Skip to content

CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881

Anil receives a cheque crossed specially to Bank X. Under Section 125 of the Negotiable Instruments Act, 1881, what may Bank X do with it?

Bank X, to whom the cheque is specially crossed, may cross it specially again to another banker acting as its agent for collection. Section 125 allows this only for collection through an agent banker, not to any banker and not by converting it to a general crossing.

  1. ACross it again specially to another banker, its agent, for collectionCorrect
  2. BCross it generally and hand it to any person
  3. CAdd the words 'not negotiable' only, and nothing else
  4. DCross it specially to any banker, whether or not he is its agent

Explanation

Section 125 provides that 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 agent condition and the purpose of collection matter, so crossing to any banker is wrong. Nothing in the section lets Bank X cross it generally.

Did you get it right without looking?

One question tells you little. A timed set on Negotiable Instruments Act, 1881 shows your real accuracy, how long you take and where you lose marks.

Practise Negotiable Instruments Act, 1881Free diagnostic mock

More Negotiable Instruments Act, 1881 questions