धारा 38

Section 38 of the Negotiable Instruments Act, 1881, explains the effect of crossing on bearer cheques. The section states that where a cheque is originally drawn payable to bearer, and then is crossed, it shall be deemed to be payable to order, and the holder shall be subject to all the incidents and effects of an order cheque, including the requirement of indorsement. This provision essentially converts a bearer cheque into an order cheque upon crossing, thereby adding a layer of security by requiring the holder to indorse the cheque for it to be negotiated further. Courts have interpreted this section to mean that the crossing of a bearer cheque imposes the same obligations and liabilities on the holder as those applicable to an order cheque, emphasizing the importance of indorsement in the negotiation of crossed bearer cheques.