A Cheque is a commercial instrument which is widely used in various commercial transactions. The person who issues the cheque is known as the “Drawer” and the person to whom the cheque is issued is known as “Drawee”.
Sometimes this cheque gets bounced or rejected due to multiple reasons which includes-
Lack of funds in the bank account of the Drawer;
The drawer prohibiting the bank to clear the cheque;
The account of the drawer has been closed by the bank;
The signature of the drawer is forged on the cheque.
In UAE, this rejection or bouncing of cheque is considered a serious offense. Article 401 of the UAE Federal Law No. (3) of 2017 imposes both the civil and the criminal liability on the issuer of a bounced cheque.
The criminal case is filed to impose a criminal penalty whereas the civil case is registered to get the amount of the cheque along with the compensation and interest. It is incumbent for a person to file a civil case to get his due amount. The court of cessation in its various ruling stated that the proceedings of the civil case and the criminal case can be run parallel or can be filed consecutively..
Proceedings in a Civil Case
Article 632 of the UAE commercial law provides a remedy to the claimant to take action against the drawer if the cheque is not paid on due date even after the protests and efforts. He has a right to ask the drawer to provide his bank statement for taking further action. If no mutual solution takes place, the drawee can approach the court and file a civil case.
For filing this, he/she needs to deposit 6% of the valuation of the case. which includes revenues, expenditures and indemnities involved in the case. If the claim amount is less than 5,00,000 AED, a minimum fee of 500 AED needs to be deposited.
After filing the case, the claimant needs to file a statement of claim with all supporting documents. In response to that a statement of defense will be provided by the respondent.
The Bonafide intentions of the drawer are the first things assessed by the court. Article 599 of the UAE Commercial law states that the drawer must maintain a sufficient balance in his account to clear the cheque on the due date.If he fails to do so, then he/she should provide a very convincing reason for the same.
The court after hearing all the facts and supporting documents pronounces it’s final judgement which may include the payment of outstanding amount with the penalty and interest. It is pertinent to note that if the drawer doesn’t pay even on the order of court, he/she will be liable for another penalty in addition to the outstanding amount.
Since a cheque bounce case entails a very high monetary risk, one should seek legal assistance before filing a civil or a criminal case.