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Criminal Implications of Bounced Cheques in Bahrain

Published on : September 2017
Author(s):Several

Tackling Post-dated Cheques in Bahrain

Lawyers in BahrainCan an instrument of payment be offered that ensures complete safety? The reality of the latter statement is an unlikely one. The law, however, does attempt to provide security where a payment transaction fails to do so. The nooks and crevices of such law must be understood to avoid any misguided reliance’s on it.

Post-dated cheques are considered to be an instrument of security to guarantee future payments. They, however, are also used as a tool of secured future payment. As can be understood, a post-dated cheque promises payment of a specific amount at a future date, and the party can only cash the said amount on the future date. In Bahrain, there are criminal implications for issuing a post-dated cheque from an account with insufficient funds. The Criminal Court of Appeal in Bahrain has issued several judgments clarifying the risks associated when doing so.

Law-Binding Spell

Due to both the social and legal implications of the ‘bouncing’ of a post-dated cheque, beneficiaries find it favorable to rely on this type of payment transaction.  Of course, one cannot automatically assume a criminal offense will arise upon the dishonoring of a cheque, but rather one can rely on court judgments for protection as the likelihood of criminal implication is high.

The Bahraini Criminal Court of Appeal has elucidated as to the matter of intention as seen below:

 I.          Criminal Appeal Number 5 of 2005, in session dated 17 October 2005 found that regardless of whether the cheque was issued as a security measure only, it remains a transaction of certainty that the issuer must adhere to.

II.          Criminal Appeal Number 77 of 2006, in session dated 26 July 2006 states that assuming the cheque issuance follows the legalities of doing so, the crime of issuing a bounced post-dated cheque occurs even if the issuer is aware of the insufficient funds in their account and issues the cheque as a security method only.

Denoting that the issuer of a post-dated cheque automatically assumes a risk and an intention to provide the money promised in the cheque regardless of whether that was their real intention.

  I.     Criminal Appeal Number 5 of 2005, in session dated 17 October 2005 states if the account of the issuer does not contain sufficient funds the crime is considered to be committed regardless of the reasoning behind it.

  II.         Criminal Appeal Number 77 of 2005, in session dated 26 July 2006 follows that an issuer of a cheque automatically assumes ‘bad intention' by merely knowingly or unknowingly issuing a cheque to an account with insufficient funds.

The decisions highlighted above follow a similar pattern of automatic risk of criminal liability regardless of intention or awareness of the crime being committed. It is enough to perform the action of issuing a post-dated cheque that will not be fulfilled at a future date to acquire liability.

The Criminal Court of Appeal has also shed light on which instances do not qualify an issuer of a post-dated cheque safety from liability:

             I.          Criminal Appeal Number. 59 of 2005, in session dated 15 May 2010 elucidates that a crime is still committed where there are insufficient funds in the account when the beneficiary attempts to cash the post-dated cheque even if the issuer provides the beneficiary with cash of the amount prescribed in the post-dated cheque before they cash the cheque.

              II.          Criminal Appeal Number 77 of 2006, in session dated 26 July 2006 follows the above line of reasoning stating that if the issuer does not take back the post-dated cheque after providing the beneficiary with the prescribed amount, then they are still liable for the crime if the beneficiary attempts to cash the post-dated cheque.

As such, these judgments provide that a defendant cannot escape liability by giving the beneficiary the amount prescribed within the cheque before the promise date. To do so, they must return the post-dated cheque to avoid liability. Otherwise, the issuer takes the risk in procuring liability regardless of the fact they had fulfilled their promise in a different manner.

             I.          Criminal Appeal Number 59 of 2005, in session dated 15 May 2010 states that even if the date of the post-dated cheque has passed and the beneficiary raises a claim to the police after the said date, the crime will still have been committed and the issuer liable.

         II.          Criminal Appeal Number 93 of 2005, in session dated 03 July 2006 lists that an account with no funds, insufficient funds, or a frozen account that does possess sufficient funds are all types of accounts that result in the crime of a ‘bounced’ cheque.

Deduction of the above follows that the law offers a wider scope of protection to a beneficiary of a post-dated cheque than it does for the issuer of one. As such although a beneficiary cannot be ensured complete safety it is fair to say that they are guaranteed sufficient safety.

The Bahraini Court of Appeal has also issued stricter judgments in comparison to those of the UAE, such as:

Criminal Lawyers in BahrainCriminal Appeal Number 59 of 2005, in session dated 15 May 2010 and Criminal Appeal Number 9 of 2006, in session dated 25 December 2006 both make clear that the law does not automatically repeal liability if the issuer of the cheque pays the promised funds to the beneficiary after the claim has been raised.

Unlike UAE law, the waiver of the criminal complaint is not offered by Bahraini law. A claimant must choose to waive their right to the criminal complaint once payment of indebted amount occurs. If they (or; their appointed lawyers) do not decide to do so, then the right to continue the criminal complaint remains within the bounds of the law. The action of issuing a post-dated cheque with the use of an account that contains insufficient funds remains an active crime.

Once a judgment has been issued, Article 393 of the Penal Code (Decree Number 15 of 1973) mandates a fine or a prison sentence on the accused. Social stigma and punishment are also followed as per the Law of Commerce (Decree Number 7 of 1987) in Article 491, where it states that once bad faith and crime is found, the court will order the publication of the judgments summary in one of the local newspapers. The publication will include their name, occupation, and the punishment they will endure.

Conclusion

What can be construed from the above judgments is the reach of the Bahraini law and its intent to implicate those who issue post-dated cheques with cash consideration. Although payment transactions are tricky, the ability to prove bad faith and ill-intention require the mere existence of an account with insufficient funds and the rest of the dominoes follow.

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