These bonds do not serve any purpose. It is not illegal to hold the full and final settlments and relieving letter when the employee has outstanding in his name. What ever may be reasons for leaving, a responsible employee can not just abscond.
While offering for a new position you may indicate that a part of the salary will be set aside and will be payable only after a particualr period and when the employee is not havng any outstanding aginst him/ her.
Definitely the outstandings can be recovered by a legal action as well.
Dayanand L Guddin
12th July 2010 From Singapore, Singapore