Cheque Bounce law– One of the most popular ways to conduct financial transactions in the UAE is with a bank check. And this is a critical factor in the UAE’s high rate of bounced checks. A bounced check, also known as a bad or dishonored one, may be subject to legal action. With a few noteworthy exceptions, most incidents of bounced checks are no longer criminal offenses as of January 2, 2022. A bounced check is still regarded as a criminal offense in the UAE, and those responsible may be subject to civil litigation. let’s explain the Cheque Bounce law in detail according to the UAE law.
What does a cheque and a bounced cheque mean under UAE law? | cheque bounce in UAE
Under UAE law, a cheque bounce is a misdemeanor (a criminal crime) punishable by jail, fine, or both. Cheque bounce cases are common in the UAE due to the country’s extensive business operations. To discourage anyone from engaging in such unethical and illegal practices, UAE regulations impose financially threatening and stringent legal consequences on violators. Cheque bounce concerns typically emerge in business transactions, rent matters, bank loans, and individual transactions, among other things. There are numerous causes for cheque bouncing, but one of the most prevalent complaints is that the debtor’s cheque to creditors is frequently rejected when repaying the debt amount and failing to refund the debt amount.
The Federal Law Number 18 of 1993, issuing the Commercial Transactions Law, which regulates the matters of issuing cheques, defines a cheque in its Article number 483 as a commercial paper containing an order issued by the drawer to a bank (the drawee) to pay, on the date indicated therein as the date of issue, a specific sum of money to the order of a third person (the payee), being the beneficiary, or the bearer thereof.
When a drawer produces a cheque instructing the bank (drawee) to pay a needed amount to the payee, and the bank rejects the submitted cheque owing to
- Inadequate funds (to partially or entirely cover the amount specified on the cheque) in the drawer’s account at the time the cheque was issued.
- Order received from the drawer instructing the bank not to pay the cheque
- The drawer’s bank account was closed before the check was offered for payment. d. The drawer’s bank account was closed before the cheque was presented for payment.
Since a check is a form of payment that depends on the availability of money, the drawee must consent to honor the check that the drawer has issued.
If a cheque is bounced or dishonored for any of the reasons listed above, the cheque bearer has recourse against the cheque drawer or endorser if the issued cheque is submitted within the time restriction and is refused under Article 632 of the UAE Commercial Transactions Law.
The drawee bank must submit a statement to the payee to substantiate the protest of failure to pay. It should be established before the cheque’s presentation time restriction expires. The drawee bank cannot refuse to give the bounce statement for the cheque handed to it.
If the bank is unable to produce the statement immediately, it may seek a grace period of no more than three working days to provide the statement. According to Article 618 of the UAE Commercial Transactions Law, the time restriction for presenting a cheque is six months from the date of issue.
According to Article 617 of Commercial Law, the cheque cannot be presented for payment before the due date written on it, and it may only be shown on the stated date.
The drawer must keep in mind that the cheque he issues must fulfill all of the conditions of a legitimate cheque, and it must be issued and due for payment in the State, as per Article 598 of the UAE Commercial Transactions Law. The legislation also specifies a time restriction for The claimant may file a claim against the drawer or endorser in the event of a cheque bounce, which is two years after the expiration of the time period for presenting a cheque under Article 638. In addition, if legal proceedings are commenced, the time restriction begins from the last action taken by the payee, as specified in Article 640. The bearer of the cheque may file legal action against the drawer, either criminally or civilly.
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FAQ about Cheque Bounce law in UAE | best lawyers in dubai for cheque bounce
1- How to File Civil Case for Cheque Bounce?
Since dishonoring a check is a crime in the UAE, those who have dishonored bank checks are permitted to initiate criminal charges against the companies or individuals who issued them. This is consistent with Article 401 of Federal Law No. (3) of 1987 of the UAE Penal Code, which states:
In Dubai, an individual or a company can submit a police complaint against a bounced cheque in one of two ways. The first step is to go to a police station, and the second step is to file a police complaint online.
2- When does a cheque in the UAE bounce or become a bad cheque?
A cheque is returned due to four factors:
- Non-availability of money equal to or greater than the amount of the cheque on the day of issue.
- Mismatched signatures, missing or incorrect dates, and over-written or scrawled text are examples of technical faults.
- Closure of the bank account prior to the issuance
- The bank receives an instruction from the issuer not to cash the check.
3- What Happens in the UAE When a Cheque Bounces?
In the UAE, a payee who gets a faulty cheque has the right to take legal action against the drawer. They can now immediately petition the court’s execution judge for help. The existing procedure for filing police complaints has been modified to expedite the process. Because most instances are now decriminalized, police intervention is no longer required.
in addition, according to the most recent amendment, the penalty for a bounced cheque in the UAE is based on the amount owed.
| CHEQUE AMOUNT | FINE AMOUNT |
| Less Than AED 50,000 | AED 2,000 |
| AED 50,000 – AED 100,000 | AED 5,000 |
| AED 100,000 – AED 200,000 | AED 10,000 |
Read more about: Money Laundering Lawyer in Dubai | Defenses, Penalties, Charges
Abdultaiyab Bahrainwala
Partner / Senior Lawyer
Abdultaiyab Bahrainwala, LLM, LLB advises on all aspects of UAE Property Laws, Commercial Laws, Corporate Laws, Labour Laws,
+971 4 427 0842
Conclusion
Bounced cheque cases are common in the UAE and can be attributed to a variety of factors such as illegal termination, company insolvency, absconding of the cheque issuer, and so on. In practice, when the bearer of a bounced cheque submits a police complaint, the most realistic option to handle the matter for all parties is to settle it peacefully at the police station.
However, if an amicable settlement cannot be achieved and the situation escalates to the next level, hiring an experienced lawyer as soon as possible would be the most practical and reasonable option to avoid future severe legal implications and damages. Khairallah Advocates provides professional services in cases involving bounced checks in the UAE as an experienced law firm with many accumulated years of legal activity. If you are not based in the UAE, you may provide us with a Power of Attorney that is notarized in the country where you are presently resident and attested by the UAE Ministry of Foreign Affairs and International Cooperation.
We will approach the bank, the court, and any other relevant authorities on your behalf in order to offer documentary proof and reach an early settlement.
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What about credit card security cheque I have a bounced cheque of 60000 on my credit card the company file a police complain and was resolved due to new law and I was set free now what the finance company can do?
Good day,
I have few case of cheques return. All the cheques are guarantee cheque against financial loan . Will i be held at airport if return to Dubai.
I am planning to return after almost five year in order to start settlement negotiation with the creditors.
Would appreciate it if you could let me know what is expected once i am return to UAE after 5 years.
I have plenty credit card in abu Dhabi I think 7card different bank worth 5k each card and the highest us 22k bank loan but only 1 the rest credit card this card issue 2020 Dec I already have travelban now what do you think mam pls help me thanks
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Dear sir/madam,
I have been cheated financially from one of my colleague. And he left from company (he is still in UAE)
So that I needed legal advise to handle the situation. Please give me your contact or call me on 0561815343.
Please support urgent basis
Regards
Ramkumar
I got a message from dubai courts,stating a travel ban has been initiated for cheque execution, but I can’t see any criminal cases against me In dubai police app.does that mean a travel is there or can I still remove travel ban paying fine,thanks
Hi iam Joseph Khairallah . I have check bounce before 6 years and already I payed the fine in police station. For check. He can make civil case against me after 6 years. And the amount it is 150000 aud.
Hello Sir /Madam,
We have invested about AED 600,000, against purchase and stock Onions in India. Out of 600k 400k was invested by one of our contact through us. We have issued a UAE company cheque of AED 400,000 to the party here in the UAE and he gave equivalent money in India.
We have signed a contract as well against the same where it was mentioned that due to natural calamity if some thing goes wrong then both the parties should bear the loss.
Unfortunately, this year in India all the stockists lost almost all the stock due to damage and market crash. Now we are unable to return the money now and the other party is not ready to settle it as per the contract and wants all 400k back or threatening to present the cheque in the bank which will bounce due to non abailabity of funds.
What wi be the consequances if the case is filed against us.?
Yesterday I personal account showing negative balance. I check details. It show FAB executed cheque case which Dubai court have execution to execute credit card cheque amount. My both adcb and hilal bank is in minus . What I do . I can’t pay high fees . But I am looking to pay in installments n clear it. Can I get this option now? I didn’t get any message earlier that my case is filed in September 2022, n case executed yesterday . I don’t want travel ban .Please guide .
I got a legal notice from Dubai Court for a bounced cheque on 28 December 2022. It was a bounced cheque case (amount 40k) against credit card (40k limit).
I approached the bank for a settlement with discount but bank refuses and asking for 45k to end the case.
What should I do as the notice period is 15 days.
Can I get the installment plan or the court will fine me for the amount?
Kindly guide me what to do in this situation.
I borrowed 8,000aed to a lender without license my husband 8,000aed and my sister 5,000aed we are paying 15% monthly interest Thru bank online transfer or by depositing to his bank account since 2019 without miss but this January 2023 we miss to pay and he deposited my cheque with amount of 21,000aed, advertising company as payee it bounced. What should I do? He is threatening me that he will file case against me in CID.
Great Information
I took a loan for 40 in 2015 for my father’s operations but my father passed away and no one was in my mother so I have to stay back now I want to enter Dubai in visit visa and find a job and pay the loan what will happen to me at the airport
Please note a travel ban order has been issued against you
regarding case Cheques Execution.
I beleived that this cheque was old and both are agreed to that pending cheque amount will be added into the new contract at same time i issue a new cheques including that cheque. But the not return my cheque and 1 year expired of the cheque, the owner will deposit and bounced. Bo they file acase agains me. So give me advice if what is a best i need to regarding tge court notice.
please call me 0568461767
I have given a check for my house rental of 9k…that bank account has closed and no funds remaining,tomorrow the check will b deposited…
Spoke to my Landlord and got to know she already submitted the check to the bank to b transferred automatically …
Between me n my Landlord things has been sorted,question is will the bank will file a check bounce case against me ? and travel band as well ?
Pls respond,m really nervous 😓
I rented a room in 2018 and no checks bounced
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