Crossing of Cheque

By: Abhijeet Kumar Vth semester Roll no. 01 What is crossing of Cheque? A cheque is a negotiable instrument. During the process of circulation, a cheque may be lost, stolen or the signature of payee may be done by some other person for endorsing it. Under these circumstances the cheque may go into wrong hands. If so happens then it would be almost impossible to trace the person who received the money. To avoid this risk crossing of check is done. Crossing is a popular device for protecting the drawer and payee of a cheque. Crossing prevents fraud and wrong payments. Crossing of a cheque means "Drawing Two Parallel Lines" across the face of the cheque. Types of crossing of Cheque General Crossing Special Crossing Account Payee or Restrictive Crossing 'Not Negotiable' Crossing

Cheque crossed generally (sec 123) Where a cheque bears across its face an addition of the words 'and company' or any abbreviation thereof, between two parallel transverse lines, or of two parallel transverse lines simply, either with or without the words 'Not Negotiable', that addition shall be deemed a crossing, and the cheque shall be deemed to be crossed generally.

Cheque crossed specially (Sec 124)

Where a cheque bears across its face an addition of the name of a banker, either with or without the words 'Not Negotiable', that addition shall be deemed a crossing, and the

cheque shall be deemed to be crossed specially, and to be crossed to that banker. This is called special crossed cheque.

Account Payee or Restrictive Crossing

This crossing can be made in both general and special crossing by adding the words Account Payee. In this type of crossing the collecting banker is supposed to credit the amount of the cheque to the account of the payee only. The cheque remains transferable but the liability of the collecting banker is enhanced in case he credits the proceeds of the cheque so crossed to any person other than the payee then the endorsement in favour of the last payee is forged. The collecting banker must make proper enquiries as to the title of the last endorsee from the original payee named in the cheque before collecting an 'Account Payee' cheque in his account. The crossing can be done by place slanted parallel line in the top most left corner of the cheque - in writing over their A/C payee's only.

Not Negotiable Crossing (sec 130)

The words 'Not Negotiable' can be added to General as well as Special crossing and a crossing with these words is known as Not Negotiable crossing. Nemo dat quod non habet:- The effect of such a crossing is that it removes the most important characteristic of a negotiable instrument i.e. the transferee of such a crossed cheque cannot get a better title than that of the transferor (cannot become a holder in due course) and cannot convey a better title to his own transferee, though the instrument remains transferable. If the title of transferor happens to be defective then the transferee acquires no better title that the transferor, even though the transferee has acted in good faith and paid consideration for it.