CROSSING OF CHEQUES

Cheques can be of two types:-

1. Open Cheque.
2. Crossed Cheque.
Kinds of CROSSING
1. General Crossing
2. Special Crossing
What is “CROSSING” a Cheque?

• “Crossing” a cheque is a way of making

even more certain that the money is paid
to the correct person and not to someone
else.
• By “crossing” the cheque in the ways that
follow, you give the bank extra
instructions about how it is to be paid.
This is called limiting its negotiability.
• If you cross out “to bearer” and draw two
parallel lines across the front of the
cheque (usually the top left corner is
sufficient) then you are telling the bank
that the money has to be paid into an
account and cannot be cashed (exchanged
for cash).
• This means that the person who
eventually receives the money can be
traced because there will be a record of
the deposit.
Essentials of General Crossing
1. Two lines are of paramount importance in
crossing.
2. The lines must be drawn parallel and
transverse. It means that they should be
arranged in a crosswise direction. They should
not be straight lines.
3. The lines are generally drawn on the left hand
side .
4. The words ‘not negotiable’ may be added to a
crossing.
5. The words ‘and Company’ may be written in
between the lines.
The following do not constitute a
crossing within the meaning of Sec 123
Forms of General Crossing

1.And Company
2. & Co.,
3. Not Negotiable
4. Payee’s A/C
Significance of General Crossing
1. The effect of general crossing is that it
gives a direction to the paying banker.
2. The direction is that the paying banker
should not pay the cheque at the
counter.
3. If a crossed cheque is paid at the
counter in contravention of the crossing:
a. He has no right to debit his customers
account, since , it will constitute a
breach of his customer’s mandate,
b. He will be liable to the drawer for any
loss, which he may suffer,
c. He will be liable to the true owner of the
cheque who may be the third party.

4. The main intention of crossing a cheque

is to give protection to it.
SPECIAL CROSSING
Sec 124 of the Negotiable Instruments Act of 1881
defines

“where a cheque bears across its face, an addition

of the name of a banker, 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”
Essentials of Special Crossing
1. Two parallel transverse lines are not at all
essential for a special crossing.
2. The name of a banker must be necessarily
specified across the face of the cheque. The
name of the banker itself constitutes special
crossing.
3. It must appear on the left hand side,
preferably on the corner.
4. The two parallel transverse lines and the words
‘not negotiable be added to a special crossing.
Who can cross a cheque
• The drawer of a cheque can cross it at the time
of issuing it
• Any holder can cross an uncrossed cheque. He
can convert general crossing into special
crossing
• The banker in whose favour a cheque has been
crossed, can again cross it in favour of another
banker, for the purpose of collection, as an
agent.
DOUBLE CROSSING

Sec, 125 of the Act provides that “Where a

cheque is crossed specially, the banker to
whom it is crossed, may again cross it
specially to another banker, his agent for
collection”