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.

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 defence by the issuer as also confirmed by Best Criminal Lawyers of Dubai.

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 accused’s defence. This is a consequence of Article 401 of the UAE Penal code which reads as follows:

“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 criminal adversity.