Court orders return of cancelled bank guarantee promptly, warns of penalty for non-compliance.

The court ordered the respondents to return the cancelled bank guarantee to the petitioner promptly, emphasizing that the guarantee could only be withheld under specific circumstances. Failure to comply would result in a daily penalty of Rs. 1000, recoverable from the responsible officer's salary. The respondents' counsel accepted the order, leading to the petition being allowed, with costs of Rs. 5,000 awarded to the petitioner.

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Issues:
Seeking return of bank guarantee with "cancelled" endorsement.

Analysis:
The petitioner sought the return of a bank guarantee with the endorsement "cancelled." The court noted that the mere pendency of an appeal by the Revenue was not a valid reason to withhold the return of the bank guarantee, especially when there was no financial recovery against the petitioner at that time. The court emphasized that it was the obligation of the respondents to return the bank guarantee promptly with the proper endorsement if the purpose of security was over, to discharge the guarantor's liability. The court clarified that the bank guarantee could only be withheld subject to the order of the Competent Tribunal or Superior Court.

The court directed the respondents to return the duly cancelled or discharged bank guarantee to the petitioner within seven days, failing which a penalty of Rs. 1000 per day would be imposed until the return. The penalty amount would be recoverable from the responsible officer's salary. The respondents' counsel acknowledged the order and agreed to communicate it to the relevant authority. Consequently, the petition was allowed, and the rule was made absolute with costs quantified at Rs. 5,000 to be paid to the petitioner.

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