Crossing of Cheques: A cheque may be classified
(a) an open cheque which can be presented for payment by the holder at the counter of the drawee‘s bank.
(b) a crossed cheque which can be paid only through a collecting banker.
Crossing defined : A cheque is said to be crossed when two transverse parallel lines with or without any words are drawn across its face. A crossing is a direction to the paying banker to pay the money generally to a banker or a particular bankers as the case may be, and not to the holder at the counter. Crossing may be written, stamped, printed or perforated.
How does the payment modality change with the crossing of a cheque?
Crossing affords security and protection to the true owner, since payment of such a cheque has to be made
through a banker. It can, therefore, be easily detected to whose use the money has been received. Cheques are crossed in order to avoid losses arising from open cheques falling into the hands of wrong persons.
Crossing of a cheque does not affect its negotiability. Crossed cheques are negotiable by delivery in case they are payable to bearer and by endorsement and delivery where they are payable to order. Holder of a crossed cheque, who has no account in any bank, can obtain payment by endorsing it in favour of some person who has got an account in a bank.
Crossed Cheque :
When two parallel lines are drawn across the face of a cheque, it is called crossed cheque. A crossed cheque
can not be paid at the counter. It can be paid only through an account.
Kinds of Crossing.
01. General Crossing
02. Special Crossing
General Crossing :
When a cheque bears two parallel lines across its face, it is called a general crossing. A cheque bearing
a general crossing can be paid only through an account. General crossing is usually put either at the top left corner or in the middle of the cheque.
Special Crossing :
When the name of the particular bank is written across the face of a cheque, it is called a special crossing.
As per Section-124 of N.I. Act, a cheque shall be deemed to be crossed specially and to a particular banker “Where a cheque bears across its face an addition of the name of a banker, either with or without the words „not negotiable”.
When a cheque bears a special crossing, it can be paid only to that bank which is mentioned in the crossing.
In case of special crossing, drawing of two parallel lines is not necessary. Simply writing of the name of the bank is sufficient.
Restrictive Crossing :
Besides the above two types of statutory crossing, in recent years the practice of crossing cheques with the
words ‗account payee‘ or ‗account payee only‘ has sprung up. Such a crossing
is termed as ‗restrictive
crossing‘.
Restrictive crossing is only a direction to the collecting banker that the proceeds are to be credited only to the account of payee named in the cheque. In case the collecting banker allows the proceeds to be credited
to some other account, it may be held liable for wrongful conversion of funds. It does not in any way affect the paying banker, who has simply to see that the cheque has been presented to it for payment by any bank
in case of general crossing and by the particular bank (named in crossing) in case of special crossing. It is
under no duty to ascertain that the cheque is in
fact collected
for
the account
of the person named as payee. Specimen of Restrictive Crossing.
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A/C PAYEE ONLY
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A/C PAYEE ONLY
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A/C PAYEE
|
|
IFIC BANK LTD.
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A/C PAYEE
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NOT NEGOTIABLE
|
It is to be noted that
the basic ingredient of crossing, „the two transverse parallel lines‟ across the face of
the cheque, must be present in order to constitute any
cheque as a crossed cheque. The cheque will not be taken as
a crossed cheque if
this has not been done.