CROSSED CHEQUES (SECTIONS 123-130) – NEGOTIABLE INSTRUMENTS ACT, 1881

 

Crossed Cheques (Section 123)

 

Where a cheque bears across its face an addition of the words 'and company' (or any abbreviation thereof) between two parallel transverse lines, or of two parallel transverse lines simply (either with or without the words "not negotiable"), that addition is deemed to be a "crossing," and the cheque is deemed to be crossed 'generally (Section 123)

 

Payment of cheque cross generally (Section 126)

 

When a cheque is crossed generally, the banker on whom it is drawn cannot pay it otherwise than to a banker.

 

Cheque Crossed Specially (Section 124)

 

Where a cheque bears across the face an addition of the name of a banker (either with or without the words "not negotiable"), that addition is deemed to be a crossing, and the cheque is deemed to be crossed specially, and to be crossed to that banker.

 

Payment of Cheque Crossed Specially (Section 126)

 

Where a cheque is crossed specially, the banker on whom it is drawn cannot pay it otherwise than to the banker to whom it is crossed or his agent for collection.

 

Payment of Cheque Crossed Specially more than One (Section 127)

 

Where a cheque is crossed specially to more than one banker (except when crossed to an agent for the purpose of collection), the banker on whom it is drawn must refuse payment thereof.

 

Payment in due course of Crossed Cheque (Section 128)

 

Where the banker on whom a crossed cheque is drawn has paid the same in due course, the banker paying the cheque and (in case such cheque has come to the hands of the payee) the drawer thereof, are respectively entitled to the same rights, and are placed in the same position in all respects, as they would respectively be entitled to, and placed in, if the amount of the cheque had been paid to, and received by the true owner thereof.

 

Payment of crossed cheques out of due course (Section 129)

 

Any banker paying a cheque crossed generally otherwise than to a banker, or a cheque crossed specially otherwise than to the banker to whom the same is crossed, (or his agent for collection being a banker) becomes liable to the true owner of the cheque for any loss he may sustain owing to the cheque having been so paid.

 

Cheque bearing 'not negotiable' (Section 130)

 

A person taking a cheque crossed generally or specially, bearing, in either case, the words "not negotiable", does not have, and is not capable of giving, a better title to the cheque than that which the person from whom he took it had.

 

FAQ (Frequently Asked Questions)

 

What is a crossed cheque?

A crossed cheque is a cheque with two parallel lines (with or without words like “& Co.” or “Not Negotiable”) across its face, instructing the paying banker to pay only through a bank account and not in cash over the counter.​

 

What is general crossing (Section 123)?

General crossing means drawing two parallel lines across the cheque (with or without “& Co.” or “Not Negotiable”). Such a cheque can be paid only to a banker and not over the counter.​

 

What is special crossing (Section 124)?

A special crossing includes the name of a specific bank written between the parallel lines. The cheque must be paid only to that specific bank or its collection agent.​

 

Who can cross a cheque (Section 125)?

A cheque may be crossed generally or specially by:

• The drawer (the person writing the cheque)
• The holder (the person in possession of the cheque)
• Even a banker can cross an uncrossed cheque to itself for collection.​

 

What is double crossing (Section 127)?

Double crossing occurs when a cheque already crossed specially to one banker is further crossed to another banker, usually as an agent for collection. This is allowed only where the second banker is acting as agent for the first.​

 

What is a “not negotiable” crossing (Section 130)?

When the words “not negotiable” are added to a crossed cheque, the transferee cannot get a better title than the transferor so if someone obtains the cheque unlawfully, further transfer does not clean the defect.​

 

What are the duties of a paying banker (Sections 126–129)?

• Section 126: The banker must pay a generally crossed cheque only to another banker, and a specially crossed cheque only to the named bank or its agent.
• Section 129: If a banker makes payment in violation of the crossing, they may be liable for any resulting loss.​

 

Can a crossed cheque be paid in cash at the counter?

No. A crossed cheque cannot be cashed directly over the counter; it must be credited to a bank account.​

 

What is the effect of crossing on transferability?

Crossing does not affect the transferability (negotiability) of the cheque unless “not negotiable” is written. However, it restricts payment to bank channels only