Encashment Of Cheque In Lieu Of Notice Bars Challenge To Termination Of Services: Delhi High Court

The Delhi High Court has held that an employee who accepts and encashes payment made in lieu of the notice period cannot subsequently challenge the termination of their services.

Justice Neena Bansal Krishna dismissed an appeal filed by a former employee of ICICI Bank, who had sought reinstatement and damages alleging that his termination was arbitrary and illegal.

The Court noted that the employee had been appointed under a contract which expressly permitted termination upon issuance of a 90-day notice or payment of salary in lieu thereof. In the present case, the bank had issued a termination letter and paid a sum equivalent to three months' salary in lieu of notice, in accordance with the terms of employment.

The employee had accepted and encashed the cheque issued towards notice pay. In such circumstances, the Court held that he could not be permitted to later question the validity of the termination.

“Once he himself had accepted the termination and encashed the cheque in lieu of the notice period, he cannot assert that his termination was not in terms of the appointment,” the Court held.

Rejecting the plea for reinstatement and compensation, the Court upheld the trial court's findings that the termination was validly effected under the contract.

However, the High Court affirmed the limited relief granted by the trial court, directing payment of one month's salary along with interest, noting that the employee had continued to work during that period prior to communication of the termination.

Appearance: Mr. Ayush Negi, Advocate for Appellant; Dr. M. Y. Khan, Advocate for Respondents

Case title: Pankaj Vaid v. ICICI Bank

Case no.: RFA 976/2025

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