Crossing of Cheques

Crossing of Cheques

Cheque crossing is recognized in the Negotiable Instruments Act of 1881 Crossing a cheque means drawing two parallel transverse lines between the lines on the cheque with or without additional words such as “& CO.” or “Account Payee” or “Not Negotiable.”

In accordance with the Sec. 125 of the Negotiable Instruments Act, the following persons are authorized to cross the cheque, apart from the drawer:

The Holder: The holder of a cheque is authorized to cross a cheque, either in general or in particular if the cheque is not crossed.He is also entitled to cross a cheque, especially if the same is generally crossed.He can also add the words “non- negotiable” to crossed cheques in general and in particular.

The Banker: The banker in whose favour a cheque is crossed in particular can also cross it in favour of another banker or his agent for collection purposes. Such a crossing is called Special Double-crossing.

General Crossing:Section 123 of the Negotiable Instruments Act deals with the general crossing of cheque, In the following cases, a cheque is generally considered to be crossed:

• If two parallel transverse lines are marked across the cheque face.
• If the cheque has an abbreviation “& C” between the two parallel transverse lines.
• If the cheque is written between the two parallel lines, the words “Not Negotiable”.
• When the cheque comes with the words “A / C. Payee” between the two parallel transverse lines.

Special Crossing: According to section 124 of the Negotiable instruments Act,

• For a cheque to be deemed to have been crossed, the banker’s name had to be added across the face of the cheque.
• In case of a special crossing, a cheque must not be crossed by drawing two parallel lines.

Section 124 of The Negotiable Instruments Act, 1881 defines Special Crossing as: “Where a cheque bears across its face an addition of the name of a banker, either with or without the words “not negotiable”, that in addition shall be deemed a crossing, and the cheque shall be deemed to be crossed specially and to be crossed to that banker.”

• Also known as Restricted Crossing.
• Two transverse lines must not necessarily be drawn.
• The banker’s name is added across the face of the cheque.
• The banker’s name may or may not carry the abbreviated word’ & Co.’
• Payment can only be made through the bank of the crossing. The banker mentioned at the crossing can appoint another banker to collect such cheques as his agent. Therefore, it is safer than ‘generally’ crossed cheques.
• Specially Crossed Cheques are not convertible into General Crossing.

Cheque bearing “Not Negotiable”

A person taking a cheque crossed generally or specially, bearing in  either case the words “not negotiable”, shall not have, and shall not be capable of giving, a better title to the cheque than that which the person form whom he took it had. [section 130]. Thus, mere writing words ‘Not negotiable’ does not mean that the cheque is not transferable. It is still transferable, but the transferee cannot get title better than what transferor had. 

Payment of Cheque crossed generally or specially

Where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker. Where a cheque is crossed specially, the banker on whom it is drawn shall not pay it otherwise than to the banker to whom it is crossed, or his agent for collection. [section 126].

Double Crossing

A cheque bearing a special crossing is to be collected through the banker specified therein. It cannot , therefore, be crossed specially again to another banker, i.e., cheque cannot have two special crossings, as the very purpose of the first special crossing is frustrated by the second one. However, there is one exception to this rule for a specific purpose. If a banker, to whom the cheque is originally specially crossed submits it to another banker for collection as its agent, in such a case the latter crossing must specify that it is acting as agent for the first banker to whom the cheque is specially crossed