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Crossing of Cheque - Negotiable instruments Act(1881), Business Law Video Lecture | Business Law - B Com

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FAQs on Crossing of Cheque - Negotiable instruments Act(1881), Business Law Video Lecture - Business Law - B Com

1. What is the meaning of crossing a cheque?
Ans. Crossing a cheque refers to the process of drawing two parallel lines across the face of the cheque. This act of crossing makes the cheque non-negotiable, meaning it cannot be encashed over the counter. The crossing can be either general or special, and it serves as a security measure to ensure that the payment is made through a bank account rather than being received in cash.
2. What are the types of crossing in the Negotiable Instruments Act?
Ans. The Negotiable Instruments Act recognizes two types of crossing: general crossing and special crossing. - General Crossing: When two parallel lines are drawn across the face of the cheque without any additional words, it is considered a general crossing. This means that the payment can only be made through a bank account and cannot be encashed over the counter. - Special Crossing: In the case of a special crossing, two parallel lines are drawn across the face of the cheque, along with the addition of the name of a particular bank. This restricts the payment to be made only through that bank, ensuring a higher level of security.
3. What is the purpose of crossing a cheque?
Ans. Crossing a cheque serves multiple purposes: 1. Security: Crossing a cheque makes it non-negotiable, reducing the risk of theft or fraudulent encashment. It ensures that the payment is made through a bank account, increasing accountability. 2. Trackability: Crossing a cheque provides a clear trail of the transaction as it can only be deposited into a bank account. This facilitates record-keeping and helps in tracing the flow of funds. 3. Confirmation: Crossing a cheque provides assurance to the payee that the payment will be made through a bank. It adds an extra layer of trust and confidence in the transaction.
4. Can a crossed cheque be encashed over the counter?
Ans. No, a crossed cheque cannot be encashed over the counter. The crossing on the cheque indicates that the payment should be made through a bank account only. The payee needs to deposit the crossed cheque into their bank account, and the amount will be credited to their account after the usual clearance process.
5. Can a crossed cheque be transferred to another person?
Ans. Yes, a crossed cheque can be transferred to another person. The payee can endorse the crossed cheque by signing on the back and mentioning the name of the new payee. However, the new payee can only deposit the cheque into their bank account and cannot encash it over the counter. The crossing remains valid even after the transfer, ensuring that the payment is made through a bank account.
33 videos|59 docs|18 tests
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