I recently got a job offer from a startup company in India, and I signed the job agreement. They asked me for cheques of ₹ (Indian Rupees) 20000 and ₹ 40000. They orally informed me that this is a security collateral for the company's confidential information and for the official laptop which they would assign to me after joining.

Due to my lack of experience in the software industry and because they pushed me to decide in a hurry, I agreed to give them the cheques. The agreement I signed is not a legal document. It does not mention the security collateral cheques, nor that I need to pay the amount if I breach the commitment, that is, if I do not join the company.

Later, I informed them that I couldn't join due to some health issues. After a number of discussions, the CEO called me and threatened me saying that he would use his full powers to ruin my career. I took that as an empty threat, and stopped payment of the cheque stating the reason as, "I have lost my cheque book".

I have now received a legal notice from the company stating that I need to pay ₹20000 within 15 days of receiving the notice, failing which they would take legal action against me under Section 138 of the Negotiable Instruments Act.

Should I be worried about this legal notice? Is it common practice for companies to carry out such threats? Should I pay them the money they are asking for to avoid trouble?


  • I have heard that very few startups in India ask a new employee to make a commitment by way of security collateral. I don't know if this practice is legal, but bonded labour is illegal in our country.
  • My seniors have told me that reneging on a signed job agreement will never be an issue. It is common practice for employees to do this if they get a better offer. I think this is why they want to file a case against me for stopping the cheque payment.
  • Comments are not for extended discussion; this conversation has been moved to chat. – Jane S Jun 10 '17 at 11:14

You will need to pay, and you definitely need a lawyer. Don't do anything without consulting one first, or you might end up in more trouble.

Signed contracts are an engagement and a cheque is always something you have to pay, there is no getting away from it.

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    Disagree. Flatly stating "You will need to pay" without even knowing the content of the agreement seems ill-advised. – sleske Jun 9 '17 at 7:02
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    Agree with @sleske. How do you know it's not a scam? Why do you advise the OP to pay someone who is probably committing a fraud? – scaaahu Jun 9 '17 at 7:06
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    He mentions himself that he gave the cheque and the next thing he did was not paying for it. That does seem more like a scam/fraud from OP than from the bank. – Houbie Jun 9 '17 at 7:08
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    Stop payment is not necessarily a fraud. Lying to the bank is something else. – scaaahu Jun 9 '17 at 7:11
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    I would say, depending on region, it is illegal to write someone a check with the intention of stopping payment and not actually paying them. One could make the case that if the OP lied to the bank about why he was stopping payment, he may have been intentionally trying to commit fraud. So I understand where @Houbie is coming from there - in general if you write someone a check you more or less need to follow through on it. Can you edit, though, to improve this answer? Because there are cases when you need to stop checks legitimately. – schizoid04 Jun 9 '17 at 14:37

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