Last Updated on January 9, 2026 by Satish Mishra

Cheque as a Security for Job In India is very common especially for young students as their first job. While for company it is their tool to retain talent as they invest in their training and skill upgradation. But does that mean, they can be treated as a bonded labour for the commitment/bond period? This post exactly answers those burning questions.

At the outset only it is illegal as law is silent on this but prior to giving of Cheque, if you sign a service agreement that covers liquidated damages then company may put force behind it for the realization of Cheque. Such service agreement generally shows employee at the receiving end and while leaving the company, the employee must either fulfill the exit criteria or return the benefit accrued politely or else legal action ensues. It can be in form of training, concession; special facilities being given to you and other inputs spend by employer equip you with desired skills for the job.

It is an illegal and unethical practice for an employer in India to demand a blank or post-dated cheque as security for a job. While an employer may request an employment bond, a security cheque is widely considered an unfair labor practice and is strongly advised against by legal experts.

Cheque as a Security for Job

But as a lawyer, I truly fail to understand how can cheques be used by employers to recover the amount in lieu of notice period. To the most, a complaint can be given to Labour Court or a Civil case for recovery but Cheque Bounce case is very rare.

Yes, if the appointment letter covers the cost of training being provided to you, then yes they can recover if you don’t fulfill the criteria. Indian Contract Act would be applicable to such scenarios.

The Supreme Court held that whether a post-dated cheque is for “discharge of debt or liability” depends on the nature of the transaction. If, on the date on which the cheque is issued, liability or debt existed or the amount is legally recoverable, Section 138 of the act will be attracted (Sampelly Satyanarayana Rao v Indian Renewable Energy Development Agency Limited)

Legality and Risks

No Legal Mandate: There is no standard or legally mandated policy that allows employers to ask for a security cheque.
High Risk for Employee: Providing a blank signed cheque is highly inadvisable as it can be misused for any arbitrary amount. If the employer presents the cheque and it bounces due due to insufficient funds, the employee can face criminal charges under Section 138 of the Negotiable Instruments (NI) Act, 1881.
Employer Liability: Although the initial presumption is against the drawer (employee) in a cheque bounce case, the employer (payee) must prove the existence of a legally enforceable debt at the time the cheque was presented for encashment.
Court Rulings: Indian courts have held that cheques issued as security can attract Section 138 charges if a legally enforceable liability or debt existed and was due at the time of presentation. However, if the employee can prove that the cheque was purely for security and no actual debt was due (e.g., if they never joined the company or fulfilled all notice requirements), it can act as a valid defence.

Cheques which are issued to discharge an existing liability are only covered under Section 138 of the act. Even the cheque towards advance payment if dishonoured, will not attract criminal liability under Section 138 of the act but the parties may be liable for breach of contract when the contract provides that the purchaser must pay in advance.

Recommended Actions if Asked for a Security Cheque

If an employer in India requests a security cheque, consider taking the following steps:

Refuse Politely: You have the right to refuse, stating you are not comfortable providing a blank cheque without a formal, written policy or contract detailing the specific terms, purpose, amount, and conditions.
Request Written Communication: Ask for the request for the cheque to be put in writing (email or formal letter) for your records.
Consult Legal Counsel: Seek advice from a labor law attorney to understand your rights and the best course of action for your specific situation.
Document Everything: Keep copies of all communications, offer letters, and any other relevant documents.
Consider Alternatives: Reputable companies often use alternative, legally compliant methods like employment bonds (which outline potential training costs but don’t involve blank cheques) or the use of NACH/ECS auto-debit mandates for loan repayments, which offer greater security for both parties.
Lodge a Complaint: If pressured, you can file a complaint with the local labour commissioner under the Payment of Wages Act, 1936.

Your employment contract must explicitly cover that employer is taking “undated cheques” from you and in case of breach will recover. Even the employee also has recourse to stop such practices by asking bank to stop payment on these cheques. As per Negotiable Instruments Act, 1881 mandate, the life of a cheque is for 3 months and after that it is invalid.

In India, fixed term jobs are governed by the Contract Labour (Regulation And Abolition) Act, 1970.

Post Written by – Research Team of LegalSeva (LawFirm) of Satish Mishra Advocate. Responses from Google’s AI Overview included in Post.

So you can choose the job quietly without making any fuss and once you leave your job after any given months, the cheque won’t remain valid. If still you are in trouble, then dial 9988817966 and I would surely assist you. That’s what we lawyers and advocates in Chandigarh, Panchkula, Mohali are here for.