Meaning of Crossing
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 banker as the case may be, and not to the holder at the counter. It may be written, stamped, printed, or perforated.
Objective of Crossing
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 payable to order. Holder of a crossed cheques, who has no account in any bank, can obtain payment by endorsing it in favor of some person who has got an account in a bank.
Types/Modes of Crossing
1. General Crossing [Section 123]: Where a cheque bears across its face two parallel transverse lines without any words or with words ‘and company’ or /and ‘not negotiable’ written in between these two parallel lines, it is called the general cross.
2. Special Cross [Section 124]: A special crossing is used in order to further restrict the negotiability of the cheque. If two parallel lines are drawn across the cheque with the name of the bank, the lines are called special/restrictive crossing.
- Two transverse lines are not necessary for a special cross
- The name of the banker must be necessarily specified across the face of the cheque
- It must appear on the left-hand side of the cheque
3. Restrictive Crossing: Besides the above two types of statutory cross, in recent years the practice of cross cheques with the words“account payee” or “account payee only” has sprung up. Such a cross is termed as ‘restrictive crossing”.
A restrictive cross is only a direction to the collecting banker that the proceeds are to be credited only to the account of the payee named in the cheque. In case the collecting banker allows the proceeds to be credited to some other account, it may be liable for the wrongful conversion of funds.
Who may Cross a Cheque [Sec 126]
1. Drawer: He may cross the cheque generally or especially.
2. Holder: Where the cheque is uncrossed, the holder may cross it generally or specially. Where it is crossed generally, he may cross it especially. Where it is crossed generally or specially, he may add the words ‘Not Negotiable’.
3. Banker: Where a cheque is crossed specially, the banker to whom it is crossed may again cross it especially to another banker for collection.