This article throws light upon the four types of crossing of a cheque. The types are: 1. Cheques Crossed Generally 2. Crossing after Issue 3. Antedated Cheque 4. Post Dated Cheque.
Type # 1. Cheques Crossed Generally:
The cheque bearing across its face an addition of the words ‘and company’ or any abbreviations thereof between two parallel transverse lines, with or without the words ‘not negotiable’; or two parallel transverse lines simply, with or without the WORDS ‘not negotiable’.
Type # 2. Crossing after Issue:
1. Where a cheque is uncrossed, the holder may cross it generally or specially.
2. Where a cheque is crossed generally, the holder may cross it specially.
3. Where a cheque is crossed generally or specially, the holder may add the words ‘not negotiable’.
4. Where a cheque is crossed specially, the banker to whom it is crossed may again cross it specially, to another banker, his agent, for collection.
A crossed cheque must be collected through a banking account and cannot be encashed across a counter. The crossing therefore constitutes a protection for the drawer, who should always cross cheques which he is intending to send through the post, as a precaution against the cheques falling into wrong hands.
Type # 3. Antedated Cheque:
A bill of exchange is not invalid by reason only of the fact that it is antedated. However a banker receiving a cheque antedated by six months or more for payment would regard it as STALE CHEQUE, and would return it unpaid unless he could get the confirmation of the drawer to pay it. (A cheque old than a period of six months can be misused as such it is extra precautions taken by the bankers)
Type # 4. Post Dated Cheque:
A postdate cheque is the one after the day of issue. On cheques postdating may be the intention of the drawer in isolated cases, but if it happens frequently it is a sign of financial weakness on the customer’s part. Banks are bound to respect the drawer’s instruction not to pay a post-dated cheque until the due date. Postdating of cheques holds many risks for the banker.
If the banker pays the cheque without noticing the postdating, he runs the following risks:
(1) The customer may stop payment before the due date, or
(2) Notice of his death or mental illness may be received. There are a number of possibilities connected with bankruptcy Etc.
Any cutting or alteration made on a cheque should by authenticated before issuing the same otherwise there is every likelihood that cheque may not be honored. Recently the reserve bank of India has banned to honour any cheque with cuttings whether or not authenticated.