UAE law on bounced cheques: All you need to know

This is in accordance with Article 401 of Federal Law No. (3) of 1987 related to issuance of the Penal Code, which states: “Detention or a fine shall be imposed upon anyone who, in bad faith, gives a draft (cheque) without a sufficient and drawable balance or who, after giving a cheque, withdraws all or part of the balance, making the balance insufficient for settlement of the cheque, or if he orders a drawee not a cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed.

“The same penalty shall apply to any one who endorses a cheque in favour of another or gives him a bearer draft, knowing that there is no sufficient balance to honour the cheque or that it is not drawable.”

Based on the aforementioned provision of law, if you are proven guilty by the criminal court of Ras Al Khaimah for the dishonour of cheques to your supplier, you may have to pay a fine or you may have to undergo imprisonment based on the judgement.

In furtherance of the above, it may be noted that pursuant to Law No. (1) of 2017 the ‘Criminal Order Law’ of Dubai, if the cheque amount is less Dh200,000, the punishment may be by fine, which may vary between Dh2,000 and Dh10,000. This is applicable if your supplier has filed a cheque dishonour complaint in Dubai.

In view of the foregoing, it may be prudent on your part to negotiate with your supplier and request for some time for the settlement of your dues. In the event there is no amicable settlement, then you may only pay the fine if the same is mentioned in the judgement. Consequently the criminal proceedings against you shall be closed.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.