It has been lately noticed that due to commercial requirements there might be a possibility of swapping the cheques and for some alternate reasons, although there is an agreement for swapping, the first cheque was not returned to the issuer of the cheques. Ergo, the question before us is even if the first cheques was swapped with the second, can the beneficiary still file a criminal case against the issuer on the first cheques.

UAE Penal Code under Article 401 empowers the holder of the cheque to file a criminal case against the issuer in case the cheque is returned by the bank for any given reason.

The article reads as follows:
a person who issues a cheque with a bad intention and knowing that he did not possess sufficient funds or withdraws the funds from his account post issuing the cheque to ensure that the cheque cannot be cleared shall be sentenced to imprisonment or fine.

In accordance with the aforementioned provision, it is clear that the possessor of the cheque has the right to file a criminal case for any cheque returned by the bank. It further implies to the fact that if the issuer, post swapping does not claim the first cheque nothing can prevent the holder of the cheque from encashing it or from filing a criminal case against the issuer.

This has been further agreed upon by the Court of Cassation under Case number 183 of the year 2008 dated 16 June 2008, wherein the court confirmed the fact if the issuer swaps the cheques with another and even if the new cheques have been en-cashed, it still does not release the accused from the liability as a criminal under any criminal case filed by the beneficiary under the first cheque.

It is strongly recommended to all our readers that in case the receiver of the cheque argues that he lost the first cheque or that it does not exist anymore, in order to ensure the waiver or to get released from all potential liability in future, it is recommended to get such waiver letter drafted by the lawyer and attested if possible.

It is further essential to note that if it is mentioned on the back of the Cheque that it shall be encashed only post seeking a written consent or it cannot be encashed unless a certain condition is fulfilled or executed it may lead to the court to consider that the concerned cheque is not subject to criminal protection or it is invalid to pass a judgment against the issuer of the cheque. The rule was replicated by Al Rowaad Advocates and Legal Consultants under Case number 364 of the year 2008.