Module: General Practice
Q182: What is the legal effect of adding the words "Not Negotiable" to a crossing on a cheque under Section 130 of the NI Act?
✅ Correct Answer: C
This is a frequent point of confusion. "Not Negotiable" does NOT mean "Not Transferable." The cheque can still be passed from hand to hand.
However, the words strip the cheque of its "Negotiability"—specifically, the "Nemo dat quod non habet" exception.
Normally, a Holder in Due Course gets a clean title even if the transferor stole the cheque.
But with a "Not Negotiable" crossing, this protection is removed.
The transferee gets only the title the transferor had.
If the transferor had no title (e.g., a thief), the transferee gets no title.
However, the words strip the cheque of its "Negotiability"—specifically, the "Nemo dat quod non habet" exception.
Normally, a Holder in Due Course gets a clean title even if the transferor stole the cheque.
But with a "Not Negotiable" crossing, this protection is removed.
The transferee gets only the title the transferor had.
If the transferor had no title (e.g., a thief), the transferee gets no title.