Cheque Bounce in UAE and Settlement Procedure

Since cheque bounce in UAE is a criminal offence and registering a complaint against the cheque writer allow a travel ban with arrest warrant, drawer of bounced check cannot leave UAE nor can enter if already left until settlements.

To know more about the settlement of Cheque bounce case and removal of travel ban, read out below guide.

New Law Cheque Bounce:

As per UAE Federal Law No 3 of 1987 promulgating the Penal Code, both criminal, as well as civil proceedings, can be initiated against the perpetrator of bounced cheque writer.

What is Cheque Bounce?

A cheque bounce or bounced check is a cheque presented by the payee and rejected by the drawer bank under below circumstances:

A: Insufficient funds in drawer account.

B: Changing signature on cheque or omitting it from being paid.

C: The drawer's bank account was closed before cheque is presented for payment.

Click here to remove absconding/Travel Ban out of UAE.

1: The Police Complaint:

In order to file a complaint for a bounced cheque, the bearer of the cheque must formally open a case with the police of the respective emirate against the drawer. For registering complaint on bounced cheque dubai, you can use Dubai Police app.

After receiving complaint, the police will contact the issuer of the cheque to notify him/her of the same and request his urgent presence. At the police station, the drawer is allowed to settle the issue through paying the full amount of the bounced cheque. If he/she paid, no further legal proceedings will be taken.

If the issuer of bad chuque does not have money to pay, he/she have the right to request some time to settle the issue. Upon such request, the issuer may be granted a reasonable period secured by the deposit of his passport at the police station. However, it highly depends on the cheque amount as in many cases such guarantee of depositing the passport is rejected by police officers if the amount drawn on the cheque is more than 1 million dirhams or higher.

Point to be noted that cheque bounced is a criminal offence in the UAE, upon filing the complaint at the police station, a travel ban and arrest warrant on the drawer will be issued automatically. Hence, the issuer of the cheque will be banned from leaving the country and arrested if he/she tries to escape, or will be detained on arrival if he enters the UAE from outside.

Such travel ban in UAE can be removed only upon settlement of the cheque bounced case, or after serving a sentence.

2: The Public Prosecution:

In case the opponents failed to resolve the cheque bounce case at the police station, the police then transfer the complaint to the public prosecutor in the court.

Based on the evidence presented in the court, the decision could be a bail either by paying the value of the bounced cheque or by depositing the passport of the defaulter or another guarantor. In case bail was denied, the public prosecutor may order the detention of the drawer until the court hears and decides on the case.

Also Read: How to open Bank Account in UAE

3: The Criminal Court:

The role of the criminal court in UAE is to dive deeper into that bounce check case, opponents’ arguments, and available evidence. The court then proceeds to examine whether the crime elements are satisfied or not. The crime elements are the material element and the mental element.

Once both of the crime elements are satisfied, and by the authority vested in it in the Article 401 of the UAE Penal Code, the court may decide the sanction of the perpetrator.

This can be confined to a fine assessed solely by the court, based on the conclusion reached and the amount claimed and usually ranging between AED 1,000 and AED 30,000+. The court may also decide the sanction of the perpetrator to be serving jail term of between 1 year and 3 years.

4: Civil Court Proceedings:

The criminal court and the civil court function separately but may solve both civil case and criminal case. Hence, the sentence issued by the criminal court comes only as a sanction for the act of issuing a bounced chque with insufficient funds in account or withdrawal all or part of the funds after giving the cheque.

The claimant may present his case to the civil court as well to claim his right to the disputed amount.

After reaching a conclusion based on the evidence and facts presented by the opponents, the civil court can then demand the issuer of the bounced cheque to pay a sum equal either to the value of the cheque or its outstanding balance. In case the perpetrator fails again to pay the said amount, his assets may be attached, and he may be subjected to another jail term for failing to comply with the civil court orders.

If there are no pending cases against the bounced cheque writer, once the jail term is completed, he is allowed to collect his impounded passport and can also leave the country.

Writing a Cheque:

If the issuer of a cheque realized that he did mistake by writing a cheque and there were sufficient funds, it can be remedied at any stage of the legal proceedings by providing account statement of cheque submission date.

How to Remove Travel Ban:

Bounce cheque travel ban can only be removed by settlement or completing the jail term, the important point for the drawer is that he/she shall make sure to retrieve the bad cheque and get a clearance paper from his debtor or court upon payment of the disputed amount or completing the jail term.

Henceforth, no further legal proceedings will be initiated, and the UAE travel ban and arrest warrant will be removed automatically.

Recent Developments in cheque bounce case:

To mitigate the non-payment of bounced cheques, the UAE government has recently introduced new regulations to punish such crimes with fines instead of jail term. This initiative allows the issuer of the bounced cheque to get employment opportunities or other such alternatives to be able to repay his debt instead of going to jail, subject to the orders of the public prosecutor.

Cheque Bounce Penalty:

According to the order, cheque bounce case of the amount not exceeding AED 200,000 shall be punished with the following fines:

If the amount is less than AED 50,000 the cheque bounce penalty will be AED 2,000.

If the amount is between AED 50,000 to 100,000 the fine will be AED 5,000.

If the amount written in bounced chuque is from AED 100,000 to 200,000+, the cheque bounce penalty will be AED 10,000+.

Conclusion and extra care:

Cheque bounce in UAE can be associated with numerous reasons including illegal termination by company, bankruptcy, absconding of the cheque writer, etc. In practice, when the bearer of the bounced cheque filed complaint with the police, the most viable way to resolve the issue for both parties is to settle it at the police station amicably.

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It is advisable that do not allow anyone to use your chequebook, as holders of chequebooks can get in trouble for a cheque bounce in uae even without signing it. The practical experience shows that there are cases where a person can be subject to legal liability towards a cheque bounce or bounced check case even it is not signed by him.