UAE: Man overpays loans by Dh338,000, wins case against bank

Fujairah: The Federal Court in Fujairah has ordered a bank to refund Dh338,641 to a customer after it was revealed he had paid far more than what was actually owed on his loans and credit facilities.

The court also instructed the bank to unfreeze his salary—held since November last year—and awarded him Dh10,000 in compensation for the emotional and financial stress he endured. Additionally, the bank must issue a clearance letter confirming he has no outstanding debts and cover all related court fees and expenses.

The case began when the man, a salaried employee, noticed that his monthly salary—regularly deposited into his account—had been suddenly frozen by the bank. This was despite having no active debts at the time.

According to the plaintiff, he had been a long-time customer of the bank before it merged with another institution. During that time, he received various financial facilities and paid them off diligently, with installments automatically deducted from his salary.

Things took an unexpected turn when, after settling all his dues, the bank froze his salary without any clear explanation. To make matters worse, the bank asked him to sign new documents claiming he still owed money—something he firmly denied.

Wanting clarity, the customer requested the court to assign an independent financial expert to review his banking history from the very beginning of his relationship with the institution up until the day the lawsuit was filed.

The court agreed and brought in a banking expert. After a thorough review of the accounts and supporting documents, the expert confirmed that the customer had paid off all his loans and credit card balances—and had actually overpaid by more than Dh 338,000, including the withheld salary. The report also confirmed that the last deduction from his salary was made in October 2024 and that no remaining debts existed that could justify withholding his income.

The bank’s legal team tried to dismiss the case, arguing that the law did not allow such claims under regulations related to current accounts. But the court disagreed, ruling that this was not about correcting an account—it was about returning money that had been wrongfully taken. The case, it concluded, should be handled under general civil law.

The court made it clear: if someone pays money they don’t legally owe, they have every right to get it back. And if someone receives money they weren’t entitled to, they’re obligated to return it. In this case, the bank’s actions—particularly freezing the man's salary—were unjustified and amounted to a mistake that warranted compensation.

The court acknowledged the damage done went beyond the financial. By denying the man access to his income, the bank caused unnecessary stress and hardship—emotionally and financially. For that, the court awarded an additional Dh10,000 in damages, plus 9% annual interest on the excess amount paid, calculated from the date the claim was filed. Interest will also be applied to the compensation amount once the ruling becomes final.