UAE amends law to decriminalise bouncing of cheques

The United Arab Emirates’ (UAE) move to amend the Commercial Transaction Law that decriminalises bounced cheque cases is expected to come as a huge relief to hundreds of Non Resident Indians who earlier had to pay hefty fines and undergo imprisonment without trial in the Gulf nation. The new decree will come into force on January 2, 2022.

The present law states that bouncing cheques is a criminal offence. “In future, it will be a civil offence where people can discuss and settle the case amicably,” Indian expatriate, K.V. Shamsudheen, who is also the chairman of UAE-based Pravasi Bandhu Welfare Trust, said.

The amendments that remove penal protection of cheques are part of a series of efforts undertaken by the UAE to accelerate economic recovery, particularly in the private sector.

One of the key changes is decriminalisation of cheques issued without sufficient funds. However, criminalisation of bounced cheques due to insufficient funds in cases of fraud, forgery and bad faith will stay. Also, partial payment of cheques will become mandatory.

This apart, the bank must pay the drawee the partial amount if the amount in the account is less than the value mentioned in the cheque unless the drawee rejects it.

Mr. Shamsudheen said that earlier, when a cheque bounced, the defaulter would end up in jail, leading to the collapse of his business. “Now, investors can find a solution to the problem. It is a great relief for the businessmen in UAE,” he said, adding that new investors from India could use the opportunity.

Nearly half of the 8,000 Indian citizens lodged in foreign jails are in the Gulf Cooperation Council (GCC) nations. And about 1,300-1,500 each undertrials are in Saudi Arabia and United Arab Emirates for alleged violation of local laws pertaining to economic offences.

“The amendment is going to be a game changer. What used to be a dead-end for both the giver and receiver has now hope. It is likely to change for the better how businesses work,”' Mohammed Hashim, an NRI in Dubai, said.

According to the Emirates News Agency, the amendments deliver the desired goals of replacing decriminalisation with preventive measures, coupled with deterrent alternative penalties to reduce the misuse of cheques. Further, these will facilitate litigation procedures, avoid the accumulation of cheque cases in civil and criminal courts.

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Printable version | Feb 13, 2022 1:27:28 pm | https://www.thehindu.com/news/cities/kozhikode/uae-amends-law-to-decriminalise-bouncing-of-cheques/article37399958.ece