The correct option is Option 2: Gulf of Mannar and Bay of Bengal.

The Palk Bay is a shallow bay located between the southeastern coast of India and the northern coast of Sri Lanka. It stretches from Rameswaram in Tamil Nadu, India, to the Jaffna Peninsula in Sri Lanka. Here`s a detailed reasoning for why Option 2 is the correct answer:

1. Gulf of Mannar: The Gulf of Mannar is a large bay situated to the west of the Palk Bay. It lies between the southeastern coast of Tamil Nadu and the western coast of Sri Lanka. The gulf is known for its rich biodiversity and coral reefs, making it an important ecological hotspot. It is also recognized as a Biosphere Reserve by UNESCO. The Gulf of Mannar is connected to the Palk Bay through a narrow channel called the Pamban Channel.

2. Bay of Bengal: The Bay of Bengal is a large northeastern extension of the Indian Ocean. It borders several countries including India, Bangladesh, Myanmar (Burma), and Sri Lanka. The bay is known for its warm waters and is subject to the influence of the southwest monsoon, resulting in heavy rainfall along its coasts. The Palk Bay opens into the Bay of Bengal towards its northeast, forming a larger body of water.

Together, the Gulf of Mannar and the Bay of Bengal surround the Palk Bay. This geographical configuration creates an important marine ecosystem that supports a diverse range of flora and fauna. The region is home to numerous coral reefs, seagrass beds, and mangrove forests, providing habitats for various species of marine life, including endangered species like sea turtles and dugongs.

It is worth noting that the other options mentioned in the question are not correct:

- Option 1: Gulf of Kachchh and Gulf of Khambhat: These are two gulfs located on the western coast of India, specifically in the state of Gujarat. They are not connected to the Palk Bay in any way.

- Option 3: Lakshadweep and Maldive Islands: The Lakshadweep Islands are a group of islands located off the southwestern coast of India, while the Maldives is an independent country to the southwest of Sri Lanka. Neither of these island groups is located in proximity to the Palk Bay.

- Option 4: Andaman and Nicobar Islands: The Andaman and Nicobar Islands are a group of islands located in the Bay of Bengal, to the southeast of mainland India. While they are geographically closer to the Palk Bay compared to the other incorrect options, they are not directly adjacent to the Palk Bay and do not surround it.