IN THE SUPREME COURT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA Lanka Milk Foods (CWE) Limited, Welisara, Ragama. Plaintiff SC Appeal No. SC/CHC/16/2007 CHC Case No. HC (Civil) 157/2001 (1)

Vs, Seylan Bank Limited, No. 33, Sri Baron Jayatilaka Mawatha, Colombo 01. Presently at:

“Ceylinco-Seylan Towers”, No. 90, Galle Road, Colombo 03.

Defendant -And Now-

Seylan Bank Limited, No. 33, Sri Baron Jayatilaka Mawatha, Colombo 01.

Presently at:

“Ceylinco-Seylan Towers”, No. 90, Galle Road, Colombo 03.

Defendant-Appellant Vs, Lanka Milk Foods (CWE) Limited, Welisara, Ragama.

Plaintiff-Respondent Before: Justice S. Thurairaja, PC Justice A.L. Shiran Gooneratne Justice Mahinda Samayawardhena Counsel: Dr. Romesh de Silva, PC with Shanaka Coorey instructed by De Livera Associates for the Defendant-Appellant.

Nihal Fernando, PC with Harshula Seneviratne instructed by Hemanthi Bulatwatte for the Plaintiff-Respondent.

Argued on: 25/11/2024 Decided on: 19/03/2025 A.L. Shiran Gooneratne J.

[1] By Plaint dated 26/11/1992, the Plaintiff-Respondent (hereinafter sometimes referred to as ‘the Plaintiff’) filed this action CHC No. HC (Civil) 157/01 (1) against the Defendant-Appellant (hereinafter referred to as ‘the Defendant Bank’) for the recovery of money due on Performance Bond/Guarantee No. 001/LG/90/253 dated 15/10/1990 [marked P6], and Performance Bond/Guarantee No. 001/LG/91/027 dated 07/02/1991 [marked P9], as the first and second causes of action, against the Defendant Bank, in a sum of US$ 72,730.23 and US$ 56,733.25 respectively, together with legal interest until the date of payment in full.

[2] The Plaintiff also prayed that, in the event of any inability to recover the decreed sum of US dollars, the sum to be recovered in Sri Lankan Rupees may be equivalent to the sum of US dollars and interest thereon at the date of payment.

[3] In paragraph 5 of the Plaint, the Plaintiff stated, that in or about July 1991, the business of The Bank of Credit and Commerce International (overseas) Limited (hereinafter referred to as the “BCCI”) was suspended by the Central Bank of Sri Lanka and the Defendant Bank upon being appointed and/or upon being given the power to do so by the Central Bank of Sri Lanka, managed and/or administered and/or carried on the business of BCCI in Sri Lanka.

[4] In paragraph 6 of the plaint, the Plaintiff stated, that acting under the Gazette Extraordinary No. 694/17 dated 28/12/1991, the President under Section 5 of the Public Security Ordinance, and under the Gazette Extraordinary No. 695/11 dated 01/01/1992, by the powers vested in it by Emergency (Banking Special Provisions) Regulations No. 2 of 1991, the Monetary Board of the Central Bank of Sri Lanka, vested the business of the said BCCI in Sri Lanka in the Defendant Bank with effect from 1^st January 1992.

[5] In Paragraph 8 of the Plaint, the Plaintiff stated, that the Defendant has acted and/or taken the benefit of the said Order made by the President marked P1, and the said Regulations marked P4 and is therefore estopped from denying same.

[6] In paragraph 09 of the Plaint, the Plaintiff, for a first cause of action on Performance Bond/Guarantee No. 001/LG/90/253 dated 15/10/1990, for the recovery of a sum of US$ 72,730.30 together with legal interest, [marked P6], stated that the Plaintiff entered into a contract with Won Ji Industrial Company Limited of Seoul, South Korea, (hereinafter referred to as ‘the Contractor’), for the purchase by the Plaintiff of 150 metric tons of Triple Laminate Foil to be supplied by the Contractor.

[7] A Condition of the said Contract marked P5, was that the Contractor shall furnish a Performance Bond for US$ 72,730,23 [United States dollars, Seventy-two thousand seven-hundred and thirty and cents twenty-three only] (10% of the total value of the contracted amount) for the due and punctual performance and fulfilment of the contract above referred to and the contractor has requested to furnish the requisite Performance Bond and whereas, Bank