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

Sunil is paid by a cheque that is crossed generally. Which statement about payment of this cheque is correct?

A cheque crossed generally should be paid by the drawee banker only to another banker, not in cash across the counter. The crossing is an instruction that payment go through a bank, so the money can be traced to the account of the person who collected it.

  1. AThe drawee banker may pay it in cash across the counter to the presenter
  2. BThe drawee banker should pay it only to a banker, not directly to the presenter across the counterCorrect
  3. CThe drawee banker must pay it only to the original payee in person
  4. DThe crossing has no effect on the manner of payment

Explanation

The purpose of crossing is to direct that the cheque be paid only through a banker. A generally crossed cheque is therefore not paid in cash across the counter. Paying cash over the counter ignores the crossing and so is wrong.

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