CROSSING OF CHEQUES Cheques can be of two types:-

1. Open or an uncrossed cheque

2. Crossed cheque

Open Cheque

An open cheque is a cheque which is payable at the counter of the drawee bank on
presentation of the cheque.

Crossed Cheque

A crossed cheque is a cheque which is payable only through a collecting banker and not
directly at the counter of the bank. Crossing ensures security to the holder of the cheque
as only the collecting banker credits the proceeds to the account of the payee of the
cheque.

When two parallel transverse lines, with or without any words, are drawn generally, on
the left hand top corner of the cheque. A crossed cheque does not effect the negotiability
of the instrument. It can be negotiated the same way as any other negotiable instrument.

Types of Crossing There are two types of negotiable instruments:-

• General Crossing

• Special Crossing

• Account Payee or Restrictive Crossing

• ‘ Not Negotiable ‘ Crossing

Cheque crossed generally

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. [section 123]

Cheque crossed specially

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. [section
124].
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 and the indorsement in favour of the
last payee is proved forged.The collecting banker must act like a blood hound and make
proper enquiries as to the title of the last indorsee from the original payee named in the
cheque before collecting an 'Account Payee' cheque in his account.

Not Negotiable Crossing

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.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 covey a better title to his own
transferee, though the instrument remains transferable.