Difference between a Crossed Cheque and A/C Payee Cheque

A person who signs the cheque and transfers the instrument is an endorser and in whose favor it is transferred is endorsee. The endorsee acquires a right to negotiate the instrument to anyone he / she likes. By making an endorsement the endorser promises that in case of dishonor, he / she provides a guarantee to compensate the holder.

Crossing a cheque by making two parallel lines with or without such words as ___& company is general crossing. Section 126 of the NI Act says that this is a direction to the bank to not to pay the cheque across the counter.

This crossed cheque is no more a bearer cheque where anyone can negotiate and get payment across the counter.

In case of a crossed cheque, the payee is free to make further endorsements.

For example , Ayesha receives a check from Rohan which has been crossed, Ayesha can get this payment in her account only and not across the counter. But in this case Ayesha is free to endorse the cheque in favor of Suresh and further Suresh is free to endorse the instrument in favor of Mukesh and so on…This means that crossing a cheque does not put restrictions on endorsements. In case the cheque gets dishonored, Mukesh can sue Suresh and Suresh can sue Ayesha and Ayesha can sue Rohan.

Now let’s discuss A/C Payee cheques. The NI act does not talk about the A/C payee crossing. There is no definition of A/C payee crossing in the NI act and it is a child of banking practice. Making a cheque A/C Payee is a result of custom, use and practice and is now accepted legally.

But, the A/C payee cheque cannot be further endorsed. This means that if the cheque in the above example which is in favor of Ayesha bears “A/C Payee”, payment can be collected in Ayesha’s account only. The paying bank makes sure that amount is being credited to the account of the payee only.

Video from our Channel


Random Articles


  • One9Osix

    This is a very useful and helpful site.

  • K.L. Thukral

    Excellent & relevant article…

  • r j unecha

    Really Helpful thanks…………….


    it is wonderful site please update sir

  • saptarshi

    thnx….very simple & clear explanation…

  • Salman

    what if Ayesha want to deposit cheque in her proprietorship account, ‘AYESHA TEXTILE’, whereas cheque crossed account payee in her name?


    thanks very usefull things…………

  • Omondi Alphonce

    So good an explanation….thanks

  • siva

    pls clarify ..a party has a chq with &co crossed seal but he has no a/c ..whether he has put the chq for collection in another a/c

  • shankar

    excellent ……

  • Shadab shagul

    Mast answer

  • Kalandi Charana Swain

    It is a very good useful site.

  • ipyana noah mwasiposya

    helped me to do my assignments…………….

  • venkat

    Very helpful.easy to understand quickly with simple examples.thanks.

  • the ctitic

    clear, logical, brief and revevant…….nice work