The direction, is the, that paying banker should pay the cheque only to the banker, whose name appears in the crossing or to his agent. This is the safest type of cheque. It has been provided in Sec. If that cheque is offered, the transferee should know the previous endorsers and their good title to that cheque. Thus, both refer to same types of checks.
This is called special crossing. Club, School, College and other Non Trading Organizations: Signed by authorized person. He will not be liable to the subsequent holder if the specified event does not take place to the instrument even before the particular event takes place. Sometimes, name of a specific bank and branch is written between the lines. The crossing therefore constitutes a protection for the drawer, who should always cross cheques which he is intending to send through the post, as a precaution against the cheques falling into wrong hands. The effect of special crossing is that the bank makes payment only to the banker whose name is written in the crossing.
Postdating of cheques holds many risks for the banker. As a common man, we often prepare cheque and mark it as account payee. But the transferee will not get the rights of a holder in due course. An is also paid only into the account of the person whose name is written on the check and thus, no counter payment is done. Here we are broadly classifying the types of cheques as open cheques or uncrossed cheques and crossed cheques. The beneficiary bank can add an additional crossing to allow another bank, who are acting as their agent in collecting payment on cheques, to be paid the cheque on their behalf.
A cheque old than a period of six months can be misused as such it is extra precautions taken by the bankers Type 4. Spelling: The endorser should spell his name exactly in the same way as his name appears on the cheque or the bill as its payee or endorsee. So, one part of the negotiability is the transferability. But he cannot enjoy Statutory protection against being sued for conversion. They could be put any where on the cheque. Otherwise, it is not a collection in due course and the banker is liable if the title of the person for whom the bank collects, turns out to be defective. But, it is a warning to the person, who takes this document, that, he should be very careful in receiving it.
They may accept such requests, only when the customer is ready to indemnify the banker for any loss which he may suffer in such cases. In other words, the effect of such a crossing is that the person who had obtained the cheque cannot acquire a better title than the person from whom he received it had. It is called as Self Cheque i. Inclusion of the name of a banker is essential in special crossing. It means that the proceeds of the cheque are to be credited to the account of the payee only. Hence, no one can be a holder in due course in the case of a not negotiable instrument.
Crossing prevents fraud and wrong payments. The collecting banker can collect the proceeds of the cheque in the account of that person mentioned on the cheque. In addition to general or special crossing, a cheque may contain various remarks written on it, the effect of which is to restrict payment in certain ways. These lines are also referred to as special or restrictive crossing. In other words, if a document is a negotiable one, a bonafide transferee who receives it in good faith and for value paid, can obtain a good title, despite the fact that, the document has prior defects.
It provides an instruction to the paying bank to pay the amount only through a banker. The object of crossing is to secure payment to a banker so that it could be traced to the person receiving the amount of the cheque. In case of such cheques the paying bank shall be discharged from its liability if: i the cheque does not appear to be a crossed one or obliteration of crossing is not apparent at the time of its presentation for payment, and ii the payment has been made in due course as required under section Opening of crossing As crossing is a material part of the cheque, law does not make any provision for the cancellation of a crossing. Sanjay can then re-issue the same cheque to Vijay. As a general rule, a banker is answerable only to his customer and this liability to a third party here is an exception. Crossing on a cheque is a direction to the paying banker by the drawer, not to pay the cheque over the counter but to pay the money generally to a banker incase of general crossing or a particular banker in case of special crossing. The person to whom the instrument is endorsed is called the endorsee.
To avoid this danger, special crossing was introduced. In this case, if the cheque gets dishonoured, Vijay can file a case against Sanjay and Sanjay can in turn file a case against Ajay. But it has been developed in practice. He can then withdraw the amount from his account. But, in case a document is a not negotiable instrument, the transferee cannot obtain a good title, when there is a prior bad title. With a view to avoiding such risks, and protect the owner of cheque, a system of crossing was introduced.
In this case, the cheque can be transferred freely, but the cheque loses the characteristic of negotiability. The drawer writes details like the amount of money, a payee, date and then signs a check. The collecting banker must collect the amount of the cheque for the account of the payee only and none else. It is made to guard payment against forgery by unscrupulous persons. A crossing is an instruction or a direction given to paying banker to pay the amount of the cheque through a banker only or a particular banker as the case may be and not directly to the person presenting it at the counter. Crossing means drawing of two parallel transverselines across the cheque with or without the words in between those lines.