Crossing of Cheques 1223537775987301 9
Crossing of Cheques 1223537775987301 9
Crossing of Cheques 1223537775987301 9
1. Open Cheque.
2. Crossed Cheque.
Kinds of CROSSING
1. General Crossing
2. Special Crossing
What is “CROSSING” a Cheque?
• 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:
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.
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. General crossing
b. Special crossing
c. Double crossing
d. A/c Payee crossing
True or False