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

Anil receives a cheque crossed generally. Before presenting it, he adds the words 'not negotiable' to the crossing. Which statement matches the Act?

Anil may add 'not negotiable'. Section 125 permits the holder to add these words where the cheque is crossed either generally or specially, so the power is not limited to special crossings or to the drawer.

  1. AHe may add the words, because a holder may do so on a cheque crossed generally or speciallyCorrect
  2. BHe may add the words only if the cheque is crossed specially
  3. CHe may not add them, since only the drawer can restrict negotiability
  4. DHe may add them only with the collecting banker's endorsement

Explanation

Section 125 states that where a cheque is crossed generally, or specially, the holder may add the words 'not negotiable'. The option limiting this to special crossing is wrong because the text covers both kinds.

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