Crossing of cheque, Types of crossing
Crossing of cheque, Types of crossing: A check is a kind of negotiable currency. It may be crossed or left open. The bearer cheque is an open cheque. The payee must submit the check to the paying banker in order for it to be paid over the counter. A crossed check, on the other hand, is not payable over the counter and must be collected via a banker. The money due on the crossed check is transferred to the payee’s bank account. General crossing, Special crossing, and Restrictive crossing are the three types of cheque crossing. Let’s take a closer look at cheque crossing.
Cheque Crossing
A crossover instructs the paying banker to pay the amount of the check to a specific banker rather than handing it over the counter. The payment to a banker is secured by crossing the check.
It also tracks the individual who receives the check amount. The addition of the terms ‘Not negotiable’ or ‘Account Payee only’ is required to limit the cheque’s negotiability. The passing of a check assures the holder’s safety and security.
We may, however, arrange for a crossed bearer cheque to be delivered and a crossed order check to be delivered through endorsement and delivery.
Cheque Crossing Types (Sections 123-131 A):
General Crossing: The face of the cheque has two parallel transverse lines added to it.
Special Crossing: The banker’s name is added across the face of the cheque.
Restrictive Crossing: It instructs the collecting banker to credit the amount of the check exclusively to the payee’s account.
When the words ‘Not Negotiable’ are put between the two parallel transverse lines, it is known as a Non-Negotiable Crossing.
Crossing of cheque, Types of crossing
Crossing Cheques in General
In general crossing, the check has two parallel transverse lines added across its face and/or the words ‘and Co.’ or ‘not negotiable’ between them.
The paying banker will pay money to any banker if the check has a general crossing. Two transverse parallel lines at the corner of the cheque are required for general crossing.
As a result, the check holder or payee will only receive payment via a bank account and not over the counter in this scenario. The words ‘and Co.’ have no meaning in and of themselves.
However, the words ‘not negotiable’ are crucial since they limit the negotiability and, as a result, in the event of a transfer, the transferee will not grant a title that is better than that of the transferor.
Crossing Special Cheques
The banker’s name is added across the face of the check in special crossing, with or without the phrase ‘not negotiable.’
The paying banker will only pay the amount of the check to the banker whose name appears on the crossing or to his collection agent in this situation.
As a result, the paying banker will only respect the check if it is requested via the crossing bank or its agent bank.
Crossing two parallel transverse lines is not necessary in this case, but the banker’s name is essential.
Account Payee’s Crossing or Restricted Cheque Crossing
The check’s negotiability is limited by this sort of crossing. It instructs the collecting banks to credit the cheque’s amount exclusively to the payee’s, the identified party’s, or his agent’s account.
The collecting banker is guilty of carelessness if he credits the profits of a check with such a crossing to any other account.
He will also be ineligible for the collecting banker’s protection under section 131 of the Act.
The paying banker, on the other hand, will be unaffected by such a crossover. This is because it is not his responsibility to ensure that the check is collected for the payee’s account.
Cheque Crossing Isn’t Negotiable
Crossing of cheque, Types of crossing: It’s when, in the case of general crossing, the words ‘Not Negotiable’ are written between the two parallel transverse lines across the face of the cheque, or when, in the case of special crossing, the name of a banker is written between the two parallel transverse lines across the face of the cheque.
The check is not non-transferable because of the Not Negotiable Crossing. A person accepting a check carrying a general or particular crossing with the words ‘not negotiable’ will not have and is not capable of granting a greater title than the person from whom he obtained it, according to section 130 of the Negotiable Instruments Act, 1881.
One of the most significant characteristics of a negotiable instrument is that it grants a good title to a person who receives it in good faith, without negligence, for value, before maturity, and without knowledge of the transferor’s title defect.
As a result, he becomes the owner in due time and has an undisputed claim to it. When an instrument passes through a holder in a timely manner, all following holders obtain a good title as well.
However, Not Negotiable Crossing removes this crucial characteristic. In this scenario, the transferee does not get the holder’s rights in a timely manner. Only if the transferor’s title is excellent is the transferee’s title likewise good. As a result, if the title of any one of the endorsers is contaminated, the title of all future transferees is equally polluted.