UAE Laws against Cheque Bounce
Have you stirred up with speculation over the rubber cheque? Here is an informative piece of knowledge.
The Cheque is a negotiable instrument which can be transferred to anyone in hand. It can be defined as “An order to bank to pay the person carrying the cheque, the amount which is written on it”. It is an unconditional order; it is a guarantee or it can be viewed as cash itself. By signing the cheque the drawer confirms himself to be the guarantor of the money written.
Every natural or legal person has once in his lifetime been transacted through a cheque. The modern economic global market is nothing without the concept of the cheque. People are using cheque as easy as the cash does. The more comfortable the cheque transactions are, the more difficult the procedures when it bounces.
Bounced Cheque UAE Law:
When a cheque is drawn and reversed with the statement that there is insufficient fund or closed account; it is known as Cheque Bounce. It is also named as ‘Bad Cheque’, ‘Dishonored Cheque’ and ‘Rubber Cheque’. Cheque bounce is a criminal offense around the globe. The United Arab Emirates also consider bad cheque as criminal offense that heads to both imprisonment and fine depending upon the circumstances of the cheque issue. That means the judiciary will keenly observe the “bad faith” on issuing the cheque; i.e. whether a criminal intent is involved in order to cheat the drawee.
If it is found that a cheating has happened, the according to the UAE Cheque Bounce Law, the UAE Court can punish the person for a fine from AED 1,000/- to AED- 30,000/- and an imprisonment from one month up to three years as per Article 401 of the Federal Law No.3 of 1987 – the Penal Code of UAE (Criminal Law).
The matter has not yet reached its climax. The defaulter is again legally accountable under Civil Law, in which the drawee can realize the defaulted amount from the drawer as per Federal Law No 18 of 1993 – The Commercial Transactions Law (The Civil Law).
Also the defaulted cheque owner has the opportunity in front of the honorable judge to prove his innocence. The cases of bounced cheques in Dubai have been increased in the last few years. It includes all types of cheque bounce cases.
Cheques are made between individuals, persons, companies etc. however, whoever signed the cheque shall be liable irrespective of his designation in his company.
And also as per an amendment in 2013 in UAE cheque bounce law, the Security Cheque bounces shall not come under the purview of Criminal Law. It shall be adjudicated under Civil Law.
In order to be free from liabilities, make sure that you have enough fund in the account before signing a cheque.
Still stuck in cheque issues, contact us, we are here to help you.
Written By: Adv. Kanmani K.S.
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