Crossing of Cheques

A crossed cheque is a cheque that has been marked to specify an instruction about the way it is to be redeemed. A common instruction is to specify that it may only be deposited directly into an account with a bank and cannot be immediately cashed by a bank over the counter.

The format and wording varies between countries, but generally two parallel lines and/or the words ‘Account Payee’ or similar may be placed either vertically across the cheque or in the top left hand corner. By using crossed cheques, cheque writers can effectively protect the cheques they write from being stolen and cashed.

From the above discussion, it should be clear that a cheque can be made safe by crossing it. To cross a cheque, two transverse parallel lines are drawn on the left hand corner of the cheque. It is also usual to write the words “& Co”, in between these two lines.

However, it is not necessary to write these words. A crossing is a direction to the paying banker not to pay the money to the holder at the counter.

Crossing of cheques

Cheques can be of two types:-

  1. Open or an uncrossed cheque
  2. Crossed cheque

Open cheque

An open cheque is a cheque which is not crossed on the left corner and payable at the counter of the drawee bank on presentation of the cheque.

Crossed cheque

A crossed cheque is a cheque which is payable only through a collecting banker and not directly at the counter of the bank. Crossing ensures security to the holder of the cheque as only the collecting banker credits the proceeds to the account of the payee of the cheque.

When two parallel transverse lines, with or without any words, are drawn generally, on the left hand top corner of the cheque. A crossed cheque does not affect the negotiability of the instrument.

Types of Crossing:

Crossings are of the following types:

  • General crossing;
  • Special crossing;
  • However, there is yet another type of crossing which is recognized by usage and custom, called restrictive crossing:
  • Not negotiable crossing.
  1. General Crossing:

In a general crossing, simply two parallel transverse lines, with or without the words ‘not negotiable’ in between, may be drawn. Such a cheque is crossed generally.

The effect of general crossing is that the payment of the cheque will not be made at the counter; it can be collected only through a banker.

  1. Special Crossing:

In a special crossing, the name of a banker with or without the words ‘not negotiable’ is written on the cheque. Such a cheque is crossed specially to that banker.

It should be noted that two transverse parallel lines are necessary for a general crossing, whereas for a special crossing, no such lines are necessary.

The effect to special crossing is that the paying banker will be the amount of the cheque only through the bank named in the cheque.

  1. Restrictive crossing:

Besides the two statutory types of crossing discussed above, there is one more type of crossing namely; restrictive crossing. This type of crossing has been recognised by usage and custom of the trade.

In a restrictive crossing the words ‘Account Payee’ or Account Payee Only’ are added to the general or special crossing.

The effect of restrictive crossing is that the payment of the cheque will be made by the bank to the collecting banker only for the account payee named. If the collecting banker collects the amount for any other person, he will be liable for wrongful conversion of funds.

It should be noted that the duty of the paying banker is only to ensure that the payment is made through the named bank, if there is any. He is not liable, in case the collecting banker collects the cheque for any other person than the account payee. In that case collecting banker will be liable to the true owner.

  1. Not negotiable Crossing (Sec. 130):

A person taking is cheque crossed generally or specially, bearing in either case the words ‘not negotiable’ shall not be able to give a better title to the holder than that of the transferor.

The effect of a not negotiable crossing is that the cheque can be transferred but the transferee will not acquire a better title to the cheque. Thus a cheque is deprived of its essential feature of negotiability.

The object of “not negotiable” crossing is to protect the drawer against loss or theft in the course of transit.


A cheque was drawn in favour of a firm B & Co. The cheque was crossed ‘not negotiable’; one of the partners, A in fraud of his Co-partner B, endorsed the cheque to P who in cashed it. Held that B, who under the terms of the partnership agreement was entitled to the cheque could recover the amount from P as A could not transfer better title than he himself had.

Who may cross a cheque? As a rule, it is the drawer who can cross a cheque. However, Sec. 125 provides that even a holder can cross the cheque. It further provides that a banker can cross the cheque specially for collecting to another banker as his agent for collection.

Discharge from liability

The maker, acceptor or endorser respectively of a negotiable instrument is discharged from liability thereon-

  • By cancellation-to a holder thereof who cancels such acceptor’s or endorser’s name with intent to discharge him, and to all parties claiming under such holder.
  • By release- to a holder thereof who otherwise discharges such maker, acceptor or endorser, and to all parties deriving title under such holder after notice of such discharge;
  • By payment-to all parties thereto, if the instrument is payable to bearer, or has been endorsed in blank, and such maker, acceptor or endorser makes payment in due course of the amount due thereon.

The term ‘discharge’ in relation to negotiable instruments is used in two senses: 

(1) Discharge of an instrument, and  (2) Discharge of one or more parties.

  1. Discharge of an instrument:

An instrument is discharged when all the rights under it are extinguished so that the instrument ceases to be negotiable.

For example, when the party primarily liable on the instrument, i.e. the maker or the acceptor is discharged, the instrument is also discharged. After an instrument is discharged all the parties are also discharged from their liabilities even holder in due course cannot claim the amount of the instrument from any party to the instrument.

  1. Discharge of one or more parties:

When one or more parties are discharged, the instrument continues to be liable and the undercharged parties remain liable on the instrument.

 For example when the name of the indorser is cancelled, the drawer and acceptor continue to be liable.

It may be pointed out that the term ‘discharge of instrument’ is wider than the term ‘discharge of party (ies).’

When an instrument is discharged, all the parties to the instrument are also discharged automatically. However, discharge of one or more parties does not necessarily discharge the instrument.

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By Hassham

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