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

Ravi Exports' cheque for Rs 75,000 is crossed generally with two parallel transverse lines. A person presents it at the drawee bank's counter and asks for cash. What is the bank's duty?

The drawee bank must not pay cash across the counter. Section 126 provides that a generally crossed cheque may be paid only to a banker, so the payee must collect it through a bank account.

  1. APay cash to the presenter if he is the named payee
  2. BPay only to a banker, so it should not pay cash over the counterCorrect
  3. CPay cash up to Rs 50,000 and the rest through a banker
  4. DPay cash only if the drawer telephones approval

Explanation

Section 126 says that where a cheque is crossed generally, the drawee banker shall not pay it otherwise than to a banker. Payment in cash to the payee over the counter would breach this. No amount threshold or telephonic approval exists in the text.

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