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Section 124: Cheque crossed specially

Negotiable Instruments Act • Official Statutory Text & Practice Guide

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Act 1881
Section 123 All 148 Sections of Negotiable Instruments Act Section 125

Legal Commentary & Landmark Judgments: Section 124

Section 124 defines a 'cheque crossed specially', enacting that where a cheque bears across its face an addition of the name of a banker, with or without the words 'not negotiable', it is crossed specially to that banker.

  • Addition of Specified Banker's Name: The name of a specific banking institution must be written across the face of the cheque; parallel lines are customary but not strictly compulsory.
  • Exclusive Payment Mandate: Under Section 126, the paying banker must pay the cheque ONLY to the banker to whom it is crossed, or their agent for collection.
  • Highest Security Standard: Restricts clearing strictly to the designated bank, providing maximum protection against fraud.
Key Landmark Precedents:
  • Kerala State Co-operative Marketing Federation v. State Bank of India (2004) 2 SCC 425: The Supreme Court analyzed special crossings under Section 124, holding that banks must adhere strictly to special crossing instructions or bear full liability for conversion.
  • Ogden v. Benas (1874) LR 9 CP 513: Affirmed that paying a specially crossed cheque to any bank other than the designated bank is negligence as a matter of law.
Courtroom Practice & Strategic Litigation Guidance:

For high-value commercial settlements or court deposit refunds, always cross the cheque specially: 'State Bank of India, High Court Branch'. This ensures the cheque cannot be deposited into any other bank account anywhere in India.

Section 123 All 148 Sections of Negotiable Instruments Act Section 125