A cheque could be an instrument. It will either be open or crossed. An open cheque is that of the bearer cheque. It’s collectible over the counter on a presentation by the receiver to the paying banker. Whereas a crossed cheque isn't collectible over the counter however shall be collected solely through a banker, the quantity collectible for the crossed cheque is transferred to the checking account of the receiver. Varieties of cheque crossing are General Crossing, Special Crossing, and Restrictive Crossing. Allow us to study cheque crossing in additional detail. A crossed cheque could be a cheque that has been marked specifying an instruction on the method it's to be saved.
A standard instruction is for the cheque to be deposited into an account with a bank and to not be like a shot paid by the holder over the bank counter. The format and verbiage vary between countries, however, usually, 2 parallel lines could also be placed either vertically across the cheque or on the highest corner of the cheque. By victimization of crossed cheques, cheque writers will effectively shield the instrument from being taken or paid by unauthorized persons. A crossed cheque could be a cheque that's collectible solely through an assembling banker and indirectly at the counter of the bank. 2 parallel crosswise lines, with or with none word, are usually drawn on the highest left-hand corner of the cheque.
The crossing of the cheque is an instruction to the paying banker to pay the amount to a specific person. The crossing of the cheque secures the payment by the banker.
It conjointly traces the person, therefore, receiving the quantity of cheque. The addition of the words ‘Not negotiable’ or ‘Account receiver only’ is critical to restrain the negotiability of the cheque.
General Crossing – cheque bears across its face an addition of 2 parallel crosswise lines.
Special Crossing – It bears the crossing across its face in which the banker’s name is included
Restrictive Crossing – It directs the assembling banker that he has to credit the number of cheques solely to the account of the receiver.
Non-Negotiable Crossing – it's once the words ‘Not Negotiable’ are written between the 2 parallel crosswise lines.
In general crossing, the cheque bears across its face which includes the addition of 2 parallel crossing lines with little spacing between them, within the case of general crossing on the cheque, the paying banker pays cash to any banker. For the aim of general crossing 2 crosswise parallel lines at the corner of the cheque are necessary.
Thus, during this case, the holder of the cheque or the receiver can receive the payment solely through a checking account and not over the counter.
In special crossing, the cheque bears across its face an addition of the banker’s name, with or whiles, not the words ‘not negotiable’.
In this case, the paying banker pays the quantity of cheque solely to the banker whose name seems within the crossing or to his assembling agent. The paying banker can honor the cheque only if it's ordered through the bank which is mentioned within the crossing. However, in special crossing 2 parallel crosswise lines don't seem to be essential however the name of the banker is most significant.
This type of crossing restricts the negotiability of the cheque. It directs the assembling banker to credit the amount of money in a cheque to the account of the receiver. Where the assembling banker credits the return of a cheque bearing such crossing to the other account, he shall be guilty of negligence. Also, he won't be eligible for the protection to the assembling banker below section 131 of the Act. However, such crossings can don't have any impact on the paying banker. This is often therefore as a result of it's not his duty to see that the cheque is collected for the account of the receiver.
It is once the words ‘Not Negotiable’ are written between the 2 parallel crosswise lines across the face of the cheque within the case of general crossing or the case of special crossing beside the name of a banker.
The Non-Negotiable Crossing doesn't mean that the cheque is non-transferable. As per the Non-Negotiable Act, 1881 section 130
A cheque holder which has crossed any single leaf of cheque either generally or in a special case. In either case, the words “non-negotiable”.
Thus, he becomes the holder in due course and acquires an indisputable title thereto. Also, once the instrument passes through a holder in due course, all the next holders conjointly receive an honest title. But, no Negotiable Crossing takes away this vital feature. During this case, the transferee doesn't get the rights of the holder in due course, as long as the title of the transferor is nice, the title of the transferee is additionally smart. Hence, just in case of any trace within the title of any one of the endorsers, the title of all the next transferees conjointly becomes tainted.
1. Who could cross the cheque?
The Drawer: The Drawer could Cross the Cheque usually or especially.
The Holder: wherever the Cheque is uncrossed, the holder could cross it usually or especially. Wherever it's crossed usually, he could cross it specially. Wherever it's crossed usually or especially he could add the words “Not Negotiable".
2. Why are cheques crossed?
Adding a crossing to a cheque will increase its security in this as it can't be paid at a bank counter however should be paid into an account in just a similar name as that seems on the 'payee' line of the cheque (i.e. the one who has received the cheque, lawfully the “payee” and “holder” of the cheque).