Middlemen are also liable for bounced cheques

Someone gave me a cheque that bounced due to insufficient funds. However, I discovered that the person who gave it to me isn’t the owner of the cheque, although both owner and the person who gave it to me have signed it. Can I file a criminal case against both?

As per the UAE Penal Law, the bearer or holder of the cheque has the right to file a criminal case against the drawer if the cheque bounces.

This is in accordance with Article 401 of the Federal Law No 3 of 1987 related to the issuance of the Penal Law, which states: “Detention or a fine shall be imposed on 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 not to cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed.

“The same penalty shall apply to anyone 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. Both the drawer and the endorser will be responsible for the last holder of the cheque.”

This was settled by a Dubai Court of Cassation appeal judgement heard in 2016 during a case where the first defendant gave the second defendant a cheque in bad faith worth Dh145,491. The second defendant endorsed the cheque knowing that it didn’t have funds to meet its value. The court punished them both with three months jail reduced to one month on appeal. The endorser of the cheque immediately becomes the owner of its value and is liable to those they pass it onto, according to the Commercial Transactions Law, No.18 of 1993.

■ Ask the Law questions are answered by lawyer Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.