Bank to pay for 'illegal' foreclosure

In an interesting development the Dubai Court of Cassation ordered a bank in the UAE to pay Dh200,000 as compensation to one of its customers who lost his potential property because the said bank foreclosed his account.

The client had filed a lawsuit against the lender seeking Dh673,000 as compensation because the bank rejected a cheque despite the client having enough funds.

The client (the plaintiff in the case) had bought a property in Bahrain worth half-a-million dirhams, and paid Dh158,000 as deposit in cash while signing the contract and gave the seller a cheque of Dh91,000 to be drawn from the said bank.
 
But when the seller sought to withdraw the amount, the bank rejected the cheque.

The client cross-checked with the bank for reasons why his cheque was rejected only to learn that the bank had foreclosed his account. And he was inturn requested to pay Dh5,505.

In the meantime, the client lost Dh158,000 - the deposit he paid for the property.

The client thus filed a suit against the bank in the Court of First Instance seeking half-a-million dirhams as compensation for losing a potential investment property; and Dh15,000 as compensation for moral damages.

The Court of First Instance ordered the bank to pay Dh200,000 in compensation.

However, both the parties rejected the ruling and moved the Appeals  Court, which upheld the verdict. Unhappy with the ruling they then took the case to the COurt of Cassation, which issued a ruling saying if clients suffer damages because of a mistake committed or breach of obligations by the bank, then the lender is liable to pay compensation to clients.
 

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