Criminal Consequences of Bounced Cheques in Türkiye

Introduction

A cheque is a negotiable instrument that is frequently used as payment in commercial activities in Türkiye, as it is both endorsable and can be issued with a postdate. With the Cheque Law No. 5941 published in the Official Gazette No. 27438 dated 20 December 2009 (“Cheque Law”) as amended from time to time, causing a cheque to be dishonored, or in other words, to bounce, has been accepted as a crime and several penalties have been stipulated for cheque account holders violating the law. With these penalties, the Cheque Law aims to maintain and increase the confidence in cheques by way of minimizing the number of bounced cheques.

Material Elements for the Occurrence of the Crime

a. There must be a valid cheque.

First of all, there must be a legally valid cheque in order for the crime to occur. In general, the validity of a cheque depends on the existence of the following obligatory elements set forth in Article 780 of the Turkish Commercial Code No. 6102 published in the Official Gazette No. 27846 dated 14 February 2011 (“TCC”): (i) “cheque” phrase, (ii) a remittance which is for an unconditional and unreserved payment of a certain amount, (iii) a drawee’s title (the drawee may only be a bank for cheques issued under Turkish law), (iv) date and place of issue, (v) a place of payment, (vi) a drawer’s signature, (vii) a serial number given by the bank, and (viii) a 2D barcode.

As per Article 781 of the TCC, in general, negotiable instruments that do not contain any of the obligatory elements listed above are not deemed to be a cheque.

Article 2 of the Cheque Law also regulates a number of elements that should be on cheques, such as the title of the bank’s branch, the cheque account number, the tax identification number, etc. However, unlike in the TCC, a lack of these elements set out in the Cheque Law does not affect the validity of a cheque.

b. Cheques must be submitted to a bank within the legal period.

A cheque must be submitted to a bank within the legal submission period for the occurrence of the crime. In other words, in cases where a bearer presents a cheque to a bank after the expiration of the legal period, the cheque account holder cannot be held criminally responsible for a bounced cheque.

According to Article 796 of the TCC, if a cheque is to be paid in the same city in which it was issued, it must be presented to a bank within 10 days. If payment is to be made in another city on the same continent, then it must be presented within one month. The legal period for submission is three months in cases where the place of payment is on a different continent. Countries in Europe and countries with coasts on the Mediterranean are considered to be on the same continent.

Moreover, in general a cheque bearer is authorized to collect a postdated cheque by submitting it to a bank before the date of issue written on the cheque. However, as an exception as per Provisional Article 3 of the Cheque Law, the submission of a postdated cheque to the bank for payment prior to the date of issue is invalid until 31 December 2021. In other words, presenting a postdated cheque to a bank before the date of issue is prohibited.

Following expiration of the aforementioned excepted period, the bearer may present a postdated cheque to a bank at any time, i.e., even prior to the date of issue. However, even if a cheque is stamped as dishonored in such a case, the crime of causing a cheque to bounce will not occur automatically since the act regulated as a crime in the Cheque Law is not issuing a cheque that may subsequently bounce, but failure to keep adequate funds in the bank account within the legal submission period. Therefore, not having adequate funds in a bank account before the legal submission period does not cause the crime to occur.

c. Cheques must partially or completely bounce.

In cases where a bank account does not have adequate funds to pay the amount written on a cheque in full, the crime of causing a cheque to bounce occurs. In cases where a cheque bounces partially or completely, a bank is obliged to stamp the cheque as dishonored. However, if payment cannot be made due to a seizure or pledge on a bank account, no criminal action can be taken against the bank account holder.

The effect of a concordat on a crime should be evaluated separately. If a bank stamps a cheque as dishonored before the date on which the bank account holder or their creditors apply to the court for a concordat, criminal proceedings will not be affected by the concordat and will continue. However, according to the decision of the 19th Criminal Chamber of the Court of Cassation[1], in case where a bank stamps a cheque as dishonored after the application for a concordat, the judgment in the concordat case will be awaited: if the court approves the concordat plan, then the offender will be acquitted; if not, the criminal liability of the offender will continue.

d. Banks must stamp cheques as “dishonored”.

Another necessary element for the occurrence of the crime is that a bank must make a written declaration on the reverse of a cheque as “dishonored”. The date of the crime is the date when the bank stamps a cheque as dishonored.

Complainant

The bearer of a bounced cheque has the right to complaint.

It is controversial in the doctrine and legal precedent whether a previous endorser has the right to complain. According to the general view in the doctrine, if a bearer returns a cheque to the previous endorser as it has bounced, the previous endorser will not be considered a bearer of the bounced cheque, and, hence, will have no right to file a complaint against the bank account holder. On the other hand, in the decision of the 19^th Criminal Chamber of the Court of Cassation[2], the appeal court decided that, in such cases, both the bearer and the previous endorser have the right to complain against a bank account holder. Please note that a number of regional courts of appeal refer to this decision and decide that a previous endorser can also complain against a bank account holder.

Complaint Period

According to Article 347 of the Enforcement and Bankruptcy Law No. 2004 published in the Official Gazette No. 2128 dated 19 June 1932 (“Enforcement and Bankruptcy Law”), a bearer should complain within three months of the date on which they become aware of the crime and within a maximum of one year starting from the date of crime. A bearer will be deemed to have learned of the crime as soon as a bank stamps a cheque as “dishonored”.

Offender

The offender is the person responsible for keeping adequate funds in a bank account; in other words, the owner of the bank account. According to Article 5 of the Cheque Law, a real person cannot appoint another person as a representative or proxy in order to issue cheques on their behalf, and the owner of the cheque book will be responsible legally and criminally in the event of such illegal authorization.

If a bank account holder is a legal entity, all members of its governing body (e.g., members of the board of directors in joint stock companies, or the board of managers in limited liability companies) are responsible for keeping adequate funds in a bank account. However, if a member of a governing body is designated to conduct the financial affairs of the legal entity, the designated member will be solely responsible.

Additionally, governing body member(s) at the date at which the bank stamps the cheque “dishonored” will be liable, whereas members at the date of issue will not be liable.

Penalties

In Article 5 of the Cheque Law, the penalties to be imposed on an offender are regulated as a judicial fine and the prohibition of issuing cheques and opening a cheque account. The court will impose both sanctions together. Additionally, the said penalties are imposed separately for each bounced cheque.

a. Judicial fines and imprisonment

According to Article 5 of the Cheque Law, an offender will be subject to a judicial fine of up to 1500 days, provided that such a judicial fine is not less than the dishonored amount of the cheque. In cases where a dishonored amount is more than the judicial fine of 1500 days, the dishonored amount will be imposed as a judicial fine.

As per Article 52 of the Turkish Criminal Code No. 5237 published in the Official Gazette No. 25611 dated 12 October 2004 (“Criminal Code”), the daily amount of the judicial fine will be at least TRY 20 and at most TRY 100 and will be determined by the court on the basis of the personal and economic conditions of the offender.

A cheque issued in a foreign currency is converted into Turkish Liras at the Central Bank of Türkiye’s effective exchange selling rate based on the submission date of the cheque.

Pursuant to Article 52 of the Criminal Code, the court may decide that the imposed judicial fine be paid in installments provided that the installment period does not exceed two years and the amount is payable at most in four installments. If an offender does not pay the judicial fine in full, the remaining part of the judicial fine will be converted into a term of imprisonment based on the amount determined by the court for each day. The term of imprisonment cannot exceed three years.

Moreover, as per the same article, the provisions concerning prepayment, reconciliation, and the suspension of the pronouncement of the judgment will not be applied to this crime.

b. Prohibition of issuing cheques and opening a cheque account

The court also rules that an offender is prohibited from issuing cheques and opening a cheque account. The court may also impose this sanction as a provisional measure of protection during the proceedings. As per Article 5 of the Cheque Law, this sanction is applicable to both real persons and legal entities who are the owners of a bank account, drawers of cheques on behalf of a legal entity, members of a governing body, and company executives registered with the trade registry.

Persons who are subject to this prohibition cannot take charge in governing bodies of companies as a board member or manager until the removal of the prohibition.

In cases where an offender pays the dishonored amount together with the default interest applied to commercial transactions accrued from the submission date, the court rules to dismiss the case. Additionally, if the said payment is made after the judgment, all consequences of the case are removed, including the prohibition of issuing cheques and opening a cheque account.

Conclusion

The aim of the Cheque Law is to eliminate the causes of cheques being bounced in order to ensure the healthy functioning of the market due to the payment instrument feature of cheques. Due to the devastating consequences of the Covid-19 pandemic, causing a cheque to bounce is not a rare crime; however, the fact that members of companies’ governing bodies are personally liable for the crime significantly increases the importance and deterrent power of the Cheque Law.

[1] 2019/23974 E. – 2019/9339 K. numbered and 10.06.2019 dated decision of the 19th Criminal Chamber of the Court of Cassation.

[2] 2018/3072 E. – 2018/5874 K. numbered and 10.05.2018 dated decision of the 19th Criminal Chamber of the Court of Cassation.