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. Crossing of cheque means drawing two parallel transverse lines on the left hand top corner of a cheque. Some times it is also done in the centre of the cheque.

A crossing is a direction to the paying banker that the

cheques should be paid only to a banker and if the banker is named in the crossing, only to that banker

 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

defines general crossing as follows:

Sec 123 of the Negotiable Instruments Act 1881

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.

Forms of General Crossing

1.And Company 2. & Co., 3. Not Negotiable 4. Payees A/C 5. Under Rupees Fifty

The following do not constitute a crossing within the meaning of Sec 123

Essentials of General Crossing

1. There must be two parallel transverse lines on 2. 3. 4.
the face of the cheques. 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 paying banker is required to pay the amount of the cheque to another bank and not to the holder

5.
6.

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 customers 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
2. 3.
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 added to a special crossing. Much safer than general crossing

4.
5.

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.

Other types of crossing

Not Negotiable Crossing A/c Payee Crossing Double crossing

Not negotiable crossing

The word not negotiable can be included
in both general and special crossing The bank must be careful in paying such cheques The payment must be made only after the bank is satisfied that the person demanding payment, is the person entitled to get it in reality

Account payee crossing

Direction to the collecting banker that
the proceedings of the cheque are to be credited only to the account of payee named, written or mentioned in the cheque.

Account payee crossing

A/C payee only A/C payee only, punjab national bank

 Cheque is crossed specially to more than

one banker Mainly used when the banker, in whose favour the cheque is specially crossed does not have any branch at the place when the cheque is to be paid.

Double crossing