Questions & Answers
Dishonoured cheques and breach of contract
A Company had issued us several cheques amounting to nearly 600,000 AED. All the cheques had bounced, and we lodged a complaint with the police station.
The police after calling for the bank documents and details from the defaulter's bank issued a travel ban. All efforts of the police to trace the defaulter or contact over the phone have been futile.
The police have now forwarded the case to the court and asked me to keep track of the dates on the portal.
The cheques were signed by the Managing Director of the company.
It is important to note that the defaulting Company had violated several terms in the contract, resulting in fraud and criminal conspiracy and breach of trust.
Please advise what will be the consequences the defaulter may have to face and how should we go about it.
Dear Sir/Madam,
Please note that my response to your question will be purely from an academic point of view based on the limited preliminary information that has been provided. Therefore, it should not be treated as a legal opinion for the want of adequate knowledge and review of relevant documents when read with the applicable laws.
A situation where a cheque is dishonoured attracts both criminal and civil liability. Article 401 of Federal Law No. 3 of 1987 states that the signatory of the dishonoured cheque would be liable for criminal prosecution if the beneficiary of the dishonoured cheque files a complaint. If the signatory of the cheque (i.e. Managing Director of the Company in your case) is found guilty, it may result in a fine, detention or both. In addition, a travel ban may also be imposed at any time on the signatory of the dishonoured cheque, which has already been done in this case.
Furthermore, even if the signatory is convicted of criminal liability and has served the jail term, the beneficiary of the dishonoured cheque can still file a complaint in the civil court for the unpaid amount. The signatory would then either have to repay the beneficiary, or alternatively, serve a jail term, which once served would leave the signatory free.
From the facts provided by you, we understand that it has been difficult to trace the Managing Director, and that the Company has also breached other terms of the contract. To further advise on alternative actions available against the Company and other interim measures, we would need to understand your relationship with the Company, review the contract(s) entered into with the Company and evaluate how the Company has defaulted against you.
We would be happy to arrange a conference call to further discuss this matter and provide you with adequate advice.
Dear,
Since you have already initiated a criminal case against the defaulter/accused, you may request the court in the same case to grant a permission to file a civil case. The said application will be allowed and be included in the criminal case judgment which will help you in the civil case proceeding that will be based on the criminal court judgment. This will save your time and money at the later stage.
If you feel comfortable discussing with us at length, you may contact us at M: +971 50 995 8770 for a free consultation over the phone.
Regards
