Banks have the right to pursue loan guarantors

A reader in Dubai asks: Three years ago, I sponsored my friend with a bank against a loan that my friend has taken. The bank asked me to sign an agreement as guarantor of this loan. It also took a blank cheque from my friend who took the loan. My friend failed to pay back her monthly instalments for over four months, and I was informed that the bank filed a complaint before the police regarding my cheque as well as my friend's cheque claiming its rights for this debt. My question here is whether the bank has the right to file a complaint about the cheques, and whether it also has the right to utilise the sponsor's cheque although he has the cheque of the owner of the loan. The owner of the loan is not an absconder and is in the country, as he is currently negotiating with the bank to resolve the matter. Why is the bank entitled to chase the sponsor although the bank's representative at the beginning of the loan procedure stated that the guarantor shall be responsible only if the owner of the loan has absconded. Please advise me in this regard whether this procedure by the bank is legal and how to solve this issue especially as this amount is large and I cannot pay it anyway.

I would like to clarify to the questioner that such a procedure taken by the bank against the owner of a loan as well as the guarantor is not contrary to the law, as the bank is entitled to utilise all the legal means to obtain its right and the bank may follow up the guarantor without the need for the owner of the loan to abscond. Moreover, I would like to further clarify to the questioner that the law considers everyone who issues a cheque, while they are aware that they have no funds at the time of issuance of this cheque, as guilty of an offence punishable by law.

Finally, I would like to point out that the bank will continue to follow up both the questioner as well as the owner of the loan until it obtains the original debt along with the agreed interest whether it has obtained its right from the debtor or the guarantor.

Furthermore, the bank will not take more than its right as mentioned by the questioner, as the questioner as well as the owner of the loan are entitled to request the assignment of an expert to investigate the authenticity of the bank's demand.

- Questions answered by advocate Mohammad Ebrahim Al Shaiba of Al Bahar Advocates and Legal Consultants.