Action for Recovery of the Amount of a Check

Action for Recovery of the Amount of a Check

With the passage of time and significant human progress in various fields, various payment instruments, including checks, have gradually come into use. Checks are commercial instruments that enable financial transactions through ordinary, certified, and traveler’s checks. In many cases, individuals, due to a lack of legal awareness or insufficient funds in their accounts, issue checks and subsequently receive certificates of non-payment from banks. As a result, dishonored checks have become a persistent social issue, and a large number of citizens are directly or indirectly involved in such matters.

Upon the maturity date of a check, if the issuer’s account lacks sufficient funds, the holder of the check may rely on various legal methods to recover the check amount and enforce their rights. In such circumstances, the bank is obligated to issue a certificate of non-payment and provide the holder with the complete details of the account holder, including the date, reference number, and the reason for dishonor.

Further proceedings regarding a dishonored check may be pursued in civil courts by filing a claim for recovery of the check amount, in criminal proceedings for issuing a dishonored check, or through enforcement by the Registration Office.

Legal Conditions for Issuance and Recovery of Checks in Iran

Filing a Civil Claim

Filing a civil claim through judicial service offices is one of the primary methods for recovering the amount of a check from the persons liable for payment, including the issuer, guarantor, or endorser. After payment of the required fees, these offices forward the claim for recovery of the check amount to the competent civil court. Following completion of legal formalities, the court schedules a hearing and, if the holder’s claim is substantiated, issues a judgment ordering the issuer to pay the amount of the check. After the judgment becomes final, the holder may proceed with enforcement measures such as seizure of the issuer’s assets, imposing a travel ban, or requesting compulsory appearance.

Recovery of the Amount of New Checks under the Revised Check Law

According to the amended Cheque Issuance Law of 2018, there is no need to file a civil lawsuit to issue a judgment against the issuer. The holder of a dishonored cheque can directly request the issuance of a writ of execution against the issuer by presenting a certificate of non-payment containing the reference number and tracking code and visiting the electronic judicial services offices. Upon registration, the request is referred to the competent court, and, upon confirmation of its legal validity, a writ of execution is immediately issued, and an execution file is opened. The holder must then identify the assets of the person responsible for payment. If no assets are found to be collectible, the holder may request measures, such as an exit ban or an obligation to execute judgments against the responsible persons.

Recovery of the Check Amount through the Registration Office

One of the advantages of checks is the special consideration they receive from legislators and the availability of various mechanisms for their enforcement. Because they are enforceable instruments, checks may also be enforced through the Registration Office. In this method, the holder must complete the prescribed application form and submit it, along with the original dishonored check and a copy, to the Registration Office located in the jurisdiction of the bank on which the check was drawn. The enforcement order issued through the Registration Office applies solely to the issuer of the check. The holder may request seizure of assets or a travel ban in accordance with enforcement regulations. It should be noted that the issuer cannot be arrested through this method, and if no assets are identified, the holder must pursue recovery through other legal avenues.

Recovery of the Check Amount through Criminal Proceedings

Filing a criminal complaint to obtain issuance of a dishonored check is another method of recovery. This method applies only to checks that are payable on demand and issued for immediate payment. In such cases, the issuer knowingly issues a check despite insufficient funds, which constitutes a dishonored check, and the holder may seek recovery through criminal proceedings. It should be noted that criminal complaints do not apply to post-dated checks (even if post-dated by one day), blank signed checks, checks issued as security, or checks whose payment is conditional upon fulfillment of an obligation. Checks without a date, or checks whose actual issuance date precedes the date written on the check, are also excluded from criminal proceedings and cannot be recovered through this method.

To file a criminal complaint for a dishonored check, the holder must apply through judicial electronic service offices.

Frequently Asked Questions Regarding Actions for Recovery of the Amount of a Check