Court rejects bank’s request to obligate customer to pay Dhs484,000

Salam Abu Shehab, Staff Reporter

The Abu Dhabi Commercial Court of First Instance revoked a lawsuit filed by a bank to obligate a man to pay Dhs484,825 as a result of his failure to pay the installments of the facilities granted to him.

The bank’s lawsuit was revoked due to its violation of the UAE Central Bank’s personal loan instructions as the loan granted to the customer exceeded 20 times his salary.

The bank also did not commit to taking multiple cheques and was satisfied with one check in violation of the law.

The court indicated that according to Article 121 regarding the UAE Central Bank, licensed financial institutions must obtain sufficient guarantees for all types of facilities provided to customers in accordance with the customer’s income or a guarantee, if any, as determined by the UAE Central Bank.

No request, claim or pleading regarding a credit facility shall be accepted before the competent judicial authorities or arbitration bodies, if filed by a licensed financial institution in the event that it does not obtain the aforementioned guarantees.

The court explained that the defendant obtained a banking facility from the bank, which was a Murabaha contract in the amount of Dhs624,232.80, including profits, while the guarantees obtained by the bank included the defendant’s salary and a cheque deposit.

The court indicated that it was clear from the defendant's salary certificate issued in May 2022 (before obtaining the facility) that his total salary was Dhs23,406.06, while the plaintiff had granted the defendant a personal loan in the amount of Dhs624,232.80, i.e. the loan amount exceeded 20 times the salary of Dhs468,121.2.

Based on the above, the court concludes that the bank (plaintiff) violated what was stated in Article 121 by violating the UAE Central Bank’s personal loan instructions by exceeding the limit by more than 20 times the salary. Furthermore, the plaintiff did not commit to taking multiple cheques and was satisfied with taking one cheque, which was in violation of the aforementioned law.