Section 125 NI Act: Crossing after issue

Negotiable Instruments Act, 1881

Section 125 NI Act at a Glance

Section 125 NI Act states how a cheque may be crossed after issue. The holder may cross an uncrossed cheque, cross it specially, or add "not negotiable", and the named banker may cross it specially to an agent banker for collection.

Section 125 NI Act Bare Act Text

125. Crossing after issue.
Where a cheque is uncrossed, the holder may cross it generally or specially.
Where a cheque is crossed generally, the holder may cross it specially.
Where a cheque is crossed generally, or specially, the holder may add the words “not negotiable”.
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.

Section 125 NI Act in Simple Words

Section 125 NI Act sets out four ways in which a cheque can be crossed or have its crossing added to after the cheque has been issued. First, where a cheque is uncrossed, the holder may cross the cheque generally or specially. Second, where a cheque is already crossed generally, the holder may cross it specially by adding the name of a banker.

Third, where a cheque is crossed generally or specially, the holder may add the words "not negotiable" to the cheque. Fourth, where a cheque is already crossed specially to a banker, that banker may again cross the cheque specially to another banker who acts as the first banker's agent for collection.

When Section 125 NI Act Applies

Where a cheque is uncrossed, the holder may cross it generally or specially.
Where a cheque is crossed generally, the holder may cross it specially.
Where a cheque is crossed generally or specially, the holder may add the words "not negotiable".
Where a cheque is crossed specially, the banker to whom it is crossed may again cross it specially to another banker, that banker's agent, for collection.

Example of Section 125 NI Act

Gopal in Guwahati issues an uncrossed cheque for ₹40,000 to Anjali. After receiving the cheque as the holder, Anjali draws two parallel transverse lines across the face of the cheque, crossing it generally under Section 125 NI Act, and then writes the name of Anjali's banker across the face of the cheque and adds the words "not negotiable". Anjali's banker in Guwahati then crosses the cheque specially to another banker that serves as the first banker's agent for collection. Each of these steps after issue is permitted under Section 125 NI Act.

FAQs on Section 125 NI Act

What is Section 125 NI Act?▼

Section 125 NI Act sets out the rules for crossing a cheque after it has been issued. It allows the holder to cross an uncrossed cheque generally or specially, to cross a cheque crossed generally into one crossed specially, and to add the words "not negotiable", and allows a banker to whom a cheque is crossed specially to cross it again specially to another banker as an agent for collection.

Can the holder cross an uncrossed cheque after it has been issued under Section 125 NI Act?▼

Yes. Under Section 125 NI Act, where a cheque is uncrossed, the holder may cross it either generally or specially.

Can a holder add the words "not negotiable" to a crossed cheque under Section 125 NI Act?▼

Yes. Where a cheque is crossed generally or specially, Section 125 NI Act allows the holder to add the words "not negotiable".

When can a banker cross a specially crossed cheque a second time under Section 125 NI Act?▼

Only for collection through an agent banker. Under Section 125 NI Act, the banker to whom a cheque is crossed specially may again cross it specially to another banker who is the first banker's agent for collection.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·