Banking and Insurance - Laws and Practice · Payment and Collection of Cheques and Other Negotiable Instruments

Crossing of Cheques under the Negotiable Instruments Act

Updated 11 October 2026 · Fact-checked

Crossing means drawing two parallel transverse lines (with or without 'and company' or 'not negotiable') across a cheque's face, or adding a banker's name. It is a direction that the drawee banker pay only to a banker, not over the counter. General crossing names no banker; special crossing names one (sections 123 to 131).

Understand Crossing of Cheques

A cheque is payable on demand. An open cheque can be cashed over the counter by anyone who holds it, so a thief can also cash it. Crossing is a safety device. It tells the paying banker to pay only through a banker. The money then goes into a bank account, so the collecting bank and its customer can be traced.

There are two kinds. In a general crossing (section 123), the cheque bears two parallel transverse lines simply, or the words 'and company' (or an abbreviation) between two parallel transverse lines. Either form may carry 'not negotiable'. No banker is named. In a special crossing (section 124), the cheque bears across its face the name of a banker, with or without 'not negotiable'. It is then crossed to that banker.

The 'not negotiable' crossing is different in purpose. Section 130 says a person taking such a cheque cannot have, or give, a better title than the person he took it from. The cheque stays transferable, but it loses the special protection of a holder in due course. So if a thief holds it, the next taker gets no good title.

'Account payee' is not mentioned in the sections supplied here. It is a banking practice. Words such as 'account payee' written on a crossed cheque are an instruction that the proceeds be credited only to the payee's account. Treat it as an added direction, not a crossing defined in sections 123 and 124. State it that way in the exam.

Crossing can be done by the drawer when issuing, and also later by the holder (section 125). Finally, the law protects the paying banker who pays in due course (section 128), the collecting banker who acts in good faith and without negligence (section 131), and it makes a banker liable to the true owner if he pays out of due course (section 129).

Key rules to remember

General crossing (s. 123): Two parallel transverse lines, or 'and company' between two lines, with or without 'not negotiable'; No banker's name. Drawee banker pays only to a banker (s. 126).
Special crossing (s. 124): Name of a banker across the face, with or without 'not negotiable'; Drawee banker pays only to that banker or his agent for collection (s. 126).
Crossing after issue (s. 125): Uncrossed: holder may cross generally or specially. Generally crossed: holder may cross specially. Any crossing: holder may add 'not negotiable'. Specially crossed: that banker may cross specially to another banker, his agent, for collection; A special crossing cannot be changed back to general.
Cheque crossed specially more than once (s. 127): Crossed specially to more than one banker, except to an agent for collection: drawee banker shall refuse payment; The agent-for-collection exception comes from s. 125.
Payment out of due course (s. 129): Paid generally crossed cheque otherwise than to a banker, or specially crossed cheque otherwise than to the named banker or his agent for collection: liable to true owner for loss; Liability is for loss the true owner sustains.
Payment in due course (s. 128): Paying banker and drawer are placed as if the true owner had been paid; Applies where the crossed cheque is paid in due course; the drawer's protection applies if the cheque has reached the payee.
Not negotiable (s. 130): Transferee gets no better title than his transferor had; Applies to generally or specially crossed cheques bearing the words.
Collecting banker protection (s. 131): Good faith + without negligence + received payment for a customer + cheque crossed to himself = no liability to true owner if title is defective; Crediting the customer's account before receiving payment still counts as receiving payment for the customer.
Uncrossed-looking cheque (s. 89): Cheque does not appear crossed at presentation, or crossing obliterated: payment per apparent tenor in due course discharges the banker; Protects a banker who could not see the crossing.

How to solve Crossing of Cheques questions

Use this order for any problem on crossed cheques. Decide the type of crossing first, then who was paid, then who bears the loss.

1Identify the crossing from the facts: two lines or 'and company' means general (s. 123); a banker's name means special (s. 124). Note any 'not negotiable' or 'account payee' words.
2Check whether the crossing was valid and who added it: drawer at issue, or holder later under s. 125. Check that any change is permitted.
3Ask who presented the cheque and who was paid. Under s. 126, a generally crossed cheque is payable only to a banker; a specially crossed cheque only to the named banker or his agent for collection.
4If the cheque was crossed specially to more than one banker, apply s. 127. Check whether the second banker is an agent for collection. If not, the drawee must refuse payment.
5If payment was proper and in due course, apply s. 128: the paying banker and the drawer are treated as if the true owner was paid.
6If payment was improper, apply s. 129: the paying banker is liable to the true owner for loss. Consider s. 89 if the crossing was not apparent at presentation.
7If title was defective, consider s. 130 (not negotiable) for the transferee's position and s. 131 for the collecting banker's protection, testing good faith and absence of negligence.
8Write the conclusion in one clear line stating who is liable and why.

Quickest way: Four-question crossing check

When to use it: Use for short-note questions and for case questions with limited time.

What is the crossing: general, special, or not negotiable?
Who got the money: a banker, the named banker, an agent, or a person over the counter?
Was it paid in due course? If yes, s. 128 protects banker and drawer. If no, s. 129.
Is a collecting banker involved? If yes, check s. 131: good faith, no negligence, cheque crossed to him.

Common mistakes in Crossing of Cheques

Saying a 'not negotiable' cheque cannot be transferred.
The word 'negotiable' suggests transfer is banned.
Fix: State s. 130: it can be transferred, but no transferee gets better title than his transferor had.
Treating 'account payee' as a crossing defined in s. 123 or 124.
Students see it printed on cheques along with the two lines.
Fix: Describe it as a banking practice and direction that proceeds go to the payee's account, separate from the statutory crossings.
Applying s. 127 to every cheque with two banker names.
The rule seems absolute.
Fix: Remember the exception: crossing to an agent for collection. A bank may cross to another bank as agent under s. 125.
Thinking a holder can convert a special crossing into a general one.
Students assume crossing is freely editable.
Fix: Under s. 125 a holder can cross an uncrossed cheque generally or specially, and a generally crossed one specially. Nothing allows the reverse.
Confusing s. 129 (paying banker's liability) with s. 131 (collecting banker's protection).
Both deal with crossed cheques and true owner.
Fix: Paying banker out of due course: s. 129. Collecting banker receiving payment in good faith without negligence: s. 131.
Forgetting s. 89 when the crossing was not visible.
Focus is only on crossing sections.
Fix: If the cheque did not appear crossed at presentation, payment per apparent tenor in due course discharges the banker.

Worked examples

Example 1

Aarav Traders draws a cheque on Bank X payable to Meera Textiles, crossed generally with two parallel lines. Rohan, who found it, presents it over the counter at Bank X and is paid. Meera Textiles is the true owner. Advise on liability.

Show the solution

The two parallel transverse lines simply make this a general crossing under s. 123.
Under s. 126, the drawee banker must not pay a generally crossed cheque otherwise than to a banker.
Rohan is not a banker, and Bank X paid him over the counter. This is payment out of due course.
Under s. 129, a banker paying a generally crossed cheque otherwise than to a banker is liable to the true owner for any loss sustained.
The s. 128 protection is not available because the payment was not in due course.

Answer: Bank X is liable to Meera Textiles, the true owner, for the loss under s. 129.

Example 2

A cheque drawn by Kavita is crossed specially to Bank P. Bank P crosses it specially to Bank Q for collection. Later Bank Q crosses it to Bank R, which is not its agent. Bank S, the drawee, is asked to pay. Can it pay?

Show the solution

A special crossing under s. 124 names a banker, here Bank P.
Under s. 125, the banker to whom it is crossed may cross it again specially to another banker, his agent, for collection. So P to Q is allowed.
Crossing to Bank R, not an agent for collection, makes the cheque crossed specially to more than one banker without the agent exception.
Under s. 127, where a cheque is crossed specially to more than one banker, except when crossed to an agent for collection, the drawee banker shall refuse payment.
Therefore Bank S must refuse payment.

Answer: Bank S must refuse payment under s. 127, because the later crossing to Bank R is not to an agent for collection.

Exam tips

Define general and special crossing with the section number and the exact marks of each: two lines, 'and company', or banker's name.
In case questions, always name the section and state the conclusion: who is liable and to whom.
For s. 127 answers, mention the agent-for-collection exception and link it to s. 125.
Separate statutory crossings from account payee practice, and do not attribute account payee to a section.
Use a short comparison with bullet points for 'difference between general and special crossing'.

Practice questions from Payment and Collection of Cheques and Other Negotiable Instruments

Crossing of Cheques in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FoundationCrossing of Cheques and Bankers' Protection

Crossing of Cheques: frequently asked questions

What is the difference between general and special crossing?

A general crossing has two parallel transverse lines, or 'and company' between them, and names no banker (s. 123). A special crossing bears a banker's name across the face (s. 124). A general crossing is payable to any banker. A special crossing is payable only to the named banker or his agent for collection.

What does section 127 say about a cheque crossed specially more than once?

If a cheque is crossed specially to more than one banker, the drawee banker must refuse payment. The exception is where it is crossed to an agent for the purpose of collection. That agent crossing is allowed by s. 125.

What is the effect of the words 'not negotiable'?

Under s. 130, the person taking the cheque cannot have, or give, a better title than the person he took it from. The cheque can still be transferred. It just loses holder-in-due-course protection.

Who can cross a cheque after it is issued?

The holder can. Under s. 125, an uncrossed cheque may be crossed generally or specially, and a generally crossed cheque may be crossed specially. The holder may also add 'not negotiable'.

When is a collecting banker protected?

Under s. 131, a banker who in good faith and without negligence receives payment for a customer of a cheque crossed to himself is not liable to the true owner merely because the title was defective.