Crossing means drawing two parallel transverse lines across the face of the cheque with or without the words “and company” in between the lines. It is a direction to the drawee bank not to pay the amount at the counter, but only through a bank. It is made to guard payment against forgery by unscrupulous persons.
Crossing of cheques is of two kinds: (1) General Crossing and (2) Special Crossing.
1. General Crossing
Sec. 123 of the Negotiable Instruments Act defines General 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 to be a crossing and the cheque shall be deemed to be crossed generally”. Two parallel transverse lines across the face of the cheque with or without the words, “& Co”, “Account Payee only”, “Not Negotiable”, constitute general crossing. The cheque which is crossed generally, is payable only to banker.
- “Account Payee” Crossing: When the words “Account Payee”, “Account Payee only” are added to the general or special crossing, it is called Account Payee Crossing. The collecting banker must collect the amount of the cheque for the account of the payee only and none else. Otherwise, it is not a collection in due course and the banker is liable if the title of the person for whom the bank collects, turns out to be defective.
- “Not Negotiable” Crossing: When the words “not negotiable” are added either in general or special crossing, the person taking the cheque cannot have and cannot give a better title than what his transferor has. So, a ‘not negotiable’ cheque is transferable. But the transferee gets no better title than what the transferor has.
2. Special Crossing
Sec. 124 of the Negotiable Instruments Act defines Special Crossing as, “where a cheque bears across its face an addition of the name of a banker, 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 crossed to that banker”. When a cheque is crossed specially, the amount is payable by the drawee only, only to the bank named in the crossing.
Rules of Crossing
- An uncrossed cheque may be crossed generally or specially by the drawer or the holder.
- A cheque crossed generally, may be crossed specially by the holder.
- The holder may add the words “not negotiable”.
- The banker to whom the cheque is crossed specially, may re-cross it, but only to another bank as his agent for collection.
- Where an uncrossed cheque or a cheque crossed generally is sent to a banker for collection, he may cross it specially to himself. But he cannot enjoy Statutory protection against being sued for conversion.