Unit -2

Lecture-7
Types of cheque:
OPEN CHEQUE - It is an uncrossed cheque which is payable at counter of the bank. It is of
two types Bearer Cheque and order cheque.
BEARER CHEQUE - When a cheque is payable to a person whose name appears on the
cheque or to the bearer i.e. to the person who presents the cheque to the bank for encashment,
is called bearer cheque. It can be transferred by mere delivery and do not need endorsement.
ORDER CHEQUE - When a cheque is payable to person named in the cheque or to his order,
is called Order Cheque. When the word Bearer is cancelled, the cheque becomes the order
cheque. It can be transferred only by endorsement and delivery.
Crossed Cheque
A Crossed Cheque is one which bears across its face two parallel transverse lines with or
without certain words. Such lines are usually drawn on the left side top corner of the face of
the Cheque. However, such lines can be drawn anywhere on the face of the Cheque. Crossing
of Cheque is a direction to the drawee bank to pay the amount of the Cheque to the account of
the account holder.Therefore, a crossed Cheque is not payable to the payee or holder at the
counter of the bank. In order to get the payment of the Cheque, it is required to be deposited in
an account with a bank. The bank, in turn, presents the Cheque to the drawee bank and gets
payment on behalf of the payee or indorsee of the Cheque. The objects of crossing of a Cheque
are as follows: To direct the drawee bank to pay the amount of the Cheque only to a bank or a
particular bank; To prevent the payment of the Cheque to an unauthorized or wrong person.
Thus Crossed cheque means drawing two parallel lines on the left corner of the cheque with or
without additional words • A crossed cheque cannot be en-cashed at the cash counter of a bank
but it can only be credited to the payee‘s account. This is a safer way of transferring money
than an Uncrossed or open cheque. Crossed cheques must be presented through the bank only
because they are not paid at the counter. Crossing is a popular device for protecting the drawer
and payee of a cheque.
Antidated cheque
Postdated cheque
KINDS OF CROSSING Crossing of Cheque is basically of two kinds:- 1. General crossing,
and 2. Special crossing.

These basic kinds of crossing may take several forms.

Some of them are:
3. Restrictive crossing.
4. Not negotiable crossing.
1. General crossing: A Cheque is deemed to be generally crossed in any of the following
cases: a. When it bears across its face two parallel transverse lines without any words. b.
When it bears across its face an addition of the words “and company” or any abbreviation
thereof between two parallel transverse lines. It may also be with or without the words ‘Not
negotiable’.
Effects of general crossing The Cheque is not payable at the counter of the bank. The drawee
bank shall pay the amount of the Cheque only to a banker. Therefore, the holder will have to
deposit the Cheque in an account with any banker.

2. Special crossing: A Cheque is said to be specially crossed when the name of a banker is
added across the face of the Cheque, either with or without words, not negotiable. Usually, two
parallel transverse lines are used in special crossing but they are required not by law.
Effects of special crossing: In the case of a Cheque especially crossed, the payment can be
obtained only through the particular banker whose name appears across the face of the Cheque
or his agent for collection.[Sec. 126, para2]
3. Restrictive crossing: Restrictive crossing has not been described anywhere in the
Negotiable Instrument Act. It is a type of crossing which has evolved out of business and
banking usage and now recognized by the law. Every Cheque crossed wither generally or
specially may be crossed restrictively credit the proceeds of the Cheque only to the account of

the payee.
4. Not negotiable crossing: Sometimes, a Cheque crossed generally or specially contains the
words ‘not negotiable’ A crossing with such words is said to be ‘not negotiable’ crossing. The
words ‘not negotiable’ on a crossed Cheque destroy the negotiable character of the Cheque but
not the transferability of the Cheque. Therefore, any person taking a crossed Cheque bearing
the words ‘not negotiable’ shall not have and shall not be capable of giving a better title to the
Cheque than the title of the person from whom he took it