A performance guarantee cannot be withheld if the underlying contract obligations have been met, as long as appropriate indemnity is provided.

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 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 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 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 4^th 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 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