Types of Crossings &Why Cross a Cheque

As explained in Sec 76 of the Bills of Exchange Ordinance Two parallel lines on the face of
a cheque is considered as a “Crossing.”

As per BEO crossings are twofold namely Special and General.

Two parallel lines on the face of the cheque is a general crossing and when a name of a
bank appears in between the two parallel lines that consider as a special crossing.
Therefore, when a bank receives a cheque to collect proceeds on behalf its customers, the
collecting bank places the crossing stamp on the reverse of the cheque is consider as a
special crossing.

Objective (Purpose ) of crossing a cheque.

As explained in the BEO, crossing is a mandate to the bank to collect same to an account,
accordingly, a crossed cheque cannot be enchased over a bank counter.(unless for special
circumstance)

Due to the said reason, below mentioned have made possible through a crossed cheque.

 Difficulty to a fraudulent party to obtain proceeds

 Increases the time available for discovering any fraudulent activity

 Drawer has more time to make a stop payment if necessary

 Fraudulent party may possible to traced

 Crossings that are with “Not Negotiable” and “Account Payee” provide the drawer
with further protection

When a cheque is crossed specially to a bank, the checque becomes a property of that
bank and also it is a direction to the paying bank to make payment to the said bank. It is the
duty of a collecting bank to see the cheques that they receives from customers to collect
proceeds have already crossed by another bank, since it has already belongs to another
bank and also to the reason that, the paying bank will have a problem when they make the
payment. Only option is, if a bank collects as an agent to another bank, then a cheque can
carries crossings of two banks.(Collecting cheques o behalf of NSB)
Who can cross a cheque ?

The Drawer, Payee or any subsequent holder can cross a cheque generally or specially to
themselves.

As per sec 78 of the BEO, crossing is a material part of a cheque and it is not authorized or
permitted any one to alter or just ignore the crossing.

Effects of a crossing with “Not Negotiable” & “Account Payee”

The two main characteristics of a cheque are Negotiability and Transferability. Words “Not
negotiable” restricts the Negotiability of a cheque where as “Account Payee” restricts further
Transferability.

Account payee is addressed to the paying bank and they are not supposed to collect it to
anyone other than the payee of that cheque. If the collecting bank ignores this and collect it
to another, then the collecting bank become liable for conversion.

As explained in sec 81 of BEO, person who accepts a cheque that carries Not Negotiable
shall not be able to obtain or shall not be able to give a better title (ownership) to the
cheque, although it remains transferable. If the subject cheque carries a defective title,
transferability of same is subject to the defect of the title to it.

ABill of Exchange, which does not carry “Not Negotiable”

1. The Title transfers freely up on delivery if it is a bearer instrument,

2. If it is an order instrument, then on Endorsement and delivery

In both above instances, the transferor is getting better title than that of the transferor.

When the words “Not Negotiable” appears on the face of the cheque, then it falls under the
law of “Nemo dat quod non habet”, which explains as“No one can give what he does not
have" 

Therefore, a person who obtains cheque which carries “Not Negotiable” shall not be able to
obtain or shall not be able of giving a better title to it.

Although the instrument remains transferable, it is subject to “any defect in it”Accordingly, a

person who accepts a cheque that carries Not Negotiable will not become a “Holder In Due
Course”