Even being a part of the statistically advanced country, a bank cheque is
still the most used and reliable mode of payment even though in comparison to
cash or wire transfer, funds payable through cheque is not available instantly.
Thus, the chances of a cheque not being cleared by the bank due to either
insufficient funds or false signature are critically high.
Most countries consider cheque bounce as a criminal act and empower the
beneficiary to register a criminal complaint against the issuer, yet the
intention while issuing the cheque holds significant importance when putting
forth as a defense by the issuer as also confirmed by Best Criminal Lawyers of
The transactions through cheques within UAE are governed by Federal Law Number
18 of 1993 concerning the Commercial Transaction Law whereas, its punishment is
governed by Federal Law Number 3 of 1987, UAE Penal Code, and subsequent laws
promulgated by the respective Emirate.
The intention while issuing the cheque has been discussed by courts on various
occasions and has been offered notable consideration in the accused’s defense.
This is a consequence of Article 401 of the UAE Penal code which reads as
“Anyone who issues a cheque in Bad Faith without sufficient funds or who upon
issuing the cheque withdraws all or part of funds from the account, so that the
remaining balance would be insufficient to cover the cheque amount or
deliberately writes the cheque in such way as to make it non-payable, shall be
sentenced to detention or to a fine.”
The foregoing provisions explicitly state that the cheque shall be issued in bad
faith or illicit intention, thereby preventing the withdrawer to en-cash the
cheque. The law certainly requires “bad intention” to punish the accused. It is
apparent from historical judgments that the courts in UAE presume the bad
intention, offering an opportunity to the beneficiary for registering the case
against the issuer unless proven otherwise.
Federal Supreme Court under Case number 196 of the judicial years 16 hearing
dated 08 February 1992 explicitly allowed the defendant to prove the fact that
he was under the impression that there was money in his account and that the
cheque was issued in such faith.
It is hereby confirmed that a dishonoured
cheque requires Bad Faith of the authorized signatory which means that he should
be aware of the facts that the cheque so issued could not be en-cashed on the
due date and such bad faith is considered to be existing unless the contrary is
proven beyond a reasonable doubt.
Ergo, Lawyers in Dubai constantly admonish
clients to be very cautious prior to issuing cheques within UAE especially for
the amounts above AED 200,000 (UAE Dirhams two hundred thousand) and advises you
to reach out to your legal consultant for adequate advise, should you face any