Sections 126-127 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Once a cheque is crossed, the bank on which it is drawn (the drawee bank) is restricted in whom it may pay. Section 126 sets the restriction for a cheque crossed generally and for one crossed specially, and Section 127 says what the bank must do when a cheque is crossed specially to more than one banker. This follows the consolidated text consulted.
A cheque crossed generally may be paid by the drawee bank only to a banker. A cheque crossed specially may be paid only to the banker to whom it is crossed, or his agent for collection. Where a cheque is crossed specially to more than one banker, other than an agent for collection, the drawee bank shall refuse payment. A bank that pays contrary to these rules can face liability to the true owner under Section 129, covered in our next article.
Where these sections sit
Crossing and who can add it are covered in Sections 123 to 125. Sections 126 and 127 turn those crossings into instructions for the paying bank. They protect the drawer and the true owner of the cheque by making sure the money goes into the banking system and to the named collecting bank, so that the receiving account can be traced.
Questions about whether a bank paid correctly, or whether a crossed cheque was paid to the wrong person, are often handled with the help of a legal consultation once the cheque and the bank's records are in hand. A note on spelling: the Act writes "indorse"; "endorse" is the common spelling.
Section 126: payment of crossed cheques
The printed heading of Section 126 is "Payment of cheque crossed generally", and the same paragraph contains a second heading, "Payment of cheque crossed specially", run on within the text. It contains two rules.
Generally crossed. "Where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker." So the drawee bank may pay only to a banker. It must not pay cash over the counter to the presenter.
Specially crossed. "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." Payment is permitted only to the named banker or to that banker's agent for collection.
The words "shall not" are prohibitory. They bind the drawee bank. The text does not say what the drawee bank must do instead of paying; the usual course is to return the cheque, but Section 126 itself is silent on it.
Section 127: crossed specially more than once
"Where a cheque is crossed specially to more than one banker, except when crossed to an agent for the purpose of collection, the banker on whom it is drawn shall refuse payment thereof."
The rule is clear: if the cheque bears the names of more than one banker, the drawee bank "shall refuse payment". The exception is the case in Section 125 where the banker to whom the cheque was crossed crosses it again to another banker as his agent for collection. That second name does not trigger the refusal.
| Cheque crossing | Drawee bank may pay | Drawee bank must not |
|---|---|---|
| Crossed generally (s.126) | A banker | Pay otherwise than to a banker |
| Crossed specially (s.126) | The banker to whom it is crossed, or his agent for collection | Pay otherwise than to that banker or his agent for collection |
| Crossed specially to more than one banker (s.127) | Only where the second crossing is to an agent for collection | Pay; the bank "shall refuse payment" unless the exception applies |
Examples
Example 1 (general crossing). A cheque from Ishaan Textiles to Jain Dyeing is crossed with two parallel lines. The presenter, a man in a hurry, asks the drawee bank for cash. Section 126 says the bank shall not pay a generally crossed cheque otherwise than to a banker. The bank pays only if the cheque is presented by a banker, for example through Jain Dyeing's collecting bank.
Example 2 (more than one banker). A cheque is crossed to "Kapoor Co-operative Bank" and also to "Lal Commercial Bank". Neither is an agent for collection of the other. Under Section 127 the drawee bank shall refuse payment. If instead the cheque was crossed to Kapoor Co-operative Bank, which then crossed it to Lal Commercial Bank as its agent for collection, Section 127's exception applies and the refusal rule does not.
What the text does not say
- It does not define "in due course" here; payment in due course is dealt with in the next sections.
- It does not state a penalty on the bank in these two sections. The consequence of paying wrongly is in Section 129.
- It gives no time within which the bank must refuse or return.
- It does not mention electronic or truncated cheques in these two sections.
Points to watch for businesses
- Treat crossing as an instruction to your own bank. If you issue a crossed cheque, you are directing how it is to be paid.
- Check the face of the cheque. Whether the crossing is general or special, and whether more than one banker's name appears, decides what the drawee bank may do.
- Do not confuse crossing with dishonour. A drawee bank that refuses payment of a doubly crossed cheque has acted under Section 127; whether a returned cheque attracts the offence in Section 138 depends on that section's own wording, which this article does not re-explain.
- Agents for collection. A second special crossing to an agent for collection is the only permitted multiple crossing.
Need help with a crossed cheque dispute?
If a crossed cheque was paid to someone who should not have received it, or a bank refused a cheque you issued, the details of the crossing and the dates are what matter. You can arrange a legal consultation to go through the cheque and the bank's response against these sections.
Key takeaways
- A generally crossed cheque is payable by the drawee bank only to a banker.
- A specially crossed cheque is payable only to the banker named, or his agent for collection.
- Where a cheque is crossed specially to more than one banker, except to an agent for collection, the drawee bank shall refuse payment.
- The consequences of paying out of due course are in the next sections.
Read next
- Sections 123 to 125: general crossing, special crossing and crossing after issue
- Sections 128 to 130: crossed cheque paid in and out of due course, and not negotiable
- Sections 131 and 131A: protection of collecting banker and drafts
- Section 138: cheque bounce (dishonour of cheque)
Disclaimer: Based on a consolidated text of the Negotiable Instruments Act, 1881 stating the position as of 26 December 2015 and on the Negotiable Instruments (Amendment) Act, 2018, as consulted on 2 October 2026. Later amendments and current criminal procedure law should be checked. This article is general information, not legal advice; check the official text before acting.