Crossing of cheque means putting on the cheque two parallel transverse lines with or without the words (& Co.) Written between the lines.
Crossing is a direction to the banker not to pay the cheque across the counter but to pay to a bank only or to a particular bank in an account with the bank.
Object:
Crossing provides a protection and safeguard to the owner of the cheque as by securing payment through a banker; it can easily be detected to whose use the money is received. Implication of:
(i) Restrictive Crossing:
Restrictive crossing has the effect of restricting the payment in certain ways. In these crossing the words ‘Account Payee Only’ or ‘Payees. Account only’ are added. The addition of these words makes the cheque non-transferable. The word, ‘account payee only’ conveys intimation to the collecting banker that the proceeds of the cheque are to be credited only to the account of the payee.
Image Source: upload.wikimedia.org
(ii) ‘Not Negotiable’ Crossing (Sec. 130):
A cheque may be crossed with the word ‘not negotiable’ on it. The effects of these words are that the cheque cannot be further negotiated. The crossing of a cheque’ not-negotiable’ does not render the instrument non transferable.
A person holding a crossed cheque bearing the word, not negotiable gets no better title than that of his transferor and cannot convey a better title to his own transferee. The position gets changed by adding the word ‘not negotiable’ to a crossed cheque. In such a crossing, the holder in due course does not get any better title than what the transferor had.