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 draw a line to cross out the words “or bearer”, then
you are telling the bank that the money cannot just be
paid out to anyone who happens to present the cheque. It
must be paid out to the person named on the “Pay” line.
It is possible to get around this by “endorsing” the cheque
. This means that the person to whom the cheque is
made out signs the back thus giving their permission for it
to be presented for payment.
• 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.
Definition of General Crossing
• Sec 123 of the Negotiable Instruments Act 1881
defines general crossing as follows:

“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 to be a ‘crossing, and
the cheque shall be deemed to be crossed
generally.”
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
5. Under Rupees Fifty
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 adedd to a special crossing.
Forms of Special crossing

a. ICICI Bank ltd

b. With the parallel line
c. ICICI Bank ltd
Not Negotiable
d. With Payee’s A/c
e. With Not Negotiable a/c payee.
Significance of Special Crossing

1. It is a direction to the paying banker.

2. A special crossing gives more protection
the cheque than a general crossing.

Not Negotiable Crossing

A/c Payee Crossing
1. Not Negotiable crossing is a warning to
the

a. Paying banker
b. Collecting banker
c. Holder
d. A and B together.
2. A Not Negotiable crossing restricts
_________ of the cheque.

a. Transferability
b. Negotiability
c. Neither transferability nor negotiability.
d. Both transferability and negotiability.
3. The following one is absolutely essential
for a special crossing.

a. Two parallel transverse line,

b. Words ‘And Company’
c. Words ‘Not Negotiable’
d. Name of a banker.
4. The safest form of crossing is

a. General crossing
b. Special crossing
c. Double crossing
d. A/c Payee crossing
True or False

a. Any holder can cross a cheque

b. A general crossing cannot be converted
into a special crossing.
c. Two parallel transverse lines are not
essential for a special crossing.
A cheque drawn in favour of ‘A’ and crossed
‘Not Negotiable’ is presented by ‘b’.
Can you pay the cheque?