CROSSING OF CHEQUES

Cheques can be of two types:-

1. Open Cheque. 2. Crossed Cheque.

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 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.

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

Kinds of CROSSING
1. General Crossing 2. Special Crossing 3. Restrictive Crossing

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.

Essentials of General Crossing

1. Two lines are of paramount importance in 2. 3. 4.
crossing. The lines must be drawn parallel and transverse. The words not negotiable may be added to a crossing. The words and Company may be written in between the lines.

Forms of General Crossing

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.

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. The two parallel transverse lines and the words not negotiable be added 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.

ICICI Bank ltd

ICICI Bank ltd

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

Restrictive Crossing.

A/c Payee

A/c Payee Not Negotiable

Differences Between Bill of Exchange & Cheque.

Cheque BE

1)Drawned on 2) Payment date & liability of drawer

Always drawn on banker. on demand & presented at reasonable time, failing which drawer not discharged.

On a drawee bank or any party. On demand or tenor (must present for acceptance), else drawer is discharged. Acceptor primarily liable to holder.

3)Acceptance Need no acceptance.

4)Presentati on for payment

Within reasonable time; Liable for 6 months

Within reasonable time for sight & on maturity date for tenor.
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Differences Between Bill of Exchange & Cheque continue..

Cheque 5) Endorsement No need to endorse. BE Payee must endorse.

Crossing

Yes.

No.

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Parties to Negotiable Instruments.

Parties to a Promissory Note. 1) Maker. 2) Payee. 3) Holder. 4) Indorser. 5) Indorsee.

Rs 1000

November 24 2010

Two months after date, I promise to pay Ram the sum of one thousand rupees, for value received. To, Ram Singh BB lane Srinagar 190012. Stamp Sd/-Sita

Parties to a Bill of Exchange. 1) Drawer. 2) Drawee. 3) Acceptor. 4) Payee. 5) Holder. 6) Indorser. 7) Indorsee. 8) Drawee in case of need. 9) Acceptor for honour.

Rs 50,000
2007

K. Lumpur 30TH March

90 days after sight pay Shahril or order the sum of fifty thousand rupees, for the value received.
To: Saad. Abc lane. Srinagar 190012.

Stamp

In case of need with Arshid.

Accepted Saad

Sd/-Sita

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Parties to a Cheque. 1) Maker. 2) Drawee. 3) Payee. 4) Holder. 5) Indorser. 6) Indorsee.

By; Qurrat Anees Lecturer BBA S M Iqbal Business School