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Cheque and Period Preventing the Hearing of the Civil & Penal Lawsuits in UAE

A cheque is a commercial paper that includes an order by the drawer to the drawee to pay at sight a certain amount of money to a specific person or to his order, who is the beneficiary or holder of paper. According to this concept, the cheque cannot be considered a real cheque unless the paper has included specific conditions stipulated under Article 596 of the Commercial Procedures Law, issued as per the Federal Law No. (18) on 07/09/1993, specifically the following:

The term “cheque” should be written in the language used on the cheque.

  • The order should not depend on a condition prescribing the settlement of a certain amount of money.
  • The name of the party that is bound to pay the cheque amount, which is the drawee.
  • Date of issuing the cheque.
  • Signature of the party who issued the cheque, manifested in the drawer.

 

chequeima
In this connection, Article 598 of the same Law stipulated that the drawer’s signature on the cheque must be identical to the specimen signatures approved by the bank. So that the holder of the banking account is held responsible towards the bank, whether the account was debit or credit.

In this respect, Article 401 of the Emirati Penal Code No. (3) for the year 1987 prescribed the punishment of imprisonment or fine against any party who issued on bad faith a cheque that has no counter sufficient drawable credit balance, or has drawn after issuing the cheque all or part of the amount deposited with the bank, so that the balance cannot satisfy the cheque value. Or, if the drawer has ordered the drawee to refrain from cashing the cheque, or if the drawer intended to write or sign the cheque in a manner preventing from cashing it. The same punishment shall be imposed on any party who endorsed or delivered a deed to its holder while recognizing that the cheque has no counter available credit balance that is sufficient to cash it or if the cheque was non-drawable.

The period – which prevent from hearing the penal lawsuit based on the charge of issuing a cheque based on bad faith without a counter credit balance (cheque bounce) – is five years starting from the date of signing the cheque and launching it for circulation, as such action represents misdemeanor, pursuant to the provisions of Article (20) of the Emirati Penal Procedures Law, issued as per the Federal Law No. (35) for the year 1992.
Nevertheless, the lapse of the penal lawsuit concerning the crime of issuing a cheque without a counter credit balance due to the lawsuit prescription, shall not deprive the beneficiary or the party to his order the cheque was endorsed to claim the value of cheque before the civil court within a period of (15) years. But, if the issued cheque was for example for the settlement of a house rental value, this right shall not elapse by the pass of time, pursuant to the text of Article 473 of the Emirati Civil Procedures Law, issued as per the Federal Law No. (5) on 15/02/1985 and amendments thereto prescribing that: the right shall not elapse by the pass of time, but the lawsuit in respect of this cheque that was filed against the party who denies this claim shall not be heard after the elapse of fifteen years without a lawfully-justified reason, after observing the special provisions stipulated in the above Law.

Here, it should be pointed out that the cheque may result from a commercial deal or business relationship. Then, the cheque shall be subject to the provisions of the Commercial Procedures Law, which should be presented for cashing within six months to the draw bank. The calculation of this period starts from the date mentioned in the cheque confirming the date of its issue, pursuant to the provisions of Article 618 of the Commercial Procedures Law. Regarding that the above period has no binding power towards the beneficiary. However, the prescription period that prevents from hearing the lawsuit, shall not prevent the beneficiary from satisfying the cheque value from the drawee bank. Subsequently, this shall not strip the cheque from its nature as an instrument of payment that has the power of cash money, provided there should be a sufficient credit balance with the drawee bank.

As for the period which prevents hearing the lawsuit of claiming the cheque value that is resulted from a business relationship that is filed by the beneficiary/holder of cheque against the drawer, endorsers and other parties who are bound to pay the cheque value; this period is determined for two years starting from the date of the expiry of the period during which the cheque should be presented to the drawee bank, pursuant to the text of Article 638, Paragraph (1) of the Commercial Procedures Law, prescribing that: “upon the denial and the lack of a lawful justified reason, it shall not be heard:
1) The lawsuit of the holder of the cheque for having recourse on the drawer, endorsers and other parties who are bound to pay the cheque value after the elapse of two years from the expiry of the period determined for presenting the cheque for cashing”.
But, the above text is not prescribed absolutely. For, under Paragraph (4) of the same Article, the legislator has excepted from the two-year period, the lawsuits that are filed against the drawer in case the latter has failed to provide an amount equivalent to the cheque value, or if he has provided it then he has withdrawn the full or part of the deposited amount. Then, the drawer cannot hold on to the pleading that the lawsuit should not be heard in case two years passed from the expiry date during which the cheque should have been presented to the drawee bank, which shall be subject to the general text mentioned under Article 95 of the same Law prescribing that: “the lawsuits – related to the traders’ obligations toward each other that are related to their business deals – shall not be heard after the elapse of ten years from the maturity period during which the commitment should be settled, unless the law has prescribed a lesser period”.

It can be understood out of the foregoing, that if the cheque holder could prove by a legally-acceptable evidence that the drawer has failed to provide an amount equal to the cheque value, or provided it then withdrew the deposited amount, then the pleading prescribing that the lawsuit should not be heard due to the expiry of two years shall not be valid against him. As such, it is sufficient for the legally-acceptable evidence to include a report proving that the drawer was interrogated in the concerned police station for the crime of issuing a cheque without a counter sufficient credit balance, and in the report the drawer should admit that he has issued the cheque and on the date of issuing it he has no counter sufficient credit balance, or that after issuing the cheque he has withdraw the deposited amount in full or part of it, which prevented from cashing the cheque.

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