Legal Consultants in Dubai have witnessed multiple cases where issuer of the cheque repays the cheque amount in cash to the beneficiary and forgets to obtain the original cheque back. In such situations can the beneficiary submit the cheque in the bank and can subsequently file a bounce cheque criminal case against the issuer.
Federal Law Number 3 of 1987, UAE Penal Code under Article 401 entitles the possessor of the cheque to file a criminal case against the issuer in case the cheque is returned by the bank for any given reason. The article reads as follows:
“A person who issues a cheque with a bad intention and knowing that he did not possess sufficient funds or withdraws the funds from his account post issuing the cheque to ensure that the cheque cannot be cleared shall be sentenced to imprisonment or fine.”
It is apparent from the above-mentioned provision and several other court precedents that the court will presume the bad intention of the issuer, unless it is proven otherwise. Ergo, if you ever issue a cheque and later deposit the amount of the cheque via cash, you must ensure that you receive the original cheque back. It has been agreed upon by the Supreme Court of Dubai in plenty of criminal judgments that even if the cheque value was later paid by the issuer, however, as far as the original cheque was not returned that does not restrict the beneficiary from filing a criminal cheque case against the issuer. The concerned principle is mirrored in Supreme Court Case number 367 of the year 2011 dated 03 October 2011 and in Court of Cassation case number 255 of the year 2005 dated 10 July 2005.
It is now quote clear that it is issuer’s duty to ensure that he or she receives the original cheque back, upon making the payment through cash or bank transfer. However, if the beneficiary claims that the cheque is lost, it is advised to enter into a settlement agreement confirming that the cheque value has already been paid and the beneficiary waives off his right to file any case against you. It is recommended to seek assistance of your legal consultants in drafting such agreement to ensure conformity UAE laws and regulations.
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