Crossing of Cheques

Crossing is a unique safety feature available only for cheques (a promissory note or an ordinary bill of exchange cannot be crossed). It does not change who is entitled to the money — it changes how the money must be collected, so that a cheque that is lost or stolen is far harder for a wrongdoer to encash.

General Crossing (Section 123). A cheque is generally crossed when two parallel transverse lines are drawn across its face, with or without the words '& Co.' between them. The effect of a general crossing is that the paying bank cannot pay the cheque in cash across the counter — it must pay only through another bank, i.e. the amount must be collected into a bank account. This is the most common and simplest form of crossing.

Special Crossing (Section 124). A cheque is specially crossed when the name of a particular banker is written across its face, with or without the words 'not negotiable'. The effect is stricter than a general crossing: the paying bank may pay the amount only to the specific banker named in the crossing (or to that banker's agent bank for collection) — not to any bank whatsoever.

'Not Negotiable' Crossing (Section 130). The words 'not negotiable' may be added to either a general or a special crossing. This does not stop the cheque from being transferred further — a common misunderstanding — but it does take away one important protection: a person who takes a cheque marked 'not negotiable' cannot get, and cannot pass on, a better title to it than the person from whom they received it had. In other words, if there was a defect in an earlier holder's title, that defect follows the cheque even into the hands of a later, perfectly innocent holder.

'Account Payee' Crossing. Although this exact phrase is not spelt out section-by-section in the Act itself, it is a universally recognised and judicially enforced banking practice layered on top of a crossing. When a cheque is crossed 'Account Payee' (often together with 'A/c Payee only'), it directs the collecting bank to credit the proceeds only to the bank account of the named payee — the cheque cannot be encashed over the counter, and, by strong banking convention, its proceeds should not be collected for any account other than the payee's own. This is the crossing most commonly used in genuine business practice today, precisely because it offers the strongest protection against the money reaching the wrong person.

Protection for the paying/collecting banker (Section 131). A bank that receives payment of a crossed cheque in good faith and without negligence, for a customer, is not made liable merely because the customer turns out to have had a defective title to the cheque. This section protects honest banks that follow proper procedure, while still leaving the true owner free to pursue whoever wrongfully obtained and deposited the cheque.