Crossing of a Cheque
You must be aware that cheques can be either open or crossed. Open cheques are those which can be paid over the counter of the bank. When two parallel lines are drawn on the left-hand top corner of the cheque, it is called crossing, and such a cheque is called a crossed cheque. A crossed cheque cannot be encashed directly at the counter. It is to be deposited in an account with a bank and the payment is made to the banker. The Act recognises two types of crossing of cheques and prescribes the responsibilities of parties dealing with crossed cheques (sections 123 to 133).
Types of Crossing
The way a cheque is crossed specified the banker on how the funds are to be handled, to protect it from fraud and forgery. Primarily, it ensures that the funds must be transferred to the bank account only and not to encash it right away upon the receipt of the cheque. There are several types of crossing
1. General Crossing: When across the face of a cheque two transverse parallel lines are drawn at the top left corner, along with the words & Co., between the two lines, with or without using the words not negotiable. When a cheque is crossed in this way, it is called a general crossing.
2. Restrictive Crossing: When in between the two transverse parallel lines, the words ‘A/c payee’ is written across the face of the cheque, then such a crossing is called restrictive crossing or account payee crossing. In this case, the cheque can be credited to the account of the stated person only, making it a non-negotiable instrument.
3. Special Crossing: A cheque in which the name of the banker is written, across the face of the cheque in between the two transverse parallel lines, with or without using the word ‘not negotiable’. This type of crossing is called a special crossing. In a special crossing, the paying banker will pay the sum only to the banker whose name is stated in the cheque or to his agent. Hence, the cheque will be honoured only when the bank mentioned in the crossing orders the same.
4. Not Negotiable Crossing: When the words not negotiable is mentioned in between the two transverse parallel lines, indicating that the cheque can be transferred but the transferee will not be able to have a better title to the cheque.
5. Double Crossing: Double crossing is when a bank to whom the cheque crossed specially, further submits the same to another bank, for the purpose of collection as its agent, in this situation the second crossing should indicate that it is serving as an agent of the prior banker, to whom the cheque was specially crossed.
The crossing of a cheque is done to ensure the safety of payment. It is a well-known mechanism used to protect the parties to the cheque, by making sure that the payment is made to the right payee. Hence, it reduces fraud and wrong payments, as well as it protects the instrument from getting stolen or encashed by any unscrupulous individual.
Post-dated Cheque
Normally cheque is drawn and delivered to the payee on the date on which it is drawn. Sometimes, a future date is given thereby implying that the drawer wants the cheque to be cashed on or after the date which is stated in the cheque.
A cheque is not invalid by the reason that it is ante-dated or post-dated or is dated on a public holiday. A post-dated cheque may be treated as a bill payable at a future time, though it can be negotiated beforehand and becomes on the date it bears a bill payable on demand and hence a cheque.
Where a post-dated cheque is accepted conditionally and it is honoured, the payment for the purposes of the law of limitations can only be the date which the cheque bears and cannot be the date on which it was actually handed over. Negotiability is also not affected by the post-dating of a cheque.
