CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881
A cheque issued to Meenakshi Exports is crossed specially to HDFC Bank. Which step may HDFC Bank take under the Act?
HDFC Bank may cross the cheque again specially to another banker, acting as its agent, for collection. The Act allows only this onward special crossing to an agent banker. It does not allow the bank to cancel the crossing or release the cheque to any person.
- ACross it again specially to another banker, its agent, for collectionCorrect
- BCross it generally and hand it to any person who asks
- CCancel the crossing and pay cash over the counter to the presenter
- DAdd words that turn it into a bearer cheque
Explanation
Under Section 125, where a cheque is crossed specially, the banker to whom it is crossed may again cross it specially to another banker, his agent, for collection. The other options would remove the protection that the crossing gives.
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