In a significant ruling, the Federal Court in Fujairah has ordered a prominent bank to refund Dh338,641 to a customer after the court determined that the bank had wrongfully overcharged him for loans and credit facilities. The court also instructed the bank to unfreeze the customer's salary, which had been withheld since November last year, and to compensate him with Dh10,000 for the financial and emotional stress caused.

 

The case dates back to when the man, a salaried employee, discovered his bank had unexpectedly frozen his monthly salary—despite him having no active debts. This action came as a shock, as the customer had diligently repaid his financial obligations over the years, with installments automatically deducted from his salary.

 

The Dispute: Bank Freezes Salary Without Justification

 

The bank had frozen the man’s salary despite no existing debt. When the customer approached the bank, he was asked to sign new documents, suggesting he still owed money. However, the man insisted that all his financial obligations had been cleared. Seeking clarity, he took the matter to court, requesting an independent financial expert to examine his banking records from the start of his relationship with the institution.

 

Banking Expert’s Report: Overpayment Confirmed

 

The court appointed an independent financial expert who thoroughly reviewed the bank's records. The expert's findings revealed that the customer had paid more than what was owed, with an overpayment amounting to Dh338,641. Additionally, the report confirmed that the last salary deduction occurred in October 2024, with no outstanding debts justifying the salary freeze.

 

Bank’s Defense and Court's Ruling

 

The bank’s legal team attempted to dismiss the claim, citing regulations related to current accounts. However, the court ruled that this issue wasn’t about adjusting the account but about returning money that had been wrongly taken from the customer. The court emphasized that individuals have the right to reclaim funds they’ve paid in error, and the bank's actions had unjustifiably withheld the customer’s income.

 

Legal Perspective: Emotional and Financial Damage Acknowledged

 

The court recognized that the damage to the customer went beyond mere financial loss. Freezing his salary had caused significant emotional and financial distress. In light of this, the court awarded the customer Dh10,000 in damages and mandated that the bank pay 9% annual interest on the overpaid amount, starting from the date the claim was filed.

 

NYK Law Firm Comment: Legal Insights on Consumer Rights

 

A legal expert from NYK Law Firm commented on the case, highlighting the importance of consumers understanding their rights in similar situations. "This case sets an important precedent in protecting consumers from unfair practices by financial institutions. The court's decision reaffirms that banks must be accountable for wrongful actions that cause undue stress and harm to individuals. It's crucial for consumers to seek legal counsel in such cases to ensure their rights are protected," said the NYK Law Firm representative.

 

Court's Directive: Bank’s Obligations Going Forward

 

In addition to repaying the overpaid amount and compensating the customer, the court instructed the bank to issue a clearance letter confirming that no outstanding debts remained on the customer's account. The bank was also ordered to cover all related court fees and expenses.

 

This case serves as a reminder that consumers have legal recourse when financial institutions make mistakes that affect their livelihoods. The ruling reinforces the importance of transparency and fairness in banking practices.

 

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004. Follow The Law Reporters on WhatsApp Channels