03 August 2024 Let's address each type of crossed cheque in the context of the Negotiable Instruments Act, 1881:

### 1. "A/c Payee" Crossed Cheque

**Definition and Endorsement:**

- **"A/c Payee" Cheque**: A cheque crossed with "A/c Payee" can only be deposited into the account of the payee named in the cheque. This is meant to enhance security and ensure that the cheque is not cashed over the counter.

**Endorsement**:

- **Endorsement Allowed**: Yes, a cheque marked "A/c Payee" can be endorsed further. The endorsee must also deposit the cheque into their own account. The purpose of the "A/c Payee" crossing is to ensure that the cheque is not encashed over the counter but is deposited into a bank account.

**Relevant Section**:
- **Section 127 of the Negotiable Instruments Act, 1881**: This section allows for the transfer of the cheque by endorsement. Even if a cheque is marked "A/c Payee," it can be endorsed and transferred, but the endorsement must be made in such a way that it aligns with the account payee restriction.

### 2. "Not Negotiable" Crossed Cheque

**Definition and Endorsement:**

- **"Not Negotiable" Cheque**: A cheque crossed with "Not Negotiable" means that the cheque is not transferable in the sense that the transferee (the person to whom the cheque is transferred) cannot have better rights than the transferor. In other words, if the cheque was issued with any defect or irregularity, the transferee would inherit those issues.

**Endorsement**:

- **Endorsement Not Allowed**: Technically, a cheque marked "Not Negotiable" can still be endorsed, but the endorsement will not carry the usual rights of a negotiable instrument. This means that the person who receives the cheque via endorsement does not gain any additional rights to enforce the cheque beyond those possessed by the original payee.

**Relevant Section**:
- **Section 130 of the Negotiable Instruments Act, 1881**: This section defines the term "Not Negotiable" and clarifies that the cheque retains its negotiable status but limits the rights of the holder to those possessed by the previous holder.

### Summary

- **"A/c Payee" Cheque**: Can be endorsed further. The subsequent endorsee can only deposit it into their own account. The restriction of "A/c Payee" is to prevent encashment over the counter and ensure that it is paid into an account.

- **"Not Negotiable" Cheque**: Can be endorsed but with limitations. The endorsement does not confer any additional rights beyond those held by the original payee. It is not transferable with enhanced rights.

### References

- **Section 127**: Provides the basis for endorsement and transferability of cheques.
- **Section 130**: Defines the effect of the "Not Negotiable" crossing on the negotiability of the instrument.

These sections ensure that the rights and handling of crossed cheques are regulated to maintain the security and proper transfer of negotiable instruments.

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