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

A cheque drawn on Bank X is crossed specially in favour of Bank P. Bank P is not the payee's own banker but is named in the crossing. Bank P presents the cheque through its agent bank for collection. To whom may Bank X pay under the Act?

Bank X may pay Bank P, the banker named in the special crossing, or Bank P's agent for collection. Section 126 forbids payment to anyone else, so a different banker or the payee in person cannot receive payment.

  1. AOnly to the payee in person
  2. BTo Bank P or to its agent for collectionCorrect
  3. CTo any banker who presents it
  4. DOnly to Bank P's head office, never to an agent

Explanation

Section 126 says a specially crossed cheque shall not be paid otherwise than to the banker to whom it is crossed, or his agent for collection. So payment to Bank P or its collecting agent is proper. Payment to any banker would apply only to a general crossing.

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