account payee cheque

Reserve Bank has also warned that banks which indulge in any deviation from the above instructions would invite severe penal action. They are: Instrument in writing: Any instrument which is not in writing cannot be considered a cheque. A. He is also entitled to cross a cheque specially if the same has been crossed generally. *You can also browse our support articles here >. Some people write it as “A/C payee”. A cheque is a paper instrument that orders a payment of money from a bank account. According to Section 124 of the NI Act, “Where a cheque bears across its face an addition of the name of a banker, either with or without the words ‘not negotiable’, that addition shall be deemed a crossing and the cheque shall be deemed to be crossed specially and to be crossed to that banker.”. A cheque need not be cross by the drawing of two parallel lines in the case of special crossing [4] . In case of a bearer cheque, the paying banker need not seek the identification of the holder of the cheque. The account payee is mentioned on the top left side of the cheque between two parallel lines. The bearer cheque does not contain the name of the payee and is payable to the person who presents it at the bank. Making a cheque with an account payee crossing does not affect the paying banker in any way as all he has to ensure is that even though the cheque might not be collected by the payee himself, the proceeds of the same are being credited to the payee’s account. Yes B. Thus after scrutinizing the definitions mentioned above, we can see that there are certain requisites for a cheque to be valid. Any default by the paying banker in making the payment of a crossed cheque is punishable with liability as defined in Section 129 of the NI Act. Foreign currency cheques now to clear in two days, says KBA. Free resources to assist you with your legal studies! How long cheques take to clear Take a look at some weird laws from around the world! Want to learn more? After a discussion of the types of crossing, it is also important to know what persons are authorized to cross a cheque. thats also called as DD. If a cheque is crossed and marked "account payee" or "account payee only", it is not transferable. Such has also been held by the Court to be the case in various matters like National Bank v. Lilke [7] and also in the case of A.Z. The cancellation of the word Bearer automatically makes the cheque an order cheque. | Meaning, pronunciation, translations and examples According to S. 5 of the Act, a “bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.”. Whatever is the loss suffered by the true owner or are the expenses incurred by him will be reimbursed by the banker. Payable On Demand: A cheque cannot be expressed to be made payable otherwise than on demand. Personal Response:"If girls go to school. Specified Banker Only: This requirement leads to two conclusions: Firstly, the cheque can only be drawn on a banker and secondly, the banker should be clearly specified in name and if possible also in address. It cannot be endorsed to anyone else. A Crossed Cheque is also called an Account Payee Only Cheque which means that, this cheque cannot be cashed directly. Tag: account payee cheque. A payee is a person or organization that receives payment for goods or services. Hello air/madam, I have a question about bearer cheque payment. 00:05:14. Payment can be in any form, including cash, a check, a money order, or an electronic transfer of funds. Though non-negotiable crossing does not result in the cheque becoming non-transferrable, it still makes such a crossing lose much of a cheques negotiability, thus preventing anyone apart from the transferor of the cheque to hold a better title than the one he has. They are [10] : The proceeds of an account payee cheque cannot be credited to any party other than the one which is clearly highlighted in the instructions provided by the issuer of the cheque as such would amount to an unauthorized act on the part of the payee banker. No other person can be awarded the cheque. According to S. 125 of the NI Act, the following people, apart from the drawer, are authorized to cross a cheque: The holder of a cheque is authorized to cross a cheque, either generally or specially, if the same is uncrossed. The High Court has held that a customer, by marking a cheque 'account payee', would not necessarily be entitled to damages for conversion from a bank which credited the cheque’s proceeds to another person. A. account payee a crossing or direction on a BILL OF EXCHANGE that the drawee should credit funds only to the bank account of the payee. Cross check and Account payee check, can often create confusion, especially for those who fear banking terms. Can you claim both HRA and Home Loan for Tax Exemption, if … 23rd Jul 2019 You need to write “A/C payee only” in between the slanted lines for this kind of cheque. Related Content. “If any bank credits the account of a constituent who is not the payee named in the cheque without proper mandate of the drawer, it would do so at its own risk and would be responsible for the unauthorized payment. Such has also been laid down in S. 126 of the NI Act, which says “where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker and 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.”. Q. You can view samples of our professional work here. Stale Cheque: A cheque bears a date and is valid up to three months of the stated date. The RBI, in a circular issued by it to the banks has laid down certain rules regarding the crossing of cheques as “Account Payee”. In cases where the bank serves as the payee of an ‘account payee’ cheque, it is the duty of the payee bank to ensure that there exists concrete instructions regarding the handling of the proceeds of the said cheque as provided by the drawer of the same. Another added advantage of account payee crossing is that the same does not result in a decrease in the negotiability or transferability of the cheque. The person who finds it can go to the bank and collect the money. A check or cheque refers to a document that authorizes and provides instructions to order a certain amount of payment from a bank account. But The A/C payee cheque cannot be further endorsed. Underwood Ltd. v. Bank of Liverpool & Martins Ltd. [8]. Of all the various methods of crossing, non-negotiable and account payee crossing are considered to be two of the most secure ones as they provide an extra layer of securities due to the reasons mentioned above by the Researcher. No. The Negotiable Instruments Act, 1881, lays down the provisions regarding crossing of cheques in Sections 123-131. When you write a cheque, you're the payer and the receiver of the cheque is the payee. A/C Payee cheques. Who will marry them?" 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