CHEQUE

A cheque is a species of a bill of exchange . Two additional qualifications, viz., (1) It is always drawn on a specified banker, (2) It is always payable on demand. All cheques are bills of exchange, but all bills of exchange are not cheques. It must be signed by the drawer. It does not require acceptance as it is intended for immediate payment.

The usual form of bank cheque is as follows :
No««. PUNJAB NATIONAL BANK Subzi Mandi, Delhi-110007 Pay««««««««««««««or bearer the sum of Rs. ««««««««««««««««««. Rs. ««««................ Sd/Date«««.2000

Crossing of cheques
Two types of cheques. Open cheque: A cheque which is payable in cash across the counter of a bank. Crossed cheque: A cheque which two parallel transverse lines with or without the words ¶& Co.· are drawn. Crossing is a direction to the drawee banker to pay the amount of money on a crossed cheque generally to a banker so that the party who obtains the payment of the cheque can be easily traced. Types of crossing. There are two types of crossing, (1) General crossing, and (2) Special crossing.

General crossing. A cheque is said to be crossed generally where it bears across its face an addition of(i) The words ¶and company· or any abbreviation thereof, between two parallel transverse lines, either with or without the words ¶not negotiable· ; (ii) Two parallel transverse lines simply, either with or without the words ¶not negotiable·. 1.

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Where a cheque is crossed generally, the drawee banker shall not pay it unless it is presented by a banker.

2. Special crossing. Where a cheque bears across
its face an addition of the name of a banker, either with or without the words ¶not negotiable·, Transverse lines are not necessary in case of a special crossing. The payment of a specially crossed cheque can be obtained only through the particular banker whose name appears across the face of the cheque.

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Restrictive crossing. In this type of crossing the
words ¶A/c payee· are added to the general or Special crossing.

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The words ¶A/c Payee· on a cheque are a direction to the collecting banker that the amount collected on the cheque is to be credited to the account of the payee.

Not negotiable crossing.
The effect of the words ¶not negotiable· on a crossed cheque is that the title of the transferee of such a cheque cannot be better than that of its transferor. Protection to the drawer or holder of the cheque against miscarriage or dishonesty in the course of transit. Who may cross a cheque (1) The drawer. (2) The holder. (3) The banker

CLASSIFICATION OF NEGOTIABLE INSTRUMENTS
The negotiable instruments may be classified as : I. Bearer and order instruments Bearer instruments. A negotiable instrument is payable to bearer(1) When it is expressed to be so payable, or (2) When the only or last indorsement on the instrument is an indorsement in blank. Order instrument. A negotiable instrument is payable to order(1) When it is expressed to be payable to order, e.g., ¶Pay to A or order· or ¶Pay to the order of A·.

In both these cases, the bill is payable to A or his order at his option. (2) When it is expressed to be payable to a particular person, and does not contain words prohibiting or restricting its transfer, e.g., ¶Pay A one hundred rupees.· II. Inland and foreign instruments (a) Inland instruments. A promissory note, bill of exchange or cheque which is (1) Both made in India and made payable in India, or (2) Drawn upon any person resident in India, Is deemed to be an inland instrument.

Examples. (a) A bill is drawn in Delhi on a merchant in Bombay and accepted payable in Calcutta or London. (b) Foreign instruments. An instrument, which is not an inland instrument, is deemed to be a foreign instrument. Usance. Usance is the time fixed for the payment of bills drawn in one country and payable in another. It is fixed by the custom of the countries and The length of the usance varies in different countries.

III. Instruments payable on demand A cheque is always payable on demand A promissory note or bill of exchange is payable on demand(a) When no time for payment is specified in it ; or (b) When it is expressed to be payable ¶on demand·, or ¶at sight· or ¶on presentment·. The words ¶on demand· are usually in a promissory note, The words ¶at sight· are in a bill of exchange. IV. Time instruments A bill or note which is payable (a) After a fixed period, or (b) After sight, or (c) On a specified day, or (d) On the happening of an event which is certain to happen, is known as a time instrument.

Ex:- An order to pay on or before a specified date is not a bill. The expression ¶after sight· in a promissory note means that payment cannot be demanded on a note till it has been shown to the maker. The expression ¶after sight· in a bill of exchange means after acceptance, or protest for nonacceptance. V. Accommodation bill A bill may be(1) A genuine trade bill, or (2) An accommodation bill. When a bill is drawn, accepted, or indorsed for consideration it is called a genuine trader bill·.

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When it is drawn, accepted or indorsed without any consideration, it is called an ¶accommodation bill·. Fictitious bill When the name of the drawer or the payee or both is fictitious in a bill, the bill is called a fictitious bill. Documentary bill and clean bill When documents of title to the goods and other documents, e.g., invoice, marine insurance policy, etc., are annexed to a bill, the bill is called a documentary bill. When no documents relating to the goods represented by the bill are attached to it, it is called a clean bill.

VII. Escrow When a negotiable instrument is delivered conditionally or for a special purpose as a collateral security or for safe custody only, and not for the purpose of transferring absolutely therein it is called an escrow. VII. Ambiguous instrument When an instrument owing to its faulty drafting may be interpreted either as a promissory note or a bill of exchange, it is called an ambiguous instrument. IX. Inchoate instrument An inchoate instrument is an incomplete instrument in some respect. When a person signs and delivers to another a blank or incomplete stamped paper, he authorises the other person to make or complete upon it a negotiable instrument for any amount not exceeding the amount covered by the stamp.

X. Undated bills and notes A negotiable instrument is not invalid by reason that it is undated. If the instrument otherwise fulfils the legal requirements, the date of its execution can be proved by oral or other evidence. A holder in due course may, insert therein the true date of issue or acceptance, XI. Hundis Hundis are negotiable instruments written in Hindustani language Sometimes they are in the form of promissory notes but usually they are like bills of exchange in from and substance.