We already know ‘What is a cheque? What are the different types of cheque?’. Here we are broadly classifying the types of cheques as open cheques or uncrossed cheques and crossed cheques. Open cheques are those which are paid over the counter of the bank. In other words, they need not be put through a bank account. Which means anyone having open cheque can get the payment from the bank counter. This kind of cheques are liable to great risk in the course of circulation. For an instance: If you lost your cheque in the market then in that case finder of the cheque can present that cheque to get the payment from bank unless drawer intimates the bank and initiates stop payment. With a view to avoiding such risks, and protect the owner of cheque, a system of crossing was introduced.
Crossing cheque means putting two parallel transverse lines across the face of a cheque with or without additional words like “Account Payee Only” or “Not Negotiable”, It is an instruction to the paying banker to pay the amount of cheque through a banker only and not to the person presenting it at the counter of bank. This is a safer way of transferring money then an Uncrossed or open cheque as it prevents fraud and wrong payments. Both bearer and order cheques can be crossed.
Modes of crossing :
There are two modes of crossing namely, general crossing and special crossing.
General Crossing :
Generally, cheques are crossed when
- There are two transverse parallel lines, marked across its face OR
- The cheque bears an abbreviation “& Co. “between the two parallel lines OR
- The cheque bears the words “Not Negotiable” between the two parallel lines OR
- The cheque bears the words “A/c. Payee” between the two parallel lines.
Essentials For General crossing:
- Two transverse parallel lines
- Lines should be drawn on the top left corner of the cheque
A crossed cheque can be made bearer cheque by cancelling the crossing and writing that the crossing is cancelled and affixing the full signature of drawer.
Special Crossing :
A special crossing is used in order to further restrict the negotiability of the cheque. If two parallel lines are drawn across the cheque with the name of the bank, the lines are called special/restrictive crossing.
Essentials OF Special Crossing:
- Two transverse lines are not necessary for a special crossing
- The name of the banker must be necessarily specified across the face of the cheque
- It must appear on the left hand side of the cheque
In addition to the word bank, the words “A/c. Payee Only“, “Not Negotiable” may also be written. The payment of such cheque is not made unless the bank named in crossing is presenting the cheque. The effect of special crossing is that the bank makes payment only to the banker whose name is written in the crossing. Specially crossed cheques are more safe than a generally crossed cheques.