Facts checked on 27 October 2026. Published by MDG Services on 26 October 2026.
What each one is
This page is for a petrol pump that gives diesel on credit to regular business customers.
| Option | What it is | In your favour | The catch |
|---|---|---|---|
| Security deposit | Money the customer hands over before credit starts, kept as cover | The cover is already in your hands | It ties up the customer's cash, and you must return it as agreed |
| Post-dated cheque (PDC) | A cheque dated for a later day, usually the day a bill falls due | The customer commits to a date | The account must hold the money that day. A bounce starts short deadlines |
| Security cheque | A cheque kept only as cover for dues that may arise later | Simple to ask for | It may not be treated like a cheque for a debt that is due NI Act 1881, s.138 |
If a cheque bounces, see cheque bounce: steps and time limits. Whether the cheque bounce law covers a security cheque is for an advocate to advise.
What to write down
A deposit: a receipt both sign, with the customer's name, amount, date, how it was paid, what it covers, when it will be returned and whether you may set it against an unpaid bill.
A cheque: the number, bank, date on the cheque, amount, the drawer's name, the day you received it and the bill it relates to. Say why you hold it: to pay a bill, or only as cover. That choice may change how the law treats it, so ask an advocate first. Photograph both sides.
Cheques have a clock
A cheque must be presented within its validity: 3 months in practice NI Act 1881, s.138. Present a PDC soon after its date. A cheque kept in a drawer for a year may be too old to present.
Keep it apart from the khata
A deposit is not a payment against a bill. Keep its receipt apart from the customer's account. If you later set it against an unpaid bill, record that then as a payment received, with the date.
The limit is still yours to set. See the credit policy and the udhar agreement format. Khata Kavach never lends and never holds money, so a deposit or cheque stays with you. It keeps the account both sides can see, and checks the limit at the nozzle before fuel goes in.
General information, not legal advice. For your own case, speak to an advocate or a chartered accountant.
Questions people ask
01PDC meaning: what is a post-dated cheque?
A cheque dated for a later day. Owners take one for the day a bill falls due, and present it soon after that date, within the cheque's validity: 3 months in practice NI Act 1881, s.138.
02Can I take a security cheque from a credit customer?
Many owners do. But a cheque given only as cover, before any debt is due, may not be treated like a cheque given to pay a debt NI Act 1881, s.138. How the cheque bounce law applies to yours is for an advocate to advise.
03Should I take a security deposit from a customer for credit?
It is your choice. A deposit puts cover in your hand, but regular customers may not want to tie up cash. A limit and a short credit period also reduce risk: see how to set a limit.
Related pages
About Khata Kavach (advertisement)
Khata Kavach is a shared credit book for petrol pumps, from MDG Services. The transporter asks before each truck fills, your nozzle man sees the limit before he fills, and both of you see every fill, payment and bill. It never lends or holds money.