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.
Types of Crossing:
Crossing are of the following types:
(1) General crossing;
(2) Special crossing;
(3) However, there is yet another type of crossing which is recognized by usage and custom, called restrictive crossing:
(4) 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.
2. 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.
3. 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.
4. 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 objects 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 encashed 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 [Fisher v. Roberst]
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.