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So, the new company I am about to join has this policy - The company can hold the salary if I have an unplanned leave and am out of contact with them for more than a day. Is it legal?

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Better not join that company. Never join an organization that considers employees as their slaves. There are many companies that view employees as assets with whom they can generate income. The company you are considering joining falls into the category of organizations that believe they are in business solely to meet your needs, or that employment is offered to you (as to other employees) because you desperately need it. That is not the reality. It should be a mutually beneficial relationship - the employer needs you, and you need the employer. Therefore, it's best to decline the offer. If they contact you again, you can candidly express that you were not impressed with the company's HR climate.
From India, Kannur
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