Endorsement is the act of signing a cheque for the purpose of transferring it to somebody else. Under Negotiable Instruments Act it means the writing of ones name on the back of the instrument or any paper attached to it with the intention of transferring the rights therin. A bearer cheque can be transferred by mere delivery but an order cheque is transferred by endorsement and delivery. Endorsements are usually made on the back of the cheque, though they can be made on its face as well. If, however, no space is left on the instrument, it may be made on a separate paper attached to it.
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Endorsement on the cheque must be made in proper fashion, otherwise the bank will not pay it. The endorser must sign his name exactly as it has been written on the cheque. He must sign his name with the same spellings as already appear on the cheque. He may, if he, likes put down the correct spellings after he has signed in the manner already appearing on the cheque. Where a cheque is endorsed on behalf of a company, a firm or some other institution, the person signing the endorsement must so sign as to make it clear that he is so doing on behalf of the company or the firm and not in his personal capacity.