As a common man, we often prepare cheque and mark it as account payee. Sometime we just cross it with parallel lines. Many of us don’t know the about the various types of crossing of cheque as per negotiable instrument Act, 1881. They are General crossing, Special Crossing, Not negotiable crossing and account payee crossing. Cheque is negotiable instrument, the property (ownership ) in which is acquired by anyone who takes it bonafide and for value, notwithstanding any defect in the title of any prior party. Download here all information.
Crossing a cheque means direction given by the drawer (maker) of the cheque to the drawee bank, not to pay the cheque at the counter of the bank, but to pay it to a person who presents it through a banker. The purpose of crossing is to make possible to trace the person to whom the payment has been made. Thus, it make the cheque safe.
So let us discuss the various crossing tools to safeguard a cheque in India.
In this type of crossing the cheque must contain two parallel transverse lines. They could be put any where on the cheque. Generally we put it on top left of the cheque. The effect of this crossing is that the cheque must be paid only to the banker.
The cheque must contain the name of the banker. It may be made only once. The effect of this crossing is that the cheque must be paid only to the banker to whom it is crossed. Please note that special crossing can not be converted into general crossing.
In this type of crossing, the cheque must contain the words ‘not negotiable’. The cheque must be crossed generally or specially. The effect of this crossing is that the cheque nevertheless remains negotiable (transferrable) and the title of the transferre shall not be better than title of transferor.
This is also called restrictive crossing. The cheque must contain the words ‘account payee’ or ‘account payee only’. The cheque must be crossed generally or specially. The effect of this type of crossing is that the cheque does not remain negotiable anymore.
So safeguard your cheque adequately, next time when you make it and use the types of crossing of cheque.