negotiable instruments

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Jitender Kumar Sultania (Querist)
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20 November 2008 please explane what it mean if a cheque marked "not negotiable" please if u may then give a example of it.
thanks

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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21 November 2008 As per Negotiable Instruments Act,1881 the crossing may be General or Special. A general crossing may be done by wrting the words NOT Negotiable in between two parallel transverse line on the instrument itself.

The relevant provision reads as:

Cheque crossed generally - Where a cheque bears across its face an addition of the words “and company” or any abbreviation thereof, between two parallel transverse lines, or of two parallel transverse lines simply, either with or without the words “not negotiable”, that addition shall be deemed a crossing, and the cheque shall be deemed to be crossed generally. [section 123]

Other relavant provisions:
Payment of cheque crossed generally or specially - Where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker. Where a cheque is crossed specially, the banker on whom it is drawn shall not pay it otherwise than to the banker to whom it is crossed, or his agent for collection. [section 126].

Cheque bearing “not negotiable” - A person taking a cheque crossed generally or specially, bearing in either case the words “not negotiable”, shall not have, and shall not be capable of giving, a better title to the cheque than that which the person form whom he took it had. [section 130]. Thus, mere writing words ‘Not negotiable’ does not mean that the cheque is not transferable. It is still transferable, but the transferee cannot get title better than what transferor had.

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