UAE court rules in favour of bank in Dh2.3 million cheque dispute

Abu Dhabi: The Federal Supreme Court has rejected an appeal filed by a bank customer who sought to overturn a ruling allowing the enforcement of a cheque worth Dh2.3 million in favour of the bank.

The customer had challenged an earlier decision that placed an enforcement formula on the cheque, arguing that it should not be used to recover the loan amount. He said the cheque had been issued in connection with a personal loan and that the bank’s enforcement action was invalid.

In his lawsuit, the claimant argued that the bank had granted him the loan without securing sufficient guarantees, despite his limited income. At the time of applying, he said, his monthly salary did not exceed Dh25,000, Emarat Al Youm reported. The plaintiff maintained that this violated a 1995 directive regulating personal borrowing from banks and financial institutions, which sets out conditions designed to prevent excessive indebtedness.

A court of first instance appointed an expert, who submitted a report on the case. The court accepted the enforcement challenge in form but rejected it in substance. The Court of Appeal later upheld the lower court ruling, prompting the customer to take the case to the Federal Supreme Court.

In his appeal, the plaintiff said he had consistently argued before both lower courts that the bank’s enforcement action should not be accepted because the loan had been granted in breach of the 1995 regulations. He added that the courts had failed to address this core defence, rendering their judgments flawed.

The Federal Supreme Court, however, rejected the appeal, setting out the principles governing such disputes. It explained that the 1995 directive was introduced to curb the growing problem of excessive personal debt among citizens and residents. The regulation requires banks to verify that a borrower’s income is proportionate to the size of the loan, that the borrower is not unemployed or on a limited income, and that sufficient guarantees are provided to ensure repayment.

The court said that whether these conditions are met is a factual matter to be assessed by the trial judge, provided the conclusion is reasonable and supported by the evidence.

It noted that the claimant had indeed raised the issue of limited income and insufficient guarantees before the lower courts. However, it found no legal error in the way those courts had handled the matter.

The Federal Supreme Court ultimately upheld the appeal court’s ruling, confirming that the cheque could be enforced and rejecting the customer’s request to cancel the enforcement formula.