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Issues with penalty for cheque bounce

Cheque bounce issues are very common in U.A.E just like anywhere else. Khairallah Advocates & Legal Consultants, Law firm in Dubai, have dealt with a lot of criminal cases due to bounced cheques. As mentioned in our other blogarticle related to Bounced cheques, the law surrounding penalizing individuals for issuing bounced cheques is very clear on the point that one will be sentenced to detention or to a fine, if he or she draws a cheque, in bad faith, without sufficient funds.

In practice, this means that at the time of writing the cheque the drawee, namely the person writing the cheque either knew he is not able to honour it and/or was reckless to this effect. This means that you either knew, at the time of writing the cheque, that you did not have sufficient funds, or that you ought to have known you will not be able to honour the cheque. In practice however, the Court appears not to be concerned with the circumstances in which the cheque was signed.

Cheque bounce penalty issues

I am adamant that there is a serious flaw with this reasoning because unless you have the ability to see the future, there is no way in which you can predict whether or not you can pay your rent in 9 months time.

A guard watches over prisoners in Dubai where individuals are locked up for cheque bounce issues

With the lack of other employment rights surrounding dismissal and redundancy there are inadequate ways of predicting whether or not your employer will decide to dismiss you or not within the next month. As such, in these circumstances, I am struggling to find “bad faith”.

There have been a large number of media attentions surrounding this matter and the reoccurring theme appears to be that people are being held responsible for crimes which have been committed for reasons sometimes beyond their control.

Penalizing the non-criminals

In practice, honest, ordinary people sign cheques for their everyday living. This includes for the borrowing, purchasing, conducting business and even paying their rents.

Put yourself in this situation; you decide to rent an apartment and as you do not have all the funds to pay everything in one go, you decide to pay with four, post dated cheques. After signing the contract and handing over the cheques to your landlord, your employer decides to make you and/or a fellow of your colleagues redundant. Unless your landlord is kind enough to cancel the tenancy agreement and hand over the cheques, you risk facing time in jail. Why? Because you lost your job.

This is a rather crude example, but in reality honest individuals are sentenced to jail because they have been dismissed from their employment or the financial situation has hit their business so bad they are unable honour their loans.

A modest proposal

I do not think that there the problem lies within in the law which for penalizing bounced cheques, indeed there is no need to neutralize the crime of deceit and fraud. On the other hand, I do not see why a new system of payment should not be introduced. Firstly, I think it should be discouraged to pay with post dated cheques. In relation to this point, I sincerely think that part of the blame should be handed down to those financial institutions that ask customers to provide post dated cheques in which they know, or ought to know, are not able to provide sufficient funds for.

The simple fact of the matter is; it is absolutely worthless to force customers to pay for something in which they are unable to pay for. The best solution I think is, to introduce payment on monthly basis through bank transfers and do credit checks on customers to see if they really are credit worthy, because criminalizing individuals for lack of funds will not magically make funds reappear.

Therefore, the problem is not criminalizing bounced cheques. It is the encouragement of issuing cheques that allows this type of situation to happen and that is where a resolution needs to be made.

Do you agree with the observation & the modest proposal put forward, please comment here to let us know your opinion.

Please feel free to contact us if you are facing penalty for bounced cheques.

Khairallah Legal

Khairallah Advocates & Legal Consultants, a law firm based in Dubai, is one of the leading Law firms in UAE. We have some of the best lawyers in Dubai and provide excellent legal assistance in various areas. Please check out our law practice areas page for more details. Should you require any legal assistance, feel free to contact us.

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One comment

  1. I left UAE on emergency leave in September 2011 and because of my paralyzed father’s illness I was delayed by one/two month, then the Dubai first Bank bounced my security cheque of AED20000 in November 2011 interestingly at that time the outstanding payment due was just AED11000 and my card limit was just AED10000.
    By bouncing my security cheque Dubai-First Bank closed my entry in UAE and made me criminal offender and this resulted that my employer terminated me for not coming back to Dubai and my professional Pharmacist’s license also got expired because I couldn’t return to Uae with in one year. I am still jobless.
    Because of this my another CITI-credit card of AED10000 limit also gets defaulted but the Citi bank doesnot have security cheque.
    My question is that Single cheque bounce by Dubai-First bank (they bounced the security cheque of AED20,000 when My total Outstanding due was AED11,000 and my maximum credit card limit was just AED10,000) ruined my life so what is your advice as I want to work in Dubai again. Now I don’t have money and now I am bankrupt. But I want to come back to Dubai again and work.
    Please Advice me.

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