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Kerala High Court
K. Baby vs Union Of India on 31 January, 2026
2026:KER:8214
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE ZIYAD RAHMAN A.A.
SATURDAY, THE 31ST DAY OF JANUARY 2026 / 11TH MAGHA, 1947
WP(C) NO. 14332 OF 2024
PETITIONER:
K. BABY
AGED 57 YEARS
S/O KOCHUVELU, SOLE PROPRIETOR,OMKAR SECURITY AGENCY,
REGN NO: 1156, DEVASWOM BUILDING, SOUTH OF PETROL PUMP,
KARUNGAPALLY, KOLLAM RESIDING AT KOYITHARA HOUSE,
MARU SOUTH, ALUMKADAVU P.O., KARUNAGAPALLY,
KOLLAM DISTRICT, PIN - 690573
BY ADV SHRI.RAJESH.R
RESPONDENTS:
1 UNION OF INDIA
REPRESENTED BY DEFENCE SECRETARY,
MINISTRY OF DEFENCE, 101-A, SOUTH BLOCK,
NEW DELHI, PIN - 110011
2 THE PRINCIPAL CONTROLLER OF DEFENCE ACCOUNTS (NAVY)
NO.1, COOPERAGE STREET, COLABA, MUMBAI,
PIN - 400001
3 THE COMMANDING OFFICER
INS ZAMORIN, NAVAL ACADEMY P.O, EZHIMALA, KANNUR,
PIN - 670310
4 THE BRANCH MANAGER
UNION BANK OF INDIA, KARUNAGAPALLY BRANCH,
KARUNAGAPALLY, KOLLAM, PIN - 690518
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WP(C) NO. 14332 OF 2024
2
BY ADVS.
SHRI.V.GIRISHKUMAR, SENIOR PANEL COUNSEL
SHRI.ASP.KURUP
SRI.SADCHITH.P.KURUP
SRI.C.P.ANIL RAJ
SHRI.SIVA SURESH
SMT.B.SREEDEVI
SMT.ATHIRA VIJAYAN
SMT.SWATHI KRISHNA P.H.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 31.01.2026, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
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WP(C) NO. 14332 OF 2024
3
JUDGMENT
The petitioner is aggrieved by the non-release of the
performance guarantee furnished by the petitioner at the
time of execution of Exts.P1 and P2 contracts. The
petitioner is an ex-service man and is the proprietor of M/s.
Omkar Security Agency, Karunagappally, which is engaged
in the supply of manpower to various Central and State
Government organizations and undertakings.
2. The petitioner entered into contracts with the 3 rd
respondent as evidenced by Exts.P1 and P2 for providing
the services of data entry operators. As per Ext.P1, three
persons were supplied and as per Ext.P2, thirty three
persons were supplied by the petitioner. The tenure of the
agreements was from 01.01.2021 to 31.12.2021. As per the
terms and conditions of the agreements, the petitioner
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WP(C) NO. 14332 OF 2024
furnished Exts.P3 to P5 performance guarantee by way of
bank guarantee issued by the 4 th respondent Bank. The
term of the contract was from 01.01.2021 to 31.12.2021.
According to the petitioner, he fulfilled all the obligations
under the contract during his tenure. However, even after
the expiry of the term of contract, the performance
guarantee was not released by the respondents.
3. When the petitioner sought the release of the
said performance guarantee, Ext.P7 communication was
issued, highlighting that the petitioner failed to pay the
bonus at a particular rate to the employees and therefore, it
was pointed out that, the performance guarantee cannot be
released. Ext.P7 is dated 06.02.2023. Even though the
petitioner submitted an objection to Ext.P7 as per Ext.P8
dated 16.02.2023, the same was not responded to and it
was in these circumstances that this writ petition is
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WP(C) NO. 14332 OF 2024
submitted seeking the following reliefs:
"(i) Issue a writ of mandamus or any other
appropriate writ, order or direction to the
respondents to release the Exhibit P3, P4
and P5 Bank Guarantees immediately at
any rate within a time frame to be fixed by
this hon'ble court.
(ii) issue any appropriate writ, order,
declaration or direction declaring that the
petitioner is entitled compensation by way
of compound interest on Bank Guarantee
amounts as per Chapter V of the Micro,
Small & Medium Enterprise Development
Act 2006.
And;
(iii) such other relief as may prayed for or
deemed fit and proper in the facts and
circumstances of the case;"
4. A counter affidavit was submitted by the
respondents 1 to 3, highlighting the terms of contracts
which mandate the necessary payment of bonus to the
employees and it is also averred that, unless the said
amounts are paid, the performance guarantee cannot
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WP(C) NO. 14332 OF 2024
be released. The 4th respondent also filed a counter affidavit
furnishing the details of the bank guarantee furnished by
the petitioner.
5. I have heard Sri.Rajesh R., learned Counsel for
the petitioner, Sri.V. Girishkumar, learned Senior Panel
Counsel for the respondents 1 to 3 and Sri.ASP. Kurup,
learned Counsel for the 4th respondent.
6. The only question that arises for consideration is
whether the performance guarantee can be directed to be
released to the petitioner. Of course, there is some dispute
with regard to the rate at which bonus ought to have been
paid to the employees of the petitioner. Evidently, there are
certain conditions in the agreement, which enables the
respondents 1 to 3 to ensure the payment of bonus to the
workers concerned. According to the petitioner, he had
already paid bonus to all the employees concerned. Even
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WP(C) NO. 14332 OF 2024
while considering the aforesaid aspects, one of the
important aspects to be noticed is that, the term of the
agreement was from 01.01.2021 to 31.12.2021. As of now,
no claims raised at the instance of the any employees, have
been brought to the notice of this Court. Even in the
counter affidavit submitted by the respondents 1 to 3, there
is no reference of any claim being raised by any such
employees. In such circumstances, I am of the view that,
merely because of the reason of non payment of bonus at a
particular rate, the performance guarantee need not be
retained, and the same can be directed to be released
subject to appropriate conditions to ensure that, no liability
is fastened upon the respondents 1 to 3, being the principal
employer, in the event of any claim being raised in future.
Accordingly, this writ petition is disposed of directing
the respondents 2 and 3 to ensure the release of the
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performance guarantee furnished by the petitioner as per
Exts.P3, P4 and P5, upon the petitioner executing an
indemnity bond in favour of the said respondents. It is
ordered that, the performance guarantee shall be released
within a period of one month from the date on which the
petitioner executes an indemnity, to the satisfaction of the
3rd respondent.
Sd/-
ZIYAD RAHMAN A.A.
JUDGE
scs
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WP(C) NO. 14332 OF 2024
APPENDIX OF WP(C) NO. 14332 OF 2024
PETITIONER EXHIBITS
Exhibit P1 THE TRUE COPY OF THE RELEVANT PAGES OF
THE GEM CONTRACT NO: GEMC-
511687705079346 DATED 21-12-2020.
Exhibit P2 THE TRUE COPY OF THE RELEVANT PAGES OF
GEM CONTRACT HAVING NO: GEMC-
511687738401220 DATED 02.01.2021
Exhibit P3 THE TRUE COPY OF BANK GUARANTEE
NO.54230IGL0000321 DATED 21/01/2021
FOR RS. 7,58,740/- IN FAVOUR OF 2ND
RESPONDENT
Exhibit P4 THE TRUE COPY OF BANK GUARANTEE
NO.54230IGL0000121 DATED 21/01/2021
FOR RS. 69,070/- IN FAVOUR OF 2ND
RESPONDENT
Exhibit P5 THE TRUE COPY OF BANK GUARANTEE
NO.54230IGL0000622 DATED 14/01/2022
FOR RS. 37,937/- IN FAVOUR OF THE 2ND
RESPONDENT
Exhibit P6 THE TRUE COPIES OF THE LETTERS DATED
30.04.2022 ALONGWITH BANK STATEMENT
SENT BY THE PETITIONER TO THE
LOGISTICS OFFICER, INS ZAMORIN
Exhibit P7 THE TRUE COPY OF THE LETTER DATED
06.02.2023 ISSUED BY THE 3RD
RESPONDENT
Exhibit P8 THE TRUE COPY OF THE LETTER DATED
16.02.2023 SENT BY PETITIONER TO 3RD
RESPONDENT
RESPONDENT EXHIBITS
Exhibit R4A A true copy of petitioner's request
letter dated 14.06.2022 is
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WP(C) NO. 14332 OF 2024
Exhibit R4B A true copy of Beneficiary's letter
dated 27.12.2022
Exhibit R4C A True copy of letters dated
24.03.2023, 21.06.2023 and 13.07.2023
Exhibit R1(a) A relevant pages of the GEMC-
511687705079346 dated 21-12-2020 was
concluded with firm for an total
amount Rs.6,90,698.37/-
Exhibit R1(b) A true copy of the relevant pages of
GeM Contract No GEMC -511687738401220
dated 02.01.2021 which was concluded
with the Petitioner firm for a total
amount Rs. 75,87,400.92
Exhibit R1(c) A true copy of the clarification
letter No. 449/06 dated 29.04.2022
Exhibit R1(d) A true copy of the letter dated
14.06.2022 for the release of the PBGs
with a false statement that the unit
had misplaced the PBG
