Page 104 - DMGT407Corporate and Business Laws

Unit 4: Law of Negotiable Instruments

4.8 Crossing of Cheques Notes

Crossing is a unique feature associated with a cheque affecting to a certain extent the obligation
of the paying banker and also its negotiable character. It is a peculiar method of modifying the
instrument to the banker for payment of the cheque. Crossing on cheque is a direction to the
paying banker by the drawer that payment should not be made across the counter. The payment
on a crossed cheque can be collected only through a banker. Section 123 defines crossing as,
“Where a cheque bears across its face an addition of the words ‘and company’ or any abbreviation
thereof, between two parallel transverse lines, or of two parallel transverse lines simply, either
with or without the words, ‘not negotiable’, that addition shall be deemed a crossing, and the
cheque shall be deemed to be crossed generally.” The crossing of a cheque is effected by drawing
two parallel transverse lines with or without the words ‘and company’ or any abbreviation
thereof. A cheque having the cross mark such as ‘X’ is not generally regarded as a crossed
cheque. A cheque that is not crossed is a called an open cheque.
4.8.1 Significance of Crossing

As payment cannot be claimed across the counter on a crossed cheque, crossing of cheques
serves as a measure of safety against theft or loss of cheques in transit. By crossing a cheque, a
person, who is not entitled to receive its payment, is prevented from getting the cheque encashed
at the counter of the paying banker.

4.8.2 Types of Crossing

Crossing may be either (1) General or (2) Special. The term general crossing implies the addition
of two parallel transverse lines.
Figure 4.1: General Crossing

Special Crossing’ implies the specification of the name of the banker on the face of the cheque.
Section 124 in this regard reads: “Where a cheque bears across its face, an addition of the name
of banker, either with or without the words ‘not negotiable’, that addition shall be deemed a
crossing, and the cheque shall be deemed to be crossed specially, and to be paid to that banker”.
The drawing of two parallel lines is not necessary in case of a specially crossed cheque. The
object of special crossing is to direct the drawee banker to pay the cheque only if it is presented
through the particular bank mentioned therein. Thus, it makes the cheques more safer.

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