There are three different types of crossing and by crossing , we mean putting or drawing two parallel transverse lines on the front side of a cheque on upper left corner, with or without the use of the word like “& CO” “Not Negotiable”.
The practice of crossing a cheque seems to have originated in England, when cheques were likely to be stolen by robbers who often robbed mail carried in slowly moving coaches. Crossing of cheques gradually reduced the number of payment to the wrongful holders of the cheque. With the passage of time, crossing of cheques came to have legal recognition. Cheques may be crossed by three persons. These are the drawer, holder and the bankers, according to the section 125 of the Act 1881.
Types of Crossing of Cheques
There are three main types of crossing;
- General crossing
- Special crossing
- Restrictive crossing
- General Crossing
A general crossing consists of two parallel lines drawn transversely the front side of the cheque with or without the word “& CO”. The effect of this cross leads the said cheque may not be cashed at the counter of the bank, but must be paid into bank accounts for collection.
- Special Crossing
A special crossing consists of the name of particular bank written across the face of the cheque. The effect of these types of crossing is that, it will be collected by the particular bank only.
- Restrictive Crossing
The act provides only two types of crossing mentioned as general and special crossing. Banking usage had developed yet another type of crossing called as “Restrictive Crossing”. This type of crossing includes the word like “A/C Payee” “A/C John only” between equivalent outline. So these types of crossing of cheques direct the banker to be credited the specific amount into the account of the payee whose name is mentioned on the cheque or between the equivalent lines. If proceeds are credited to some other accounts, the collecting banker will be held responsible.
Right and Objectives of Crossing
Following parties have the right to cross a cheque;
- Drawer of the Cheque can cross the cheque at the time of writing the cheque. This crossing can be general, special or restricted.
- Holder of the cheque, can cross the cheque in his possession, if it is already not crossed by the drawer for any reason.
- Collecting bank crosses the cheque deposited with it, for receiving the amount of said cheque named therein or any uncrossed cheque is deposited by a customer in his account for collection. It is necessary to cross all the cheques before depositing.
It is possible that payment of a bearer or even of an order cheque is made or received to a wrong person. In this case bank has got no responsibility except for order cheque. Hence the main objective of the crossing is to make sure that the payment is made or credited to the right person. In case of any fraud or wrong payment , it is easy to detect the person or party receiving the wrong payment just by checking the record of the bank, because the said cheque is deposited , collected and posted in bank ledger though a bank account of the person concerned.
The other objective of crossing is that large amount of money is transferred from one person or place to another, without any risk of cash involved in payment.
The only disadvantages of crossing is that sometimes it becomes inconvenient for the holder of a cross cheque to get the cash at once if he is urgency. If the cross cheque is of the same branch or of local branch, then the inconvenience is not so much as compared to the out-station cross cheque, in which mail process involves and the efficiency of the other branch in releasing payments.