Security Cheque Concerns After Joining a New Company
Hello, I have joined a company after clearing the interview. It was mentioned in the appointment letter that I had to submit a security cheque, which I will get returned after completing 6 months. I submitted an undated signed cheque of 60k to the company as I needed the job. My one month is almost completed, but I am uncomfortable in the company.
Concerns About Security Cheque Encashment
My query is - since this has a security cheque involved, I think that the company will directly go for encashment of the cheque.
1. If I choose to resign, how do I not lose the money?
2. If I issue a cheque stop payment, will I be held accountable for 138?
3. What are the cases that I need to avoid 138 in this above scenario?
Acknowledge(0)
Amend(0)
Hello, I have joined a company after clearing the interview. It was mentioned in the appointment letter that I had to submit a security cheque, which I will get returned after completing 6 months. I submitted an undated signed cheque of 60k to the company as I needed the job. My one month is almost completed, but I am uncomfortable in the company.
Concerns About Security Cheque Encashment
My query is - since this has a security cheque involved, I think that the company will directly go for encashment of the cheque.
1. If I choose to resign, how do I not lose the money?
2. If I issue a cheque stop payment, will I be held accountable for 138?
3. What are the cases that I need to avoid 138 in this above scenario?
Acknowledge(0)Amend(0)
Legal Implications of Undated Cheques
This is not an easy situation to deal with. Your undated cheque has put serious legal (civil as well as criminal liability) consequences, and the wrath of Section 138 of the Negotiable Instruments (NI) Act 1881 is inescapable. The NI Act favors the holder of the cheque by way of presumptions allowed in the Act as per Section 118 and 139 of the Act.
Issuance of Undated Cheques
As regards the position on the issuance of undated cheques, it is a usual practice that many times cheques are issued bearing no date or post-dated cheques. The holder of the cheque enters the date, and thereafter, cheques are presented. Here, please refer to the Hon'ble Bombay High Court decision in the case of Purushottamdas Gandhi vs. Manohar Deshmukh 2007 (1) Mh. L.J. 210, which observed that inserting such a date does not amount to tampering or alteration. By the delivery of such an undated cheque, the drawer authorizes the holder to insert the date, and the period of 6 months for the presentation of such a cheque to the Bank would start from the date which bears on the cheque.
Presumption in Favor of the Holder
In Ashok Badwe vs. Surendra Nighojkar A.I.R. 2001, S.C. 1315, the law is settled that until the contrary is proved, presumption is in favor of the holder of the cheque that it was drawn for the discharge of debt or liabilities. However, it is a rebuttable one, and the accused can rebut it by producing cogent evidence. The querist can draw some support from Goa Plast Pvt. Ltd. vs. Shri Chico Ursula D'Souza 1996 (4) All MR 40, where the former was an employer and the latter was an employee. But the employer had not led evidence to show that the accused was liable to pay any due or part thereof, and thus liability was not proved. Similarly, it was not proved that the cheque was given towards those liabilities. The accused, much earlier to the presentation of cheques to the Bank, had appraised the complainant that he is not liable to pay any amount, and therefore, stopped payment. The Hon'ble Bombay High Court had observed that the complainant failed to prove that the cheque was issued for the discharge of legal liabilities. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. The existence of a legally recoverable debt is not a matter of presumption under section 139. It merely raises a presumption in favor of the holder of the cheque that the same has been issued for the discharge of any debt or other liability.
From India, Mumbai
Acknowledge(2)
Amend(0)
1593This is not an easy situation to deal with. Your undated cheque has put serious legal (civil as well as criminal liability) consequences, and the wrath of Section 138 of the Negotiable Instruments (NI) Act 1881 is inescapable. The NI Act favors the holder of the cheque by way of presumptions allowed in the Act as per Section 118 and 139 of the Act.
Issuance of Undated Cheques
As regards the position on the issuance of undated cheques, it is a usual practice that many times cheques are issued bearing no date or post-dated cheques. The holder of the cheque enters the date, and thereafter, cheques are presented. Here, please refer to the Hon'ble Bombay High Court decision in the case of Purushottamdas Gandhi vs. Manohar Deshmukh 2007 (1) Mh. L.J. 210, which observed that inserting such a date does not amount to tampering or alteration. By the delivery of such an undated cheque, the drawer authorizes the holder to insert the date, and the period of 6 months for the presentation of such a cheque to the Bank would start from the date which bears on the cheque.
Presumption in Favor of the Holder
In Ashok Badwe vs. Surendra Nighojkar A.I.R. 2001, S.C. 1315, the law is settled that until the contrary is proved, presumption is in favor of the holder of the cheque that it was drawn for the discharge of debt or liabilities. However, it is a rebuttable one, and the accused can rebut it by producing cogent evidence. The querist can draw some support from Goa Plast Pvt. Ltd. vs. Shri Chico Ursula D'Souza 1996 (4) All MR 40, where the former was an employer and the latter was an employee. But the employer had not led evidence to show that the accused was liable to pay any due or part thereof, and thus liability was not proved. Similarly, it was not proved that the cheque was given towards those liabilities. The accused, much earlier to the presentation of cheques to the Bank, had appraised the complainant that he is not liable to pay any amount, and therefore, stopped payment. The Hon'ble Bombay High Court had observed that the complainant failed to prove that the cheque was issued for the discharge of legal liabilities. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. The existence of a legally recoverable debt is not a matter of presumption under section 139. It merely raises a presumption in favor of the holder of the cheque that the same has been issued for the discharge of any debt or other liability.
From India, Mumbai
Acknowledge(2)Amend(0)
Acceptance of a blank cheque as security
Acceptance of a blank cheque by a company as security has various aspects. Are you currently undergoing any training specifically tailored for you? What is the notice period specified in the appointment letter? Are you still in your probationary period? Remember to request the return of the cheque in compliance with the rules and regulations. Forcing you to work is comparable to bonded labour. In any case, when the company requested such security, you should have reconsidered.
From India, Pune
Acknowledge(0)Amend(0)
Acceptance of a blank cheque by a company as security has various aspects. Are you currently undergoing any training specifically tailored for you? What is the notice period specified in the appointment letter? Are you still in your probationary period? Remember to request the return of the cheque in compliance with the rules and regulations. Forcing you to work is comparable to bonded labour. In any case, when the company requested such security, you should have reconsidered.
From India, Pune
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Employment terms.pdf