payment. The reasons could include insufficient funds, an error in the date, or the incorrect instruction from an account's holder signature that doesn't match the cheque's signature or editing it another way, etc. The person who signed the cheque can resubmit the check to the bank within 6 months from the date printed on the cheque. Suppose the person who wrote the cheque cannot pay. In that case, the beneficiary is entitled to the option of filing an investigation into the person who signed the cheque under the area at the local police station in which the cheque has been revoked. A complaint may be made by the person who signed the cheque or his Power of Attorney holders and lawyer. After the report is filed, the police contact the bank that issued the cheque to confirm the signature of the person who signed the cheque drawer. Police will file an investigation into the person who signed. After the criminal complaint is filed, it will be accompanied by a travel ban for the person being investigated. It's a crime that is cognizable and punished with a sentence of imprisonment or fine. The police will report the matter to the public prosecutor. The public prosecutor has the power to grant bail, either by settling the value of the bounced cheque or requiring the signature of the defaulter or a guarantor. If bail is not granted, the public prosecutor can decide to detain defaulters until the court has heard and determined the matter. After submitting the arguments of both parties and if the public prosecutor can find sufficient evidence to support a criminal case, he'll refer an appeal to the appropriate criminal court. Based on the evidence provided by the parties and the examination of witnesses when necessary, the court will render a verdict.

Punishment:

Fines from 1000 to 3,000 Dirhams and Imprisonment from 1 month to 3 years In the Emirate of Dubai, there is a Dubai Public Prosecution, cases being transferred to Criminal Courts to arise a criminal conviction in the sort of penalties, but the judgments cannot be appealed. It also applies to dishonored cheques with the amount of not more than AED 200 000. Penalties issued by the public prosecution or the court are due to the UAE government Article (20) in the UAE Criminal Procedures Law allows the limitation of five years for misdemeanors, and bounce cheque cases fall under the misdemeanor.

Solving Civil disputes permitted by Law

Criminal penalties are not a solution for the victim. The applicant must present his case to the civil court to make a claim or get the funds. Based on proof or the facts provided by the parties, the civil court will issue a ruling requiring the person who defaults on the bounced check to pay a sum equivalent to the amount of the cheque, plus interest and legal costs. The UAE Commercial Transactions Law provides for two years following the expiration date of the period for presentment to file an action in civil court can bring a civil lawsuit upon the company if the cheque is addressed as a manager. The manager, however, will be subject to the criminal obligation. The judge may select to end all criminal and civil actions against an individual defender under the amendment to the Insolvency Law and also against a corporate entity under Federal Law by Decree No. (9) of 2016 on Bankruptcy.

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