Criminal Liability of cheque bounces vis-a vis Debt Recovery in UAE

Criminal Liability of cheque bounces vis-a vis Debt Recovery in UAE

Cheque is a Negotiable instrument which carries the promise of payment unconditionally. Virtually, it is kind of promissory note with the promise of unconditional payment. The bounce of cheque has been termed as Criminal offence or Quasi Criminal wrong in all major jurisdictions. Cheque bounce is a cheque fraud under the Laws of United Arab Emirates (UAE). The provisions of Art.401 of Criminal Procedure code is attracted for imposing the punishment under the criminal law. The initiation of criminal proceeding presupposes the enforcement of contract and trust vested upon the negotiable instrument. Consequentially, it envisages a mechanism for pressurizing the debtor to secure the repayment through the provisional measures of confinement of debtor during investigation and travel ban. But ultimately, if the pressurization doctrine failed, the award of punishment would be fine or imprisonment by keeping the civil remedy to realize the amount.

Issuance of security cheque has become inevitable in this fast growing economy like of UAE for securing the advance payment and loan payment. The unscrupulous minds often submit the security cheque issued as a cheque for legally dischargeable amount.  The criminal proceeding against the cheque bounce can be defended on various grounds with sufficient proof; however the signature on the cheque is the confirmation of sufficient fund in the account. The conviction of defaulted is not the end, the amount along with the cost can be recovered from the drawer under civil law of debt recovery. Often the defaulter feels that the fine or imprisonment is the climax, it is not, The civil law remedy could be made useful for defending the claim as well. In cases of run away in the criminal cases, the proceedings through Interpol to be exercised to catch the defaulter.

In nutshell, the strategy of actions and defense is more important to establish or defend the claim.


Author is attached with a Dubai Based law firm, can be reached +971-527520742

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