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All about Account Payee Cheque Vs Crossed Cheque

All about Account Payee Cheque Vs Crossed Cheque, Negotiable Instruments – Account Payee Cheque Versus Crossed Cheque, What is Account Payee Cheque and Crossed Cheque?, Difference between Account Payee Cheque and Crossed Cheque. Before we go too much into detail about account payee cheque & crossed cheque, it is important to know what are Negotiable Instruments! So, let us have a look on the definition & characteristics of Negotiable Instrument. check more details regarding “All about Account Payee Cheque Vs Crossed Cheque” from below…..


All about Account Payee Cheque Vs Crossed Cheque


The law relating to negotiable instruments is contained in the Negotiable Instruments Act, 1881. The term “negotiable instrument” means a document transferable from one person to another. However the Act has not defined the term. It merely says that “A .negotiable instrument” means a promissory note, bill of exchange or cheque payable either to order or to bearer.

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Noteworthy Characteristics of Negotiable Instruments

Following are the important characteristics of negotiable instruments:

  • They are freely transferable.
  • The holder of the instrument is presumed to be the owner of the property contained in it.
  • A holder in due course gets the instrument free from all defects of title of any previous holder.
  • The holder in due course is entitled to sue on the instrument in his own name.
  • The instrument is transferable till maturity and in case of cheques till it becomes stale (on the expiry of 3 months from the date of issue).
  • Certain equal presumptions are applicable to all negotiable instruments unless the contrary is proved.

Negotiable Instruments include Cheques, Promissory Notes, Bills of Exchange, etc.

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Let us go into a detailed study about Cheques.

Features of a Cheque

  • It is always payable on demand.
  • It is always drawn on a banker.
  • It does not require acceptance.
  • A cheque can be drawn on the bank where the drawer has an account.
  • Cheques may be payable to the drawer himself. It may be made payable to the bearer on demand unlike a bill or a note.
  • A cheque is usually valid for three months. However, it is not invalid if it is post dated.
  • No Stamp is required to be affixed on cheques.

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What is crossing of cheque?

A cheque is either “open” or “crossed”. An open cheque can be presented by the payee to the paying banker and is paid over the counter. A crossed cheque cannot be paid across the counter but must be collected through a banker.

Modes of Crossing

There are two types of crossing which may be used on cheque, namely: (i) General & (ii) Special.

General Crossing: Where a cheque bears across its face, an addition of two parallel transverse lines and/or the addition of the words “and Co.” between them, or addition of “not negotiable”, it is a General Crossing.

Special Crossing: In case of special crossing, the paying banker needs to honour the cheque only when it is prescribed through the bank mentioned in the crossing or it’s agent bank.

Specimen of a general crossing    Specimen of a special crossing
Specimen of a general crossing Specimen of a special crossing

Account Payee’s Crossing:

Such crossing does, in practice, restrict negotiability of a cheque. It warns the collecting banker that the proceeds are to be credited only to the account of the payee, or the party named on the cheque, or his agent.

Account Payee's Crossing

About CA Ridhi Dhoot

The writer is a Chartered Accountant & a Licentiate Company Secretary. You can reach out to her at

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