Many individuals and businesses are using alternatives to cheques as a payment method. This is the case in many foreign jurisdictions, particularly as the world increasingly moves towards digital payment methods. However, post-dated cheques are still widely used, and it remains a popular method of payment in Oman in business and private life.
However, a risk with using post-dated cheques as a method of payment in Oman is that a criminal offence will have been committed if a cheque bounces. According to Oman's Public Prosecution Department, in 2022, this was one of the most commonly committed crimes in the Sultanate of Oman, with 14.9% of the 6,500 cases handled by the department being related to bounced cheques. We explore some of the issues further below.
Parties concerned
A cheque transaction usually involves three parties: 1) the drawer, i.e. the issuer of the cheque; 2) the financial institution and 3) the payee, i.e. the recipient of the sums to be paid under the cheque.
Actions that can constitute a criminal offence
The Penal Code sets out several acts which can result in a cheque crime being committed:
- The drawer of the cheque gives a cashable cheque from a bank account which has insufficient funds to meet the cheque, or the bank account to which the cheque relates is closed;
- The drawer draws out all or some of the funds in the bank account after issuing a cheque so that the remaining balance in the bank account cannot meet the cheque amount;
- The drawer orders the payee not to cash the cheque;
- The drawer signs or writes on the cheque in a way that prevents it from being cashed;
- A person endorses or hands over a bearer cheque, knowing that the cheque amount will not be met or that the cheque is non-cashable;
Enforcement of a bounced cheque
The payee must pursue the drawer to enforce payment if the cheque is not honoured.
One way this can be done is through a criminal complaint to the Police or Public Prosecution. The complaint can be made verbally or in writing. In practice, the complaint will often be made to the Police, who will then refer the matter to Public Prosecution.
Alternatively, the payee can file a civil claim for the cheque sum.
Lapse of the right to file a criminal complaint
A payee's right to make a criminal complaint will be lost in the following situations:
- If the payee fails to submit the criminal complaint within three months of receiving notice of the bounced cheque;
- If the payee dies before the complaint is filed;
- If the drawer pays the cheque amount before the complaint is referred to the Court;
- If the drawer pays the cheque amount after the complaint is referred to Court, then the Court may stop the proceedings if the payee agrees to waive his complaint, provided that the waiver is submitted before the Court renders its final judgment;
Conclusion
A payee is likely to prefer filing a criminal complaint rather than a civil claim because the penalty for a bounced cheque involves imprisonment and thus offers a payee more teeth in enforcing the payment of the cheque.
The penalty for a bounced cheque ranges from one hundred Omani Rials to one month and up to two years imprisonment with a fine between one hundred Omani Rials to one thousand Omani Rials.
Further, the Criminal Court, upon convicting the drawer for a crime, also has the power to render a judgment on any civil claims, i.e. the payment of the cheque sum.
If a criminal complaint is not an option, the payee may file a civil claim to claim the cheque amount from the drawer.
Originally published November 18, 2023.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
