Usually a guarantee bond contains a bank clause meaning:
" Notwithstanding anything contained herein:
a. Our liability under this bank guarantee shall not exceed Rs. _______ (Rupees ____only)
b. This bank guarantee shall be valid upto ____________; and
c. Unless a demand or claim is made on us in writing on or before ________ to pay the guaranteed amount or any part thereof under this bank guarantee, all your rights herewith shall be forfeited and we shall be relieved and discharged of all our liabilities thereafter."
A BG with a clause as above (or similar) & validity having expired and no written notice for claim having been served by the beneficiary, the bank is no longer authorized to entertain any claim from the beneficiary against expired bank guarantee.
Upon your serving the issuing bank a written notice to close the expired BG and refund the margin money, the bank is required to send a written notice to the beneficiary asking them to return the expired original bond. If the original bond is not returned by the beneficiary after a lapse of 30 days, the issuing bank is required to cancel the BG and return the margin money without any further delay as RBI guidelines