Cheque are usually crossed as a measure of safety. The act of drawing two parallel cross lines on the face of the cheque is called crossing of cheque. The crossing distinguishes cheques from other bills of exchange. The object of general crossing is to direct the drawee banker to pay the amount of cheque only to a banker, to prevent the payment of the cheque being made to wrong person.
Types of Crossing Cheque
1) Generally crossing (Section 123)
A Cheque is said to be crossed generally when it bears across its face (usually on the left hand top corner) two parallel transverse lines without any words or with words such as and company’s or its abbreviation and co. or/and ‘not negotiable’ written in between these two parallel lines.
Where a cheque is crossed generally, the drawee bank shall not pay it otherwise than to a banker (section 126). Therefore, the holder of such a cheque will have to get his cheque collected through some bank. Generally, it is the bank of the holder.
2) Special Crossing
Where a cheque bears across its face an addition of the name of a banker, either with or without the words ‘not negotiable’ that addition shall be deemed as crossing and the cheque shall be deemed to be crossed specifically and to be crossed to that banker. Transverse parallel lines are not necessary in case of special crossing. The payment for specially crossed cheque can be obtained only through the particular banker whose name appears in the crossing.
Thus, in the case of special crossing, the paying banker is to honour the cheque only. When it is presented through the bank mentioned in the crossing or an agent of such bank. The banker named in the crossing acts as a collecting agent of the payee. A special crossing makes the more safe than a general crossing because a thief now has to search an account holder of that particular bank only whose name appears in crossing. This is very difficult.
3) Crossing after issue (section 125)
A Cheque may be crossed by the following persons under the following circumstances:
1) By the drawer: The drawer may cross the cheque generally or specially originally at the time of its issue.
2) By the holder:
# Where the cheque is uncrossed the holder may cross it generally or specially.
# Where a cheque is crossed generally, he may cross it specially.
# Where a cheque is crossed generally or specially he may add the words ‘not negotiable’ in the crossing.
3) By the banker: Where a cheque is crossed specially to the banker to whom it is crossed, he may again cross it specially to the banker as his agent for collection.