What are Marked and Crossed Cheques?

Marked cheque: A cheque need not be presented for acceptance. Therefore the drawee of the cheque i.e., the banker, is under liability, to the person in whose favour the cheque is drawn. The banker, however, will be liable to his customer ( drawer), if he wrongly refuses to honour the cheque. In such a case, action can be taken by the customer against the banker for the loss of his reputation. In certain cases, however , a cheque is marked or certified by the banker on whom it is drawn as “good for payment’. Such a certification of marking is strictly not equivalent to an acceptance but is very similar to it and protects the person to whom the cheque is issued against the cheque being refused for payment subsequently by Banking in India, as a rule, do not mark or certify cheque in this manner. Bankers in India, are not liable even if a bank has marked a cheque as “good for payment” (Bank of Baroda vs. Punjab National Bank Ltd. ).

Crossed cheque : (a) The usage of crossing cheques: Cheques are usually crossed as a measure of safety. Crossing is made by drawing two parallel transverse lines across the face of the cheque with or without the addition of certain words. The usage of crossing distinguishes cheques from other bills of exchange. The object of general crossing is to direct the drawee banker to pay the amount of the cheque only to a banker, to prevent the payment of the cheque being made to wrong person (Section 123);

Special crossing: Where a cheque bears across its face an entry of the name of a banker either with or without the words “not negotiable”, the cheque is considered to have been crossed specially to that banker. In the case of special crossing the addition of two parallel transverse lines is not essential though generally the name of the bank to which the cheque is crossed specially is written between two parallel transverse lines (Section 124).

Crossing after issue: (i) If cheque has not been crossed, the holder thereof may cross it either generally, or specially. (ii) If it is crossed generally, the holder may cross it, specially. (iii) If it is crossed, either generally or specially the holder may add the words “not negotiable”. (iv) If a cheque is crossed specially, the banker to whom it is crossed, may again cross it specially to another banker, his agent, for collection. This is the only case where the Act allows a second special crossing by a banker and for the purpose of collection [Akro Kervi Mines vs. Economic Bank (1904) 2 K.B. 465 (Section 125)]. It may be noted that the crossing of a cheque is an instance of an alteration which is authorized by the Act.
 

Payment of cheque, crossed generally or specially (Section 126 & 127): If a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker. Again, where a cheque is crossed specially, the banker on whom it is drawn shall not pay it otherwise than to the banker to whom it is crossed or his agent for collection.

Where a cheque is crossed specially to more than one banker except when it is crossed to an agent for the purpose of collection, the banker on whom it is drawn shall refuse payment thereof. This is because, in such a case, the instruction by the drawer would not be clear (Section 127).
 

Payment in due course of crossed cheque: Where the banker on whom a crossed cheque is drawn, pays it in due course, it is to be presumed that he has made payment to the true owner of cheque, though in fact, the amount of the cheque may not reach the true owner. In other words, banker making payment in due course is protected, whether the money is or is not, in fact, received by the true owner of the cheque (Section 128).

Payment out of due course: Any banker paying a crossed cheque otherwise than in accordance with the provisions of Section 126 shall be liable to the true owner of the cheque for any loss he may have sustained. Thus, if the money does not reach the true owner, he can claim payment over again from the banker (Section 129).