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
Sec 123 of the Negotiable Instruments Act

Crossing
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
2.
3.
4.
5.

crossing.
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.
The lines are generally drawn on the left
hand side .
The words not negotiable may be added
to a crossing.
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. Payees 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

b.
c.

account, since , it will constitute a

breach of his customers mandate,
He will be liable to the drawer for any
loss, which he may suffer,
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
2.
3.
4.

essential for a special crossing.

The name of a banker must be necessarily
specified across the face of the cheque.
The name of the banker itself constitutes
special crossing.
It must appear on the left hand side,
preferably on the corner.
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 Payees 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?