It is very familiar sentence which every body usually mention " Do cross the cheque when ever it issue".
But not body except bankers may know the proper use of the crossing and also know the effect of the crossing of the cheque.
Today I am going to discuss about the crossings of the cheques.
First of all we have to know what is a cheque and other technical words?
"A cheque is a negotiable instrument".
Now I want to discuss also here what is a Negotiable Instrument.
A negotiable instrument is a document guaranteeing the payment for a specific amount of money, either on demand, or at a set of time, with the payee's name on the face of that document.
The examples of negotiable instruments are
promissory notes,
bills of exchange,
banknotes,
demand draft and
cheques.
First of all I going to discuss what is a cheque?
The defination of cheque as per section 6 of the Negotiable Instrument Act "A bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand."
To understand in simple words,
A cheque is a kind of bill of exchange or an unconditional order in writing, addressed by customer with signature to the bank to pay a certain amount to the bearer or as per order.
One more question come into my mind that what is a bill of exchange
So the Bills of Exchange is a written and signed order directing the person named to pay a certain amount of money only to, or to the order of a certain person or to the bearer.
Now I going to discuss about the importance of the crossing of the cheque.
During the process of circulation,
a cheque may be lost, stolen or the signature of payee may also be done by some other person or unlawfully endorse it.
If happen, under these circumstances the cheque may go into wrong hands or miss utilised.
Crossing is a popular device for protecting the drawer (the owner of the cheque or the account holder) and payee ( the beneficiary) of a cheque for both bearer and order cheques.
Both Bearer or Order cheques can be crossed.
In other words crossing prevents fraud and wrong payments. What is the meaning of crossing of a cheque. Crossing of cheque means "Drawing Two Parallel Lines" across the face of the cheque. Thus, crossing is necessary in order to have safety. Crossed cheques must de presented through the bank only because they are not paid at the counter.
Now I am going to discuss about the different types of crossing.
1. General Crossing :-
Generally, cheques treated as crossed when two transverse parallel lines, marked across on the face of the cheque or
the cheque bears an abbreviation
"& Co."between the two parallel lines or
the cheque bears the words "Not Negotiable" between the two parallel lines or the cheque bears the words "A/c. Payee" between the two parallel lines.
A crossed cheque can be made bearer by cancelling the crossing and writing the crossing is cancelled and pay cash with the full signature of drawer.
2. Special or Restrictive Crossing :-
When a bank's name is written on the face of the cheque or a bank's name is written in between the two parallel lines the cheque is said to be specially crossed.
The cheques bearing special crossing can also be crossed in general crossing.
The payment of such cheque is restricted unless the bank named in crossing is presenting the cheque. The payee banker made payment easily because the payment is made to a bank whose name is written on the crossing this is the effect of the special crossing.
Specially crossed cheques are more safe than a generally crossed cheques.
Double crossing - When a cheque bears two special crossing, is called Double Crossing.
In this situation second bank act as an agent of the first collecting banker. It is made when the banker in whose favour the cheque is crossed does not have branch where the cheque is paid.
It is very important to see that the crossing of cheques have any legal aspect or not?
Section 6 of the Negotiable Instrument Act defines a cheque as, "A bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand."
In understandable words,
A cheque is a kind of bill of exchange or an unconditional order in writing, addressed by customer with authorized signature to their banker to pay a certain amount to the bearer or as per order.
One more word we have to know that what is bill of exchange.?
Bills of Exchange is a written and signed order directing the person named on it to pay a certain amount of money only to, or to the order of a certain person or to the bearer.
It is also important to know what are the parties involve in a cheque.
DRAWER - The person who signs the cheque and order for payment.
DRAWEE - It is always bank on which cheque is drawn and is ordered to pay the amount of cheque.
PAYEE - The person to whom the cheque is payable. ( usually drawer and payee can be the same person.)
Now let me discuss about the types of cheques
TYPES OF CHEQUES
OPEN CHEQUE - It is an uncrossed cheque which is payable at counter of the bank. It can be Bearer Cheque or Order Cheque .
BEARER CHEQUE - When a cheque is payable to a person whose name appears on the cheque or the person who presents the cheque to the bank for payment, is called bearer cheque. It can be transferred through delivery and it does not need endorsement.
ORDER CHEQUE - When a cheque is payable to person named in the cheque or to his order, is called Order Cheque.
(When the word Bearer is cancelled , the cheque becomes the order cheque. It can be transferred only by endorsement and delivery.)
CROSSED CHEQUE - when the cheque on which two parallel transverse lines are drawn on the face of the cheques, with or without the word : ' & Co.' Not Negotiable,
A/c Payee only
In other wirds these types of the cheques can not be encashed over the counter of the bank, These kind of cheques can only be credited to the account of the payee.
STALE CHEQUE - As every one aware that the validity of cheque is for three months. When a cheque is not presented within the specified time period, it got expired and becomes the Stale Cheque or Out-dated cheque.
(Earlier the validity of cheque was for 6 months, but w.e.f.1 April, 2012 it has been reduced to three months.)
ANTE- DATED CHEQUE - When a cheque issued at the prior date or back date, it is called Ante-Dated cheque.
The Bank will paid this cheque until it exceed the specified time period (three months).
POST-DATED CHEQUE - When the cheque bears the date later than the date on which it is drawn, ( issued for future date is called Post-Dated Cheque. )
The Bank will not honour this type of cheques before the date written on it.
MULTILATED CHEQUE - If a cheque which is torn into pieces is called Multilated cheque.
The idea behind my this bloc is to provide knowledge regarding the cheques to my reader friends and I think it can also be important to my banker friends to enhance their knowledge.
But not body except bankers may know the proper use of the crossing and also know the effect of the crossing of the cheque.
Today I am going to discuss about the crossings of the cheques.
First of all we have to know what is a cheque and other technical words?
"A cheque is a negotiable instrument".
Now I want to discuss also here what is a Negotiable Instrument.
A negotiable instrument is a document guaranteeing the payment for a specific amount of money, either on demand, or at a set of time, with the payee's name on the face of that document.
The examples of negotiable instruments are
promissory notes,
bills of exchange,
banknotes,
demand draft and
cheques.
First of all I going to discuss what is a cheque?
The defination of cheque as per section 6 of the Negotiable Instrument Act "A bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand."
To understand in simple words,
A cheque is a kind of bill of exchange or an unconditional order in writing, addressed by customer with signature to the bank to pay a certain amount to the bearer or as per order.
One more question come into my mind that what is a bill of exchange
So the Bills of Exchange is a written and signed order directing the person named to pay a certain amount of money only to, or to the order of a certain person or to the bearer.
Now I going to discuss about the importance of the crossing of the cheque.
During the process of circulation,
a cheque may be lost, stolen or the signature of payee may also be done by some other person or unlawfully endorse it.
If happen, under these circumstances the cheque may go into wrong hands or miss utilised.
Crossing is a popular device for protecting the drawer (the owner of the cheque or the account holder) and payee ( the beneficiary) of a cheque for both bearer and order cheques.
Both Bearer or Order cheques can be crossed.
In other words crossing prevents fraud and wrong payments. What is the meaning of crossing of a cheque. Crossing of cheque means "Drawing Two Parallel Lines" across the face of the cheque. Thus, crossing is necessary in order to have safety. Crossed cheques must de presented through the bank only because they are not paid at the counter.
Now I am going to discuss about the different types of crossing.
1. General Crossing :-
Generally, cheques treated as crossed when two transverse parallel lines, marked across on the face of the cheque or
the cheque bears an abbreviation
"& Co."between the two parallel lines or
the cheque bears the words "Not Negotiable" between the two parallel lines or the cheque bears the words "A/c. Payee" between the two parallel lines.
A crossed cheque can be made bearer by cancelling the crossing and writing the crossing is cancelled and pay cash with the full signature of drawer.
2. Special or Restrictive Crossing :-
When a bank's name is written on the face of the cheque or a bank's name is written in between the two parallel lines the cheque is said to be specially crossed.
The cheques bearing special crossing can also be crossed in general crossing.
The payment of such cheque is restricted unless the bank named in crossing is presenting the cheque. The payee banker made payment easily because the payment is made to a bank whose name is written on the crossing this is the effect of the special crossing.
Specially crossed cheques are more safe than a generally crossed cheques.
Double crossing - When a cheque bears two special crossing, is called Double Crossing.
In this situation second bank act as an agent of the first collecting banker. It is made when the banker in whose favour the cheque is crossed does not have branch where the cheque is paid.
It is very important to see that the crossing of cheques have any legal aspect or not?
Section 6 of the Negotiable Instrument Act defines a cheque as, "A bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand."
In understandable words,
A cheque is a kind of bill of exchange or an unconditional order in writing, addressed by customer with authorized signature to their banker to pay a certain amount to the bearer or as per order.
One more word we have to know that what is bill of exchange.?
Bills of Exchange is a written and signed order directing the person named on it to pay a certain amount of money only to, or to the order of a certain person or to the bearer.
It is also important to know what are the parties involve in a cheque.
DRAWER - The person who signs the cheque and order for payment.
DRAWEE - It is always bank on which cheque is drawn and is ordered to pay the amount of cheque.
PAYEE - The person to whom the cheque is payable. ( usually drawer and payee can be the same person.)
Now let me discuss about the types of cheques
TYPES OF CHEQUES
OPEN CHEQUE - It is an uncrossed cheque which is payable at counter of the bank. It can be Bearer Cheque or Order Cheque .
BEARER CHEQUE - When a cheque is payable to a person whose name appears on the cheque or the person who presents the cheque to the bank for payment, is called bearer cheque. It can be transferred through delivery and it does not need endorsement.
ORDER CHEQUE - When a cheque is payable to person named in the cheque or to his order, is called Order Cheque.
(When the word Bearer is cancelled , the cheque becomes the order cheque. It can be transferred only by endorsement and delivery.)
CROSSED CHEQUE - when the cheque on which two parallel transverse lines are drawn on the face of the cheques, with or without the word : ' & Co.' Not Negotiable,
A/c Payee only
In other wirds these types of the cheques can not be encashed over the counter of the bank, These kind of cheques can only be credited to the account of the payee.
STALE CHEQUE - As every one aware that the validity of cheque is for three months. When a cheque is not presented within the specified time period, it got expired and becomes the Stale Cheque or Out-dated cheque.
(Earlier the validity of cheque was for 6 months, but w.e.f.1 April, 2012 it has been reduced to three months.)
ANTE- DATED CHEQUE - When a cheque issued at the prior date or back date, it is called Ante-Dated cheque.
The Bank will paid this cheque until it exceed the specified time period (three months).
POST-DATED CHEQUE - When the cheque bears the date later than the date on which it is drawn, ( issued for future date is called Post-Dated Cheque. )
The Bank will not honour this type of cheques before the date written on it.
MULTILATED CHEQUE - If a cheque which is torn into pieces is called Multilated cheque.
The idea behind my this bloc is to provide knowledge regarding the cheques to my reader friends and I think it can also be important to my banker friends to enhance their knowledge.
No comments:
Post a Comment