Abu Dhabi court rejects Dh100,000 claim after ruling cheque was issued as guarantee

Abu Dhabi: The Abu Dhabi Civil Family and Administrative Court has dismissed a lawsuit filed by a farm seller seeking Dh100,000 from a buyer over a cheque that the court ruled had been issued as a guarantee rather than as a payment instrument.

The court said the cheque in question was a security cheque that could not be cashed once the purpose of the guarantee had been fulfilled.

According to Emarat Al Youm, the claimant had sought to compel the defendant to pay Dh100,000, the value of the cheque, as well as Dh15,000 in compensation for alleged material and moral damages resulting from non-payment. 

He also requested legal interest on the claimed amount from the date of filing, in addition to legal fees and expenses.

The claimant argued that the defendant had issued the cheque for the amount in question, but when it was presented to the bank, payment was refused because the cheque had been issued and signed in a manner preventing it from being cashed.

A criminal court had previously convicted the defendant of issuing a cheque in bad faith and imposed a fine, with the ruling becoming final. The defendant, however, submitted a defence memorandum requesting the civil case be dismissed.

In its reasoning, the court stated that documents showed the cheque had been clearly marked on the back as a “guarantee cheque”, confirming it had not been intended as a payment instrument but rather as security related to the purchase of a farm.

The defendant also provided evidence that the full purchase price of Dh700,000 had been paid, supported by payment receipts and WhatsApp correspondence between the parties confirming completion of the transfer.

The court found that once the obligation secured by the cheque had been fulfilled, the basis for retaining the cheque no longer existed, and holding it after the completion of the transaction contradicted the agreement between the parties.

It further noted that the criminal case related to the cheque was limited to determining the elements of the criminal offence and did not extend to resolving the civil relationship between the parties or the purpose for which the cheque was issued. 

The civil court therefore retained the authority to examine the underlying reason for the cheque and determine whether it constituted a payment instrument or a guarantee.

Based on the evidence showing the purchase price had been fully settled and the purpose of the guarantee fulfilled, the court ruled that the defendant had no further obligation regarding the cheque and that it could not serve as a valid basis for claiming payment again.

The court therefore dismissed the case and ordered the claimant to pay the legal costs and expenses.