It has been lately noticed that due to commercial requirements there might be
a possibility of swapping the cheques and for some alternate reasons, although
there is an agreement for swapping, the first cheque was not returned to the
issuer of the cheques. Ergo, the question before us is even if the first cheques
was swapped with the second, can the beneficiary still file a criminal case
against the issuer on the first cheques.
UAE Penal Code under Article 401 empowers the holder of the cheque to file a
criminal case against the issuer in case the cheque is returned by the bank for
any given reason.
The article reads as follows:
a person who issues a cheque with a bad intention and knowing that he did not
possess sufficient funds or withdraws the funds from his account post issuing
the cheque to ensure that the cheque cannot be cleared shall be sentenced to
imprisonment or fine.
In accordance with the aforementioned provision, it is clear that the possessor
of the cheque has the right to file a criminal case for any cheque returned by
the bank. It further implies to the fact that if the issuer, post swapping does
not claim the first cheque nothing can prevent the holder of the cheque from
encashing it or from filing a criminal case against the issuer.
This has been further agreed upon by the Court of Cassation under Case number
183 of the year 2008 dated 16 June 2008, wherein the court confirmed the fact if
the issuer swaps the cheques with another and even if the new cheques have been
en-cashed, it still does not release the accused from the liability as a
criminal under any criminal case filed by the beneficiary under the first cheque.
It is strongly recommended to all our readers that in case the receiver of the
cheque argues that he lost the first cheque or that it does not exist anymore,
in order to ensure the waiver or to get released from all potential liability in
future, it is recommended to get such waiver letter drafted by the lawyer and
attested if possible.
It is further essential to note that if it is mentioned on the back of the
Cheque that it shall be encashed only post seeking a written consent or it
cannot be encashed unless a certain condition is fulfilled or executed it may
lead to the court to consider that the concerned cheque is not subject to
criminal protection or it is invalid to pass a judgment against the issuer of
the cheque. The rule was replicated by Al Rowaad Advocates and Legal Consultants
under Case number 364 of the year 2008.