This document defines and explains various types of cheques and cheque crossing procedures. It begins by defining bearer cheques, ordered cheques, uncrossed cheques, crossed cheques, post-dated cheques and stale cheques. It then explains general and special cheque crossing, including what constitutes each type of crossing and their effects. The document also covers endorsement, material alterations to cheques, and definitions of key cheque terms like drawer, drawee and payee.

1. CROSSING OF
CHEQUES
BY
ABDUL QADIR
BHAMANI

2. 1. Bearer Cheque
2. Ordered Cheque
3. Uncrossed/Open Cheque
4. Crossed Cheque
5. Anti-Dated Cheque
6. Post Dated Cheque
7. Stale Cheque

3.  Dividend Warrant
 Interest Warrant
 Bank Draft
 Travellers’ Cheque

5. 1) Drawer: Maker or writer of a bill of exchange (cheque)
2) Drawee: the party that has been directed by the depositor to pay a certain sum of
money to the person
3)Payee: a person to whom money is paid or is to be
paid,

6. When the words "or bearer" appearing on the
face of the cheque are not cancelled, the
cheque is called a bearer cheque. The bearer
cheque is payable to the person specified
therein or to any other else who presents it to
the bank for payment. However, such cheques
are risky, this is because if such cheques are
lost, the finder of the cheque can collect
payment from the bank.

7. When the word "bearer" appearing on the face of a cheque
is cancelled and when in its place the word "or order" is
written on the face of the cheque, the cheque is called an
order cheque. Such a cheque is payable to the person
specified therein as the payee, or to any one else to
whom it is endorsed (transferred).
 Uncrossed or Open Cheque
When a cheque is not crossed, it is known as an "Open
Cheque" or an "Uncrossed Cheque". The payment of
such a cheque can be obtained at the counter of the bank.
An open cheque may be a bearer cheque or an order one

9. If a cheque bears a date earlier than the date on
which it is presented to the bank, it is called as
"anti-dated cheque". Such a cheque is valid upto
six months from the date of the cheque.
Post-Dated Cheque
If a cheque bears a date which is yet to come
(future date) then it is known as post-dated
cheque. A post dated cheque cannot be honoured
earlier than the date on the cheque.

10. If a cheque is presented for payment after six
months from the date of the cheque it is called
stale cheque. A stale cheque is not honoured by
the bank.
Dividend Warrant
A dividend warrant is a cheque drawn by a
company upon its banker in payment of
dividends to its shareholders. They are quasi-
negotiable instruments.

12. Types of crossing.
1) General crossing
2) Special crossing

13.  “Crossing” a cheque is a way of making even more
certain that the money is paid to the correct person
and not to someone else. By “crossing” the cheque in
the ways that follow, you give the bank extra
instructions about how it is to be paid. This is called
limiting its negotiability.
 If you draw a line to cross out the words “or bearer”,
then you are telling the bank that the money cannot
just be paid out to anyone who happens to present the
cheque. It must be paid out to the person named on
the “Pay” line. It is possible to get around this by
“endorsing” the cheque. This means that the person to
whom the cheque is made out signs the back thus
giving their permission for it to be presented for
payment.

14.  Sec 123 of the Negotiable Instruments Act 1881 defines
general crossing as follows:
“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 shall be deemed to be a ‘crossing,
and the cheque shall be deemed to be crossed generally.”
 If you cross out “to bearer” and draw two parallel lines
across the front of the cheque (usually the top left
corner is sufficient) then you are telling the bank that
the money has to be paid into an account and cannot
be cashed (exchanged for cash).This means that the
person who eventually receives the money can be
traced because there will be a record of the deposit.

16. 1. Two lines are of paramount importance in crossing.
2. The lines must be drawn parallel and transverse. It
means that they should be arranged in a crosswise
direction.They should not be straight lines.
3. The lines are generally drawn on the left hand side .
4. The words ‘not negotiable’ may be added to a
crossing.
5. The words ‘and Company’ may be written in between
the lines.

18.  The effect of general crossing is that it gives a direction to
the paying banker.
 The direction is that the paying banker should not pay the
cheque at the counter.
 If a crossed cheque is paid at the counter in contravention
of the crossing:
 He has no right to debit his customers account, since , it
will constitute a breach of his customer’s mandate,
 He will be liable to the drawer for any loss, which he may
suffer,
 He will be liable to the true owner of the cheque who
may be the third party.
 The main intention of crossing a cheque is to give
protection to it.

19.  A cheque is deemed to be crossed especially
when it bears across its face the name of the
banker either with or without the words ‘Not
Negotiable’.
 In case of special crossing the payment can
only be made to the bank named therein the
cheque.
19

20. Sec 124 of the Negotiable Instruments Act of 1881
defines
“where a cheque bears across its face, an addition of
the name of a banker, with or without the words
‘Not Negotiable’, that addition shall be deemed a
crossing, and the cheque shall be deemed to be
crossed specially, and to be crossed to that banker”

21. 1. Two parallel transverse lines are not at all essential
for a special crossing.
2. The name of a banker must be necessarily
specified across the face of the cheque.The name
of the banker itself constitutes special crossing.
3. It must appear on the left hand side, preferably on
the corner.
4. The two parallel transverse lines and the words
‘not negotiable be added to a special crossing.

22. GENERAL CROSSING
 In this type of crossing the
two parallel transverse lines
are there.
 Money can be encashed by
any banker.
 Less safe.
 General crossing can be
converted into special
crossing.
SPECIAL CROSSING
 In this type of crossing
there is no necessity of
drawing two parallel
transverse lines.
 Money can be encashed
only by the bank shown
under crossing.
 More safe.
 It can’t be converted.

23.  NOT NEGOTIABLE
 Transferee can’tget better title than transferor – Normal
principle is that a person cannot transfer better title to
property that he himself has.
 For example, if a person steals a car and sells the same,
the buyer does not get any legal title to the car as the
transferor himself had no title to the car.The real owner of
car can anytime obtain possession from the buyer, even if
the buyer had purchased the car in good faith and even if
he had no idea that the seller had no title to the car.

24.  Any alteration made in the cheque is Material
Alteration.
 These cheque are not honored by Banks, for
making This as a valid cheque then the drawer
has to sign at every correction made.
 Alterations' Like:
 Date,
 Amount,
 Payee Name,
 Converting order into bearer cheque, etc.

26. An alteration can be made by drawer. But an
alteration on a material part of a negotiable
instrument which is not signed makes it
invalid.
A banker however, is protected under Sec.84 if
he pays a cheque with alterations and the
alteration is not apparent.

27.  Signature included on the front or back of a check acknowledging that both
parties have agreed to exchange the specified amount on the document.
 The signature or account information included on the back of a check
acknowledges that the intended recipient received the document and deposited
it.
 To cash a cheque, the issuer and the recipient must endorse the document.
 Negotiation of an instrument is the process by which the ownership is
transferred from 1 person to another person.
 There are 2 parties in Endorsement
 Endorser
 Endorsee
 Endorser
 The Person who signs the instrument with an instrument of transferring his
ownership.
 Endorsee
 The person in who’s favor the instrument is transferred.

28. THANKYOU