Crimes of Cheques under the Omani Penal Code No. 7/2018

 A cheque is considered one of the most important commercial instruments in today’s modern world. It is among the most commonly used commercial instrument, alongside bills of exchange, promissory notes, and bonds. However, in the Sultanate of Oman, the cheque is the most widely used commercial instrument.

The cheque is used in various forms, the most common of which is as a means of settling debts, replacing cash, and being treated as an instrument of payment. A cheque is defined as a written document and instrument containing an order from the drawer (the issuer of the cheque) to the drawee (the bank) to pay a specified sum of money to the bearer or beneficiary of the cheque on the due date stated on it.

The Omani legislator has paid special attention to cheques. Article (356) of the Omani Penal Code promulgated by Royal Decree No. 7/2018 stipulates:

“Whoever commits any of the following acts shall be punished with imprisonment for no less than one month and not exceeding two (2) years, and with a fine of no less than one hundred (100) Omani Rials and not exceeding five hundred (500) Omani Rials:

• Issuing a cheque payable for encashment without sufficient funds, or when the funds are less than the value of the cheque, or when the account is closed.
• Withdrawing, after issuing the cheque, all or part of the funds so that the remainder is insufficient to cover its value.
• Ordering the drawee bank not to pay the cheque.
• Writing or signing the cheque in a manner that prevents its encashment.
• Endorsing or handing over a cheque payable to the bearer while knowing there are insufficient funds to cover its full value or that it is non-payable.

In all cases, and upon the request of the concerned party, the court shall obligate the convicted person to pay the value of the cheque in addition to expenses borne by the beneficiary.”

1. Definition of a Cheque in Omani Law

The Omani Commercial Law defines a cheque in Article (523) as an instrument that must contain the following particulars:

1. The word “Cheque” written in the body of the instrument in the language in which it is written.
2. The date and place of issuance.
3. The name of the drawee (the party required to pay).
4. The name of the payee or his order.
5. An unconditional order to pay a specific sum of money.
6. The place of payment.
7. The signature of the drawer (the issuer of the cheque).

Rules and Principles of Issuing a Cheque

When issuing a cheque, it must include the name of the drawee bank, the cheque amount in figures and words, the name of the beneficiary, the date of issuance, and the drawer’s signature. The cheque must be payable within the period specified on it, and no claim may be made before its due date.

Given the extensive use of cheques in Oman, several issues and disputes have emerged relating to cheques, which undermine their credibility and threaten economic and commercial stability. This often occurs when cheques are issued or circulated despite being non-payable.

The Crime of Issuing a Cheque without Funds in Omani Law

In Omani society, the phenomenon of issuing cheques without sufficient funds has become widespread. In such cases, the drawer issues a cheque without having enough funds in his bank account to cover the amount stated, or without having any funds at all, or even when the account is closed. This constitutes a crime punishable under the Omani Penal Code because of its negative impact on trust in commercial and financial dealings.

According to Article (356) of the Penal Code, the penalty is imprisonment for no less than one month and not exceeding two years, in addition to a fine of no less than one hundred (100) Omani Rials and not exceeding five hundred (500) Omani Rials.

Acts Criminalized in Relation to Cheque Offenses

The Omani Penal Code defines the acts that constitute cheque-related crimes as follows:

• Issuing a cheque for encashment without sufficient funds, or with funds less than the cheque’s value, or from a closed account.
• Withdrawing all or part of the funds after issuing the cheque so that the remaining balance does not cover its value.
• Ordering the drawee bank not to pay the cheque on its due date.
• Drafting or signing the cheque in a way that prevents its encashment.
•  Endorsing or handing over a cheque payable to the bearer while knowing that there are insufficient funds to cover it or that it is non-payable.

Conclusion

The Omani legislator in the Penal Code has set clear rules for drafting, signing, circulating, and presenting cheques for payment, and has specified the responsibilities of the drawer, beneficiary, and bank, as well as the penalties.

The law stipulates that a cheque is an instrument of payment that must be honored immediately upon presentation, and no obstacle should prevent its encashment. The legislator has regulated cheque-related crimes under the Omani Penal Code issued by Royal Decree No. 7/2018 and the Omani Commercial Law issued by Royal Decree No. 55/90.

In conclusion, we ask Almighty God that this effort and work be sincerely for His sake. May He guide us, bless our efforts, and make this study beneficial. Indeed, He is All-Hearing and Responsive.

Prepared by: Dr. Mohammed Gharbawi
Al-Alawi & Co – Lawyers and Legal Consultants
Muscat, Sultanate of Oman