Banking and insurance cia -2 CROSSING

Introduction - crossing
Father of crossing Irwin
In the year 1856 , crossing of cheques became a matter of legislation . It was laid down by the 1956 act

what is crossing ?
Bellamy Bs. Morjori banks rossing is a mere memorandum on the face of the cheque and forms no part of the instrument itslef and in no way alters its effect

Kinds of crossing
General crossing
Specific crossing

General crossing
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 a crossing, and the cheque shall be deemed to be crossed generally

Essentials of general crossing

2 lines are of paramount importance in crossing
The lines must be parallel and transverse

The lines are generally drawn on the left side and should cut across some kind of writing
The words and company or its abbreviations may be written in-between the lines.

Significance of general crossing

Gives direction to the payee banker
The direction is that the banker should not pay the cheque at the counter. It should be paid only to a fellow banker Gives protection However forgery can happen and hence special crossing was introduced

Special crossing
Where a cheque bears across its face an addition of the name of a banker, either 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. This is called special-crossed cheque.

Essentials of special crossing

2 parallel transverse lines are not essential
The name of the banker must be necessarily specified across the face of the cheque Appears on the left side The words not negotiable maybe added

Significance of special crossing

It also gives direction
A special crosiing gives more protection to the cheque than in general crossing The banker in whose favour the cheque has been crossed, knows the payee and his specimen signature well

Not negotiable crossing

The words 'not negotiable' can be added to generalas well as special-crossing and a crossing with these words is known as not negotiable crossing.

Significance
The effect of such a crossing is that it removes the most important characteristic of a negotiable instrument i.e. the transferee of such a crossed cheque cannot get a better title than that of the transferor (cannot become a holder in due course) and cannot convey a better title to his own transferee, though the instrument remains transferable.

A/c payee crossing

This crossing can be made in both general and special crossing by adding the words account payee. In this type of crossing the collecting banker is supposed to credit the amount of the cheque to the account of the payee only. The cheque remains transferable but the liability of the collecting banker is enhanced in case he credits the proceeds of the cheque so crossed to any person other than the payee and the endorsement in favour of the last payee is proved forged.

Double crossing
where a cheque is crossed specially, the banker to whom it is crossed, may again cross it specially to another banker, hs agent for collection

Who can cross a cheque

The drawer of a cheque can cross it at the time of issuing it.

Opening of crossing
The cancellation of crossing is usually termed as opening of crossing.

Thank you..!!