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Section 123: Cheque crossed generally

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1881
Section 122 All 148 Sections of Negotiable Instruments Act Section 124

Legal Commentary & Landmark Judgments: Section 123

Section 123 defines a 'cheque crossed generally', enacting that where a cheque bears across its face two parallel transverse lines, with or without words like 'and company', it is crossed generally.

  • Two Parallel Transverse Lines: The essential statutory characteristic; crossing must appear across the face of the cheque.
  • Optional Statutory Additions: May include the words 'and company' or any abbreviation thereof, with or without 'not negotiable'.
  • Ban on Over-the-Counter Cash Payment: Under Section 126, a cheque crossed generally cannot be paid in cash over the counter; it can only be paid to a banker into an account.
Key Landmark Precedents:
  • Indian Overseas Bank v. Industrial Chain Concern (1990) 1 SCC 484: The Supreme Court examined the legal purpose of crossing under Section 123, holding that crossing is a statutory directive to the paying bank to pay only through a bank account.
  • Bobbett v. Pinkett (1876) 1 Ex D 368: The classical authority establishing that crossing provides an unalterable audit trail to trace the recipient of commercial funds.
Courtroom Practice & Strategic Litigation Guidance:

In commercial payments, always cross cheques generally. Under Section 123 and Section 126, a general crossing forces the transaction through a verifiable bank account, completely eliminating the risk of an unauthorized person cashing the cheque across the counter.

Section 122 All 148 Sections of Negotiable Instruments Act Section 124