The Dubai Civil Court of First Instance ordered a man to pay AED 5.5 million after finding that he had deliberately signed a cheque for the loan amount in a way that made it impossible to cash.

The case stemmed from business dealings between the two parties. The defendant had requested a loan from the claimant and received a total of AED 5.5 million in 11 instalments.

After the claimant demanded repayment, the defendant issued a cheque for the full debt amount from his account at a local bank. However, when the cheque was presented, the bank refused payment, stating that it had been drawn up and signed in a manner that prevented it from being cashed.

A criminal case was subsequently filed against the cheque issuer, resulting in a fine and the confiscation of his chequebook. The ruling was upheld on appeal and became final.

After the cheque was dishonoured, the claimant filed a civil lawsuit seeking repayment of AED 5.5 million with legal interest, as well as AED 500,000 in compensation for material and moral damages and loss of profit.

In its review of the case, the court stressed that a cheque is fundamentally a payment instrument and a substitute for cash, issued to settle a debt that has fallen due, unless the issuer proves otherwise.

The court also found that the defendant had neither attended the hearings nor provided evidence that the debt had been paid or settled. Citing the final criminal ruling, the court determined that he had deliberately used an invalid signature on the cheque.

Accordingly, the court ordered the defendant to pay the full AED 5.5 million.

In addition to the principal debt, the defendant was ordered to pay annual legal interest of 5 per cent from the cheque’s due date until full settlement. He was also ordered to cover court costs and pay AED 1,000 in legal fees.

However, the court rejected the claimant’s request for an additional AED 500,000 in compensation, ruling that the evidence did not establish any further damage warranting a separate award.

The court said the proven loss resulted from the non-payment of the cheque and had been adequately addressed by ordering repayment of the principal debt with legal interest.