The UAE no longer considers a bounced cheque as a
criminal offence
Abu Dhabi: Dishonoured security cheques
can no longer be used to arrest defaulters and convict them, in keeping with a
decree by the President His Highness Shaikh Khalifa Bin Zayed Al Nahyan, a senior
official said on Tuesday.
“The President’s instructions were that
all defaulters including citizens and foreigners arrested or convicted for
presenting dishonoured security cheques must be freed, any related cases being
heard be suspended and any penalties handed down to these defaulters be
annulled,” Jassem Saif Bu Asseeba, head of the Judicial Inspection Department
at the Ministry of Justice, told Gulf News.
Bu Asseeba stressed that this ruling
only covers security or collateral cheques for the total amount of a loan,
commodity or job which lenders require borrowers or contractors ask clients to
sign and that other cheques submitted towards fixed-term payments can still be
used to file a criminal case if they are dishonoured.
Bu Asseeba added the police,
prosecution and courts immediately enforced Shaikh Khalifa’s orders since
November. “Judicial and law enforcement authorities have stopped accepting
bounce security cheques as a criminal tool against debt defaulters,” he said.
Bu Asseeba, however, clarified that the
move does not mean the rights of lenders are compromised as “they are still
entitled to file cases with the civil courts to claim dues. Banks, financial
firms and other lenders still have the right to present these security cheques
to prove they are owed money by debtors.”
According to official statistics issued
by the UAE Central Bank, out of 28.5 million cheques worth Dh1.2 trillion
written in 2011 across the UAE, 1.6 million cheques worth about Dh55 billion
were dishonoured.
On average, one out of every 20 cheques
written in 2011 was sent back by a bank marked “Refer to Drawer” or
“Insufficient Funds”.
Although the Central Bank advises that
issuing a blank cheque to banks as a surety for a credit card or a loan is
illegal and violates the personal loans system in the UAE, banks are still
demanding these security cheques.
Legal experts said making security
cheques not enough to arrest defaulters and convict them partially allays fears
of clients of banks and financial firms.
An expert suggested that banks and
other financial firms be stopped from demanding these security cheques in the
first place and if other cheques are dishonoured creditors be demanded to
recourse to civil courts or normal insolvency procedures rather than resorting
to a speedier course — filing a criminal complaint for a bad cheque.
Experts suggested there should be other
legal courses for bad cheques such as withholding the passport of a defaulter,
rescheduling the loan payments and granting the defaulters sometime to clear
the issue.
Article 401 of the UAE Penal Code
states: “Any person who writes a cheque with insufficient funds — causing it to
be dishonoured — can face a jail term of one month to three years, or a fine of
a minimum of Dh1,000.”
Source: Gulf News
