- A cheque without crossing is called an open cheque. It is open to many risks. In order to protect it, crossing has been introduced
- Irwin, one of the bank employees, who mooted the idea of clearing house. It was there, the practice of crossing cheques originated. Hence, he can better be called, the father of crossing.
- In the act of 1858, it was laid down in that act that, crossing was a material part of the cheque and its obliteration or alteration amounted to forgery and that, the person committing this fraud is liable to transportation for life.
Kinds of crossing
- General crossing
- Special crossing
- Definition (sec 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 shall be deemed to be a ‘crossing’, and the cheques shall be deemed to be crossed generally.”
Essential of crossing
- Two lines are of paramount importance in crossing.
- The lines must be drawn parallel and transverse. Transverse means that they should be arranged in a cross wise direction. They should not be straight lines. Mathematical signs of plus and multiplication do not constitute crossing, because they are not parallel and do not run transverse.
- The lines are generally drawn on the left hand side so as not to obliterate or alter the printed number of the cheque. Preferably, the lines should cut across some of the writings.
- The words ‘And company’ or its abbreviation may be written in between the lines. They themselves are not essential but are done in practice.
- The words ‘Not Negotiable’ may be added to a crossing. But, they themselves do not constitute a crossing but are done in practice.
Forms of general crossing
Significance of general crossing
- The effect of general crossing is that it gives a direction to the paying banker.
- The direction is that, payment is made through an account and not at the counter. Sec.126 of the Act clearly lays down that, “where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker.”
- If a crossed cheque is paid at the counter in contravention of the crossing: (A) the payment does not amount to payment in due course. (B)He has no right to debit his customer’s account, since; it will constitute a breach of his customer’s mandate. (C)He will be liable to the drawer for any loss, which he may suffer. (D)He will be liable to the true owner of the cheque who may be a third party, irrespective of the fact, that, there is no contract between the banker and the third party. As a general rule, a banker is answerable only to his customer and this liability to a third party here is an exception.
- The main intention of crossing a cheque is to give protection to it. When a cheque is crossed generally, a person who is not entitled to receive its payment is prevented from getting that cheque cashed at the counter of the paying banker.