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

Ravi Textiles holds a cheque that was crossed generally by the drawer. Which action is expressly permitted to the holder under Section 125 of the Negotiable Instruments Act, 1881?

The holder of a generally crossed cheque may cross it specially, naming a particular banker. Section 125 gives this power. It does not allow the holder to cancel the crossing or to turn the cheque into one payable across the counter.

  1. ACross it specially to a named bankerCorrect
  2. BCancel the crossing and make it payable over the counter
  3. CConvert it into a bearer cheque by deleting the crossing
  4. DCross it a second time generally with a different banker's name

Explanation

Section 125 states that where a cheque is crossed generally, the holder may cross it specially. The Act gives no power to cancel a crossing in this provision. A special crossing names a banker, so a second 'general' crossing with a banker's name is not the permitted act.

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